DoT urges states to use BSNL, MTNL for telecom services, cites data security: Report

BSNL posted a net profit of Rs 262 crore in Q3 FY25, its first since 2007-08

The Department of Telecommunications (DoT) has reportedly urged state governments to prioritise telecom services from state-run operators Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), citing data security concerns.

In letters sent on April 8 to chief secretaries of all states and Union Territories, DoT Secretary Neeraj Mittal highlighted the government's 2019 Cabinet decision mandating such use by central agencies, and extended the appeal to state departments, PSUs, and agencies, according to an Economic Times report.

The move, if adopted, is likely to significantly impact private telecom operators and internet service providers (ISPs), who rely heavily on government contracts for enterprise revenue.

According to industry executives, private players, which command over 92 percent of the sector's adjusted gross revenue of Rs 2.23 lakh crore (April-December 2024), are expected to lose thousands of crores annually. Smaller ISPs with thin profit margins may be especially hard-hit.

Critics, including the Internet Service Providers Association of India, have labelled the directive discriminatory, states the report.

The DoT has, however, defended its stance, pointing to BSNL’s recent financial turnaround.

The telco posted a net profit of Rs 262 crore in Q3 FY25, its first since 2007-08, and has ramped up investment in 4G rollout and optical fibre infrastructure as part of revival packages totaling Rs 3.22 lakh crore since 2019.