In a bid to strengthen data security, the Department of Telecommunications (DoT) has formally recommended that state governments prioritize using Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) for their telecom needs—covering internet, broadband, landlines, and leased lines.
Rationale Behind the Push
The advisory, sent in letters dated April 8 to chief secretaries, cites a 2019 Cabinet directive mandating the use of BSNL/MTNL by central government agencies for enhanced data security. DoT Secretary Neeraj Mittal noted that BSNL, now managing MTNL operations, has also added dedicated nodal support for state governments.
Private Sector Pushback
Industry leaders warn that this sweeping recommendation—unprecedented in scope—could jeopardize private telcos and ISPs, who depend heavily on government contracts. Private operators currently account for over 92% of industry AGR, amounting to ₹2.23 lakh crore from April–December 2024.
Critics argue the directive challenges fair competition and regulatory impartiality. As noted by an unnamed executive “The government has been supporting BSNL through financial packages… it should compete on its strengths and not through preference”.
Similarly, ISPAI President Rajesh Chharia cautioned that favouritism could stifle investment and question government neutrality.
Backing for BSNL/MTNL Revival
DoT defends the move as part of BSNL/MTNL’s revival strategy. Since 2019, the government has invested about ₹3.22 lakh crore to bolster 4G rollout and infrastructure. This investment helped BSNL post a net profit of ₹262 crore in Q3 FY25—its first since 2007–08.
Bottom Line
- DoT’s advisory reflects a strategic security-first stance, encouraging states to lean on PSU telecoms.
- Private players fear it may tilt the telecom market unfairly and reduce their enterprise revenues.
- BSNL/MTNL appear digitally revived, but questions remain on whether preference undermines open competition.
