The Department of Telecommunications (DoT) has written to all state governments, urging them to use the services of state-run telecom operators Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) for enhanced data security.
While some government projects have previously mandated the use of BSNL/MTNL services, this broader recommendation marks an unprecedented move. Industry executives warn that if adopted widely, it could significantly impact private telecom and internet service providers (ISPs), costing them thousands of crores in annual enterprise revenue. Smaller ISPs with thin margins are likely to be the hardest hit.
Government contracts form a major portion of enterprise revenue for private telcos and ISPs. From April to December 2024, the telecom sector’s adjusted gross revenue stood at Rs 2.23 trillion, with over 92 per cent coming from private operators.
As per the DoT’s proposal, BSNL, also managing MTNL’s operations, would set up a dedicated one-stop nodal point to serve state governments with high-priority services.
Private telcos argue that such a move could undermine the competitive tendering process typically followed by public sector units (PSUs) and state departments, which award contracts based on the lowest bid. They also point out that the original intent behind separating BSNL/MTNL from the DoT was to ensure a fair regulatory environment by decoupling ownership from governance.
