Indian Cabinet approves third revival package of $11bn for BSNL

Indian Cabinet has given its approval to a revival package worth 890.47 billion rupees ($10.79 billion) for state-owned telecom operator BSNL.

"In a significant move, as part of the revival strategy, the Union Cabinet chaired by Prime Minister Narendra Modi, today approved the third revival package for BSNL with a total outlay of Rs. 89,047 crore," a government press release said.

As per the announcement, the revival package includes the allotment of 4G/5G spectrum for BSNL through equity infusion.

BSNL has been facing difficulties due to inadequate infrastructure and fierce competition from Jio, the wireless subsidiary of Reliance Industries. "The authorised capital of BSNL will be increased from Rs. 1,50,000 crore (1500 billion rupees) to Rs. 2,10,000 crore (2100 billion rupees)," the press release said, adding that with this revival package, BSNL will emerge as a stable telecom service provider focused on providing connectivity to remotest parts of India.

Other competitors of BSNL are Bharti Airtel and Vodafone Idea.Telecomfirms have been offering 4G services at affordable prices both on voice calls and data.With this revival package, BSNL will emerge as a stable telecom service provider focused on providing connectivity to the remotest parts of India.

BSNL-Tata Consultancy Services partnership

This decision comes after BSNL entered into a partnership with Tata Consultancy Services, a leading software company, to assist in the deployment of a 4G network across the country.

In a regulatory filing at the time, the company had said, "The consortium led by Tata Consultancy Services Limited has received an Advance Purchase Order valued over Rs 15,000 crore from BSNL, a 100% Govt. of India-owned Public Sector Undertaking, for the deployment of a 4G network across India."

First and second revival package

The Indian government approved the first revival package for BSNL/MTNL in 2019. It amounted to Rs. 69,000 crores (690 billion rupees) and brought stability to BSNL/MTNL.

In 2022, Government approved a second revival package for BSNL/MTNL amounting to Rs. 1.64 Lakh Crore (1640 billion rupees). It provided financial support for capex, viability gap funding for rural landlines, financial support for de-stressing the balance sheet, settlement of Adjusted Gross Revenue (AGR) dues, the merger of BBNL with BSNL, etc.

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With the government aid of two revival packages, BSNL started earning operating profits in FY 2021-22. The total debt of BSNL has reduced from Rs. 32,944 Crore (329.44 billion rupees) to Rs. 22,289 crore (222.89 billion rupees).

Following the announcement of the revival package for BSNL, the shares of Mahanagar Telephone Nigam Ltd, a state-owned telecom company and rival to BSNL, experienced a significant increase of nearly 12 per cent.

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