Ncell and the government ownership debate

Will Ncell come under the government's ownership automatically now or will it reach August after five years? It will depend on whether or not Ncell pays the renewal fee, additional fee and other dues by the 15th of August.

To understand this, we need to get into the background of how Ncell entered Nepal. After the implementation of liberalization and open license system in the telecommunication sector in the Telecommunication Policy 2060, the way for private service providers to operate telecommunication services was opened. According to Rule 10 of Telecommunication Regulations 2054, it is mentioned that license fee, renewal fee and royalty will be given to the service provider who pays the most by increasing the license fee, renewal fee and royalty to the eligible telecommunication service providers.

According to that, Mero Mobile (currently Ncell) at that time claimed that the license fee was 21 million, the renewal fee was 20 billion for 5 years and the royalty was 4 percent. More importantly, Ncell did not ask for installments at the time of accepting the bill. Ncell received the license on 16 August 2061 and operated the mobile service.

crisis caused by promotion

Ncell participated in promotion in the year 2060 by accepting the rule that license fee, renewal fee and royalty will be awarded to the service provider who collects the most. Until that time, Nepal Telecom was the only provider of telecommunication services in Nepal. Earlier, Nepal Telecom was granted a license on the condition that the service provider would pay the license fee and the renewal amount after receiving the license fee of 20 million.

Telecommunication Regulations 2054 11 of 2 states that the license fee must be submitted at once or in installments as specified by the authority within the duration of the license. However, there is no provision for installment plan in the renewal of license and Ncell has not asked for installment plan during extension. As mentioned above, Ncell had admitted that the license fee was Rs 21 crore, the renewal fee was Rs 20 billion for 5 years and the royalty was four percent of the total income.

Ncell paid 10 times more than the license fee provided to Nepal Telecom by the Government of Nepal. 20 billion for another 5 years in the renewal fee. 4 billion per year in simple calculations. In the same financial year 2060/61, the total income of Nepal Telecom, the only telecommunication service provider, was only 1.55 billion. Normally, the renewal fee is 8 to 10 percent of the total revenue, but at that time, private service provider Ncell collected almost three times the total revenue of Nepal Telecom. The concerned body also accepted it.

It doesn't seem to have been analyzed that this unexpected renewal fee could lead to a crisis tomorrow. Can Nepal Telecom or other service providers who come tomorrow pay the unexpected renewal fee or not? How will this affect the environment of fair competition between service providers? The answers to such questions are still unanswered. In simple terms, the main reason why Ncell has accepted the license renewal fee for 20 billion 5 years is that no other service provider should enter the area and the existing service providers will also be closed if they cannot pay the renewal fee.

The service provider has to pay other charges besides renewal charges like: frequency charges, rural telecom development fund, royalty etc. The crisis of renewal fee was introduced by Ncell at that time and Ncell is now trying to provide installment facility to pay the same renewal fee. Installment facility is not mentioned in any of the current telecommunication service laws. Ncell, which itself accepted the exorbitant renewal fee yesterday, is now in trouble with the same renewal fee after 20 years. But according to the existing legal provisions, there is no other option but to pay the renewal fee late.

Unclear law

According to Rule 10 of Telecommunications Regulations 2054, it is mentioned that the increased renewal fee will be applicable only for the first time. Since there was no mention of the second and third renewal fees, Nepal Telecom and Ncell paid the specified fees after the cabinet decided to take only 20 billion for the second renewal. But the authority wrote to Nepal Telecom and Ncell only in 2081 Baisakh to pay the third time renewal fee of 20 billion as soon as possible. In this way, no one seems to be interested in making a clear law even though there is confusion about how much and when to pay the renewal fee every time.

Nepal Telecom got the license five and a half years before Ncell got the license. License fees, renewal fees and royalties accepted by Ncell will automatically apply to Nepal Telecom. Nepal Telecom did not get that opportunity because Ncell made a commercial plan and accepted the fee, and it was forced to pay an incalculable amount that was accepted by others. While Ncell got the installment facility while paying the license fee, Nepal Telecom could not use the installment facility because it got the license five years ago.

The government-owned service provider has repeatedly written to the regulatory body to explain how much and when to pay the third renewal fee as there is no clear legal provision. Nepal Telecom made a lump sum payment of 20 billion as soon as the regulatory body sent correspondence regarding the third renewal fee. But Ncell has paid only four billion. On the one hand, Nepal Telecom has always been under pressure due to having to pay various fees charged by private service providers, and on the other hand, having to comply with government regulations when introducing any technology.

Moreover, the income of the telecommunication sector has been decreasing continuously for some years, and it seems that it will decrease further. Out of six telecommunication service providers in this region, there are currently only two and among them, the issue of license renewal of Ncell is becoming complicated. There is no legal provision for renewal without payment of renewal fee and other dues. This subject is also causing headaches for regulatory bodies. If there is no renewal, Nepal Telecom will be the only telecommunication service provider in Nepal and it seems that the jurisdiction of regulation will be limited.

Nepal Telecom's 25-year license was granted by the authority only the day before its expiry. Experts in the field even quipped that the regulatory body did 25 years of work in a single day. In recent years, various procurement issues have come into controversy in the regulatory bodies. Defunct telecommunications service providers have imposed billions of charges. The license period of some internet service providers has expired and the service is being operated even though there is no renewal or re-license. The Telecommunications Act 2053 states that services should not be operated without a license and legal action will be taken. The main objective of the regulatory body is the development and expansion of the telecommunication sector. But in the last few years, the development and expansion of the telecommunication sector has mostly been at a standstill.

Waiting for August 15

According to Section 33 (1, 2 and 3) of the Telecommunications Act 2053, Ncell will automatically be owned by the Government of Nepal for a period of 25 years, i.e. from August 16, 2086, based on the current capital investment. Only a few months ago, Nepal Telecom received a license again according to section 33(4) of the Telecommunications Act 2053. Last February, the Council of Ministers instructed the authority to renew the license including the condition that there should be no change in Ncell's share ownership.

According to Rule 6 of the Property Management Regulations of Telecommunication Service Providers 2079, which do not have a valid license, it is stated that at least three years prior to the expiry of the license period, the property shall not be mortgaged, mortgaged and sold or transferred in any way without the approval of the authority. According to the same, the authority has not given approval for the sale of shares to Ncell.

If Ncell does not renew the license by this August 15, the license will automatically be canceled and from the date of its cancellation, Ncell's property will automatically be transferred to the ownership of the Government of Nepal. But the service will be operated continuously and the necessary arrangements will be made by the regulatory body.

Ncell's current second license expires on August 15. According to Rule 12 of Telecommunication Regulations 2054, it is mentioned that three months before the expiry of the license period, the applicant should pay the renewal fee and submit an application to the authority. According to this provision, by June 15, Ncell had to pay the agreed 20 billion and submit an application to the authority for renewal. But he submitted the application after paying only four billion. Now within this August 15, he will have to pay the pending renewal fee of 16 billion and additional fee of 3 billion to 19 billion as well as other outstanding amounts and apply to the authority for the third renewal of the license. Because

is a matter of revenue, it seems that it will probably be difficult to use the right to give instructions provided in Section 20 of the Telecommunications Act 2053 . Therefore, if Ncell continues to operate telecommunication services in this condition for another five years, there is no option to pay the renewal fee and additional fee late.

Otherwise, the permit will automatically be canceled and will come under the ownership of the Government of Nepal.