BSNL's ₹3.22 Lakh Crore Gamble: Sovereignty at What Cost?

The headline the government wants you to read

On paper, BSNL's revival is a fairy tale.

One lakh 4G sites, almost reached, with 96,103 on-air as of March 2026 out of 97,906 installed. Revenue climbing. EBITDA surging 335% year-on-year in the most recent quarter. Operating profit jumping from ₹2,395 crore in FY24 to ₹5,100 crore in FY25, with double-digit growth projected for FY26. First profit in seventeen years, posted in Q3 FY25. The first time India has built a complete homegrown telecom network from radio to core, putting it in the company of the US, China, Europe, and South Korea.

Communications Minister Pemmasani Chandra Sekhar, in a recent interview, called it “one of the most significant public sector turnarounds in recent years.” The narrative is everywhere: PIB releases, DD India interviews, Ministry social media. BSNL is back. The state can build strategic infrastructure. Atmanirbhar Bharat works.

There is one problem with this fairy tale.

The numbers underneath it tell a different story, and the customers living it tell a third. Both stories are worth listening to, because the choice India made in 2019 to back BSNL with massive state support and an indigenous technology stack was not a bad choice. It may even have been the right one. The way it has been executed, though, and the way its results are being marketed, deserve a harder look than they've been getting.

This is the most expensive telecommunications policy decision India has ever made. It deserves a critical nationalist's eyes, not a cheerleader's.

What was actually decided

To understand where BSNL is in 2026, you have to go back to 2019. The company was, on every measure, on its deathbed.

Jio had reshaped the market. Airtel had been forced into a brutal price war. Vodafone Idea was bleeding subscribers. And BSNL, the only state-owned telecom operator at scale, was the slowest to adapt. Its 4G rollout had been delayed by years of tender cancellations, vendor disputes, and the political difficulty of choosing a foreign partner. The Modi's first term ended with BSNL posting a net loss of ₹15,500 crore in FY19, with debt service costs and AGR dues piling up.

Three revival packages followed, totalling roughly ₹3.22 lakh crore by the Ministry's own accounting. The first, in 2019, was a ₹69,000 crore package combining VRS (about a third of BSNL's workforce took it), debt restructuring, and sovereign guarantees. The second came in 2022, adding spectrum allocation and 4G capex. The third is still being deployed, with a ₹47,000 crore capex pipeline through FY27. None of this counted the AGR dues of nearly ₹1.78 lakh crore, which were absorbed in earlier write-offs.

That's the largest state support package ever given to a single Indian company in the telecom sector. It is comparable in scale to the airline bailouts of 2020-21 or the bank recapitalisation of 2017-19. It's not presented that way, though. It's presented as a turnaround, a successful one, in its final phase.

The bet had two pillars. The first was operational revival: get BSNL profitable, or at least self-sustaining. The second was sovereignty: build a fully indigenous 4G stack, radio to core to software to hardware, owned and operated by Indian companies. The TCS, Tejas Networks, and C-DOT consortium was the answer. The result, in 22 months of actual development, was the country's first end-to-end indigenous 4G network. India joined a small club of countries with this capability.

On paper, this is historic. On the ground, it's more complicated.

The receipts: what the independent data shows

Let me take the revival story claim by claim, against the data that doesn't come from the Ministry.

Revenue and profit

The Ministry's preferred number is the EBITDA jump, from roughly ₹50 crore to nearly ₹7,000 crore in two years. That figure is real. It's also misleading on its own.

EBITDA is earnings before interest, taxes, depreciation, and amortisation. In BSNL's case, depreciation has exploded because of the 4G capex. In Q2 FY26 alone, depreciation and amortisation hit ₹2,477 crore, up 57% year-on-year. The Q2 net loss was ₹1,357 crore, wider than the ₹1,241.7 crore lost in the year-ago quarter. The full-year FY26 net loss came in at ₹4,740 crore, double the ₹2,250 crore lost in FY25.

Q1 FY26 showed a narrowed net loss of ₹1,049 crore (down from ₹1,542 crore a year earlier), but this came after two profitable quarters in FY25 that BSNL itself described as partly driven by one-off accounting adjustments. By Light Reading's accounting, FY26 revenue grew by only 1% over FY25, even as the cost base widened with network operating expenses and finance charges.

