India needs a functioning public-sector telecom operator to ensure connectivity in remote areas, retain strategic control over critical communication infrastructure and prevent excessive concentration in the telecom market. Bharat Sanchar Nigam Limited (BSNL) can serve these purposes, provided it becomes commercially viable. The case for continuing to support Mahanagar Telephone Nigam Limited (MTNL) is much weaker.
Successive governments have spent heavily to keep both companies afloat. Their financial troubles, technological setbacks and declining market positions have persisted despite repeated revival packages. There are legitimate reasons for the government to maintain a presence in telecommunications. Indefinitely financing companies that have lost their ability to compete, however, is neither a sound industrial policy nor a sensible use of public money.
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On November 5, an inter-ministerial group recommended the sale of MTNL’s non-core assets worth ₹1,100 crore. The proposal, involving surplus land and buildings, requires further government approval. It is part of an effort to manage the company’s mounting liabilities.
MTNL’s liabilities reached approximately ₹40,000 crore in FY2025-26. The company reported a net loss of ₹3,103 crore on total income of ₹1,469 crore. It has defaulted on repayments to seven public-sector banks. Selling properties may provide temporary financial relief, but cannot resolve the underlying problem. The government must decide whether MTNL has a viable commercial future or whether its remaining assets should be used primarily to discharge its obligations.
MTNL’s decline and the limits of asset sales
Established in 1986 to provide telephone services in Delhi and Mumbai, MTNL once enjoyed a near-monopoly in two of India’s most lucrative telecommunications markets. Its position weakened as private operators introduced better services at competitive prices. The arrival of Reliance Jio accelerated the shift towards affordable mobile data, while other operators invested in 4G and subsequently 5G networks. MTNL failed to keep pace.
The consequences are evident in its financial performance. Revenue from operations fell from ₹1,061 crore in FY2024-25 to ₹887 crore in FY2025-26. Other income, including non-operating receipts, helped lift total income, but finance costs alone reached ₹2,983 crore. The company’s wireless subscriber share had fallen to approximately 0.02% by March 2026.
The government has attempted to address these problems through restructuring. In 2019, it approved a revival package of approximately ₹69,000 crore for BSNL and MTNL. The measures included voluntary retirement, spectrum allocation, debt restructuring and asset monetisation. An in-principle merger was also approved, but never implemented.
Instead, BSNL took over MTNL’s operational activities through a service agreement in 2024. This effectively separated the management of telecom services from MTNL’s accumulated financial liabilities.
The government has supported MTNL’s restructuring through sovereign-guaranteed bonds worth ₹24,071 crore and financial assistance for interest payments. These measures have helped the company maintain positive earnings before interest, taxes, depreciation and amortisation (EBITDA). Its EBITDA improved to ₹437 crore in FY2025-26. Yet total liabilities have risen from ₹30,960 crore in FY2021-22 to approximately ₹40,000 crore in FY2025-26.
This distinction matters. MTNL has made progress in controlling operating costs, but the financial burden accumulated over the years remains overwhelming. Its operating surplus cannot come close to meeting its financing obligations.
The government estimates that MTNL holds substantial non-core property assets. Monetisation could therefore be an important part of settling its liabilities. But the existence of valuable real estate does not establish the viability of the telecom business. Asset sales should support an orderly financial restructuring, with transparent valuations and a clear schedule for meeting obligations.
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BSNL’s strategic role justifies a different approach
BSNL is in a different position. It has a nationwide network, an established customer base and responsibilities in areas where commercial returns may not justify private investment. It supports government connectivity requirements and plays a central role in BharatNet and rural telecommunications programmes.
These functions have strategic and developmental value that cannot be measured entirely through quarterly profits.
The government has approved three major revival packages for BSNL and MTNL since 2019, with a combined value of approximately ₹3.22 lakh crore. They cover capital infusion, debt restructuring, spectrum allocation and financial support for rural connectivity. An additional ₹6,982 crore of capital expenditure support was approved in February 2025. These are approved commitments, not an equivalent amount of cash already disbursed.
The most significant technological development has been BSNL’s rollout of an indigenously developed 4G network. By February 28, 2026, it had installed 97,906 sites, of which 96,103 were operational, against a target of one lakh. By July, the number of installed sites had increased to 98,557, with 97,213 on air.
Yet infrastructure deployment has not produced a convincing commercial turnaround.
