India's BSNL may be given a 23.9 billion rupee ($524.1m) in subsidies to help fund the rollout of Wimax services in unprofitable areas.
A source within the telecom ministry told the Economic Times that the department is considering acceding to BSNL's demands for a grant to support its rollout obligations.
The state-owned operator last month declared that it was not willing to continue the project unless it gets compensation for running an unprofitable business.
But the government is expected to make some stipulations to go with the grant, such as requiring BSNL to seek network sharing partnerships to keep costs down, the source said.
BSNL has also reportedly been asked to scale down marketing and distribution projections.
The DoT had previously agreed to provide 7.1 billion rupees for the first two stages of the rollout project.
But BSNL had insisted it could only roll out 1,798 towers with this level of compensation, not the 7,863 planned for.