Indian govt clears $20.5bn funding for state-operator BSNL

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The cabinet also cleared the merger of Bharat Sanchar Nigam Limited (BSNL) with Bharat Broadband Network Limited (BBNL), the special purpose vehicle created to operate BharatNet

Today, the Indian telecoms minister Ashwini Vaishnaw has announced that the Union Cabinet has approved the roughly $20.5 billion revival package for state-operator BSNL.

The minister says that the funds will be used primarily for three purposes: to destress the company’s balance sheet, improve the quality of services it offers, and expand the reach of its fibre networks.

The government will also reportedly allocate additional 4G spectrum to BSNL to allow the operator to expand and improve its mobile networks.

“With these measures, BSNL will be able to improve the quality of existing services, roll out 4G services and become financially viable. It is expected that with the implementation of this revival plan, BSNL will turn around and earn profit in FY 2026-27," said BSNL in an official statement. 

The funds will be allocated to BSNL in a staggered fashion over four years, with 70% of the funds expected to be given within the first two years.

The Cabinet has also announced that it has given the green light for BSNL to merge with BBNL, a deal that was first conceived back in 2019 and formally announced in April this year.

BBNL was founded back in 2012 to build and operate BharatNet, the Indian government’s nationwide fibre broadband network, which aimed to make 100Mbps internet available throughout the country. 

The merger will see BBNL’s fibre network over around 567,000km combined with that of BSNL, which currently spans just shy of 700,000km.

“BSNL will work as an executing arm of the government and ownership of assets will rest with the government. BBNL has a workforce of less than 200. We have in our proposal said that we can absorb them in BSNL and contracts will be obliged, and revenue share agreements will be honoured,” BSNL’s chairman and managing director PK Purwar explained.

BSNL has been struggling severely in recent years, losing market share to the ultra-aggressive Reliance Jio, which launched fibre services in 2019. At that time, BSNL was by far the biggest fibre provider in the Indian market, recording around 8.7 million customers. Now, following the aggressive pricing strategy by Jio, this total has fallen by over 50% to just 4.2 million. In fact, JioFibre overtook BSNL as the largest fibre provider in India at the start of this year, with 4.3 million subscribers.

In related news, the Indian government is currently in the process of completing its highly anticipated 5G spectrum auction, with the winners expected to be announced at the end of the month.