To assist the state-owned telecom operator implement 4G and 5G services in a market dominated by private operators, India's cabinet on Wednesday approved a 890.47 billion rupee ($10.79 billion) revitalization package for loss-making Bharat Sanchar Nigam Ltd (BSNL).

"With this revival package, BSNL will emerge as a stable telecom service provider focused on providing connectivity to the remotest parts of India," the cabinet said in a statement.

The news comes only a few days after BSNL teamed up with leading software provider Tata Consultancy Services to help push out 4G networks across the nation at a time when bigger competitors were launching 5G networks.

According to Vivekanand Subbaraman, a telecom analyst at Ambit Capital, "From the government's perspective, BSNL is not just an investment to ensure competition, it is also a sandbox for the indigenisation initiatives that the government has as far as telecom networks are concerned."

"The investment will assist with some of the infrastructure that must be built for 5G and for a trustworthy third player to be present in the market,"

For the past 12 years, BSNL has been losing money as a result of its mounting debt and inadequate infrastructure. In the fiscal year that ended in March 2022, losses decreased from 74.41 billion rupees to 69.82 billion rupees.

Intense price competition from Reliance Industries-owned Reliance Jio Infocomm, Bharti Airtel, and Vodafone Idea has also made it difficult for the corporation to gain clients.

When Jio launched in India in 2016, it completely changed the telecom industry by providing discounted data plans and free calls, undermining rivals' profits and revenues and encouraging consolidation.