Ghulam Mustafa was accused along with a second man Liaqat Ali of stealing the cables in the Vehari District of southern Punjab, about 200 kilometres southeast of the nearest major city of Multan.
The case is the latest to outrage rights activists following the bludgeoning to death of a pregnant 25-year-old outside Lahore's High Court last week, with one prominent lawyer saying it showed the country was "drifting fast towards barbarism".
The men said police chopped off one of each of their hands on Friday, but officers insist the men inflicted the wounds on themselves in order to commit suicide.
He said the severed hand of the other suspect was found in the police station.
The police said they were now investigating two officials over the incident and had suspended five others including the station's chief.
"We are investigating the incident" he said Amjad Javaid Saleemi, a senior police official.
"We have registered cases against two police officials while five police officials including in-charge of the police station have been suspended" he added.
Hina Jilani, a supreme court lawyer and rights activist, said the incident was indicative of a growing trend of religiously motivated vigilantism.
"The incident shows that this society is drifting fast towards barbarism," she said.
"When the state machinery is habitual of giving inhumane penalties and taking the law into its own hands, than the notion of rule of law exists no more," she added.
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