Ncell wins additional spectrum in 1,800 megahertz bandwidth

Ncell has acquired additional spectrum in the 1,800 megahertz bandwidth through the first-ever frequency auction held by the Nepal Telecommunications Authority (NTA) today for residual spectrum in the given bandwidth.
Currently, Ncell utilises 11 megahertz under 1800 band to relay cellular and data 4G Long Term Evolution (LTE) services, and 8 megahertz under the 900 band to provide 3G services in remote and rural areas, But Ncell will be allowed to use the frequency – it won today – only after it clears outstanding capital gains tax (CGT).
Though, it is the highest bidder, Ncell will not be able to purchase all the available remaining 16 MHz in the 1,800 MHz bandwidth as telecom companies are limited to use maximum of 20 MHz in any bandwidth. As Ncell is already using 11 MHz in the 1,800 MHz bandwidth, it can now purchase maximum of 9 MHz in the bandwidth.
With a bid amount of Rs 58 million per MHz, Ncell became the highest bidder surpassing the state-owned Nepal Telecom, which made a bid of Rs 50 million per MHz.
Earlier, the telecom sector regulator had called for spectrum auction for available 16 MHz in the 1,800 MHz bandwidth. Out of the available 75 megahertz bandwidth under the 1800 spectrum, 59 megahertz is currently assigned to five telecommunications companies, and the NTA has now auctioned the residual frequency of 16 megahertz.
Frequency spectrum is one of the important resources in the telecommunication sector without which operators cannot start wireless mobile service. The company with higher frequency spectrum can provide efficient services to its customers. The spectrum is expected to enable the concerned telecommunication operator to enhance the speed of 4G service at low cost while helping to expand its coverage. The telecom companies prefer 1,800 MHz bandwidth for GSM and 4G technology.
Initially, NTA had called for spectrum auction for available frequencies across all 900 MHz, 1,800 MHz and 2,100 MHz bandwidths. But auction across two other bandwidths could not take place as Ncell was the only company to express interest in the frequency auction of 900 MHz and 2,100 MHz bandwidths.
The Ncell will not be allowed to immediately use the additional spectrum in the 1,800 MHz that the company won today as it is facing tax issues, though NTA had allowed Ncell’s participation in the spectrum auction only on the condition that it will use additional spectrum in the given bandwidth – if it becomes the highest bidder – only after it clears all its tax liabilities, including CGT.
“Though Ncell was the highest bidder in the spectrum auction held today, NTA will allow the company to use additional frequency in the 1,800 MHz band only after Ncell clears its tax liabilities to the government,” the authority informed.
The Supreme Court in November said Ncell could pay Rs 21.10 billion in CGT against the Rs 39.06 billion determined by the tax authorities. Last April, the Large Taxpayers' Office had asked Ncell to pay Rs 39.06 billion in CGT, following which Ncell had moved the apex court seeking annulment of the decision taken by taxmen. Ncell, however, is yet to clear the amount.
Due to specifications for participating in the spectrum auction, no other telecom company except NT and Ncell could participate in the frequency auction. The spectrum auction notice had mentioned that telecom companies had to either have a basic telephony service licence or unified licence, clear all dues including royalty, RTDF and spectrum fees to be eligible to participate. Smart Cell and UTL are yet to clear the dues of frequency that they are using, while CG Telecom has not been granted unified license yet.
CG Telecom – citing that NTA was biased – had, however, filed a case in the Supreme Court a week ago seeking stay on the NTA’s frequency auction process. But the apex court did not issue a stay order.
The Chaudhary Group subsidiary filed the writ on Sunday stating that the regulator had not provided it with a GSM licence despite its eligibility to obtain one, and set the terms of the auction preventing it from participating in the bidding.
A court decision on the writ by the single bench of Justice Prakash Kumar Dhungana today has asked the government to clarify why CG has not been given a permit to operate GSM services, and why it was not allowed to take part in the bidding. But the decision came after the bidding process concluded.

