4G Rollout: A smart move in a 5G world

India’s state-owned telecom operator, Bharat Sanchar Nigam Limited (BSNL), is gearing up for a nationwide 4G rollout by the end of this fiscal year with an infrastructure investment of Rs 19,000 crore (USD 2.25 billion). Industry experts see this as a timely move, coinciding wwith recent tariff hikes by private operators for 4G services. As BSNL prepares to offer more affordable, nationwide 4G coverage, the government’s substantial investment appears to be aimed at revitalising the operator and positioning it as a viable alternative in India’s telecom landscape.

The government has also initiated an extensive revival plan for BSNL, allocating Rs 82,916 crore (USD 9.9 billion) to boost its network operations and ensure a swift rollout.

4G infrastructure is less capital-intensive than 5G, which allows BSNL to allocate resources for value-added services rather than high infrastructure costs.

This effort includes daily performance targets and coordination with key players, such as Tejas Networks and Tata Consultancy Services (TCS), which is deploying BSNL’s indigenous 4G technology stack. Experts believe this approach could help BSNL address a gap in the market, catering to customers priced out by private sector tariff hikes while avoiding direct competition in the high-cost 5G arena.

A BEHEMOTH’S RECOVERY PLAN

In July this year, Union Telecom Minister Jyotiraditya Scindia underlined the efforts to revive BSNL from a prolonged struggle to compete with private telecom giants Reliance Jio Infocomm and Bharti Airtel. “We are on track to have the 100,000 radio access networks in place for BSNL,” Scindia announced, adding that the daily targets defined by the performance monitoring unit (PMU) will be monitored by Neeraj Mittal, Secretary, Department of Telecommunications (DoT).

Prominent figures supporting BSNL’s revival are N Ganapathy Subramaniam, former COO of TCS and now chairman of Tejas Networks, who is overseeing the development of the indigenous 4G network infrastructure stack. Media reports last month indicated that this 4G rollout could be completed by the end of the fiscal year, further raising expectations for BSNL’s comeback.

WHY 4G IN A 5G WORLD?

For BSNL, a 4G rollout is both timely and strategic, even as private operators in India have already launched nationwide 5G networks. While 5G offers faster speeds and lower latency, it has yet to generate significant consumer or enterprise demand. For most mobile users, 4G is adequate for everyday applications such as streaming and browsing, and the on-ground difference between 4G and 5G services remains minimal. Enterprise uptake for private 5G networks has also been limited due to the incremental difference over existing 4G networks.

For most mobile users, 4G is adequate for everyday applications like streaming and browsing, while the difference between 4G and 5G services remains minimal.

With India now looking ahead to the next phase of telecom evolution, the government is supporting top operators to explore a 6G network stack, even as the incremental next-generation telecom standard, 5G-Advanced, is expected to come through by 2027. However, BSNL’s 4G focus is well-positioned to meet immediate market demand, allowing it to capture a key segment of users who may be more concerned with affordability than cutting-edge speeds.

In a recent media statement, BSNL Chairman Robert Ravi noted that the company does not plan to increase tariffs “in the near future”—a competitive stance as private operators raised rates by up to 21% in mid-2024, prompting some users to switch to BSNL.

BUILDING A MARKET ADVANTAGE

BSNL’s recent growth is directly linked to rising tariffs from private operators, which drove over 2.9 million users to BSNL in July and an additional 2.5 million in August. By positioning itself as a low-cost provider, BSNL is filling a critical gap for customers who find the rising data costs from private providers too burdensome.

Besides offering competitive pricing, Mittal noted earlier last month that BSNL’s service suite would include innovative features like automated SIM kiosks, spam filtering by default, and direct-to-device applications, adding value beyond simple connectivity.

The broader economic landscape also plays a part in BSNL’s advantage. India’s telecom market, which once boasted 1.18 billion users, has declined to 949 million as of the latest report—a nearly 20% drop within two years due to rising costs. This shift underscores the opportunity for BSNL to capture and retain price-sensitive users with affordable 4G services despite initially lower average revenue per user or ARPU. As the operator scales, it could reintroduce a third competitive player in India’s telecom landscape, filling a gap left by Vodafone Idea Limited, which continues to lose subscribers amid struggles to find additional funds to invest in the network.

India’s telecom market, which once boasted 1.18 billion users, has declined to 949 million, around 20% drop within two years due to rising costs.

BSNL’s focus on 4G over 5G also presents a cost advantage. A senior telecommunications consultant working with BSNL remarked, “4G infrastructure is less capital-intensive than 5G, allowing BSNL to allocate resources for additional value-added services rather than high infrastructure costs.” He added that by opting for 4G, BSNL is avoiding a direct price war with private operators, which have greater financial flexibility and can offer value for public investment by delivering reliable, affordable services.

Union Minister Scindia underlined BSNL’s unique market position, noting that it is still the only operator capable of reaching remote villages with telecom services. This positioning not only enhances BSNL’s relevance in India’s vast market but also allows it to meet strategic connectivity goals that private players may overlook.

SUSTAINABILITY AND FUTURE PROSPECTS

Although BSNL has returned to EBITDA (earnings before interest, taxes, depreciation, and amortisation) positivity, the company’s net profit remains in the red, indicating that more subscribers and service expansion will be crucial for a complete turnaround. Between 2019 and 2021, BSNL nearly collapsed financially, reaching a cash flow crisis amid the pandemic. In response, the government has sold non-core assets to boost liquidity, with the 4G rollout serving as the final component of BSNL’s recovery plan.

Minister Scindia also expressed confidence in BSNL’s ability to upgrade to 5G in the future, citing that BSNL’s current 4G network is designed to be easily scalable. “BSNL will not be a follower but a leader in the days to come,” he stated, underscoring the potential of BSNL’s indigenous 4G network as a foundation for future advancements.

The consultant added that BSNL’s demand will likely remain steady, driven primarily by rural and price-sensitive users who may not see 5G as necessary. “BSNL’s focus on 4G resonates well with hinterland consumers, who will form a substantial part of its user base. To do this, 4G is the way forward—it gives the right balance between infrastructure cost, service speeds, and more,” he said.

As BSNL continues its journey, the state-owned operator is poised to play a stabilising role in India’s telecom industry, with the potential to bring more equitable access to mobile services. In doing so, BSNL’s resurgence reflects not only a strategic government investment but also a renewed focus on a mobile-driven, connected India.

By Vernika Awal

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