Amidst fierce competition from telco rivals, state-owned telecom firm Bharat Sanchar Nigam Limited (BSNL) was found drowning and losing hope.
The Union Cabinet, in an attempt to revive it, approved $20.5 billion to help the loss-making firm compete better with private rivals.
The fresh capital will be utilized for upgrading services, allocating spectrum, de-stressing its balance sheet, and augmenting its fiber network by merging Bharat Broadband Nigam Ltd (BBNL) with BSNL.
The package has cash support of Rs.43,964 Cr and non-cash support of Rs.1.20 lakh Cr, spread over 4 years.
Most of it will be implemented in the first two years, he added.
The cash proponent will be used for spectrum allocation, capital expenditure, and viability gap funding.
To de-stress the telco’s balance sheet, Rs 33,000 Cr statutory dues will be converted into equity, and a similar amount of bank loans will be repaid through the issue of low-interest bonds.
So all these years, BSNL has been frantically trying to keep up with private biggies like Reliance Jio, Bharti Airtel, and Vodafone Idea, who have rolled out 4G services and aggressively cut data prices.
To improve existing services and provide 4G services, BSNL will be allotted spectrum in the 900/1800 MHz band administratively through equity infusion. With this spectrum, BSNL will be able to compete and provide high-speed data, including in rural areas.
Too long? Here’s a one-liner: Telecom minister announces $20.5 billion to revive BSNL and merge it with its broadband arm, statutory dues will be converted into equity and spectrum in the 900/1800 MHz band will be allotted to compete in 4G space.