Nepal Telecom’s profit growth rate slows down

Increased licence fee, foreign exchange losses, and falling revenues caused by changing consumer tastes and preferences has pulled the Nepal Telecom (NT) net profit down by 42 per cent – compared to the last fiscal year – in the fiscal year 2018-19 that ended on July 16.
According to a consolidated interim financial report released by Nepal Telecom today, its net profit dropped to Rs 10.20 billion in the fiscal year 2018-19 from Rs 17.48 billion in fiscal year 2017-18, after it was obligated to pay Rs 4.02 billion for the second renewal of its licence, which had expired in 2014.
The state-owned utility still has to pay around Rs 16 billion in pending licence fees to the Nepal Telecommunications Authority (NTA). And as the second renewal has also expired in May, there is uncertainty over fees for a third renewal too.
According to the telecom service provider, the company was obligated to pay Rs 20 billion, despite a dispute with the regulating authority over the payment of Global System of Mobile Communication (GSM) renewal fees, which had accrued on May 12, 2014.
Though, the government rescheduled – on May 24 – the payment, and allowed to settle in five annual installments from the fiscal year 2018-19 to save the state-owned, the employees' union of the NT has demanded that the fee be withdrawn.
According to a statement released by the union, the company which has a paid-up capital of Rs 15 billion – Rs 5 billion less than the fee amount sought by the regulator – should not be subjected to such a huge fee as it will lead to a massive financial burden.
The Nepal Telecom had received approval to sell GSM services in 1999. Since there was no fixed charges set for approval and renewal fees at the time. The telecom company had, however, agreed to pay the amount which would be paid by other service providers in the future.
In 2004, when Spice Nepal – now Ncell – began operations, it had agreed to pay Rs 210 million for approval to run GSM service and Rs 20 billion after 10 years for renewal, which has put pressure on Nepal Telecom to pay the same charge as default fees for renewal of the GSM licence.
Telecom operators are, now required to renew their licences every five years after 10 years of operation. “The issue of quantification of the GSM licence renewal fee that expired in May this year is not settled within the authority,” Nepal Telecom said, adding that the company renewed its licence by paying nearly Rs 190 million and has amortised the cost accordingly. “The fee liability of third renewal, if confirmed and quantified may result in further cost to the company and hence, the net profit after tax will be adjusted by that extent.”
Apart from renewal fee, the telecom also attributed the decline in its net profit to a fall in revenue as it recorded Rs 36.78 billion in total income in the last fiscal year, a drop of Rs 2.24 billion compared to revenues of Rs 39.02 billion in the fiscal year 2017-18. The fall in profit has hit the public listed company’s earning per share as it has dropped to Rs 68.05 per share from Rs 116.56 in a year, according to the unaudited financial statement of Nepal Telecom. “The company also suffered a foreign exchange loss of Rs 153.79 million in the fiscal year 2018-19 against a gain of Rs 635.55 million in foreign exchange in 2017-18.”
The marketing schemes also cost the company Rs 775.26 million in discount schemes on recharge card sales. 
The telecom has blamed growing use of over-the-top messaging services like WhatsApp and Facebook Messenger over long distance and domestic voice calls for the decline in revenue, despite a growth in subscriptions. Earlier, long distance voice calls used to contribute a major chunk to the revenue, according to the telecom that has planned to expand the 4G network – to again gain the market – and also replace ADSL with fibre to the home (FTTH) connection.
The political bickering and red tape also forced the telecom service provider to loose its ground with the private players.

