The Indian government has approved a package of 1.64 trillion Indian rupees (US$20.65 billion) for state-owned service provider Bharat Sanchar Nigam Limited (BSNL), to help it to improve services, expand its fiber network and boost finances. The administration hopes this will help the telco to turn profitable by 2026-27.

This is the second revival package. In 2019, the government offered a INR700 billion ($8.81 billion) package to fund a voluntary retirement scheme for BSNL and the other state owned service provider Mahanagar Telephone Nigam Limited (MTNL).

Figure 1: BSNL will also be merged with Bharat Broadband Network Limited (BBNL) to create India's National Fiber Network (NOFN).
(Source: Per Bengston/Alamy Stock Photo)

The government will also allocate 4G spectrum to the company. It is the only service provider in the country which is yet to launch 4G services. BSNL has been making losses and is struggling to remain relevant as the private service providers are close to launching 5G. This is mainly because the administration insists that the service provider uses indigenously developed 4G technology, leading to delays.

As part of the revival package, INR330 billion ($4.15 billion) of statutory dues will be converted into equity.

Merger with BBNL

BSNL will also be merged with Bharat Broadband Network Limited (BBNL), also known as BharatNet, a special purpose vehicle (SPV) set up by the government to create India's National Fiber Network (NOFN).

BBNL is the world's largest rural broadband project, aiming to provide connectivity in all 250,000 Gram Panchayats (village councils) across the country, using funds from the Universal Service Obligation Fund. However, the project has been marked with innumerable delays.

BSNL already has a network of 680,000 km of optical fiber cable, and once the merger comes through it will acquire an additional 567,000 km across 185,000 village panchayats. Many argue that there was no need to set up a separate company to execute NOFN when BSNL could have done it from the beginning.

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The government has decided to try to revive the loss-making company again mainly because it offers connectivity in rural areas, and in border areas – crucial for armed forces.

Added to this, BSNL is key to the government's Atma nirbhar (self reliant) philosophy, as it can be used to build a domestic vendor ecosystem and promote telecom startups.

However, while the financial package is crucial, more than that there is a need to professionally manage the company to ensure its sustained profitability.

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— Gagandeep Kaur, contributing editor, special to Light Reading