The operating engine is improving. The capital being deployed is so heavy, though, that the bottom line is getting worse, not better. The EBITDA number is the right thing to celebrate if you're a CFO. It's the wrong thing to celebrate if you're a Finance Minister.

Market share

BSNL ended March 2026 with a 7.34% share of the wireless market, down from 7.8% a year earlier. The market itself grew; total wireless subscribers are now over 1.16 billion, but BSNL's slice shrank.

To put that in context: Reliance Jio and Bharti Airtel together hold the overwhelming majority of Indian wireless subscribers. The two-player duopoly is now structural, not transitional. Vodafone Idea is a distant third with single-digit share and is in turnaround talks of its own. BSNL is the fourth player in a market where the top two are closing the door.

This is the dirty secret of the revival. The state did not pour ₹3.22 lakh crore into BSNL to make it the fourth player. It poured it in to make it a strategic player, the operator of last resort, the rural and government network, the buffer against duopoly pricing. The financial story is being told as if BSNL were a competitive challenger, and it's not.

The “active subscriber” problem

The most damning data point in TRAI's most recent numbers: the share of active subscribers on BSNL's network fell from 63.37% in March 2025 to 56.36% in March 2026.

In a healthy telecom network, 80-90% of subscribers are active in any given month. BSNL is at 56%. Out of 92.9 million reported subscribers, only about 52 million are actually using the network. The other 41 million are zombie SIMs: people who bought a BSNL connection at some point but have ported out, switched to a second device, or stopped recharging.

This is the ARPU paradox. BSNL's average revenue per user rose 12% in Q2 FY26. The Ministry presents this as a win. The real driver is that the inactive subscribers dropped out of the denominator, not that the active ones started spending more. ARPU at BSNL is still around ₹178, compared to Airtel's ₹257 and Jio's ₹214. BSNL is not winning more wallet share. It is losing the customers who were costing it the least to serve.

Service quality

The TRAI drive tests, the regulator's own independent audits, paint a picture the Ministry does not highlight.

In Himachal Pradesh and UP West, only 7-17% of BSNL's tested locations achieved “excellent” signal strength. The call drop rate in Himachal was 15.69%, the worst of any major telco. Mean Opinion Scores for voice clarity were below the regulatory minimum. Data speeds were routinely below 7 Mbps. In the June 2025 Meerut drive test, BSNL lagged private operators across every measured metric.

These are not anecdotes. They are TRAI's data.

The field reports corroborate. The DT Next investigation in Chennai found that BSNL's 4G tower installation, supposed to be completed by December 2024, was still incomplete in 2025, with BSNL's own General Manager writing to TCS about operational issues at newly commissioned sites. The Chennai official said only 1,000 of the required towers had been installed. Customer complaints cite FTTH connections that have been down for months, with docket numbers registered and closed without resolution. “I will port out” is a regular refrain in BSNL's own complaint threads.

The TCS, Tejas, C-DOT stack is real. The deployment is real. The deployment is not yet at a level where a BSNL customer in a major Indian city can rely on it.

The cost of sovereignty

The 4G delay was not an accident. It was a choice.

Communications Minister Jyotiraditya Scindia has confirmed, in his own words, that the government “decided to bypass the easy route of buying off-the-shelf foreign equipment to focus on building a completely indigenous technology stack.” In his framing, this was a “calculated, strategic decision,” a “pain today for gain tomorrow” trade.

There is a serious argument to be made in favour of that choice. Foreign telecom equipment, from Ericsson, Nokia, Huawei, ZTE, Samsung, comes with documented security concerns. The US, UK, Germany, and Australia have all restricted or removed Chinese vendors from their 5G cores on national security grounds. India's geographic and strategic situation makes it more exposed to those risks, not less. The Snowden revelations in 2013 showed how deeply foreign intelligence agencies had compromised commercial telecom equipment. The NSO Group scandal showed what commercial spyware can do once it's inside a network.

The argument for an indigenous stack is not ideology. It's risk management. A network you do not control is a network that can be turned off, tapped, or backdoored by someone else.

