27 August 2024, Kathmandu
Ncell, a leading telecom provider in Nepal, faces challenges in renewing its operating license, which is set to expire on August 31, 2024.
Ncell’s License Renewal Faces Government Stalemate
Despite submitting a renewal application on Monday, May 27, 2024, and depositing NPR 4 billion to the Nepal Telecommunications Authority (NTA), the renewal process has stalled due to a dispute over the payment structure.
The Issue at Hand
The NTA insists that Ncell must pay the entire renewal fee of NPR 20 billion upfront, a demand that contrasts with past practices where installment payments were allowed. Ncell has expressed its willingness to pay the remaining NPR 16 billion in yearly installments, in line with previous license renewals for other telecom companies in Nepal, including Nepal Telecom.
Legal and Economic Implications
Nepal’s Telecommunications Act stipulates a 25-year license period, initially granted for 10 years and subsequently renewed every five years with a NPR 20 billion fee. Historically, the government has facilitated these payments through installments. However, this time, with only a week left before the deadline, the government has shown little interest in accommodating Ncell’s request.
Ncell’s substantial contribution to Nepal’s economy is noteworthy. The company ranked third in tax payments last fiscal year, contributing over NPR 20.3 billion in taxes. Additionally, Ncell provides employment to approximately 25,000 individuals, directly and indirectly. Experts argue that the government’s hardline stance could deter private sector investment, which is crucial for economic growth and job creation.
Comparative Analysis: Ncell vs. Nepal Telecom
In contrast, Nepal Telecom renewed its license in 2019 by initially paying NPR 189 million, with the balance of NPR 19.81 billion paid in April 2024. Nepal Telecom also received an interest waiver during this period. The NTA’s demand for a NPR 3 billion penalty from Ncell for not paying the full renewal fee three months prior to expiration has further complicated the situation.
Regulatory Standpoint
The NTA’s statement cites the Telecommunications Act, which does not provide for installment payments, as the basis for their stance. While Ncell argues for equal treatment based on precedent, the NTA maintains that any deviation from the law would require a directive from the government.
Conclusion: A Call for Government Intervention
The Council of Ministers has the authority to direct the NTA to allow installment payments under Section 20 of the Telecommunications Authority Act. This section empowers the government to issue directives to diversify, expand, and regulate telecommunications services. As the deadline approaches, stakeholders await a government decision that could have significant implications for the future of telecommunications in Nepal.
Ncell’s License Renewal Faces Government Stalematent
