Private telcos alarmed as states told to use BSNL, MTNL for better data security: Report

In letters sent to the chief secretaries of all states and Union Territories on April 8, DoT Secretary Neeraj Mittal said the services of BSNL and MTNL should be considered for internet, broadband, landline and leased line requirements across all departments, public agencies, and state-run enterprises.

“As BSNL/MTNL are becoming competitive in the telecom sector, and in light of the Cabinet decision in the past, I request you to consider utilisation of the services of BSNL and MTNL...,” Mittal was quoted as saying by ET.

BSNL, which now manages MTNL’s operations, will set up a dedicated nodal point for streamlined service delivery to states, the letter said.

While central and state projects have periodically mandated the use of public sector telecoms, industry executives told ET this broad-based directive is unprecedented. If widely implemented, it could significantly impact private telecom and internet service providers (ISPs), especially smaller players that operate on slim margins, they warned.

According to ET, the private sector accounts for over 92% of the telecom industry’s adjusted gross revenue, which totalled ₹2,23,799 crore ($26.7 billion) for the April–December 2024 period. Government contracts form a major portion of enterprise revenues for many private telcos.

Industry representatives expressed concern that the DoT’s push would disrupt competitive neutrality in public tenders.

“The government has been supporting BSNL through various financial packages, and it should compete in the market on its strengths and not through preference,” ET quoted an executive as saying.

Rajesh Chharia, president of the Internet Service Providers Association of India, said the government must remain impartial toward all licensed operators, including public and private firms, to maintain healthy competition.

The DoT cited a 2019 Cabinet decision approving the mandatory use of BSNL/MTNL networks by central government departments, adding that states were similarly “requested” to utilise their services for telecom needs. The central government has invested about ₹3.22 lakh crore in the two firms since 2019 as part of multiple revival packages.