KATHMANDU: Ncell has urged the government to reconsider decisions related to its share ownership transfer, stating that the prolonged lack of recognition of the transaction has affected the company’s operations, management and future investment plans.
The telecom company submitted a letter to the Office of the Prime Minister and Council of Ministers on Wednesday, requesting a review of the Cabinet decision regarding the share transaction, conditions imposed during license renewal and the 10th amendment to the Telecommunications Regulations.
Ncell said copies of the letter were also submitted to the Ministry of Communication and Information Technology, Nepal Telecommunications Authority (NTA), Department of Industry and other concerned government agencies.
The company had previously sent a letter on January 7, seeking a resolution but said no decision or direction was received, prompting a renewed appeal.
Ncell has argued that the government’s decision and additional conditions imposed on the company are inconsistent with existing laws and have created an unfavorable environment for foreign investment and the telecommunications sector.
The dispute centers around Axiata Investments (UK) Limited’s sale of its entire stake in Reynolds Holdings to Spectrlite UK Limited. Spectrlite is fully owned by Nepali non-resident citizen Satish Lal Acharya.
Ncell has maintained that the transaction was not a direct sale of Ncell shares but a transfer of shares in its parent company. However, the Nepal Telecommunications Authority has not recognized the transaction, citing the lack of prior approval.
According to Ncell, although obtaining prior approval was practically challenging, it submitted applications to the Department of Industry and the telecom regulator within the required timeframe under the Foreign Investment and Technology Transfer Act. The company said it also submitted documents related to the agreement between the buyer and seller, as well as evidence of the buyer’s technical, financial and managerial capacity.
Based on recommendations from a high-level study and investigation committee, the Cabinet decided on February 18, 2024, not to accept the transaction in its current form.
Following that decision, additional conditions were imposed during Ncell’s license renewal, including restrictions on changing the existing share structure, payment of interest on renewal fees and the possibility of initiating license cancellation procedures if conditions were not met.
Ncell has described these conditions as unequal and beyond the scope of the Telecommunications Act. The company argued that restrictions on share ownership changes limit shareholders’ property rights and the company’s ability to operate.
It also claimed that requiring Ncell to pay interest on license renewal fees while Nepal Telecom was not subjected to similar charges violates the principle of equal treatment.
The company further argued that the basis for the government’s initial decision has changed. While the transaction was rejected over concerns about the buyer’s technical, financial and managerial capacity, Ncell said the same capacity was later assessed by the telecom regulator when its license was renewed for another five years.
Ncell said the company has continued operating without disruption for the past two years, indicating that earlier concerns have already been addressed.
The company also referred to the Supreme Court’s recent full text of its decision, which directed the government and concerned authorities to resolve the ownership dispute through legal administrative procedures. Ncell said the writ petitions seeking cancellation of the share transaction had already been dismissed, and keeping the issue unresolved for a prolonged period was unnecessary.
In its letter, Ncell stated that the Cabinet has the authority to amend, withdraw or replace its own decisions if legal challenges or errors are identified, urging the government to provide a resolution.
The company said it has already paid Rs 1.69 billion in taxes after filing separate financial statements following the share transaction and remains ready to pay any additional tax liabilities determined according to law.
However, Ncell said it has been unable to transfer payments to the seller under the agreed transaction structure because the share transfer has not received official recognition.
The company also objected to the 10th amendment of the Telecommunications Regulations, which introduced a provision considering the share structure at the time of obtaining the license as the basis for ownership assessment.
Ncell claimed the amendment was applied retrospectively and appeared to specifically target the company, as the original law considered the share structure at the time of license expiry.
The company warned that prolonged uncertainty could send a negative message to foreign investors, raise questions over Nepal’s international investment protection commitments and potentially escalate the dispute to an international level.
Ncell has requested immediate review of the Cabinet decision of February 18, 2024, the conditions imposed by the telecom authority regarding share ownership and interest payments, and the 10th amendment to the regulations.
The company also proposed that the share transaction could be regularized through necessary regulatory action regarding prior approval requirements.
Ncell said it is prepared to increase Nepali ownership in the company beyond 50 percent and make shares available to Nepali citizens and institutions through a public offering.
The company added that with an appropriate policy resolution from the government, it plans to increase investment in 5G services, high-speed fiber networks and digital infrastructure.
According to Ncell, the company currently serves around 14 million customers, supports more than 100,000 direct and indirect jobs, and has contributed approximately Rs 375 billion in revenue to the state since its establishment.
The company has urged the government to resolve the dispute through a solution-oriented administrative process rather than punitive measures, while ensuring the continuity of services, employment, government revenue and digital infrastructure development.
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