KATHMANDU: The government has announced its decision to assume control of the assets of Ncell, a private telecommunications company, after a five-year period.
Under Section 33 of the Telecommunication Act 2053, the government has the right to seize the land, buildings, equipment, and infrastructure of a telecommunications company with over 50% foreign investment after its 25-year license expires.
If the company wishes to renew its license, it must pay the full price based on an evaluation of the company’s assets.
Realizing that its assets would be transferred to the government after the license expires, Malaysia-based Axiata, the majority shareholder of Ncell, revealed on December 1, 2023, its intention to sell its shares in Reynolds Holding Company—owner of 80% of Ncell’s shares—to SpectraLite UK Limited.
Axiata owns 100% of Reynolds Holding, which is registered in St. Kitts. SpectraLite UK Limited is controlled by Satishlal Acharya, a Nepali-origin businessman based in Singapore, with his wife, Bhavna Singh, owning 20% of Ncell through Sunivera Capital Venture.
Axiata’s decision to sell its shares in Ncell was met with criticism from the Nepal Telecommunications Authority (NTA), which argued that the transaction occurred without prior approval from the regulator.
In response, the government formed a high-level inquiry committee, chaired by former Auditor General Tankmani Sharma.
After reviewing the committee’s recommendations, the government decided not to honor the agreement between Axiata and Spectralite UK Limited. The Council of Ministers made this decision on February 18, but it was only publicly announced last Friday.
Ncell’s GSM cellular mobile service license, issued on September 1, 2004, will expire at the end of August 2024. The company must renew its license for the third and final time, covering the period until 2029.
The government has stipulated that the license will only be renewed on the condition that Ncell comes under government ownership after August 31, 2029.
The government will also consider whether to renew the license for another five years and conduct further investigations into the recent ownership changes at Ncell during the renewal process.
To ensure continued service provision, the government has decided to approve the license renewal only if the company demonstrates sufficient technical, financial, and administrative capacity and agrees to government ownership after the 25-year period.
The government has also decided to take regulatory action against the buying and selling of shares in Ncell without prior approval.
Axiata Berhad had previously contested a tax-related dispute with the Nepalese government at the International Center for Settlement of Investment Disputes (ICSID), which ruled in favor of the government last June. The Council of Ministers dismissed Axiata’s claims of unfair taxation in Nepal as unfounded.
With Ncell’s tax audit pending since the fiscal year 2076/77, the government has decided to expedite the audit and assess any tax liabilities, including capital gains tax or institutional income tax, under the Income Tax Act of 2058.
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