India announces $8bn plan to revive state telecoms firms

India announced an almost $8 billion plan yesterday to help state telecom providers Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd catch up with private competitors, including a merger of the two companies. BSNL and MTNL have struggled to win customers as Reliance Industries’ telecoms arm Jio and rivals Bharti Airtel and Vodafone Idea have rolled out 4G services and cut prices on voice calls and data.

“Neither BSNL-MTNL is being closed, nor is being disinvested, nor is being hived (off ) to any third party,” Federal Communications Minister Ravi Shankar Prasad told a news conference. “We want to make them competitive, bring in professionalism.” The plan includes the allocation of state-funded airwaves for 4G telecoms services to the two companies, Prasad said. The carriers will also raise 150 billion Indian rupees ($2.1 billion) of long-term bonds which New Delhi will guarantee, he added.

Prasad did not give a timeline for a BSNL-MTNL merger but said MTNL, largely present in major Indian cities such as Delhi and Mumbai, would act as a unit of BSNL until the merger was completed. BSNL had 116 million subscribers in August, according to data from India’s telecoms regulator. The two companies have debts of 400 billion rupees, Prasad said, with the government planning to raise 380 billion rupees by selling their assets.