KATHMANDU: Nepal’s Supreme Court has directed the Nepal Telecommunications Authority (NTA) to regulate the transfer of an 80 percent stake in telecom operator Ncell in accordance with the law, effectively placing the final decision on the nearly three-year-old ownership dispute in the hands of the sector’s regulator.
The directive, issued in the court’s recently released full verdict, requires the NTA to exercise its authority under the Telecommunications Act, Regulations and Share Transfer Bylaws to determine whether the transaction complies with Nepal’s legal framework. The regulator may approve the transfer, impose penalties, or take other legal action as deemed appropriate.
The dispute stems from the sale of Malaysian telecom giant Axiata Group’s 80 percent stake in Ncell to UK-based Spectrlite UK on December 1, 2023. Under Nepal’s Telecommunications Regulations, prior approval from the NTA is mandatory for the transfer of more than five percent of the paid-up capital of a licensed telecom service provider. However, the transaction was completed without obtaining such approval, prompting the regulator to withhold formal recognition of the ownership transfer.
The case reached the Supreme Court after Rastriya Swatantra Party lawmaker Amaresh Kumar Singh filed a writ petition seeking to nullify the share purchase agreement. On December 26, 2024, a joint bench of Justices Sapana Pradhan Malla and Tek Prasad Dhungana dismissed the petition. However, the court’s full text clarifies that while the writ was rejected, the NTA remains legally obligated to carry out its regulatory responsibilities.
The court ruled that it was unnecessary to issue a mandamus compelling the NTA to act or to invalidate the share purchase agreement through judicial intervention because the regulator already possesses the legal authority to determine the transaction’s validity.
Importantly, the court did not declare the transaction automatically valid. Instead, it emphasized that the NTA must exercise its powers under the Telecommunications Act. These include issuing directives, suspending or revoking licenses, and imposing fines on companies that violate licensing conditions or regulatory requirements.
The verdict also instructs the NTA to ensure that all licensed telecom operators, including Ncell, comply with applicable laws and submit all required documents. It further directs Ncell to operate transparently and strictly adhere to the Telecommunications Act, the Telecommunications Regulations, the NTA’s Share Transfer Bylaws, and the conditions of its operating license.
With the court’s order, the NTA is now expected to formally examine the ownership transfer and issue a decision under the law. The ruling makes clear that a share transaction does not automatically gain legal recognition unless all statutory procedures have been fulfilled.
The decision carries broader implications for Nepal’s telecommunications sector, the country’s foreign investment climate, and regulatory credibility. Ncell’s operating license has only about three years remaining, and the prolonged uncertainty over its ownership has raised concerns among investors and industry stakeholders.
Another issue linked to the dispute is a provision in Nepal’s Telecommunications Act requiring telecom companies with more than 50 percent foreign ownership to transfer their assets and ownership to the government upon the expiry of their operating licenses. Ncell has long objected to this provision, arguing that it was introduced retrospectively and is inconsistent with the spirit of the law.
The company has urged the government to review the regulations and has repeatedly expressed its willingness to reduce foreign ownership below 50 percent through an initial public offering (IPO). However, the government has yet to make a final policy decision on the matter.
The Supreme Court’s order means that the future of Ncell’s ownership transfer will now depend largely on the NTA’s regulatory decision. Observers say a clear ruling from the regulator could finally resolve one of Nepal’s longest-running telecom disputes while setting an important precedent for foreign investment and regulatory enforcement in the country.
Comment