Whalesbook
Network Expansion Fuels Profit Growth
BSNL, India's state-run telecom operator, is undertaking a major network expansion, planning to install between 50,000 and 60,000 new mobile towers. This initiative is supported by substantial investment; the company has already spent ₹20,000 crore on its 4G network, built using domestic technology.
Financially, BSNL has shown a strong turnaround. It reported an operating profit of ₹5,100 crore for the fiscal year 2024-2025, a significant increase from ₹2,395 crore in the previous year. The company's subscriber base has also grown, rising from 8.55 crore in June 2024 to 9.27 crore currently. BSNL anticipates a smoother transition to 5G, requiring mostly core network software updates due to its self-reliant 4G infrastructure.
Fierce Competition and Network Gaps
Despite these gains, BSNL faces intense competition in India's telecom market, which is largely dominated by Reliance Jio and Bharti Airtel. These two companies together hold over 75% of the wireless subscriber market share. BSNL's approximate 7.9% market share places it far behind.
Revenue per user is another significant gap. Bharti Airtel leads with an average revenue per user (ARPU) of ₹256 in Q3 FY26, followed by Jio at ₹211.4. BSNL's ARPU ranges between ₹40 and ₹175, highlighting a substantial difference in earnings.
Furthermore, BSNL is lagging in 5G deployment, with no commercial 5G services launched yet, while competitors are already building substantial 5G subscriber bases. The company's network improvement efforts are hampered by ongoing performance issues. Independent tests have shown that many newly deployed 4G towers transmit signals well below their intended power levels, leading to coverage problems, dropped calls, and slow data speeds, with BSNL consistently trailing Jio and Airtel in service quality metrics.
Lingering Weaknesses and Financial Scrutiny
While BSNL reports progress, structural weaknesses persist. Its 7.9% market share indicates a competitive disadvantage. Problems with its 4G network, including thousands of towers transmitting at reduced power levels (below 35 dBm against a target of 46 dBm), directly affect service quality, resulting in higher call drop rates and slower data speeds, as confirmed by regulator TRAI.
This technical fragility, combined with challenges in deploying and maintaining its domestic technology stack, raises questions about long-term network reliability. BSNL's delay in launching 5G further disadvantages it against rivals who have already established significant 5G customer bases.
Financially, although operating profit has increased, net losses continue. Q2 FY26 recorded a ₹1,357 crore loss, underscoring BSNL's reliance on government support. A government auditor report (CAG) revealed BSNL failed to bill Reliance Jio for shared infrastructure over ten years, leading to an estimated ₹1,757 crore loss to the government exchequer, pointing to potential systemic issues in contract management.
Discussions about infrastructure sharing with Vodafone Idea also highlight the financial pressures and competitive challenges both companies face.
The Path Ahead
BSNL's future hinges on continued government backing and its ability to overcome operational hurdles. The ambitious tower expansion and domestic technology development are national priorities, but their success in a cutthroat market remains uncertain.
Critical for its long-term viability will be BSNL's capacity to deliver consistent, high-quality network services, accelerate its 5G rollout, and close the revenue-per-user gap with competitors. Infrastructure sharing agreements may offer immediate cost savings, but they do not alter the fundamental competitive dynamics that favor the established duopoly.
Ultimately, BSNL's turnaround will depend on transforming its operational performance and effectively monetizing its expanded network in a market increasingly driven by value and technological superiority.