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BSNL gets ₹1.64-lakh-crore lifeline from government – The Hindu

The package includes administrative allotment of 4G spectrum worth ₹44,993 crore

The package includes administrative allotment of 4G spectrum worth ₹44,993 crore

In yet another effort to revive the state-owned telecom firm Bharat Sanchar Nigam Limited  (BSNL), the Union Cabinet on July 27 approved a ₹1.64–lakh crore package for its revival.

The package, which has a cash component of ₹43,964 crore and a non-cash component of ₹1.2 lakh crore spread over four years, will include administrative allotment of 4G spectrum worth ₹44,993 crore. In addition, Bharat Broadband Network Ltd (BBNL), which was set up to implement the ambitious BharatNet project, will be merged with BSNL.

Other key components of the package include capex support of ₹22,471 crore, viability gap funding of ₹13,789 crore for rural wireline operations, debt structuring by raising of bonds with sovereign guarantee worth ₹40,399 crore and financial support for AGR (Adjusted Gross Revenue ) dues worth ₹33,404 crore.

2019 package 

The Cabinet had in 2019 too cleared a package worth nearly ₹70,000 crore for the revival of BSNL and MTNL, while also giving an in principle nod for the merger of the two entities.

“BSNL has actually turned around after the 2019 package. It has made an operating profit of almost ₹1,000 crore… So, it is not that we have not seen any result of the previous package. It was a good result and that is what has given us hope and confidence that this is now a stable company,” Telecom Minister Ashwini Vaishnaw told reporters.

He added that attrition of customers had stopped, and currently BSNL’s market share was stable at about 10%, while revenues were now stable at around ₹19,000 crore.

“With the first package, BSNL became a stable entity. With today’s revival package it will become a viable entity,” the Minister added.

Capex support 

The Cabinet had approved an allocation of 900/1800 MHz band spectrum worth ₹44,993 crore to support the 4G services of BSNL, he said, adding that this would allow the firm to compete in the market and provide high-speed data. The government would fund a capex of ₹22,471 crore over the next four years to “boost development and deployment of Atmanirbhar 4G stack”.

Also, the government would provide ₹13,789 crore to BSNL as viability gap funding for commercially unviable rural wireline operations done during 2014-15 to 2019-20.

Further, to de-stress its balance sheet, ₹33,404 crore of statutory dues would be converted into equity and the government would give a sovereign guarantee to the company to raise long-term bonds of ₹40,399 crore to repay its current high-cost debt. The AGR dues of BSNL, amounting to ₹33,404 crore, would be settled by conversion into equity, while BSNL would also re-issue preference shares of ₹7,500 crore to the government.

The authorised capital of BSNL would be increased from ₹40,000 crore to ₹1.5 lakh crore in lieu of dues, provision of capex and allotment of spectrum, the Minister said.

“With these measures, BSNL will be able to improve the quality of existing services, roll out 4G services and become financially viable. It is expected that with the implementation of this revival plan, BSNL will turn around and generate net profit in the next 3-4 years,” the Minister said.

He added that BSNL’s 8.6 lakh–km optical fibre would be extended by merging BBNL (which has the BharatNet project under it, and an optical fibre network of 5.8 lakh km). With this, BSNL would have 14 lakh km of the optical fibre network.

“The revival package will enable BSNL to improve services and generate a net profit in 3-4 years. Its 5G services launch will happen in the next 1.5-2 years,” Mr. Vaishnaw said. “In 1-1.5 years its 4G telecom services will reach people.” On the merger of MTNL and BSNL, he said the plan was still there but “it needs complex financial restructuring”, although, in effect, the two companies were working as one.