Government delaying action against tax cheaters

Despite clear direction of the Parliamentary Accounts Committee (PAC) to investigate and penalise responsible authorities for not recovering capital gains tax (CGT) from the seller of GSM operator Ncell, concerned authorities, after 10 months of the shares transfer, are arguing on who should pay the CGT.
According to domestic and international laws, the CGT has to be paid by the seller.
Though PAC, on May 29, wrote to the Commission for the Investigation of Abuse of Authority (CIAA) to investigate the transaction from the very beginning and penalise the officials responsible, neither the CIAA nor the government has heeded the PAC directive.
The government could lose the CGT, if the dilemma and misinterpretation of the law continues any further.
Albeit late, the cabinet last week decided to recover capital gains tax (CGT) from the seller ie Swedish telecom operator TeliaSonera on the basis of decision of the Public Accounts Committee (PAC) of May 29 and Finance Committee of June 3.
Malaysian telecom giant Axiata had bought Reynolds Holding, which held a majority stake in Ncell, from TeliaSonera at around US$ 1.03 billion in April last year. Reynolds Holding was TeliaSonera's wholly-owned subsidiary registered at Saint Kitts and Nevis, a tax haven.
The TeliaSonera had sold its entire stakes in Ncell as part of its strategy to exit Asian and former Soviet markets to focus on Europe and its home Nordic region. The Swedish firm had sold a 60 per cent stake in Ncell and also dissolved its interest in an additional 20 per cent stake owned by local partner in December 2015. Ncell officially became a part of Axiata Group Bhd on April 12, 2016.
But the Nepali taxmen started an initiative to tax the transaction only after TeliaSonera exited Nepal.
The largest transaction in Nepali corporate history has been in news – affecting Ncell's plan to rollout 4G services – also due to some of the responsible government officials, including director general of Inland Revenue Department Chudamani Sharma and chief of the Large Tax payers' Office (LTO) Shovakanta Poudel. Sharma has been claiming that TeliaSonera does not need to pay CGT in Nepal, whereas Poudel has not yet calculated how much CGT the government owns to the TeliaSonera, currently Telia.
TeliaSonera has been however claiming that there is no need to pay CGT in Nepal since the transaction had taken place elsewhere. Responding to an email query press officer of TeliaSonera Johanna Hansson said that recent reports in Nepali media do not change TeliaSonera's view on the tax situation. "We are still of the firm belief that Telia should not pay CGT on the international part of the transaction relating to the sale of Ncell," she added.

Cabinet decides to recover CGT from TeliaSonera

Putting an end to a long-running controversy, the government today decided to recover capital gains tax (CGT) from the seller of GSM operator Ncell.
The cabinet meeting held today evening directed the Finance Ministry to recover CGT as per the decision of the Public Accounts Committee (PAC) of May 29 and Finance Committee of June 3 from the seller of Ncell, informed minister for Law and Justice Ajay Shankar Nayak.
The decision means Swedish communication firm, TeliaSonera AB which has been claiming that it did not need to pay any tax to Nepal government, now has to pay CGT to the Nepal government.
Malaysian telecom giant Axiata had bought Reynolds Holding, which held a majority stake in Ncell, from TeliaSonera at around $1.03 billion last April. Reynolds Holding was TeliaSonera’s wholly-owned subsidiary, registered at Saint Kitts and Nevis – a tax haven.
The TeliaSonera AB had sold its entire stakes in Ncell as part of its strategy to exit Asian and former Soviet markets to focus on Europe and its home Nordic region, according to the TeliaSonera.
The Swedish firm had sold a 60 per cent stake in Ncell and also dissolved its interest in an additional 20 per cent stake owned by local partner in December 2015. Ncell officially became a part of Axiata Group Bhd on April 12, 2016.
Both TeliaSonera and Axiata are public companies in their respective countries. The Nepali taxmen started an initiative to tax the transaction only after TeliaSonera exited Nepal raising lots of suspicion that the tax administration played foul by letting TeliaSonera exit the country without paying CGT to the government.
The cabinet today took the decision on the basis of directives issued by the Finance Committee and the PAC as the two parliamentary committees have been regularly asking the government to recover the CGT from the seller of Ncell. As according to the international law and domestic law, the beneficiary or the seller has to pay the CGT.
The largest transaction in Nepali corporate history has been in news – affecting Ncell’s plan to rollout 4G services – also due to some of the responsible government officials, including director general of Inland Revenue Department Chudamani Sharma, who have been saying that TeliaSonera does not need to pay CGT in Nepal. Likewise, TeliaSonera (currently Telia) has also been claiming that there is no need to pay CGT in Nepal since the transaction had taken place outside the country.
However, the house committees had been regularly directing the Large Taxpayers Office (LTO)) to fix the CGT the TeliaSonera owes to the Nepal government. Ncell is one of the largest tax payers in Nepal since last couple of years.

