The union cabinet has approved the second revival package worth ₹1.64 lakh crore for Bharat Sanchar Nigam Limited (BSNL) to address the telecom PSU’s financial woes and upgrade its services. The funds will also be used by the state-run teleco to roll out 4G services and make its rural wireline services viable.

“The Cabinet has allocated a package of ₹1,64,156 crore for revival of BSNL,” informed union telecom minister Ashwini Vaishnaw during the post-meeting briefing on Wednesday. “BSNL has become financially stable with an operating profit of ₹1,000 crore after the first revival package in 2019. The package announced today will be utilised to make the company a sustainable and vibrant telecom player.”

The package incorporates three elements —expanding BSNL’s services and upgrading their quality, de-stressing the telco’s balance sheet, and expanding BSNL’s fibre network by merging the BharatNet infrastructure laid by Bharat Broadband Network Ltd (BBNL) with it, the minister stated.

Administrative allocation of 4G spectrum, and subsequently 5G spectrum, will be carried out under the first element. BSNL will be allotted 4G spectrum in 900 MHz and 1800 MHz band at the cost of ₹44,993 crore through equity infusion, a government statement reads.

The capital expenditure for upgrading BSNL’s service over the next four years will be funded by ₹22,471 crore allocated under the package. For this, BSNL will use indigenously developed 4G technology stack, Vaishnaw stated.

Development of 4G equipment is part of the production-linked incentive (PLI) scheme for the telecom sector, which was extended last month by one year by the central government. The scope of the scheme has also been extended to cover design-led manufacturing.

The latest BSNL revival package also has provision of ₹13,789 crore that will be utilised as viability gap funding (VGF) for the wireline operations laid down by the company in rural and remote areas of the country between 2014-15 and 2019-20, the cabinet statement says.

The revival package will see the authorised capital of BSNL increase from ₹40,000 crore to ₹1,50,000 crore in lieu of AGR dues, provision of capex and allotment of spectrum.

In a bid to de-stress BSNL’s balance sheet, the central government will provide sovereign guarantee to the PSU through long-term bonds that will be used to repay bank debt worth around ₹33,000 crore in its balance sheet. This will help restructuring existing debt and de-stressing the balance sheets, Vaishnaw said.

The government will also convert BSNL’s legacy dues worth ₹33,404 crore arising from adjusted gross revenue (AGR) liabilities into equity to further improve its balance sheet, the minister added.

“This balance sheet restructuring exercise will see BSNL emerge as a very sustainable entity going forward,” Vaishnaw stated.

To augment the optical fibre network of BSNL, the cabinet has also approved the merger of BBNL with BSNL to facilitate wider utilisation. The amalgamation will root out gaps in coordination between the two entities, the telecom minister averred.

The combined optical fibre network between BSNL and BBNL will span around 14 lakh km, he added.

The central government expects BSNL to turn around and earn profit in the financial year 2026-27 after the implementation of this revival plan. The package will also result in 1 lakh new jobs, Vaishnaw said.

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