(Bloomberg) -- India will spend about 410 billion rupees ($6 billion) on two unprofitable state-run telecommunication companies in a bid to help the firms take on competition.

The government also approved a plan to combine Mahanagar Telephone Nigam Ltd., which provides services in Mumbai and New Delhi, with Bharat Sanchar Nigam Ltd., that services the rest of the nation, Telecom Minister Ravi Shankar Prasad said at a briefing in New Delhi on Wednesday. MTNL has reported losses in nine of the past 10 years, according to data compiled by Bloomberg.

Prime Minister Narendra Modi’s administration, which is already ploughing 300 billion rupees of tax payers’ money into state-run Air India Ltd., expects the proposal to help the merged entity turn profitable in coming years. It’s as yet unclear how the government will fund the infusion amid a slowing economy and falling revenues.

“With all these, I’m confident, BSNL will become EBITDA positive in next two years,” Prasad said.

To contact the reporters on this story: Santosh Kumar in New Delhi at sthakur10@bloomberg.net;Debjit Chakraborty in New Delhi at dchakrabor10@bloomberg.net

To contact the editors responsible for this story: Jeanette Rodrigues at jrodrigues26@bloomberg.net, Arijit Ghosh

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