NEPAL TELECOM : Can Leapfrogging be Sustained?

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NEPAL TELECOM : Can Leapfrogging be Sustained?

Talking about the management of NT, obviously the main focus should be to maximise efficiency and productivity by simplifying both formal and informal procedures in the overall operation.


Development experts say the important pillars needed for accelerated socio-economic development of a country are visionary political leadership, good governance, cultural change in the society, infrastructure development, education, environment and aggressive technology acquisition policy. Telecommunication is an important infrastructure for the prosperity of a society and to generate economic wealth for a country. Despite the entry of private telecommunication companies in Nepal, the Nepal Telecom (NT), with more than 90% government stake, is still playing a dominant role in the industry.

Rapid innovations in the entire spectrum of Information and Communication Technology (ICT) have changed the traditional market of ‘voice only service’ upside-down with fixed landline telephones replaced by mobiles in massive scale and voice replaced by data, text messages, images and video. These fast-changing technologies and ever-increasing demand of the 21st century consumers have become a tough challenge for the government owned-entity, especially  NT which is  supposed to follow all laws and rules just like a government department. Despite the request by the NT management over the last two decades for more autonomy, the government has refused to change the status quo. Strangely, NT with 92% government holding is receiving a lot of criticism from all quarters comparing it with privately-owned Ncell. It is a matter of common sense that there is no level playing field in the contest between NT and Ncell. Moreover, being a public sector enterprise, NT has to serve a vast rural population spread over one of the world’s toughest terrains.  

Talking about the management of NT, obviously the main focus should be to maximise efficiency and productivity by simplifying both formal and informal procedures in the overall operation. Like in any big organisation, chain of command is equally important. In the given scenario of a controlled and ‘suffocating’ environment generated from government laws and rules, leading the NT is a daunting task. Hence, leadership matters more in the running of the NT. The smoothness and quality of the NT’s leadership hinges on the leadership capability of the CEO or Managing Director. It is sad that amidst loud and clear protest from unions and management of the NT, the government has recently appointed an outsider as the Managing Director for the first time in the NT’s half-a-century history. The decision makes no sense at all, especially because the NT has stood as the best run government organisation for the past fifty years, and it has always been led by engineers with a minimum of 25 years of experience in the same organisation. NT presently has more than two dozen engineers having more than 20-25 years of work experience who are equally capable to lead the company. Hence, it will be worthwhile to revisit the so-called criteria to select the Managing Director of NT.

The growth of telecommunication service in Nepal is one of the best in South Asia. Mobile penetration (mobile per hundred population) is about 138% and Internet penetration is about 33%. One sector which developed fast after the advent of democracy in the year 1990, is the telecommunication sector. Unlike in many developing countries, the operator with government ownership has managed to capture almost half of the total market. It may be a case for development activists and economists to analyse why other sectors could not perform like the telecom sector. One reason is early corporatisation of the then Nepal Telecommunication Board in the mid-1970s when corporations in most of the developing countries, including India, were still run by government departments. The second reason is financial and technical assistance from the World Bank for 25 years which helped in capacity building of the organisation. It will be worthwhile to mention here that as per the then World Bank officials, Nepal was performing better than many other countries where the World Bank was assisting in telecommunication projects.

Talking about quality, Nepal was almost the first country in Asia, even before Japan, to install digital telephone exchanges. Engineers in the then Nepal Telecommunication Corporation (NTC) were praised by foreign engineers for their technical knowledge and acumen. Few engineers were even hired by reputed telecommunication manufacturing companies to work abroad. Service quality was so good that Indian citizens in border areas used to travel to Nepal for making overseas calls. It was a real success story in infrastructure development of the country, that also in a high-tech field like ICT. It is one unique example of leapfrogging. Sadly, the nation could not leapfrog. Nepal is still among 30 countries with least per capita income.

