Ncell’s License Expired

Ncell’s License Expired: A Critical Setback for Their Services

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With just one day left before the expiration of Ncell’s telecommunication service operation license on August 31, 2024, Ncell does not have the funds to pay the renewal fee to renew its license. Therefore, the Nepal Telecommunications Authority (NTA) has sent an urgent notice to the Ministry of Communications and Information Technology (MoCIT) and Ncell Limited.

The Story of Ncell’s License Renewal Fee Delay: What Went Wrong?

Financial Struggle

According to the latest financial report, the company needs to pay a renewal fee of NPR 19 billion (19 Arab) for its license immediately, as stated by the Nepal government. The report indicates that as of mid-2023 (2080 in the Nepali calendar), the company had 13.83 billion rupees (13 Arab 83 crores) in cash reserves. At the same time, the company had more than 15.51 billion rupees (15 Arab 51 crores) in debt. This shows that the company’s liquid cash was insufficient to cover its debt, leaving a shortfall of 1.68 billion rupees (1 Arab 68 crores).

Axiata Sells its 80% shares at 96% Loss

Soon after that, in December 2023, Ncell’s parent company, Axiata, exited the company by selling its 80 percent stake for NPR 6.56 billion (6 Arab 56 crore) to Spectralite UK, a company owned by Singaporean national NRN Shatishlal Acharya. Interestingly, Axiata had originally acquired these shares from TeliaSonera of Sweden for approximately NPR 1.05 trillion (1 Kharba 43 Arab) in 2016. Axiata sold its 80 percent stake at a 96% loss, with payment scheduled in installments up until December 29, 2029.

This raised concerns among Nepalese citizens, news media, and political and governmental bodies. In response, the government formed a five-member committee led by former Auditor General Tankamani Sharma Dangal. The committee also included Nepal CA Association President Sujan Kumar Kafle, Joint Secretaries Ritesh Kumar Shakya and Baburam Bhandari, and Government Secretary Phanindra Gautam. Due to public pressure, the committee submitted its report to the government on January 29, 2024, but it has not yet been made public.

Latest Update

The company paid NPR 4 billion (4 Arab) for the license renewal on June 14, 2024. However, Ncell still needs to pay the remaining NPR 15 billion (15 Arab), along with an additional 15 percent fee on the due amount, by August 31. Some reports claim that Ncell does not have the capital to pay the full amount, so they have requested NTA to allow them to pay renewal fee in installments.

NTA: No Installments, Full Fee Required

NTA spokesperson Santosh Paudel stated that the NTA does not have the authority to offer installment plans to companies like Ncell and insists them to pay its full renewal fee. Since, Ncell has requested an installment plan, there are no signs that company will pay the full renewal fee. Paudel added, ‘We are doing our best to ensure Ncell pays their renewal fee, but the NTA lacks the capability to provide the installment plan like company has requested.

Why Won’t Banks Support a Loan to Ncell?

As Ncell shows signs that it can’t repay the full renewal fee, the Nepal government has imposed one last condition for renewing its license: Ncell must surrender all its assets to the government of Nepal within the next five years (by 2086 BS or 2029 AD). Due to this, banks have trust issues regarding lending loan to Ncell and are not providing loans to the Ncell.

Why Telecommunications Companies Need a License: Understanding the Renewal Requirements

Under the Telecommunications Act 2053, all telecommunication companies in Nepal are required to obtain a mobile facility license. The Act stipulates that the license period for a telecommunication company is up to 25 years. Companies must renew their license for the first time after 10 years and then every 5 years thereafter until the maximum period of 25 years is reached.

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