The Union Cabinet has approved the merger of Bharat Broadband Network Limited (BBNL) into Bharat Sanchar Nigam Limited (BSNL) to expand BSNL’s fibre reach. Additionally, the cabinet has also approved a Rs 1.64 trillion revival package for BSNL to improve the quality of its services and de-stress the balance sheet.

According to Ashwini Vaishnaw, Union Minister of Communications, Electronics and Information Technology and Railways, the package will include cash support of Rs 439.64 billion and non-cash support of Rs 1.2 trillion. The cash proponent will be used for spectrum allocation, capital expenditure and viability gap funding.

According to the government, BSNL will be allotted spectrum in 900/1800 MHz band administratively at the cost of Rs 449.93 billion through equity infusion to improve existing services and provide 4G services. With this spectrum, BSNL will be able to compete in the market and provide high-speed data using their vast network including in rural areas.

Further, BSNL is also in the process of deploying ‘Atmanirbhar 4G’ technology stack. To this end, the government will fund capex of Rs 224.71 billion to meet the projected capex for the next four years. The government will also provide Rs 137.89 billion to BSNL as viability gap funding for commercially unviable rural wireline operations done during 2014-15 and 2019-20. Moreover, the authorised capital of the operator will be increased from Rs 400 billion to Rs 1.5 trillion in lieu of adjusted gross revenue (AGR) dues, provision of capex and allotment of spectrum. AGR dues of BSNL amounting to Rs 334.04 billion will be settled by conversion into equity. The government will provide funds to the operator for settling the AGR and GST dues. BSNL will re-issue preference share of Rs 75 billion to the government. In order to de-stress the balance sheet, the government is approving sovereign guarantee bond issuance for the operator to repay the bank loans, which stands at approximately Rs 330 billion. Also, there is an element of sovereign guarantee bonds for Mahanagar Telephone Nigam Limited (MTNL), a subsidiary of BSNL, in the package. The administrative allocation of spectrum for 4G and 5G services for BSNL has also been approved by the government.

Meanwhile, the merger of BBNL with BSNL will facilitate wider utilisation infrastructure laid under BharatNet. According to Vaishnaw, the combined fibre network will be around 14 lakh km. High-speed optical fibre services are likely to get a boost across India, including in remote areas, after the merger comes into effect. According to the operator, it will work as an executing arm of the government and ownership of assets will rest with the government. The workforce of BBNL, which is less than 200, is proposed to be absorbed into BSNL, and revenue share agreements will be honoured.

The minister further added that post the implementation of the revival package, BSNL will be able to expand 4G services to raise the average revenue per unit (ARPU) to Rs 170-180. Moreover, the rollout of BSNL 4G services is expected in about two years and will significantly increase the revenue. The revival plan is also expected to generate 100,000 million employment. As per the government, it is expected that BSNL will earn profit in fiscal 2027.