Now, it is a foregone conclusion that ICT is transforming every aspect of business, human life and society. ICT is enabling people and the entire trade and industry as well as the government to organise in new ways, to build social networks, to educate with online knowledge, to transform news media, to link business activities, to increase productivity, and above all to bring dynamism in the entire governance, and trade and industry. The citizens of Nepal would certainly demand new technology and latest services available in the advanced 21st century world. The strategy of NT, therefore, should be based on two pertinent questions: to what extent is Nepali society advancing or being left behind by worldwide fast progress in the ICT world? And to what extent Nepal is adapting to and taking advantage of available technologies and services?

NT must be able to give a proactive push to introduce the latest technologies and services as fast as possible not only to compete with private operators but also to catch up with the rest of the world. The revolution in ICT was possible due to five waves of technological development- digitisation, mobility, internet, convergence and application technology. The last four waves are the main challenges for telecom operators all over the world. NT must respond to these challenges. And the government must facilitate the NT by keeping it outside the laws and rules of the government departments so that it gets a level playing field to compete with the private players.

In general, it is an accepted fact that competitive markets will promote efficient supply of services, enhance the service quality, result in faster deployment of latest and advanced technologies and bring down prices of services. As the main factor regarding the NT’s capability to compete with the private sector is investment capability, NT should feel comfortable as it is a cash-rich business entity. The three main hindrances for NT to face competition would be to enhance technical knowhow and talent of executives; to have new simplified laws, rules, procedure; and to enhance decision-making capability of the top management. Regarding decision making capability, the inherent problem of taking any risk is rampant in NT like other government departments. The glowing example is the decision to procure a 4G system which took the NT three years, compared to just three weeks for Ncell.

Apart from issues regarding technology, service quality, need for drastic amendment in laws, and rules and procedures, equal emphasis should be given to change the mindset, mentality and instincts of the entire workforce as well as in organisational culture, concept of values and ethical behaviours. The core set of culture, values and norms should be reflected in the strategic guidelines of NT. Although it is the responsibility of the employees to understand and uphold the values, norms, and ethical behaviours, the top management must have a special responsibility to set the tone at the top. Top management is supposed to mould the whole organisation, and not the other way round. As values are mostly determined and guided by unwritten rules, the top management, especially the Managing Director, must take the lead in shaping basic values. The fiasco in the procurement of the 4G system should never be repeated, and political interference should be tactfully managed. The Managing Director’s informal unwritten instructions and occasional motivational speeches to executives and employees should include importance of team spirit, employee’s cooperative attitude towards others, cheerful outlook towards life, pride in the job, treating people with respect, informal interaction over tea about office improvement and consumer complaints, giving importance to informal communication rather than ‘TIPPANY’ wars, and to make sure that all employees genuinely believe that they are directly and indirectly contributing in socio- economic development of their motherland.

As the NT is still a public sector enterprise, earning trust is of more importance than technical, economical, administrative and financial issues. Integrity, conviction and consistency are main requirements for the NT to be effective and to succeed. This boils down to the collective capacity of all staff members to earn the trust of consumers, the regulatory body - Nepal Telecommunication Authority (NTA), the concerned ministries, other related government agencies, and above all the general public at large. Due to the very nature of the organisation, and because the lifestyle of the entire society is influenced one way or the other by the ICT sector, every action of the NT will not only have an impact on the entire society, but also in the highly competitive regime in the ICT sector. Moreover, continuous reform in every aspect of functioning is a must, if the NT wants to maintain leadership in the sector. Continuous reform also means that the NT must be prepared to change to exploit new possibilities and new investments in the ICT market, keeping pace with latest innovations and fast technological development. Of course, accomplishing ‘change’ in a public sector enterprise is not an easy task due to many factors. But there is no alternative to ‘change’, if NT wants to excel in the highly competitive and sophisticated service industry like ICT. The Managing Director of the NT must act as the ‘change agent’, and s/he must be a visionary with excellent leadership capability.

Mr. Kansakar is the former Managing Director of Nepal Telecom

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