Nepal Telecom and Ncell Deprived of Foreign Exchange Facility

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Nepal Telecom and Ncell Deprived of Foreign Exchange Facility

KATHMANDU: Tata Communication International Pvt Ltd (Singapore), which supplies internet bandwidth services to Ncell, has halted its services, potentially affecting the quality of Ncell's internet service.

A senior official from the Nepal Telecommunications Authority (NTA) disclosed that both Ncell and Nepal Telecom, whose majority shares are owned by the government, have been deprived of foreign exchange facilities for the past six months due to non-payment of the specified frequency fee.

The service providers and the regulatory body are in dispute over whether the fee should be paid. Ncell has filed a case in the Supreme Court. Unless Ncell settles the dues, the NTA has taken a stance recommending foreign exchange facility to the private sector telecommunication service provider. As a result, Ncell has been unable to pay Tata Communication International for bandwidth.

"Tata stopped providing bandwidth from June 17," an Ncell source confirmed.

According to the source, Ncell owes Tata Singapore about $4 million (approximately Rs 540 million). "Tata has sent a legal notice indicating legal action if payment is not made," the source added. "Despite being ready to pay, we cannot proceed due to the lack of foreign exchange facility," the source revealed.

The same source mentioned that Ncell has also been unable to procure equipment for service improvements or pay for consulting services from abroad for almost six months.

The competition between Nepal Telecom and Ncell is intense, and Ncell officials are concerned that without paying for internet bandwidth, equipment, and consulting services, their service quality will suffer, putting them at a disadvantage against Nepal Telecom.

Ncell’s internet service is currently sustained through various measures, but the cessation of bandwidth supply by Tata—accounting for over 30% of Ncell's total bandwidth purchases—poses a significant threat. If other suppliers also stop providing bandwidth, Ncell’s service quality will deteriorate.

Internet services were previously affected when Airtel, an Indian company, stopped providing bandwidth to various internet service providers on May 2, causing internet speeds to slow down significantly for several hours. The NTA had deprived ISPs of foreign exchange facilities due to disputes over the rural telecommunication fund and royalty amounts. Although Airtel resumed bandwidth supply following government intervention, the Supreme Court recently ruled in favor of the NTA.

There is also an ongoing dispute between the NTA and two telecommunication service providers regarding frequency fees. In 2019, 2100 bandwidths were auctioned for 3G services, and the frequency price was determined through bidding. Previously, service providers were allowed to use the frequency for a minimum charge, which was Rs 240 million. The dispute arose when the NTA demanded that providers pay fees for the previously used time at the newly determined auction price. Ncell has contested this in court, filing a writ in the Supreme Court.

Pradeep Paudyal, deputy spokesperson and deputy director of the NTA, stated that the original license agreement required payment of fees based on price determined in the future. However, Ncell sources argue that there was no such condition and that the NTA’s fee demand is unfair. The NTA claims the two telecommunication providers owes it about Rs 2 billion.

Paudyal asserted that the NTA aims to provide quality services and that service providers must fulfill their obligations to the government. He indicated that services could be reinstated once obligations are met and warned that continuous delay in payments would result in additional fees as per government law.

The service providers contend that while the case is pending in court, the NTA should not deprive them of foreign exchange facility. Paudyal noted that since the court has not issued an interim order against fee collection, the NTA is justified in its actions.

Despite both Ncell and Nepal Telecom being deprived of foreign exchange facilities, Nepal Telecom claims it has not faced any issues with foreign payments. Acting Managing Director of Nepal Telecom, Sangeeta Pahadi (Aryal), stated that Nepal Telecom has fulfilled its payment obligations for services from foreign companies and has also paid the required fees to the NTA.


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