KATHMANDU, July 13: After the revocation of Smart Telecom's license, the anticipated tender process for its asset management and license sale has hit a roadblock. Despite the government taking ownership of Smart Telecom and initiating a global tender process for its license sale, the process is yet to commence. The asset management committee, headed by Gokarna Mani Sitaula, a member of the board of directors of Nepal Telecommunication Authority (NTA), had intended to call for the tender. However, sources within the NTA indicate that the process remains stagnant.
In an effort to prevent new companies from entering the market, Nepali companies have been invited to participate in the tender process. Notably, Ncell, a prominent private sector company, has expressed interest in acquiring Smart's license. However, even after three months of government ownership, the global tender process for asset management and license sale has failed to make any headway. Addressing this issue, chairman of the NTA, Purushottam Khanal, stated that the asset management committee is actively working to resolve the matter.
"We are making progress, but it may take a few more months. The process will commence once the property evaluation is finalized," NTA Chairman Khanal confirmed. He further explained that the delay is attributed to the ongoing evaluation of a telecommunication service provider whose license is deemed invalid under the Property Management Rules of the Telecommunication Service Providers, 2079 BS.
Smart Telecom's license renewal deadline expired on April 16, leading to a writ petition being filed at the Patan High Court on behalf of the company. As the regulatory authority was preparing for asset management and a global tender to cancel the license, the court cleared the path for Smart's assets to be transferred to the government's ownership. Under the leadership of Sitaula, the committee is working on this matter. However, the global tender has not been initiated due to pending asset management tasks.
The delay in asset valuation and the global tender is primarily caused by the uncertainty surrounding the registration date for the potential buyer of the license, in accordance with the provisions of the Telecommunications Act, 2053 BS.
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According to the provision that it will be owned by the Nepal government after 25 years of obtaining the operating permit, Smart's license is more than that of the telecommunication companies that are currently operating. While the authority has faced pressure to conduct the global tender based on the provision that the most recent license can be utilized, there is disagreement regarding the implementation of the Telecommunications Act, 2053 BS, resulting in a delay in the tender for Smart's license sale.
"There is a dispute regarding the Act's provisions, and the Ministry of Communications and NTA do not agree on this matter. The Authority aims to attract a new company for operations, while the Ministry's officials believe that provisions should be made for the existing company to continue operating," revealed a source. They added, "Once this matter is resolved, a global tender will be announced. Ncell is attempting to acquire Smart's license at a lower price to circumvent the government's ownership of Ncell's license after six years."
On April 17, the NTA made the decision to revoke Smart Telecom's license due to outstanding dues of approximately Rs 30 billion for operating permits and renewals up until April 16. Consequently, Smart Telecom has now fallen under government control.
In a recent amendment made in Mangsir (mid-November to mid-December), the rules were altered to transfer Smart Telecom's operations to Ncell. As per the revised regulations, Ncell participated in the second round of tenders and progress has been made as planned towards Ncell taking ownership of Smart Telecom. There exists a legal provision that mandates all telecommunication companies, including Ncell, to automatically come under government ownership after 25 years of obtaining the operating license. For Ncell, this date is set at September 1, 2029. Sources suggest that the regulations were modified to prevent Ncell from falling under government ownership.
Furthermore, following the acquisition of Smart Telecom, there has been mounting pressure at the government level to grant permission for Ncell to operate under Smart's license, according to sources. "In an attempt to exclusively choose Ncell through the proceedings to buy Smart’s license, the regulations have been modified," stated an insider associated with the Ministry of Communication. The motive behind these changes is to ensure that Ncell, slated to come under government ownership in six years, is kept out of the equation.
Ncell's Nepali associate Satish Lal Acharya and the owners of Smart Telecom are also from the same family, so attempts are being made to stall the license revocation process. At present Sunivera Company of Acharya owns 20 percent stakes in Ncell while the remaining 80 percent shares are held by the Malaysian telecom company Axiata.
Lal Sahu Distributors Pvt Ltd Singapore has a 70 percent stake in Smart Telecom, Gillette has 10 percent and Sachin Lal Acharya's Square Network Pvt Ltd has 20 percent shares. The Acharya brothers each have shares in one of the two telecom companies.
According to the Asset Management Regulations of Telecommunication Service Providers, 2079 BS, the management group was entrusted with the management of Smart's service operation and asset auction. "After April 17, Smart Telecom went into the auction process. Soon the tender for asset management and license purchase and sale will be called, but it will be only on the conditions specified by the authority," said the NTA source.
According to the Telecommunication Act, 1997 and the Asset Management Regulations of Telecommunication Service Providers, 2079 BS, the Authority had initiated the auction process of Smart Telecom's assets. In order to proceed with the auction process, the authority said that it will call for a global tender in the first phase and if no one is involved in it, it will issue a second-phase tender.
In the second phase, Nepali companies are allowed to bid for the tenders. Based on the same regulation, Ncell is trying to get Smart's license and extend its license till the year 2095 BS, the source claims.
Sources claim that Satish Lal Acharya and Sachin Lal Acharya, who have political influence in the telecommunication sector, hold telecommunication licenses in countries from Nepal to Africa. According to the Telecommunications Act, the same company cannot do business by engaging in two companies through cross holdings. But the Acharya brothers have internally invested in Smart Telecom. Similarly, they have purchased shares in Ncell in the name of their family members and have cross holdings.
