BSNL News: BSNL, MTNL get fresh lifeline of Rs 1.6 lakh crore | India Business News – Times of India

NEW DELHI: The government on Wednesday announced a fresh support of Rs 1.64 lakh crore to struggling state-run telecom companies BSNL and MTNL, three years after a Rs 70,000 crore package was doled out to keep them afloat.
Communications minister Aswani Vaishnaw invoked their “strategic” status to justify the latest aid, which will involve a cash outgo of around Rs 44,000 crore and 4G spectrum worth Rs 44,993 crore. He said that the package will help them turn profitable in three-four years.
The move comes just when the Centre, which has been insisting on returning to the fiscal consolidation path, is seen to be getting a windfall of Rs 1.5 lakh crore from 5G auctions.
A key element of the earlier package, the merger of MTNL and BSNL, has been on the backburner with the telecom department citing technical issues.
At a press conference following approval by the Union Cabinet, Vaishnaw said the PSUs need to be protected and made stronger as they are “strategic” in nature, and would also act as “market balancers” in the face of private sector dominance. He said BSNL will be held answerable to “clearly defined outcomes”, including being accountable for performance.
Communications minister Ashwini Vaishnaw said, “After all, it’s taxpayers’ money… Commitments must be met in clearly defined timeframes.”
The Cabinet also approved merger of Bharat Broadband Network Ltd, the firm that created a fibre network called BharatNet, with BSNL to boost infrastructure and support telephony services as they will cumulatively boast 14 lakh km of optic fibre. It also gave a go-ahead for a project for saturation of 4G mobile services in uncovered villages at a total cost of Rs 26,316 crore, which will provide connectivity in 24,680 villages.

The fresh revival package, which had been in the works for over six months, will see the government provide BSNL and MTNL much-need 4G firepower which has been missing from their arsenal. They will, however, remain a generation behind private players who are likely to offer 5G in a couple of months. Vaishnaw said that BSNL and MTNL would get a 5G upgrade in the next 18-24 months.
Of the Rs 1,64,156 crore package, Rs 43,964 crore will come through cash, while Rs 1,20,192 crore would be non-cash support. The PSUs would be provided 4G spectrum worth Rs 44,993 crore through the administrative route as part of equity infusion. Also, to fund indigenous technology upgradation, BSNL will be provided a capex of Rs 22,471 crore, while getting another Rs 13,789 crore as viability gap funding for undertaking commercially-unviable rural wire-line operations done during 2014-15 to 2019-20.
As part of strengthening the PSUs’ balance sheet, the government will provide sovereign guarantee to raise longterm loans. They will be able to issue long-term bonds for Rs 40,399 crore at cheaper rates, helping them restructure existing debt and de-stress their balance sheets, the minister said. Also, the AGR dues of BSNL, worth Rs 33,404 crore, will be settled by conversion into equity.
“Government will provide funds to BSNL for settling the AGR/GST dues,” the telecom ministry said, adding that BSNL will reissue preference shares of Rs 7,500 crore to the Centre. Once the shining jewels in the government’s PSU line-up, BSNL and MTNL have been a drain on the exchequer for the last decade or so — suffering losses running into thousands of crores of rupees — as competition hit their businesses.