The TCS, Tejas, C-DOT consortium delivered the stack in 22 months. That's a real engineering feat. No other country of India's size has built a complete 4G core and radio network in this timeframe. The IP stays in India. The manufacturing is in India. The future export potential, selling this stack to other countries wary of Chinese equipment, is real.

The argument against the choice is equally serious. By betting on indigenous, BSNL entered commercial 4G roughly seven years after Jio. Airtel completed its 4G rollout in 2016. Jio did so in 2017. BSNL's pan-India 4G only soft-launched in August 2025, with full commercial availability in September 2025. By the time BSNL's customers could reliably use 4G, the duopoly had already entrenched itself. The window when a state operator could meaningfully compete on speed and coverage, the 2017-2022 window, was spent on building the indigenous stack.

The cost of sovereignty was the market. The customers who would have been BSNL's growth story became Jio's and Airtel's growth story. The state chose to keep the means of production in Indian hands, and paid for it in lost subscribers, lost revenue, lost relevance.

Whether that trade was worth it depends on what you think a state-owned telecom is for.

What a state telco is for

The privatisation orthodoxy says a state-owned telecom operator is a contradiction in terms. Telcos are infrastructure-heavy, capital-hungry, depend on operational excellence. They need to be run like private businesses. If they cannot compete, they should be allowed to die.

This is the argument Vodafone Idea's bankers make. It's the implicit argument behind every piece of advice the IMF and the World Bank have given India on telecom since 1999. In a narrow sense, it's correct.

In a wider sense, it's wrong.

A state-owned telecom is not a business. It's a piece of strategic infrastructure. Its job is to be the network that exists when private capital does not want to be there. It is the operator that builds towers in the Ladakh highlands, in the Andaman islands, in the LWE-affected districts of Chhattisgarh, places where the ARPU will never recover the capex. It is the network the army can rely on during a war. It is the network that keeps working when a cyclone knocks out power in Odisha for two weeks. It is the network the government can use to push direct benefit transfers, run census operations, and provide a communications backbone for disaster response.

A private telco is not going to do any of that. Jio's pricing model depends on dense urban usage. Airtel's 5G rollout is following the same economic logic. Neither is going to spend capex on a tower that serves 200 subscribers in Arunachal Pradesh when those 200 subscribers are not going to recover the capex in their lifetime.

This is the case for BSNL that almost never gets made in the business press. It is the case that should be made, because it is the actual reason the Indian state is willing to keep funding a company that loses ₹4,740 crore a year. The Ministry is not trying to make BSNL profitable in the conventional sense. It is trying to keep BSNL alive, and in the process, build the sovereign capability that allows India to never be in a position where its core communications infrastructure is owned, operated, or backdoored by a foreign power.

Seen through this lens, the question is not “is BSNL competitive with Jio?” It is “is BSNL's continued existence a worthwhile strategic investment for the Indian state?” On that question, the data is more favourable.

And here's the part the Ministry does not want made: the strategic value only matters if the operational reality is improving. A rural operator that does not work in rural areas, a strategic telco that cannot keep its own customers connected, a sovereign network that drops 15% of its calls in the mountains, is not a strategic asset. It's a sunk cost.

The Ministry knows this. The 60,000 new towers being deployed under the ₹20,000 crore capex push, the focus on service quality, the AI-led network monitoring, these are the operational fixes. The numbers suggest they are not yet sufficient. They are the right direction.

The real test, five years out

If the 4G stabilisation succeeds, if the indigenous stack reaches a quality level competitive with foreign vendors, if BSNL is positioned clearly as the strategic and rural operator of last resort, and if the government is willing to keep funding the gap between revenue and operating cost in perpetuity, then BSNL will be a slow, unglamorous, perpetual-money-pit success story. The next ten years will see it lose market share in cities, gain modest share in rural India, lose money on operations, and quietly be the network that holds the country together in ways the private operators will never be.

If the 4G stabilisation fails, if TRAI's drive tests continue to show call drops above 10%, if ARPU growth does not come from real customer spend, if the 5G upgrade gets delayed by another three years, then BSNL becomes India's Concor. A state-owned entity that survives on permanent subsidy, technically alive but operationally fading, existing more to keep a workforce employed than to provide a real service. The 60,000 new towers become monuments to a strategic decision that did not work.