Telephony customer reaches 33 million milestone

Nepal reached 33 million voice telephony subscribers in October 2016, up from 31.4 million in June. The mobile voice subscriber base amounted to 31.3 million users in mid-June, up from 29.7 million in June, according to data from the Nepal Telecommunications Authority (NTA). "The total included 29.8 million GSM users, and 1.46 million subscribers to Nepal Telecom's CDMA service."
Nepal Telecom led the country’s voice telephony services market in October, with a total of 16 million subscribers, followed by Ncell with 14.6 million, according to the NTA's management information system (MIS). "The country had a mobile teledensity of 118.3 percent at mid-October 2016, while fixed teledensity reached 3.22 per cent," it revealed, adding that Nepal also had 14.4 million data/internet services users at October 17, and an internet penetration of 54.42 per cent.

NT 4G service opened to Apple phone users

Nepal Telecom (NT) has made fourth generation (4G) or Long Term Evolution (LTE) service available to Apple phone users also from today after fixing technical issues.
"4G service is now available to Apple iPhone 6, 6 Plus, Seven and Seven Plus handset users,” the telecom service provider said in a statement.
Even after 4G service was opened to postpaid and prepaid subscribers, people using Apple phones could not switch to the upgraded network due to procedural delays between NT and Apple due to technical issues, according to the telecom service provider.
The US-based Apple said that it would make 4G network compatible with all Apple handsets from March in Nepal. "However, our persistent communication with Apple yielded results as the company made 4G service available by introducing a beta version,” the state-run telecom giant's press note reads. "Apple phone users need to download an application from Apple’s website beta.apple.com."
Due to lack of such version in iPhones available in Nepal, a number of iPhone users were deprived of 4G service. NT had then requested Apple to introduce the feature in its mobile phones in Nepal.
However, users have been advised to make a data backup before downloading the software. After that, they should go to the handset’s general settings, open software update and download the beta version, one of the largest operators in the country said.
NT customers can subscribe to 4G service by dialing *444#.
According to the company, more than 50,000 postpaid users in Kathmandu and Pokhara have switched to 4G network since the service was launched for them on January 1.
It expects the number of prepaid subscribers upgrading to 4G to rise faster as there are more of them than postpaid users. NT has opened 4G service in Kathmandu and Pokhara in the pilot phase.
The telecom service provider has upgraded 308 of its Base Transceiver Station (BTS) towers in the Kathmandu Valley and 25 stations in Pokhara to launch 4G service, it said, adding that the upgraded network allows consumers to use data at speeds of up to 32.4 Mbps. "The company aims to eventually raise the speed to 100 Mbps."
Nepal Telecommunications Authority (NTA) has authorised Nepal Telecom to offer 4G service with a bandwidth of 5 Mhz from the 1800 Mhz frequency band. The NT has asked the regulator for another 5 Mhz bandwidth to increase the speed to 100 Mbps. Once the pilot phase is completed, the company aims to launch the service in 15 municipalities in the first phase, according to the regulator of telecommunications sector.
According to the Management Information System (MIS) report of the authority, the NT has 13,536,114 GSM subscribers, apart from 7,504,457 internet service users using GPRS, EDGE and WCDMA technologies. "There are 13.74 million internet service subscribers using these technologies across the country."

Nepal Telecom posts Rs 5.55 billion net profit in the first half of fiscal year

Nepal Telecom posted a net profit Rs 5.55 billion in the first half of the current fiscal year 2013-14.

The profit is 0.66 per cent more compared to the same period a fiscal year ago.

The Nepse-listed company’s financial statement for the second quarter of the current fiscal year published today revealed that its total income stood at Rs 19.69 billion compared to the last fiscal year's second quarter, when it recorded an income of Rs 18.43 billion.

According to the telecom service provider, it has managed to record a growth despite cut-throat competition and increasing operating cost due to power outage.

The company has posted increment of 6.86 per cent in income to Rs 19.69 billion, whereas expenditure also increased to Rs 12.2 billion – due to payment for new projects like WiMax and additional 10 million GSM lines– of from Rs 10.81 billion last year.

The only profit making company under the others sub group in the Nepse has also reported that its expenses also increased in paying frequency fee, contribution to the Rural Telecommunication Development Fund, operation and maintenance, royalty and administrative cost, though the expenses for licence fee and interest on subscribers’ deposit decreased.

Nepal Telecom is planning to pay Rs 462 million for frequency fee in the current fiscal year, whereas its operation and maintenance cost increased to Rs 3.75 billion from last year’s 3.1 billion.

