The Union cabinet on Wednesday approved a Rs 1.64 lakh crore (trillion) package to revive BSNL. The telecom PSU has struggled to win customers as Reliance Industries’ telecoms arm Jio and rivals Bharti Airtel and Vodafone Idea have rolled out 4G services and aggressively cut data prices.
Telecom minister Ashwini Vaishnaw said the package has a cash component of Rs 43,964 crore and a non-cash component of Rs 1.2 lakh crore spread over four years. “We are committed to strengthening BSNL,” he said. Funds will be provided to upgrade services, allocate spectrum, de-stress the balance sheet and augment the fiber network by merging Bharat Broadband Nigam Ltd (BBNL) with BSNL.
Analysts said the revival package was too late in the day as private telecom players have garnered significant market share and are bidding for 5G to consolidate their position. The state-owned player is likely to get the 5G spectrum after two years or so as indicated by the minister, which would further erode the subscriber base of the telco. An equity infusion of Rs 44,993 crore will be made to buy spectrum that will be allocated through the administrative route. The government will offer spectrum in the 900/1800 MHz bands.
The government will fund capex of Rs 22,471 crore to develop 4G technology. A sum of Rs 13,789 crore will be given as viability gap funding by the Centre for rural wireline operations during 2014-15 to 2019-20. Another Rs 33,404 crore of statutory dues will be converted into equity to de-stress the balance sheet. Besides, the government will provide a sovereign guarantee to raise money to repay current loans. Bharat Broadband Network Ltd — the firm that created a fibre network called BharatNet — will be merged with BSNL to boost its infrastructure and support telephony services, The infrastructure created under BharatNet will continue to be a national asset, accessible on a non-discriminatory basis to all the telecom service providers.
The cabinet also approved a project for the saturation of 4G mobile services in uncovered villages across the country at a total cost of Rs 26,316 crore.
