BSNL’s numbers don’t add up — And neither does the narrative

A doubled net loss, a 25 percent revenue miss, and a rising ARPU that may owe more to subscriber attrition than genuine customer loyalty. Behind the official optimism, BSNL’s FY26 results tell a harder story.

There is a particular kind of institutional optimism that thrives in inverse proportion to the evidence supporting it. BSNL’s FY26 results, and the official commentary surrounding them, offer a masterclass in exactly that.

The headline numbers are stark. A net loss of ₹4,738 crore for FY26, more than double the prior year’s ₹2,247 crore. Revenue growth of a meagre 1.7 percent, landing at ₹21,199 crore against a target of ₹28,476 crore, a miss of nearly 25 percent. And auditors who have attached a qualified opinion to the financials, citing understated losses and overstated receivables. Yet officials speak of “systematic rigour,” “private-sector discipline,” and results that are “now visible.”

The question worth asking: visible to whom, exactly?

The ARPU paradox: When the metric becomes the mirage
The most analytically interesting, and troubling, detail buried in BSNL’s FY26 disclosures is the sharp divergence between its claimed ARPU growth and its actual revenue performance.

BSNL says average revenue per user (ARPU) jumped 42 percent to ₹101 in FY26. On its face, this sounds like a genuine business turnaround signal, customers paying more, consuming more data, graduating to higher-value plans. But the cellular business, which accounts for about 26 percent of total revenue, grew just 1 percent over the same period. Revenue in that segment rose to ₹5,571 crore.

The math refuses to cooperate. ARPU is, at its core, a simple ratio: mobile-services revenue divided by active subscribers. If revenue barely moves but ARPU jumps 42 percent, there is only one arithmetic explanation, the denominator has collapsed. Active subscribers are leaving, not arriving.

“Rising ARPU driven by base erosion is not a growth signal. It is a contraction signal wearing a growth costume.”

TRAI data appears to confirm this. While BSNL’s total mobile subscriber count grew marginally to 92.9 million, its active subscriber base stood at just 52.7 million by March, a figure that has been declining steadily. In other words, BSNL is not winning customers; it is losing the ones it had. The rising ARPU is the mathematical artifact of that attrition, not evidence of customer loyalty or product improvement.

This matters far beyond semantics. ARPU is the metric BSNL and its government sponsors have chosen to signal recovery. Targeting ₹150 ARPU by FY27 will mean very little if it is achieved by continued subscriber erosion rather than genuine revenue expansion. A shrinking base paying a higher average still produces a smaller business.

EBITDA: The flattering lens
Communications minister Pemmasani’s claim that EBITDA “jumped dramatically from ₹50 crore to nearly ₹7,000 crore” is, in isolation, a genuinely impressive number. Operational efficiency matters, and a ₹7,000 crore EBITDA swing reflects real improvements in cost management and the absorption of rationalised workforce and network operating efficiencies.

But EBITDA has always been a metric that tells you what a business earns before it tells you what a business costs, in terms of debt, depreciation, and taxes. And it is precisely those downstream costs that are crushing BSNL. The government’s massive recapitalisation and 4G rollout programme has loaded BSNL with enormous capital expenditure. That CapEx generates depreciation charges and, where debt-financed, finance costs, both deliberately excluded from EBITDA.

This is not a flaw in BSNL’s execution; it is the inherent arithmetic of a capital-intensive turnaround. The CapEx is necessary. The 4G network had to be built. But celebrating EBITDA improvement while the net loss doubles is a selective reading of a complicated picture. The honest version of that statement would acknowledge that the company is in a deep valley between investment and returns, and that the climb out is neither confirmed nor imminent.

The auditor’s unwelcome testimony
In corporate governance, a qualified audit opinion is rarely a footnote. Here, it deserves to be read as a core part of the BSNL story.

Auditors VK Jindal & Co found accounting errors across two circles that understated reported losses by approximately ₹98 crore. They flagged a ₹248 crore overstatement of trade receivables, an asset inflation that makes the balance sheet look healthier than it is. And they identified governance lapses: the absence of a mandatory woman director and an inadequate number of independent directors on the board.

Taken individually, each of these might be dismissed as administrative oversight in a sprawling, legacy state enterprise. Taken together, they raise a harder question: if BSNL’s financials are directionally inaccurate even by the company’s own auditors’ assessment, and if the governance architecture that might catch and correct such errors is itself incomplete, how confident should investors, partners, and policymakers be in the numbers being used to declare progress? The answer is: not entirely confident.

The structural problem no CapEx can fix
There is a deeper issue sitting beneath all of this that quarterly results and ARPU targets cannot resolve: BSNL is competing in a market that has structurally moved on.

India’s private telecom sector is now dominated by two extraordinarily well-capitalised operators, Reliance Jio and Airtel, who spent the better part of a decade building 4G and 5G networks, deepening distribution, and locking in customers through bundled services, content, and enterprise solutions. Launching 4G in 2025–26 in a market where competitors launched in 2016 and have since rolled out 5G is not a technological leap; it is a decade-long game of catch-up against incumbents with network effects, brand loyalty, and a superior customer experience baked in.

The 92.9 million subscriber base sounds large until you consider that a significant portion of those users are inactive, present in the database but absent from the network in any meaningful sense. Reactivating passive subscribers requires more than network coverage; it requires a compelling reason to return to a brand that many consumers associate with poor service and bureaucratic friction.

What a genuine recovery would look like
None of this is to say BSNL is beyond recovery. State-owned telecoms in other markets have navigated difficult transitions, though typically with greater decision-making agility, stronger commercial mandates, and less political interference in operational strategy.

A credible path forward for BSNL would require, at a minimum: a sustained increase in active subscriber numbers (not total subscriber counts); cellular revenue growth that outpaces ARPU growth, indicating base expansion rather than base contraction; clean, unqualified financial statements with a governance structure capable of producing them; and realistic, analyst-validated targets rather than aspirational numbers set at ministerial review meetings.

The EBITDA improvement is real. The 4G investment is real. The intent, presumably, is genuine. But intent and investment are inputs, not outcomes. FY26’s results, a doubled loss, a missed revenue target, a shrinking active base, a qualified audit, are the outcome. And until the outcomes begin to match the narrative, the commentary from India’s telecom corridors will remain exactly what BSNL’s own numbers suggest it to be: a story still in search of its ending.

Analysis based on BSNL FY26 financial statements, TRAI subscriber data (March 2026), IIFL Capital brokerage note (29 May 2026), and communications ministry releases.

CT Bureau