Fixed telephony base surpasses 850,000 in December

The country saw its fixed telephony base grow to 851,199 in mid-December, up from 849,096 in mid-November.

The total includes 647,152 PSTN subscribers and 198,219 WLL telephony users, figures from the Nepal Telecommunications Authority (NTA).

Nepal Telecom (NT) leads the PSTN market with 647,152 customers, up from 645,013 a month earlier, while STM Telecom Sanchar's base was flat at 5,230 customers. Smart had 598 public phone centres, the same as in the previous month.

Nepal Telecom also leads the WLL market with 122,505 customers for the service, slightly down from 122,541 in November, followed by UTL with 73,070 subscribers, same as the previous month.

Nepal Satellite Telecom had 2,644 WLL subscribers, also unchanged. Meanwhile, the number of limited mobility subscribers stood at 1.74 million, up from 1.71 million, and Global Mobile Personal Communications (GMPCS) users remained at 1,742 in December.

Nepal Telecom to introduce new social network site

Nepal Telecom plans to introduce a new social network site in March, The telecom service provider has been testing the site internally at present.

Managing director of the company Anoop Ranjan Bhattarai, today said that the social site will have the same facilities as Facebook, plus Skype, group message and Viber facilities. "Nepal Telecom has not yet named the site."

The new social network aims to initially benefit one million users, moving to 10 million people at a later date. Nepse-listed Nepal Telecom has invested Rs 900 million so far to construct the social network site.

Likewise, he urged the the regulatory bodies to simplify public procurement process to help company upgrade technologically, and remain competent in the market.

Though Nepal Telecom is competitive, it is finding difficult to upgrade technologically due to procurement act, he added, on the occasion of 10th anniversary.

The company that had earned Rs 11.2 billion net profit in the last fiscal year, is providing telecommunication service to almost one million customers through its GSM, CDMA, landlines, Wimax and ADSL internet services.

The company had also contributed Rs 7.6 billion to the government coffer as tax in the last fiscal year.

The company’s priority is to increase the country’s digital inclusion by expanding our digital presence all over the nation,” he added.

However, chief secretary Leela Mani Poudyal on the occasion, said that there is no legal barriers to the Nepal Telecom to expand its market. Emphasising on the need to focus on improving its service quality, he said that company can only survive in the long run if it can provide the customers with better and quality services

Special offers flood
KATHMANDU: Nepal Telecom's postpaid GSM and CDMA customers will get free 50MB data per month for the next three months. The company has announced discounts for its customers on the occasion of its 10th anniversary.

Three out of every four Nepalis have mobile

Three out of every four Nepalis have mobile, if the recent data released by the telecommunications authority is to believe.

In a country of 26 million population, mobile subscribers' base has increased to 19.59 million in mid-October – up from 19.40 million in mid-September – figures of Nepal Telecommunications Authority (NTA) revealed.

Though, in most of the urban areas, professionals have two to three mobile, the report stated that a total of 18.60 million use GSM – up from 18.43 million – and the remainder uses Nepal Telecom's CDMA service.

Ncell led the GSM market with 10.81 million subscribers – up from 10.76 million a month ago – while Nepal Telecom had 7.80 million GSM subscribers – up from 7.67 million in September – and the Nepse-listed company also had 987,363 CDMA customers, up from 973,392 a month earlier.

Likewise, the fixed telephony base also grew slightly in October to 847,973 from 847,008 a month earlier, it said, adding that the total includes 649,091 PSTN subscribers and 198,882 WLL telephony users. Nepal Telecom led with 643,263 PSTN customers, down from 642,353 a month earlier, while STM Telecom Sanchar's base was flat at 5,230 customers. Smart had 598 PSTN public phone centres, the same as in the previous month. Nepal Telecom also served 122,862 WLL customers, down from 123,041 in September, while Nepal Satellite Telecom's WLL base was stable at 2,950 subscribers. UTL had 73,070 WLL customers, up from 72,836 in the prior month.

Meanwhile, the number of limited mobility subscribers stood at 1.66 million versus 1.61 million a month earlier and Global Mobile Personal Communications (GMPCS) users numbered 1,742, it revealed.