The third path is the worst: privatisation. If BSNL is sold to a private buyer, and there have been murmurs of this since 2022, the indigenous 4G stack gets licensed or sold, the rural network gets cherry-picked, and the strategic capability India built over the last six years gets absorbed into a private balance sheet. The state loses the sovereign option. The taxpayer pays for the capability. The private operator gets the upside.

The most likely outcome, given the political economy, is a slow drift toward the first path. The current government has shown no appetite to privatise BSNL. The revival packages continue. The capex continues. The political incentive to keep BSNL alive is significant: it is a major employer, a major rural presence, a visible symbol of state capability.

Slow drift is not a strategy. The country needs the government to make an explicit choice about what BSNL is. The current messaging tries to have it both ways: strategic asset and profitable turnaround, sovereignty and market share, indigenous stack and competitive 5G. All four are not possible simultaneously. Three of them might be, if the trade-offs are acknowledged.

What the numbers should be read as

The right way to read BSNL in 2026 is not as a turnaround story. It's a strategic investment in progress.

The 4G stack is real. India built it. That's historic. The fact that the rollout is slower than the private operators, and that the quality is currently worse, is the cost of the strategic choice. The cost is bearable. ₹3.22 lakh crore is a lot of money, but it's less than one year's defence capital outlay, and the alternative was permanent dependence on foreign vendors for a piece of critical national infrastructure.

The market share decline is real, but it's also the market's verdict on a state operator that was not allowed to compete on equal terms. A private telco that was seven years late to 4G, blocked from using foreign equipment, and tasked with serving the parts of India no one else wants to serve, would have lost market share too.

The service quality problems are real, and they're the most urgent. Until the BSNL customer in a tier-2 city can make a call without dropping, the 4G stack is a strategic capability on paper, not in practice. The next year of capex, the 60,000 new towers, the AI-led monitoring, the battery and power upgrades, is the test. If service quality reaches Airtel-and-Jio parity in 2027, the strategic bet pays off. If it does not, the bet was the right idea with the wrong execution.

The duopoly is real. Jio and Airtel are not going to be dislodged from the top of the Indian market. They're also not going to serve the strategic and rural use cases that BSNL exists to handle. The state did not pour ₹3.22 lakh crore into BSNL to make it the second-largest telco. It poured it in to make it the last telco standing when strategic necessity requires it.

That's a less glamorous story than “BSNL is back.” It's a more honest one. It explains what is actually happening on the ground: the wins, the losses, and the costs of a sovereign bet India is still in the middle of making.

The sovereignty tax

Every country that builds indigenous strategic infrastructure pays a sovereignty tax. The US paid it in the 1950s and 60s when it decided to build its own semiconductor industry rather than rely on imports. South Korea paid it in the 1970s when it built POSCO rather than rely on Japanese steel. China paid it in the 2010s when it built its own commercial aerospace industry rather than rely on Boeing and Airbus.

The tax is real. It's the cost of doing something slower, harder, and more expensive than the alternative, in order to keep a strategic capability in national hands. The tax is not always worth paying. Sometimes the alternative is genuinely better, and the strategic bet is a vanity project.

In BSNL's case, the strategic case is strong. The 4G stack gives India a sovereign option in a sector that every major power now treats as critical infrastructure. The TCS, Tejas, C-DOT capability is the foundation for a potential export industry, selling the stack to countries that want alternatives to Huawei. The rural and strategic network is a public good the market will not provide.

The cost, seven years of customer pain, market share loss, perpetual subsidy, is the sovereignty tax. It's being paid in real time by the BSNL customer in Himachal who drops 15% of his calls. By the BSNL employee in Chennai who wonders if her job is secure. By the Indian taxpayer who funded ₹3.22 lakh crore of revival packages and may fund more.

The bet is not yet won. The next 24 months are the test. If the 4G stack reaches quality parity, if BSNL finds its role as the strategic and rural operator, if the indigenous capability gets commercialised into an export industry, the sovereignty tax will be retrospectively worth it. If not, it will be remembered as a strategic mistake dressed up as a turnaround story.

BSNL is not a fairy tale. It's a strategic investment in progress. We'll know in 2027 which one it ends up being.

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