How to Navigate State-Owned Telecom Operator Restructuring

Here is a detailed overview of restructuring options for state-owned telecom operators in India, primarily focusing on BSNL and MTNL as of 2025:

State-Owned Telecom Operator Restructuring Options

1. Capital Infusion and Debt Restructuring
   The government has launched several multi-crore revival packages for BSNL and MTNL since 2019 aimed at reducing operating costs, infusing fresh capital, and restructuring debts. Key allocations include:
   • ₹69,000 crore initial revival package in 2019
   • ₹1.64 lakh crore for fresh capital and viability gap funding (2022)
   • ₹89,000 crore for 4G/5G spectrum allotment and network rollout (2023)
   • Additional ₹6,982 crore CAPEX support for 4G expansion approved in 2025
     These funding rounds have helped BSNL return to operating profits from FY 2020-21 onwards.
2. Merger and Integration of MTNL into BSNL
   Due to MTNL’s high debt burden and poor financial health, the government is considering options such as delisting MTNL and merging its entire operations into BSNL. This merger would consolidate resources, reduce duplication, and allow BSNL to manage MTNL’s debt and services more effectively.
   • Staff rationalization options including Voluntary Retirement Scheme (VRS) or transfer of MTNL employees to BSNL are under consideration.
   • Debt restructuring plans allow raising long-term loans backed by sovereign guarantees to stabilize merged operations.
3. Board and Governance Reforms
   The government is restructuring boards of state-owned enterprises (broadly including telecom PSUs) to bring them on par with global standards. This includes greater autonomy in decision-making, appointment of independent directors, and reducing board size for efficient governance.
4. Regulatory and Legal Reforms
   The introduction of the Telecommunications Act, 2023 replaces outdated colonial-era laws, providing a modern regulatory framework. This supports restructuring by enabling:
   • Clearer spectrum assignment and management
   • Streamlined Right of Way (RoW) processes via online portals
   • Strong provisions for innovation, security, and dispute resolution
     This legal foundation aids smoother corporate restructuring and operational flexibility.
5. Technology Upgradation and Network Expansion
   Restructuring efforts emphasize technology modernization with a focus on 4G and impending 5G services rollout. Capital support channels investment towards infrastructure and digital service readiness to improve competitiveness.

Summary

The Indian government’s multi-pronged restructuring strategy for state-owned telecom operators revolves around heavy capital infusion, debt restructuring, operational consolidation (notably MTNL-BSNL merger), governance reforms, and regulatory modernization. These measures aim to make BSNL and MTNL financially viable, technologically up-to-date, and better able to compete with private players in a rapidly evolving telecom landscape.

This strategic restructuring is critical given the financial challenges faced by both PSUs and the growing importance of universal connectivity and digital infrastructure in India.