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 The Union Cabinet on Wednesday approved a revival package of Rs 1.64 lakh crore for loss-making state-run telecom operator Bharat Sanchar Nigam Limited (BSNL).

The Cabinet also approved the merger of BSNL and BBNL (Bharat Broadband Network Limited).

Telecom Minister Ashwini Vaishnaw, on Wednesday said that the package will have three main elements - it will aim at improving the quality of BSNL services, it will be used to de-stress the balance sheet, and will attempt to expand the company's fibre reach.

Revival measures approved by the Cabinet focus on infusing fresh capital for upgrading BSNL services, allocating spectrum, de-stressing its balance sheet, and augmenting its fibre network by merging Bharat Broadband Nigam Limited (BBNL) with BSNL.

To improve existing services and for providing 4G speed, BSNL will be allotted Spectrum in 900/1800 MHz band administratively at a cost of Rs 44,993 crore through equity infusion. With this spectrum, BSNL will be able to compete in the market and provide high speed data using their vast network even in rural areas.

To promote indigenous technology development, BSNL is in the process of deploying Atmanirbhar 4G technology stack. To meet the projected capital expenditure for the next four years, the government will fund capex of Rs 22,471 crore. This will be a significant boost to development and deployment of Atmanirbhar 4G stack.

Despite the commercial non-viability, BSNL has been providing wireline services in rural/remote areas to meet the social objectives of the government.

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

It will also provide sovereign guarantee to these PSUs for raising long term loan. They will be able to raise long term bonds for an amount of Rs 40,399 crore. This will help restructure the existing debt and de-stress the balance sheet.

To further improve the balance sheet, AGR dues of BSNL amounting to Rs 33,404 crore will be settled by conversion into equity. The government will provide funds to BSNL for settling the AGR/GST dues.