BSNL’s mobile subscriber base declined from approximately 113.7 million in March 2022 to 92.94 million in March 2026. Revenue increased from ₹19,053 crore in FY2021-22 to ₹25,049 crore in FY2025-26, but its net loss widened from ₹2,247 crore in FY2024-25 to ₹4,738 crore in FY2025-26.
The government has highlighted BSNL’s positive operating earnings since FY2020-21. That achievement deserves recognition, particularly after years of financial strain. But depreciation, interest and other costs continue to leave the company with substantial net losses. Operating profitability is an important milestone, not proof of a successful revival.
BSNL’s difficulties cannot be attributed entirely to the disadvantages of public ownership. Private operators had been investing in faster networks for years, while BSNL struggled with procurement delays, organisational rigidity and uncertainty over technology choices. Its delayed entry into 4G was especially damaging. Customers who had moved to better networks had little reason to return merely because BSNL eventually introduced comparable technology.
A nationwide 4G rollout gives the company a chance to improve its position. Whether it can convert that investment into stronger subscriber retention, higher revenue and better service quality remains uncertain.
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Separate BSNL’s public obligations from commercial goals
The central weakness in BSNL’s revival strategy is the absence of a sufficiently clear distinction between its commercial business and its public-service responsibilities.
BSNL is expected to compete with private operators in urban markets while extending connectivity to remote and commercially unattractive areas. It must also undertake strategic projects and maintain infrastructure that may not generate adequate returns. These expectations place competing demands on its capital and management.
There is a legitimate public case for providing such services. Universal connectivity supports economic activity, access to government services and national security. But these obligations should be identified and funded transparently.
The government already has mechanisms, including the Digital Bharat Nidhi, to support telecommunications infrastructure in commercially unviable areas. BSNL’s public-service responsibilities should be financed through explicit arrangements that establish the cost of delivering the services and measure the results.
Commercial operations require a different approach. BSNL needs greater flexibility in procurement, network investment, pricing and management decisions, accompanied by accountability for financial performance and service quality.
The company should be judged on how effectively it uses its new network, improves customer retention and expands profitable services. Its public-service performance should be assessed separately against the connectivity obligations it has been assigned.
This would also make government support easier to scrutinise. Taxpayers should know how much public money is financing national connectivity objectives and how much is being used to cover commercial losses.
Telecom competition needs an effective BSNL
India’s mobile telecommunications market is increasingly dominated by two private operators. In March 2026, Reliance Jio accounted for 39.21% of wireless subscribers and Bharti Airtel for 37.74%. Vodafone Idea retained 15.68%, while BSNL held 7.34%. Together, the two largest operators controlled nearly 77% of the market.
Vodafone Idea’s financial difficulties raise questions about the durability of competition. BSNL offers an alternative, particularly in areas where private networks are inadequate. Its presence also gives the government an operational capability that could prove valuable during emergencies and disruptions.
But a public-sector operator that cannot match competitors on network quality, reliability or customer service will have limited influence on market outcomes. Ownership alone does not guarantee effective competition.
The argument for preserving BSNL is therefore strongest when accompanied by a credible business plan. Network modernisation must translate into better services and sustained revenue growth. Government support should be linked to measurable improvements rather than another cycle of financial assistance without demanding commercial accountability.
MTNL needs a settlement plan, not another bailout
The decisions facing MTNL are more difficult. With BSNL already managing its operations, there is little commercial justification for maintaining two separate corporate structures indefinitely.
The government should establish a time-bound plan for settling MTNL’s liabilities, monetising surplus assets and determining the company’s eventual corporate structure. Creditors, employees, pensioners and customers have legitimate interests that must be protected. Any restructuring will also have to account for sovereign guarantees and other government commitments.
A merger with BSNL might simplify the institutional arrangement, but it would not make MTNL’s debt disappear. Transferring its liabilities to BSNL without a credible settlement mechanism could undermine the very company the government needs to strengthen.
The opportunity cost of repeated bailouts is substantial. Funds committed to supporting loss-making enterprises cannot simultaneously be used for network investment or other public priorities. Continued support may be justified when it produces identifiable public benefits. Maintaining an enterprise simply because the government has already invested heavily in it is a poor basis for further spending.
BSNL may still have a commercially viable future if its strategic responsibilities are properly funded and its management is held accountable for results. MTNL’s future is more likely to lie in financial restructuring than in restoring its former position as an independent telecom operator.
India does not need two struggling public-sector telecom companies to protect its national interests. It needs a BSNL capable of competing where commercial opportunities exist and delivering essential connectivity where private investment does not.