India's cabinet on June 7 approved an 890.47 billion rupee ($10.79 billion) revival package for loss-making Bharat Sanchar Nigam Ltd (BSNL) to help the state-owned telecom operator deploy 4G and 5G services in a market dominated by private players.

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

The development comes days after BSNL partnered with top software company Tata Consultancy Services to help deploy 4G network across the country at a time when larger rivals were rolling out next-generation 5G network.

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

"The investment will help with some of the infrastructure that needs to come up for 5G and for a credible third player to be present in the market."

Debt-laden BSNL, grappling with poor infrastructure, has been posting losses for the past 12 years. The losses narrowed to 69.82 billion rupees in the year ended March 2022 from 74.41 billion rupees a year ago.

The company has also been struggling to win customers in the face of intense price competition from Reliance Industries-owned Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea.

The telecom market in India was upended by Jio's launch in 2016, when it offered free calls and cut-price data plans, eroding the profit and revenue of rivals and leading to consolidation.