We may soon have a competitive third telecom company in Nepal. The chances have grown as the regulator Nepal Telecommunications Authority (NTA) has formed a committee to study the prospect of a new operator. The idea for a fresh new telco venture has been around for a long time, but now, we might see some tangible outcomes as the industry stakeholders and customers feel a need for a new company to ensure competitive services.
The committee is led by NTA’s Director of Regulatory Division Ambar Sthapit and includes an ensemble comprising another Director Santosh Paudel, Deputy Directors Dr. Pradip Paudel, Sundar Pyakurel, and Assistant Director Sunil Khatiwada.
It’s reported that the new government under Prime Minister KP Sharma Oli is keen on allowing a new telco’s entry into the industry. It’s reported that NTA chairperson Bhupendra Bhandari has been instructed to make arrangements for the same. The committee has been given three months to submit its report detailing the premises for a new company.
NTA director and spokesman Santosh Paudel said, “The committee studies whether there is a need for a third operator or not. The government will study the report and decide whether to issue a license for a new telecom company or not.”
The authority is positive on a new telco that seeks to operate 5G services. Nepal currently has only two companies in operation- Nepal Telecom (NTC) and Ncell. Many feel that a new company’s presence is a necessity to intervene in their duopoly and make the telco market more competitive.
Also read: All About NTA’s Radio Frequency Policy for Telecom Services
A New Telecom Operator in Nepal to Operate 5G
NTA is planning to have a new telecom company to provide 5G services. Although NT trialed the 5G network for two years, it couldn’t launch it for public access. Ncell has not received approval to start its own. Besides, there is a consensus that the telecom service quality in Nepal is not satisfying and is also costly.
In addition, Ncell‘s license situation could incur complications in 2086 as it reaches 25 years. This is why, the government is feeling a need for a new operator. Do note that Ncell also launched its industry-defining Sadhain ON pack as a step towards 5G. It indicates that the private telco wants to operate 5G but has run into issues with the government over license renewal payment.
Despite revenues falling, both NT and Ncell combine annual operations worth Rs 75 billion. So, that’s a likely prospect for Nepal’s prominent business houses to venture into the country’s telco industry. The revenues have dropped in recent years, however, analysts believe that the industry needs a reshuffle in business to generate earnings. Neighboring countries such as Bangladesh and Sri Lanka managed 40% revenue growth, so there’s potential to turn around the fledgling income and turn it into profit for willing companies.
We can assume that the government is looking for a competitive and financially stable telecom operator that would deliver and compete with the 5G network and other advanced technologies. Both NT and Ncell have recently renewed their licenses though.
Making it easy for the newcomer
To encourage the new telecom company’s entry, the government has planned to implement a revenue-based payment model. Sources have shared that the government will issue a license for a new telco on the basis of annual royalty payments from its revenue. This is vastly different from the current practice in which an operator pays Rs 20 billion for renewal, preferably in one lump sum. In FY 2079/80, NTC and Ncell paid Rs 1.62 billion and Rs 1.88 billion for their frequency, respectively.
This new payment structure could greatly ease the financial burden for the new company and encourage its operations.
Anyway, telecom companies’ frequencies are seen as a major asset. Globally too, radiowaves are considered vital than licenses. Therefore, Nepal also has a school of thought that believes that payment should be determined as per the frequency used. The renewal fee of Rs 20 billion has usually drawn criticism from the market competitors.
Additionally, MoCIT’s new draft bill proposes an 8% annual payment on telcos to the government. That will significantly reduce companies’ payment obligations. Nepali telcos are hard done by having to pay Rs 20 billion for 5 5-year renewals.
Do Read: How many telecom operators are needed for a country like Nepal?
New or Old?
Previously, there were talks of Chaudhary Group (CG) gaining a telecom license. But the prominent business house couldn’t obtain approval, and its plans remain on hold. Instead, the business house launched CG Net which inspired a speed war in the ISP market.
The prospects still remain high for CG to get a telco license and become the third telecom operator in Nepal. Or, maybe, an entirely new venture would enter the market. And we can assume that the plan for a new telco could bear fruit by the end of the current fiscal year FY 2081/82.
Benefits of a Competitive Third Telecom Operator in Nepal
A new telecom would bring much-needed benefits to the industry as well as the end users. First of all, users will get better quality services while services like data and voice will also come at competitive rates. According to the sources, the government also plans the same with the new operator.
Particularly, the government wants to stress the new company around data service. The government wants to improve 4G accessibility and prepare 5G infrastructure with the new venture.
“It’s a government’s responsibility to provide better services through a new operator compared to the current two active companies. There is a challenge to monetize data services while revenues from voice are gradually declining. So, we are looking for a strong operator that would invest in 5G, an MoCIT official said.
Communication Minister Gurung has recently said that the government will extend 4G to all local levels and 5G in major cities in FY 2081/82. Ntc has extended its 4G coverage to 98% local levels. However, the service remains discrepant and questions about consistent quality have been constant.
Ncell, likewise, is also expanding its voice and data services. However, the company faces its own issues with license and falling revenue just as Ntc. So, a new operator might add major value and growth to the dwindling telco enterprise.
To put it in context, Nepal once had up to six telecom companies, however, that’s come down to just two as others were burdened by heavy license renewal fees, lack of expansion efforts, investment resources, etc.
Our Thought: A Third Telecom company in Nepal means a Progressive Situation for the Industry
The entry of a new telecom company in Nepal could bring multiple benefits for users and the industry. So long and so far, NT and Ncell have enjoyed duopoly but the customers have often called for high-quality services. While both have invested resources and efforts, works remain in progress. A third operator might address those loopholes.
We just hope that the next telco, if there will be one, will be competitive and full of resources to sustain through hard times. We don’t want to see the fate of Smart and UTL repeated with the next ambitious company.
Check out: The Internet History in Nepal: 1995 to 2021
The current government looks highly motivated to invest and lift the game for the telecommunication industry in Nepal. The customers have long called for a new telecom company for healthy competition. This largely emanates from high-quality services and more affordable voice and data packs. Let’s see how NTA and the government work with its plan for a new telco in Nepal.
Do you want a new telecom operator in Nepal? Why and what would be your expectations? Do share with us in our comment section below.
