The decision is likely to be a huge relief for loss-making state-owned telecom companies BSNL and MTNL who have been continuously losing their subscriber base.
In a major development, the central government has mandated that all ministries, government departments and Public Sector Units (PSUs) i.e. public sector companies will use the telecom services of Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). The announcement was made in a memorandum issued by the Telecom Department (DoT).
The decision is likely to be a huge relief for loss-making state-owned telecom companies BSNL and MTNL who have been losing their subscriber base. In 2019-2020, BSNL recorded a loss of Rs 15,500 crore while MTNL posted a loss of Rs 3,694 crore.
Only BSNL, MTNL connections can be used
The memorandum was sent to all the secretaries and departments on October 12 after consulting the Finance Ministry on behalf of the central government. This memorandum issued by the Telecom Department states that all ministries/departments are urged to issue the necessary guidelines to CPSEs/Central Autonomous Institutions to only use BSNL or MTNL network for their requirements of internet / broadband, landline and leased line.
"All ministries/departments are accordingly requested to issue necessary instructions including to CPSEs/Central Autonomous organisations under their control for mandatory utilisation of BSNL/MTNL network for internet/ broadband, landline and leased line requirements," the DoT memorandum said.
Due to the increased competition in the telecom sector, BSNL's wireline subscriber base has come down from 2.9 crore in November 2008 to just 80 lakh by July 2020. Similarly, MTNL's 35.4 lakh fixedline customers in November 2008 have come down to 30.7 lakhs in July this year.
Network expansion
Government telecom company BSNL has raised Rs 8,500 crore through sovereign guarantee bonds, which it will use in its network expansion and operational expenses. MTNL was also got approval to raise Rs 6500 crore through Sovereign Gold Bond in October 2019, although the company has not yet raised this amount.
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