Nepal's telecommunications sector has undergone significant transformation since the 1990s when people had to stand in enduring long queues for STD and ISD calls and pay exorbitant fees for every second of talk time. It was only two decades ago, in 2004, when Nepal opened its telecommunications market to the private sector, attracting foreign investors such as United Telecom Limited (UTL), Ncell (previously Spice Nepal), and Smart Telecom. Within the first five years of Ncell’s entry into Nepal, it played a pivotal role in revolutionizing the country’s telecommunications industry—making phone calls and data services more accessible and affordable, and empowering the masses with connectivity. Ncell's launch of 3G in 2010 and 4G in 2017 provided high-speed mobile data coverage nationwide.
This transition was transformative, and Ncell is proud to have been a major contributor to what many development agencies would describe as Nepal's leapfrogging over the past two decades; whether in agriculture, e-commerce, telemedicine, internet banking services, or information technology. Individuals who previously lacked bank accounts can now pay bills directly from their mobile phones. Those without access to basic healthcare can now receive diagnoses via telemedicine using the power of connectivity.
Telecommunications is one of the few sectors in which Nepal has been able to keep pace with other developing and developed nations. The telecommunications sector is now one of the largest contributors to Nepal’s national revenue collection; both Nepal Telecom (NT) and Ncell are consistently listed among the top five largest taxpayers to the government annually. While things were promising for some time, the sector is now facing severe challenges. The economy is transitioning and there is change in how businesses and individuals use telecommunications services. The voice-driven market has shifted to a data-driven one, emphasizing the need for reliable, quality connections. This necessitates continuous investment in technology for expansion and the replacement of outdated infrastructure. Despite these needs, telecom companies are hindered by license renewal costs which were set 20 years ago. The approach for the pricing of telecommunication licenses and frequencies will have to be re-evaluated to align with the current landscape. Data consumption has been increasing yet Over The Top (OTT) services have been a big challenge for voice operators like Ncell.
Over the last six years, revenue in the telecommunications sector has declined by 26 percent and profit by 81 percent, with forecasts indicating a negative profitability trend over the next two years. With the industry becoming increasingly non-viable, telecom companies will be unable to invest in maintaining the existing infrastructure and adopting new technologies, ultimately impacting consumers negatively.
Communication Registrar Office under Province 3 govt holds inte...
Since Nepal opened up to Foreign Direct Investment (FDI) in the telecom sector, several international telecom companies have exited the market and Ncell is still here for Nepal and Nepalis. This stands in contrast to neighboring countries like India, Sri Lanka, and Bangladesh, where foreign operators are eager to invest. Despite its vast potential, both major operators in Nepal, Nepal Telecom and Ncell, have faced revenue declines in recent years. The question we must ask ourselves is: why? The telecommunications sector should be treated as a public good. However, in Nepal, it is highly regulated by laws and regulations that are nearly three decades old and are no longer relevant. The government and relevant regulators, such as the Nepal Telecommunications Authority (NTA), play a crucial role in shaping the ecosystem and must update policies to enable telecom companies to deliver the best service to customers. Policies and guidelines should be revised to align with international standards, fostering market growth and competitiveness.
As the world moves towards smart cities, smart cars, and AI, Nepal must also embrace technological advancements. The government must enable this transition to ensure Nepal remains competitive on the global stage. However, without timely policy interventions, Nepal risks being left behind in this fast-paced, technology-driven world.
The Ministry of Finance and Investment Board have assured foreign investors that Nepal will ensure optimal protection and facilitation of investments, returns, and repatriation. This commitment sends a positive message to potential investors. However, several changes are needed in the country’s rules and regulations regarding investment.
For instance, the Build-Own-Operate-Transfer (BOOT) model in the telecom sector, which works well for infrastructure projects like hydropower, is not suitable for telecom and ICT sectors due to the continuous need for technological upgrades and need of investment. Investment protection is another critical area. Nepal must streamline processes for dividend repatriation and forex approvals, ensuring smooth operations for telecom companies. Additionally, foreign investors require a level playing field, which currently does not exist compared to state-owned operators like NT or Internet Service Providers.
For Nepal to attract FDI and achieve economic growth, it must improve the ease of doing business within the country. Political stability, infrastructure availability, government facilitation, bureaucracy, and the overall political climate must support foreign investors.
At Ncell, we welcome the proactive role the Government of Nepal is taking in hosting investment summits and addressing the existing bottlenecks to attract more FDI. The development we have witnessed in the telecom sector thus far is the result of free-market policies and FDI. FDI is crucial for any market, and investors must be treated fairly to ensure returns on their investments. Such investments contribute to socio-economic development and employment generation.
As one of the largest foreign investors in Nepal, Ncell is one of the biggest taxpayers in the country. Our direct and indirect contributions to the country’s GDP stand at around 2 percent. Since our inception, we have contributed almost Rs 300 billion in taxes and fees. Additionally, we have contributed more than NPR 1.85 billion under our Corporate Social Responsibility (CSR) initiatives, supporting various social development projects.
We have made substantial investments in infrastructure for service expansion and quality improvement, investing Rs 32-35 billion annually in Capex and Opex. Infrastructure development in sectors like telecommunications has a profound impact on the overall growth, poverty alleviation, job creation, healthcare, education, banking services, disaster management, and quality of life.
The telecom revolution has transformed how we communicate, connect, and conduct business. We must continue to embrace innovation and leverage telecom development to create a more connected world, driving economic growth and empowering people.
