KATHMANDU: The plan orchestrated by Shatish Lal Acharya to gain control of Axiata through his Nepali partner is likely to be intercepted before it infiltrates political circles and manipulates media narratives.
Following intense pressure and CPN-UML Chairman KP Oli’s unwavering stance against allowing CPN-UML’s image tarnish, Prime Minister Pushpa Kamal Dahal Prachanda has decided to extend the remaining five-year period solely under the condition that Ncell will revert to the Nepal government after 25 years.
Despite Acharya’s extensive lobbying efforts, reliable sources assert that Prime Minister Dahal is steadfast in his decision, made during the cabinet meeting on February 18, that Ncell must pay the remaining 85 billion in taxes, regardless of any influence he may encounter.
According to reliable sources, Acharya employed various channels to withhold crucial information from the government under the guise of promoting Ncell’s Nepali interests.
Additionally, he neglected to disclose profit tax details from the sale initially.
Acharya further purported that mainstream media outlets were under his influence, assuring no opposition would arise from any quarter.
It has been learned that recently Niraj Govinda Shrestha and other businessmen remained active in attempting to transfer company assets.
Just a couple of days ago, Satish Lal’s brother, Sachin Acharya, conveyed his brother’s message to Balkot-based UML Chairman KP Oli, seeking support and claiming that all arrangements had been made.
Sources claimed that UML Chairman Oli, upon hearing this, was infuriated.
Oli firmly asserted that he had been unjustly maligned in the past, despite his significant efforts to foster an investment-friendly environment.
It’s emphasized that the agreement will not be accepted in its current state, as per the recommendation of the investigation committee, due to the absence of relevant documentation. The respective company will be duly informed of this decision.
He maintained that now, without engaging in any actions, the government should rightfully take the lead, sources claimed.
Despite Satishl Lal’s efforts to send multiple intermediaries to negotiate with Oli, the latter remained resolute, stating that his party was not in favor of transferring the company’s property to individuals. Instead, Oli expressed readiness to vehemently oppose such actions.
He emphasized that after investing billions of dollars in Nepal, totaling up to 25 billion rupees, it is now imperative for the state to reap the benefits it rightfully deserves.
According to reliable sources, Oli reiterated his commitment to truth over treachery, affirming his stance despite all parties, including the media, seemingly aligning towards the transfer of Ncell to questionable individuals.
Sources indicate that Oli informed Prime Minister Dahal about his stance, and it appeared that Prime Minister Dahal, too, shared a similar opinion.
Both Oli and Prime Minister Dahal grew increasingly frustrated upon discovering plans to transfer tower equipment and materials to various business entities without prior notification to the government.
It may be noted that a decision of the Council of Ministers on February 18, as the Minister of Communications and Government Spokesperson Rekha Sharma, in a press conference, disclosed that “the report submitted by the committee formed to investigate the alleged purchase and sale of Ncell shares will be forwarded to relevant agencies for implementation.”
This information was also documented in the detailed records of the Council of Ministers’ decision maintained by the Ministry of Communication.
However, the decision made during the Council of Ministers’ meeting on February 18, held at the Office of the Prime Minister and Council of Ministers, contains explicit details concerning Ncell.
It stipulates that Ncell’s renewal for the remaining five years will only occur upon submission to the Government of Nepal after the completion of 25 years.
According to the decision no. 37 of the meeting, two resolutions were reached concerning the implementation of the report on the sale and purchase of shares of the telecommunications service provider company, Ncell.
Firstly, Ncell’s license for GSM cellular mobile service is due to expire on September 1, 2024.
The organization obtained permission on September 16, 2004. Should the Council of Ministers opt to extend the period by five years in September 2024, it is stipulated that following the expiration of the 25-year period outlined in the permission letter, in accordance with Section 33 of the Telecommunication Act, 2053, the ownership of the land, buildings, devices, equipment, and structures pertinent to telecommunication services will revert to the Government of Nepal.
Secondly, during the license renewal process, it is specified that the renewal must incorporate a condition prohibiting alterations to the existing share ownership structure of the service provider company.
Additionally, in cases where tax liabilities, including capital gains tax or corporate income tax, arise from the purchase and sale of shares under the Income Tax Act, 2058, it is mandated to ascertain and levy such taxes accordingly.
As per this condition, post-2029, the ownership of the land, buildings, devices, equipment, and structures associated with Ncell’s telecommunication services will transition to the government. The extension of Ncell’s period beyond this point in August is contingent upon maintaining Axiata’s share ownership in Ncell.
According to Section 20 of the Telecommunications Act, 2053, the first directive conveyed to the Nepal Telecommunication Authority through the Ministry of Communication and Information Technology mandates that any telecommunication service provider company must secure approval from the Nepal Telecommunication Authority before engaging in a share purchase and sale agreement, in compliance with prevailing laws.
This approval process necessitates confirmation of the buyer’s technical, financial, and managerial capabilities.
