BSNL proposes a Rs 77,000 crore capital plan to add 200,000 more 4G sites and begin a 5G rollout
12 Aug, 04:23 IST · Plays out over months · 2 sources
State-owned BSNL wants Rs 77,000 crore to build 200,000 more mobile towers and start 5G, which would mean big orders for the Indian companies that make optical fibre cable and telecom gear - but it is only a proposal so far, and most of those suppliers currently lose money.
Key facts
What the reporting establishes, before any reading of it.
- BSNL has PROPOSED, not yet received approval for, roughly Rs 77,000 crore of capital expenditure
- The plan covers about 200,000 additional 4G sites plus the start of a 5G rollout
- It follows the Rs 89,047 crore third revival package approved on 7 June 2023 and the Rs 1.64 lakh crore package of 27 July 2022
- BSNL's 4G network is built by a TCS-led consortium with Tejas Networks supplying the radio equipment
How the news spreads
Step by step — from the first companies it hits to whole sectors.
Who it hits first
- Two hundred thousand new mobile sites require optical fibre cable to connect them, radio equipment to run them, and towers to hold them - a multi-year order pipeline for Indian telecom equipment makers.
- Sterlite Technologies (optical fibre cable), HFCL (cable and equipment), ITI (state-owned equipment) and Tejas Networks (4G radio) are the listed names in the direct line of supply.
- This is a proposal, not an approved package, so nothing is committed - the last two BSNL packages took Cabinet approval before any orders flowed.
Who may gain
- Optical fibre cable makers Sterlite Technologies and HFCL, since every new site needs backhaul fibre.
- Tejas Networks, whose 4G radio equipment is already deployed in BSNL's network through the TCS-led consortium.
- Tower and passive-infrastructure companies that would host or service the new sites, and the civil contractors doing the trenching and installation.
Along the supply chain
Downstream
BSNL is the single downstream customer. Its subscribers get better 4G coverage, and rural users get service where private operators have not built out. A financially stronger BSNL adds price competition for Jio, Airtel and Vodafone Idea in the low-ARPU rural market.
Upstream
Sterlite and HFCL buy optical fibre preform, glass and cable-jacketing polymers; Tejas and ITI buy semiconductors, RF components and contract-manufactured boards. A 200,000-site programme would tighten those inputs, and the semiconductor lines in particular are imported and currently constrained by the global memory and chip supply crunch.
Where demand moves
Business
This is government money creating brand-new demand rather than shifting it. If approved, BSNL places orders that flow first to equipment and cable makers, then to their own suppliers of glass preform, copper, electronics and steel towers, and then to installation contractors. Nobody loses orders - private operators Jio and Airtel are unaffected on the supply side, though a stronger BSNL competes with them for subscribers. The catch is that the flow only starts on Cabinet approval, and the last approval in June 2023 was followed by all four suppliers falling over the next month, so the market has learned to wait.
Capital
Announcement-driven money tends to rush into the small-cap telecom equipment names on headlines like this and out again when orders do not materialise on schedule. The June 2023 package shows the pattern - all four suppliers were lower a month later. Because three of the four listed beneficiaries are loss-making or under exchange surveillance, this scan routes no conviction into the theme: two SKIPs, two low-confidence WATCHes.
How it spreads across sectors
Capital Goods
Tower fabrication, power backup, cabling and civil installation contractors would see multi-year work if the plan is approved.
Telecommunication
A large potential order book for domestic equipment and cable makers, offset by the fact that it is unapproved and that the listed suppliers have poor returns.
A pattern seen before
Cascade chain
- BSNL proposes Rs 77,000 crore for 200,000 4G sites and 5G
- Optical fibre cable and radio equipment orders for domestic suppliers
- Upstream demand for preform, glass, polymers and semiconductors
- Tower fabrication and civil installation contracts
- Stronger BSNL adds rural price competition for private operators
Pattern name
Govt Capex Cascade
Sectors queried
- Telecommunication
- Capital Goods
When it plays out
Immediate
Headline-driven interest in the small-cap telecom equipment names; the June 2023 precedent argues against chasing it.
Medium term
If approved, order inflows would show up in the equipment makers' order books over FY28-FY29, and the real question becomes whether any of them can execute at a profit - which the current margin profile does not support.
Short term
Watch for the proposal reaching the Cabinet and for any tender floats. Absent that, the story has no cash flow attached to it.