Cabinet approves revival of BSNL, and merger of BBNL with BSNL

The Union Cabinet on Wednesday approved Rs 1,64,000-crore revival package for loss-making state-run telecom operator Bharat Sanchar Nigam Limited (BSNL). Consequently, the Cabinet also approved the merger of BSNL and BBNL (Bharat Broadband Network Limited).

Addressing a Cabinet briefing in New Delhi, Telecom Minister Ashwini Vaishnaw said the package will have three main elements – it will aim at improving the quality of BSNL services, it will be used to destress the balance sheet, and will attempt to to expand the company’s fibre reach.

He also said that the government will make administrative allocation of spectrum to BSNL to help it expand 4G services.

To destress the balance sheet, the government is approving a sovereign guarantee bond issuance for BSNL to repay bank loans, the minister said. Rs 33,000 crore of statutory dues to be converted into equity, he added.

“Revival measures approved by the Cabinet focus on infusing fresh capital for upgrading BSNL services, allocating spectrum, de-stressing its balance sheet, and augmenting its fiber network by merging BBNL with BSNL,” the Telecom Ministry said in a statement.

Here are the revival plans approved by the Cabinet:

A. Upgrading BSNL services:

• Administrative allotment of Spectrum: To improve existing services and provide 4G services, BSNL will be allotted Spectrum in 900/1800 MHz band administratively at the cost of Rs 44,993 Cr through equity infusion. With this spectrum, BSNL will be able to compete in the market and provide high speed data using their vast network including in rural areas.
• Financial support for capex: To promote indigenous technology development, BSNL is in process of deploying Atmanirbhar 4G technology stack. To meet the projected capital expenditure for next 4 years, Government will fund capex of Rs 22,471 Cr. This will be a significant boost to development and deployment of Atmanirbhar 4G stack.
• Viability gap funding for rural wireline operations: Despite the commercial non-viability, BSNL has been providing wireline services in rural/remote areas to meet the social objectives of the Government. Government will provide Rs 13,789 Cr to BSNL as viability gap funding for commercially unviable rural wire-line operations done during 2014-15 to 2019-20.
• Increase in authorized capital: The authorized capital of BSNL will be increased from Rs 40,000 Cr to Rs 1,50,000 Cr in lieu of AGR dues, provision of capex and allotment of spectrum.

B. De-stressing BSNL balance sheet:

• Debt structuring: Government will provide sovereign guarantee to these PSUs for raising long term loan. They will be able to raise long term bonds for an amount of Rs 40,399 Cr. This will help restructuring existing debt and de-stressing the balance sheets.
• Financial support for AGR dues: To further improve the balance sheet, AGR dues of BSNL amounting to Rs 33,404 Cr will be settled by conversion into equity. Government will provide funds to BSNL for settling the AGR/GST dues.
• Re-issue of preference shares: BSNL will re-issue preference share of Rs 7,500 Cr to the Government.

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 earn profit in FY 2026-27, the ministry added.

As for the merger, BSNL already has a network of over 6.8 lakh kilometer of optical fibre cable (OFC) network.

With the proposed merger, BSNL will get 5.67 lakh kilometer of optical fibre which has been laid across 1.85 lakh village panchayats in the country using Universal Service Obligation Fund (USOF).

Special purpose vehicle (SPV) BBNL was formed in February 2012, to lay out optical fibre network across 2.5 lakh village panchayats across the country using USOF and provide access to all telecom operators on a non-discriminatory basis. BusinessToday