KATHMANDU: Over a year has passed since Smart Telecom ceased operations, but the company still has an outstanding loan of Rs 4.49 billion from various banks that remains unpaid.
A recent government investigation has revealed that this loan, taken out by Smart Telecom and now under the purview of the Nepal Telecommunication Authority, is at significant risk.
The investigation, which also examined the controversial Nepali telecom company Ncell, found that Smart Telecom had accumulated substantial debt without repaying it.
The telecom sector in Nepal, dominated by a single interest group beyond the government-owned Nepal Telecom, has now endangered banks and financial institutions.
The government’s research report calls for a thorough investigation into the Rs 4.49 billion rupee loan taken by Smart Telecom.
Sarbesh Joshi, the Managing Director of Smart Telecom, saw the company’s management taken over by the Nepal Telecommunication Authority.
The investigation report, specifically on page 34, suggests that with Rs 4.49 billion potentially at risk, an investigation is warranted.
Nevertheless, it was discovered that Smart Telecom made some payments even after the Authority began its takeover process.
Shatishlal Acharya, who acquired 80 percent of Ncell’s shares in December 2023, is the owner of Smart Telecom.
The investigation revealed that Shatishlal, who had driven Smart Telecom into commercial difficulties, repaid Rs 1 billion of the loan sourced from Investment Mega Bank.
Despite this, Rs 3.75 billion of the loan remains unresolved, and Nepal Investment Mega Bank Ltd. has classified it as non-performing.
The investigation report notes that Smart Telecom made a Rs 1 billion repayment despite the cancellation of its license and the management takeover by the Nepal Telecommunication Authority.
However, the specifics of when this payment was made to Nepal Investment Mega Bank are not detailed in the report.
The Authority’s report details that Smart Telecom, which was authorized to provide basic telecommunication services, failed to pay the frequency and renewal fees, leading to the automatic cancellation of its license.
When queried about this matter, Rajesh Sharma, Deputy GM and Information Officer of Nepal Investment Mega Bank, stated that the bank has provided the necessary documents to the government investigation committee but is unaware of further details.
The investigation report mentions the involvement of an investment bank but does not specify which bank holds the remaining loan.
Santosh Paudel, spokesperson for the Nepal Telecommunication Authority, stated that the Authority is not informed about the details of Smart Telecom’s remaining loan.
Following the cancellation of Smart Telecom’s operating license, the Nepal Telecommunication Authority issued a notice stating that, under Rule 18 of the Asset Management Regulations, 2079, the company’s assets have been taken into control.
The Authority also clarified that the government or the Authority would not be liable for any obligations of Smart Telecom incurred.
According to Rule 5 of the Asset Management Regulations, 2079, all liabilities should be settled by the company itself.
Rule 19 provides for the auctioning of the service provider’s property if liabilities cannot be covered from the provider’s cash balance and income.
However, given that Smart Telecom’s liabilities are expected to exceed its assets, and with the asset evaluation process yet to be completed, the likelihood of altering the company’s banking and other liabilities remains slim.
Delay in Asset Management
According to Section 25 (5) of the Telecommunications Act, 2053, following the cancellation of a service provider’s license, the company is required to transfer its telecommunication infrastructure, systems, and network to the authority as per Rule 9 of the Asset Management Regulations, 2079.
Although Smart Telecom’s service operation license was revoked a year ago, the Telecommunication Authority has yet to initiate the auction process for the company’s assets.
The Authority’s report details that Smart Telecom, which was authorized to provide basic telecommunication services, failed to pay the frequency and renewal fees, leading to the automatic cancellation of its license.
In a board meeting, the Authority decided that, since Smart Telecom’s license was automatically revoked, the company’s assets should be managed according to the Property Management Regulations, 2079.
Following this, the Authority established a 5-member asset management team led by Gokarn Sitaula, a member of the board of directors.
According to Rule 13 of the Asset Management Regulations, 2079, a pricing committee must be formed to determine the company’s asset value within six months as stipulated in Rule 14.
If the valuation is not completed within this timeframe, a three-month extension may be granted.
Furthermore, the report notes that Shatishlal Acharya is a director of Lalsahu Distributors Pvt. Ltd. in Singapore, which holds a 50 percent share in Smart Telecom.
However, Gokarna Sitaula, the coordinator of the asset management group, informed Khabarhub that no progress has been made regarding Smart Telecom’s asset management, despite the company’s services being suspended for over a year.
Additionally, Gajendra Kumar Thakur, spokesperson for the Ministry of Information Technology and Communication, stated that he had no information regarding the delay in Smart Telecom’s asset management.
The Auditor General’s 61st report indicates that Smart Telecom failed to pay 6.25 billion rupees to the government by the 10th installment.
Due to the non-payment of the final installment amounting to 13.13 billion rupees, the company’s license was automatically canceled under Section 25 (5) of the Telecommunications Act, 2053.
The report shows that the license was revoked because Smart Telecom did not fulfill its financial obligations to the state.
The Authority decided to cancel Smart Telecom’s license, for failing to pay revenue, including license renewal fees, over a five-year period.
Despite being granted a four-year extension to settle the arrears in five installments, Smart Telecom did not comply.
Further extensions were granted by Cabinet meetings, but Smart Telecom failed to act on any of these decisions.
Following the repeated concessions that were not implemented, Smart Telecom filed a petition with the Patan High Court, seeking to halt the license cancellation process.
Single Entity Dominating Nepal’s Telecom Sector: Findings on Ncell and Smartcell
Government research has revealed that a single individual or group is attempting to monopolize Nepal’s telecommunications sector through various companies and holding entities.
This finding emerged from an investigation led by former Auditor General Tankamani Sharma Dangal into the transactions involving Ncell.
According to page 34 of the research report, Shatishlal Acharya, who purchased 80 percent of Ncell’s shares from Axiata Group, is also the owner of Smart Telecom.
The report highlights that Smart Telecom was previously owned by three shareholders listed in the shareholder registry: Square Network Pvt Ltd, Lalsahu Holdings Pvt Ltd, and Kosovo Investments Limited.
Furthermore, the report notes that Shatishlal Acharya is a director of Lalsahu Distributors Pvt. Ltd. in Singapore, which holds a 50 percent share in Smart Telecom.
This connection raises concerns about the potential conflicts of interest and the implications for the future of Ncell, which has been embroiled in controversy.
Also Read:
https://english.khabarhub.com/2024/29/367698/
https://english.khabarhub.com/2024/28/367453/
https://english.khabarhub.com/2024/08/370915/
https://english.khabarhub.com/2024/26/367221/
https://english.khabarhub.com/2024/05/368725/
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