In a bid to help Bharat Sanchar Nigam Ltd (BSNL) sustain its loss-making rural landline business, the Universal Service Obligation Fund (USOF) will reportedly soon provide the State-run telecommunications giant with subsidy worth Rs 1,500 crore.

A senior telecom department official revealed that the USOF has signed a memorandum of understanding with BSNL to support its rural landline operations, and that the state-owned company would receive the subsidy as early as next week.

The USOF is an independent body, within the department of telecommunications, which subsidizes telecoms infrastructure in rural parts of India.

Revealing the development, the official said, "Under the terms of the MoU, we have been directed to only disburse Rs 1,500 crore, which will compensate the telco for expenses incurred between July 18, 2011, and July 18, 2012."

The official also said that BSNL might receive another subsidy of Rs 1,250 crore if the National Institute of Communications Finance recommends the Telecom commission for the same.

However, apart from continuing its rural landline operations, BSNL also needs funds to meet additional costs of upgrading its all MARR-based village public telephones across twenty circles.