The Union Cabinet on Wednesday approved an ambitious Rs 1.64 lakh crore package for the revival of government-owned BSNL, Telecom Minister Ashwini Vaishnaw said.

The cabinet has also approved the merger of BSNL and Bharat Broadband Network Ltd, the minister told journalists.

The revival package has three main objectives which are: to improve services, de-stress the company’s balance sheet and expand its fibre network. 

The government will make an administrative allocation of spectrum to BSNL to help it expand 4G services, he explained. The allocation of spectrum in 900/1800 MHz band at the cost of Rs 44,993 crore would be through equity infusion.

To de-stress the balance sheet, Rs 33,404 crore statutory dues will be converted into equity.  Besides, the government will provide sovereign guarantee for raising money to repay current loans, he said.

The Cabinet also approved the merger of BSNL and Bharat Broadband Network Limited (BBNL), the state-owned broadband infrastructure provider. The minister said the combined network of BSNL and BBNL is expected to be 14 lakh km approximately.  This will boost high-speed optical fibre services across India including remote areas.

He said to meet the projected capital expenditure for the next four years, the government will fund capex of Rs 22,471 crore for developing 4G technology stack.

Also, the government will provide Rs 13,789 crore to BSNL as viability-gap funding for commercially unviable rural wireline operations done during 2014-15 to 2019-20.