KATHMANDU, Dec 27: The Supreme Court (SC) has instructed the Nepal Telecommunications Authority (NTA) to effectively regulate all companies which have obtained licenses as telecommunications service providers, in accordance with the law. Additionally, the SC has directed Ncell Axiata to comply with the letter of the law.
A division bench of Justices Sapana Pradhan Malla and Tek Prasad Dhungana dismissed the writ petition filed by Member of Parliament Amresh Kumar Singh against Ncell and issued an instructive order to the NTA to take legal action without delay.
The dispute began when Malaysia's Axiata Group, which had purchased 80 percent of Ncell's shares for Rs 144 billion eight years ago, sold its shares to Spectrlite UK, a British company with Nepali founders, for Rs 6.50 billion. On December 1, 2023, Axiata Investment, the shareholder holding 80 percent of Ncell Axiata, transferred its shares to Spectrlite.
On December 8, 2023, Member of Parliament Singh filed a writ petition against Ncell's actions. He claimed that Ncell's share transactions were conducted opaquely, violating legal procedures and causing harm to the country. Following this, on December 19, 2023, the SC instructed the NTA to explain why it allowed Ncell to sell its shares.
NSU takes out warning march against Ncell share sale (Photos)
The SC dismissed the presented writ petition. The SC’s brief verdict issued on Thursday stated, "As there is no need to issue any order regarding the legality and validity of the share transactions, the presented writ petition is dismissed."
Although the court dismissed the writ petition, it observed that “repeated changes in the share structure of Ncell Axiata, a foreign-invested telecom service provider, along with the buying and selling of shares both domestically and internationally, have revealed serious issues and trends concerning compliance by the authorized parties.”
The bench issued an instructive order to Ncell Axiata, stating, "Ncell Axiata must operate its services transparently and legally, strictly adhering to the Telecommunications Act-2053 BS, the Telecommunications Regulations, the NTA (Share Purchase and Sale by Licensees) Regulations-2076 BS, and the conditions of the license."
The court mentioned, "The NTA should have granted approval before the share transaction, but it was not obtained. The written response stated that there is no requirement to obtain approval from the NTA for buying or selling shares."
The licensee and Spectrlite did not submit the share purchase agreement for prior approval, despite the NTA 's repeated correspondence, and the NTA ignored these requests.
While the writ petition was under consideration, Ncell Axiata submitted its request for approval to the NTA on March 13, 2024. However, the NTA decided that it could not approve the request in the current situation. In addition to the regulatory duties and powers assigned under Section 13 of the Telecommunications Act-2053 BS, Section 15 grants the NTA the power to issue necessary orders or directives, while Section 47 gives the NTA the right to impose fines on individuals who fail to comply with the conditions stated in the license.
The Large Taxpayers' Office also filed a writ petition against Ncell, and the court issued an order on February 6, 2019. The order stated, "Ncell Axiata has acted contrary to the principle of full disclosure and has failed to submit the required documents."
On February 18, 2024, the Cabinet decided that since Ncell Axiata's tax audit for the fiscal year 2019/20 and onwards remains pending, the Internal Revenue Department and its offices must ensure timely tax audits for such multinational companies and those with a history of tax evasion, and determine and collect the tax liabilities accordingly.
The government formed a committee on December 7, 2023, to investigate the share transactions, led by former Auditor General Tanka Mani Sharma. The committee, under Sharma's leadership, prepared and submitted its report to the government on January 29, 2024. On March 28, 2024, the NTA decided that it could not approve the Ncell share purchase agreement in its current form.
