The Union Cabinet on July 27 approved a 1.64 lakh crore package for the restoration of the state-owned telecom company Bharat Sanchar Nigam Limited (BSNL), in yet another bid to bring it back to life.
The package will include the administrative allotment of 4G spectrum worth 44,993 crore, which contains a cash component worth 43,964 crore and a non-cash component worth 1.2 lakh crore spread over four years. The ambitious BharatNet project’s implementation vehicle, Bharat Broadband Network Ltd (BBNL), would also be amalgamated into BSNL.
The package also includes funding for capex of 22.471 crore, viability gap funding for rural wireline operations of 13.789 crore, debt structuring through the issuance of bonds with sovereign guarantees worth 40.399 crore, and financial assistance for AGR (Adjusted Gross Revenue) dues of 33.404 crore.
The revival of BSNL and MTNL as well as the merger of the two organizations received approval from the Cabinet in 2019 in a package worth nearly 70,000 crore rupees.
“BSNL actually changed its mind following the 2019 package. It generated an operating profit of about 1 billion rupees. Therefore, it is not as though the results of the prior package were not visible. We now have optimism and trust that this is a stable company because of the positive outcome, Telecom Minister Ashwini Vaishnaw told reporters.
He continued by saying that customer attrition had ceased, BSNL’s market share was stable at roughly 10%, and revenues were now stable at about 19,000 crore.
The initial package made BSNL a stable organization. It will become a viable company with today’s revival package, the Minister continued.
He added that the allotment of 900/1800 MHz band spectrum valued at 44,993 crore by the Cabinet would assist BSNL’s 4G services and allow the company to compete in the market and offer high-speed data. For the next four years, the government would invest $22,471 crore to “promote development and implementation of Atmanirbhar 4G stack.”
Additionally, the government would give BSNL 13,789 crore as viability gap financing for rural wireline operations carried out between 2014–15 and 2019–20 that were not commercially viable.
Further, the government would provide a sovereign guarantee to the business in order to raise long-term bonds in the amount of 40,399 crore in order to pay off its present high-cost debt and convert 33,404 crore of statutory dues into equity to de-stress its balance sheet. The government would receive 7,500 crore in preference shares from BSNL as well as the company will convert its outstanding AGR debt of 33,404 crore into equity.
According to the Minister, the permissible capital of BSNL would be raised from 40,000 to 1.5 lakh crore in lieu of debt payments, capital expenditures, and spectrum allocation.
“With these steps, BSNL will be able to raise the standard of its current services, introduce 4G, and achieve financial viability. With the implementation of this recovery strategy, BSNL is anticipated to come around and produce net profit in the following three to four years, according to the Minister.
He also said that by combining with BBNL, BSNL’s 8.6 lakh km of optical fiber would be extended (which has the BharatNet project under it, and an optical fibre network of 5.8 lakh km). With this, BSNL would have a network of optical fibers covering 14 lakh kilometers.
“BSNL will be able to enhance services and produce a net profit in 3–4 years thanks to the restoration package. In the following 1.5 to 2 years, it will offer its 5G services, according to Mr. Vaishnaw. “People would be able to use its 4G telecom services in one to 1.5 years.” Regarding the MTNL and BSNL merger, he claimed the idea was still in place but “it required significant financial restructuring,” even though the two businesses were actually operating as one.