It’s emphasized that the agreement will not be accepted in its current state, as per the recommendation of the investigation committee, due to the absence of relevant documentation. The respective company will be duly informed of this decision.
In the subsequent directive, it is stipulated that if shares are transacted without prior approval, regulatory measures will be taken in accordance with applicable laws.
However, if the technical, financial, and managerial capacities of the license holder are confirmed to ensure the continuity of the company’s services, permission will be granted to renew the license upon submission of the requisite renewal fee as per prevailing laws.
Furthermore, it is underscored that upon renewing the permit, no alterations shall be made to the share ownership structure of the service provider company, in line with Section 33 of the Telecommunications Act, 2053, which aims to maintain the ownership of land, buildings, devices, equipment, and structures related to telecommunication services by the Government of Nepal.
The renewal conditions should incorporate these provisions accordingly.
The Nepali government rejected the purchase and sale of shares and complicated the renewal of Ncell’s license by insisting on maintaining the previous share structure and asserting ownership over assets and structures related to telecommunications services.
During the international arbitration conducted under the auspices of the World Bank, concerning the allegations raised by Axiata Berhad, Malaysia, regarding the purported absence of an investment-friendly environment in Nepal due to unfair taxation and regulatory ambiguity, it has been decided that the claims made lacked substantiation.
Axiata has, meanwhile, chosen to refute these baseless allegations, as the arbitration has determined that the submission was founded on such claims without presenting sufficient evidence to support them.
In decision no. 38, the Ministry of Finance has been directed to execute the recommendations outlined in the report concerning the purchase and sale of shares of Ncell.
Furthermore, the Council of Ministers has tasked the Finance Ministry with assessing the tax obligations and recovering the outstanding tax liabilities of the company from the fiscal year 2076/77 onwards, as these remain unresolved.
Additionally, in cases where tax liabilities, including capital gains tax or corporate income tax, arise from the purchase and sale of shares under the Income Tax Act, 2058, it is mandated to ascertain and levy such taxes accordingly.
Ncell share dispute
The Ncell share dispute revolves around the sale of shares of Ncell, a telecommunications service provider in Nepal, by Malaysia’s Axiata to Spectralite UK, a company owned by Shatishlal Acharya, a citizen of Nepalese origin.
Axiata owned 80 percent of Ncell’s shares, and the sale was conducted without prior notification to relevant Nepali government agencies, sparking controversy.
The transaction involved transferring 80 percent of Ncell’s shares to Shatishlal Acharya and the remaining 20 percent to his wife’s name through the purchase of the company in the UK.
However, Nepali government bodies disputed the legitimacy of this transaction.
Despite the confirmation of the sale of shares to citizens of Nepali origin, the decision was met with resistance in Nepal, ranging from parliamentary opposition to public protests.
This transaction not only resolves Ncell’s ongoing issues with the Nepali government but also leaves the option open for involving additional buyers before the expiration of Ncell’s license.
The Nepali government rejected the purchase and sale of shares and complicated the renewal of Ncell’s license by insisting on maintaining the previous share structure and asserting ownership over assets and structures related to telecommunications services.
This dispute has led to legal, regulatory, and diplomatic challenges surrounding the ownership and operation of Ncell in Nepal.
What also has to be noted is that Satishlal consistently finds himself embroiled in controversies surrounding Ncell.
During the transfer of Ncell ownership, 20 percent of the shares registered under Nepali investor Niraj Gobinda Shrestha were sold under the name of his wife, Bhawana Singh Shrestha.
Following this, when Malaysia’s Axiata, the holder of 80 percent of Ncell shares, sold its entire stake to Satishlal’s company, he became the center of attention.
A statement released by Axiata revealed that approximately 80 percent of its Ncell shares were sold to ‘Spectralite UK Limited,’ established solely for this purpose in Greater London on October 9, 2023.
The company, formed merely two months prior, lists one active director (Satishlal Acharya) and one active member. Its registration appears designed solely for the transfer of Axiata’s Ncell ownership.
Axiata sold its shares to Spectralite UK Limited for $50 million (Rs 6.66 billion).
Axiata had initially acquired these shares from Sweden’s TeliaSonera in 2016 for $1.36 billion (Rs 1.43 billion, according to the exchange rate at that time).
This move suggests that, seven and a half years later, Axiata is poised to exit Nepal, selling its shares at a price less than five percent of their initial value.
However, it is stipulated in the share purchase agreement that Axiata will continue to receive dividends from Ncell until 2029.
The document outlining Axiata’s divestment of its Ncell ownership in Nepal clarifies the rationale behind this sale.
It states, “The proposed transaction has been determined based on negotiations between the interested buyer and seller and is the result of a strategic review, including outreach to other potential credible acquirers.”
This transaction not only resolves Ncell’s ongoing issues with the Nepali government but also leaves the option open for involving additional buyers before the expiration of Ncell’s license.
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