Will the government be able to save the failing telecom company with the BSNL Revival Package?

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The government is trying again with a Rs 1.64 lakh crore package to save the state-owned Bharat Sanchar Nigam Ltd. By doing this, the government hopes to improve the quality of BSNL’s services, reduce the stress on the company’s balance sheet, and increase the company’s fiber reach (BBNL). The BSNL revival package comes at a time when the country’s biggest private telcos are bidding for a 5G spectrum. The question is whether or not the package will save the state-owned telecom company.

What Does the BSNL Revival Package Have? The package includes cash aid worth Rs 43,964 crores and aid in other forms worth Rs 1,200,000 crores.

Ashwini Vaishnav, the minister for telecom, said that the cash proponent will be used for spectrum allocation, capital expenditures, and funding for gaps in viability.

“Spectrum in the 900/1800 MHz band will be given to BSNL for an administrative cost of Rs 44,993 crore. So, that it can improve its current services and offer 4G services.” “With this spectrum, BSNL will be able to compete in the market and offer high-speed data through their large network, even in rural areas,” an official statement said.

What is the government doing to make BSNL’s balance sheet less stressful?

The government is letting the telecom service provider sell sovereign guarantee bonds so it can pay back the bank loans. BSNL is owed about Rs 33,000 crore by banks.

The Rs 33,404 crore in AGR debt that BSNL owes will be paid off by converting the debt into equity. The government will give BSNL money to pay off its AGR and GST debts, according to an official statement. The statement also said that BSNL would give the government a preference share worth Rs 7,500 crore.
The government has also given the go-ahead for BSNL and Bharat Broadband Nigam Ltd to merge (BBNL). This will add 5.67 million kilometers of optical fiber to the 6.83 million kilometers that BSNL already has.

Will BSNL be able to compete with private players after this package?

According to the Telecom Regulatory Authority of India’s most recent report, as of May 31, 2022, private telecom service providers had 89.87 percent of the market share of wireless subscribers, while BSNL and MTNL, the two PSU access service providers, only had 10.13 percent.

At a time when leading private telcos are aggressively bidding for 5G spectrum. It would be hard for BSNL to compete with its rivals, who are already well-established and better positioned in the market.

So far, about Rs 1.45 lakh crore offered by Reliance Jio, Bharti Airtel, Vodafone Idea, and Gautam Adani to buy 5G airwaves.

But the government seems to keep BSNL for a “defined set of customers” and hopes that the telecom company, which is losing money, will start making money. In an official statement from the government. It said that BSNL will turn around and start making money again by “FY 2026-27.”

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“We will hold BSNL to very clear outcomes and goals,” Vaishnav said. “The money we’re giving them is from taxpayers.”

The government canceled BSNL’s 4G tender in 2020, so the company does not offer 4G services everywhere in the country.

After its revival package, the government also wants BSNL to offer more 4G services so that the average revenue per user (ARPU) goes up to Rs 170–180.

The Cabinet has also given the go-ahead for BSNL to be in charge of allocating spectrum for 4G and 5G services.

A news story on a news site says that BSNL has debts of Rs 33,000 crore. But as of March 31, 2022, Vodafone had a total debt of Rs 197,878 crore. Which, included interest that had been earned but was not yet due. Airtel, on the other hand, had a net debt of Rs 1,23,500 crore, which did not include its lease liability.

Why is the government bringing back BSNL?

Even though BSNL can’t compete with the big private telecom companies in the country. It has a good reach in rural and remote areas where the big private telcos haven’t yet set up shop.

In the last few years, Airtel and Jio have worked harder, but BSNL is still a strong player.

Has the government already announced a plan to improve BSNL?

In a written answer to the Lok Sabha, Minister of State for Communications, Devusinh Chauhan, said that BSNL has lost Rs 50,631 crore over the past five years.

In 2019 the government put out a plan that cut BSNL’s losses from Rs 15,500 crore in FY20 to Rs 7,441 crore in FY21.

The plan called for a Voluntary Retirement Scheme (VRS) to lower staff costs, an administrative allocation of spectrum for 4G services, and the sale of Sovereign Guarantee Bonds to restructure debt.

The government had suggested that BSNL and Mahanagar Telephone Nigam Limited (MTNL) merge to save both companies, which owned by the government but were losing money. But the government put the merger off.

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