BSNL provided a sovereign guarantee worth Rs 19,000 crore to support debt restructuring

According to sources, the government has provided Bharat Sanchar Nigam Ltd (BSNL) with a Rs 19,000 crore sovereign guarantee, allowing the struggling government telco to reorganize its debt as well as that of the state-run Mahanagar Telephone Nigam Ltd (MTNL).

A total of Rs 60,000 crore in debt is owed by both companies, of which Rs 33,000 crore is recorded on BSNL’s accounts. According to the officials, the company will receive an additional bank guarantee in the same sum when the next fiscal year begins, allowing for additional debt reduction.

In addition to the sovereign guarantee, the government recently gave the state-run company Rs 5,000 crore, which enabled it to pay off a part of its supplier debt.

Officials claim that all of BSNL’s needs are getting met as soon as possible. The company will shortly receive extra spectrum so that it can keep trying to compete with the companies in the private sector.

Depending on the 4G stack created by Tata Consultancy Services, BSNL intends to deploy 100,000 4G sites throughout the nation (TCS). Once the 4G services are introduced, the government company anticipates returning to profit.

Due to a large number of consumers switching to private telcos in the lack of 4G, the company has been losing market share. The DoT was earlier notified by BSNL that “lack of 4G is resulting in only low spending consumers continuing with BSNL, which is contributing to ARPU (average revenue per user) divergence and customer churn.”

In addition to enhancing its services, BSNL has been managing MTNL’s activities. According to the government, BSNL should oversee MTNL’s services until a formal integration is agreed upon in order to maximise synergies.

The government had July approved a Rs 1.64 lakh crore rehabilitation plan to make BSNL financially sustainable. The government authorised rejuvenation steps that included injecting new money for service upgrades, issuing spectrum, de-stressing its balance sheet and expanding its fibre network by combining BSNL with Bharat Broadband Nigam Ltd (BBNL).