Cabinet Approves Relaunch of BSNL and Merger of BBNL, BSNL

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

Addressing a Cabinet briefing in New Delhi, Telecoms Minister Ashwini Vaishnaw said the package will have three main elements – it will aim to improve the quality of BSNL services, it will be used to de-stress the balance sheet and will attempt to expand the company carried fibers.

He also said the government would administratively allocate spectrum to BSNL to help it expand 4G services.

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

“Cabinet-approved stimulus measures focus on injecting new capital for upgrading BSNL services, allocating spectrum, relaxing its balance sheet and increasing its fiber network by merging BBNL with BSNL,” the telecoms ministry said in a statement.

Here are the stimulus packages approved by Cabinet:

A. Upgrading BSNL Services:
1. Administrative spectrum allocation: To improve existing services and provide 4G services, BSNL will be administratively allocated spectrum in the 900/1800 MHz band at a price of Rs 44,993 Cr through capital injection. With this spectrum, BSNL will be able to compete in the market and provide high-speed data using its extensive network, including in rural areas.
2. Financial support for capex: To promote the development of indigenous technology, BSNL is rolling out the Atmanirbhar 4G technology stack. To meet the planned capital expenditure for the next 4 years, the government will finance capital expenditure of Rs 22,471 Cr. This will be a significant boost for the development and deployment of the Atmanirbhar 4G stack.
3. Funding the sustainability gap for rural wireline operations: Despite commercial non-viability, BSNL provided wireline services in rural/remote areas to meet government social objectives. The Government will provide Rs 13,789 Cr to BSNL as Viability Gap Funding for commercially non-viable rural wireline operations carried out between 2014-15 and 2019-20.
4. 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, capex provision and spectrum allocation.

B. De-stressing assessment of BSNL:

5. Debt structure: The government will provide a sovereign guarantee to these PSUs to raise long-term loans. They will be able to raise long-term bonds for an amount of Rs 40,399 Cr. This will help restructure existing debt and de-stress balance sheets.
6. Financial support for AGR contributions: To further improve the balance sheet, BSNL’s AGR contributions amounting to Rs 33,404 Cr will be settled by conversion into equity. The government will provide funds to BSNL for the settlement of AGR/TPS dues.
seven. Reissue of preference shares: BSNL will reissue a preferential share of Rs 7,500 Cr to the government.

Thanks to these measures, BSNL will be able to improve the quality of existing services, deploy 4G services and become financially viable. It is expected that with the implementation of this stimulus package, BSNL will turn around and turn a profit in the fiscal year 2026-27, the ministry added.

As for the merger, BSNL already has a network of over 6.8 lakh kilometers of fiber optic cable (OFC) network.

With the proposed merger, BSNL will get 5.67 lakh kilometers of optical fiber which has been laid on 1.85 lakh village panchayats in the country with the help of Universal Service Obligation Fund (USOF).

The BBNL Special Purpose Vehicle (SPV) was established in February 2012 to deploy fiber optic network in 2.5 lakh village panchayats across the country using USOF and provide access to all telecom operators on a non-discriminatory basis.

(With contributions from the agency)

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