Cabinet approves BSNL's Rs 89,047cr revival package,4G/5G spectrum allocation

The Union Cabinet has reportedly approved the third revival package for Bharat Sanchar Nigam Limited (BSNL), which happens to be a significant development.

This complete package, which would cost a total of Rs 89,047 crore, intends to revive BSNL and establish it as a dependable telecom service provider with a particular interest and emphasis on enhancing connectivity in rural parts of India.

A notable component of the agreement is the transfer of shares to BSNL in exchange for the 4G/5G spectrum.

As part of the rehabilitation plan, BSNL is expected to see a large increase in authorised capital, going from Rs. 1,50,000 crore to Rs. 2,10,000 crore.

Spectrum Allocation

1- Band : 700 MHZ

Spectrum allotted : 10 MHz paired in 22 LSAs

Budgetary support: Rs 46,338.60 Crore

2- Band : 3300 MHz

Spectrum allocated: 70 MHz in 22 LSAs

Budgetary support: Rs 26,184.20 Crore

3- Band : 26 GHz

Spectrum: 800 MHz in 21 LSAs and 650 MHz in 1 LSA

Budgetary Support: Rs 6,564.93 Crore

4- Band- 2500 MHz

Spectrum: 20 MHz in 6 LSAs and 10 MHz in 2 LSAs

Budgetary Support: Rs 9,428.20 Crore

5- Miscellaneous Items: Rs 531.89 Crore

Total- Rs 89,047.82 Crore

The first revival package, totaling Rs 69,000 crore, was approved in 2019, marking the beginning of the process to revive BSNL and Mahanagar Telephone Nigam Limited (MTNL). This package was crucial in bringing both counterparts' operations under control.

Following which , the government approved the second rejuvenation package in 2022, totaling Rs. 1.64 lakh crore. This complete package included a number of essential components, including finance for capital expenditures, funds to close the viability gap for rural landlines, debt restructuring, payment of Adjusted Gross Revenue (AGR) dues, and the merging of BBNL and BSNL.

These relief packages drastically reduced BSNL's overall debt from Rs 32,944 crore to Rs 22,289 crore and helped the company return to operating profitability starting in the fiscal year 2021–2022 (FY 2021–2022). In FY 2022–23, BSNL expects revenue of Rs. 20,699 crore and an operating profit of Rs. 1,599 crore.

This spectrum allotment will enable BSNL to provide 4G and 5G services nationwide, expand 4G coverage to rural and far-flung areas, offer high-speed internet access through Fixed Wireless Access (FWA) services, and provide services and spectrum for Captive Private Network.

According to recent reports, the Indian government is also considering The Mahanagar Telephone Nigam Ltd. (MTNL) closure and subsequent transfer of its operations and personnel to Bharat Sanchar Nigam Ltd. (BSNL)

MTNL has had trouble improving its situation despite assistance from the government. For the fourth quarter and the entire year ending March 31, 2023, Mahanagar Telephone Nigam Limited announced financial results and the telco posted sales for the fourth quarter at INR 2,191.8 million, down from INR 2,385.9 million in the previous quarter. Revenue decreased from INR 5,198.8 million to INR 4,181.4 million.

While, the financial situation of BSNL, has seen modest improvements in recent years. BSNL is on pace for recovery thanks to government support of Rs 1.64 trillion in 2021 and a recent purchase order for 4G equipment for Rs 15,000 crore.

A significant turning point in BSNL's recovery has been reached with the approval of the third revival package by the PM Modi led union cabinet along with the distribution of the 4G/5G spectrum. As other major telecom players like Airtel and Jio are already rolling out their 5G services all across the country, this revival assistance might reinforce the company's position as a reliable telecom service provider.