BSNL to shut down 3G, end legacy vendor contracts for better 4G
With 92.2 million subscribers, only 22 million of whom are on 4G, the transition faces hurdles regarding handset compatibility and network stability.
As part of a broader effort to cut costs, Bharat Sanchar Nigam Ltd (BSNL) will shut down its 3G mobile services nationwide. The state-owned telecom operator also plans to terminate annual maintenance contracts (AMCs) with vendors such as Nokia and Chinese equipment maker ZTE for the 3G sites, according to two officials familiar with the matter and letters seen by Mint.
The move comes as the state-run telecom operator focuses on its 4G network, having currently installed 97,481 4G towers across the country. “Keeping in view the above progress on 4G Network, circle heads are hereby authorized to shut down the 3G services wherever feasible in their areas," the telecom operator said in a letter on 10 December to chief general managers of all circles. A copy of the letter was also marked to Tata Consultancy Services (TCS), which has rolled out indigenous 4G for the telecom operator.
Analysts believe the move could impact BSNL users who currently have 3G SIM cards and rely on the older handsets.
BSNL currently has 58,919 3G sites out of a total 229,278 tower sites across the country as of March end, according to its FY25 annual report. The company serves around 5,863 towns and cities under 3G, as per the report. As of September-end, BSNL has 92.2 million total mobile subscribers, according to data from the Telecom Regulatory Authority of India. Of these, 22 million users are on 4G, while the remaining users are on 2G and 3G, according to a government release in September. Notably, a large number of the remaining users are on 2G, which remains BSNL's mainstay and is expected to be maintained alongside newer technologies.
Legacy tech
One of the reasons for BSNL to move away from 3G is to use the existing 2100 MHz spectrum completely for 4G. The company only has 10 MHz spectrum in the band, which supports better capacity, meaning it helps carry more data and more users at higher speeds, especially in towns and cities. “This will help BSNL in saving expenditure towards power consumption and AMC (annual maintenance cost) expenses being incurred on 3G Network," BSNL said in the letter.
In a separate letter dated 10 December, the company instructed all circle heads to issue notices to vendors operating in their circles for the termination of annual maintenance agreements pertaining to 3G sites and radio network controller (RNC) equipment.
- BSNL is authorizing circle heads to shut down 3G services to reallocate the 2100 MHz spectrum entirely for 4G.
- The telco is terminating maintenance contracts with Nokia and ZTE for 3G equipment to lower operating costs.
- The government has mandated a 10% reduction in operating expenditure following a ₹1,357 crore quarterly loss.
- Sunsetting 3G is essential because legacy tech has left insufficient bandwidth for 4G.
- With roughly 70 million users still on 2G/3G, the shutdown could lead to service disruption for those without 4G-compatible handsets.
Queries emailed to BSNL chairman and managing director Robert Ravi did not elicit any response until press time.
Parag Kar, an independent telecom sector analyst, said, “The shutdown of 3G will impact existing BSNL users, who will need to upgrade to 4G handsets or fall back on 2G. For BSNL, stabilizing its 4G network is critical and requires the full 10 MHz spectrum in the 2100 MHz band, of which only 5 MHz is currently available as the rest remains locked in legacy 3G," he said.
Kar noted that BSNL’s 4G deployment in the 700 MHz band offers limited benefit, as many legacy devices do not support it. “Most users therefore rely on 2100 MHz for 4G, where 5 MHz is insufficient to deliver meaningful throughput, making the shutdown of 3G in this band essential to improve user experience and network performance," he added.
The government has asked BSNL executives to closely monitor the operating expenditure, ensure a reduction, and proactively implement cost optimization measures in the respective circles to improve the profitability of the company.
Transition tension
“From a technology lifecycle perspective, 3G is already sunset in many global markets. However, any decision to shut down 3G should be calibrated and region-specific, taking into account actual 4G coverage, network stability, and the profile of users still dependent on 3G services, or not," said Murtuza Kachwala, managing director of Protiviti Member Firm for India.
According to Kachwala, it is important for BSNL to manage the transition carefully through phased shutdowns, clear communication, and possibly device or tariff support to minimize inconvenience to customers.
In the July-September quarter, BSNL’s network operating expenses were at ₹1,488 crore, up 2.5% year-on-year (y-o-y). The network operating expenses, which include repair and maintenance work, constituted 29% of BSNL’s ₹5,167 crore revenue in the quarter.
The government has asked BSNL to reduce the operating expenses by 10% in the October-December quarter.
In the September quarter, BSNL reported a net loss of ₹1,357 crore, more than ₹1,048 crore in the preceding quarter and the ₹1,241.7 crore it had lost in the year-ago quarter, as per the company’s financial statements dated 14 November.
As per the telecom operator’s memorandum of understanding (MoU) with the department of telecommunications (DoT), BSNL has been given a revenue target of ₹28,476 crore in the current financial year ending March, a 37% increase from the previous year. The MoU document was seen by Mint.
As per the document, the company has been asked to incur a capital expenditure of ₹34,258 crore in FY26, up from ₹25,000 crore in FY25.
After reporting profits for two consecutive quarters for the first time in 18 years, BSNL was back in the red, with a net loss of ₹1,049 crore in the June quarter. It had posted a net profit of ₹280 crore in the March quarter and ₹262 crore in the December quarter. Since 2019, the government has given three revival packages to BSNL and MTNL worth a combined ₹3.2 trillion.
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