NCELL TELECOM ISSUE: Hurting FDI

With the recent statements reaction of political leaders and parliamentary committee on Ncell share has badly rocked the foreign investor coming to Nepal

Dec. 17, 2023, 11:59 a.m. Published in Magazine Issue: VOL. 17, No. 09, December.15,2023 (Mangishr,29. 2080) Publisher and Editor: Keshab Prasad Poudel Online Register Number: DOI 584/074-75

Amidst criticism from political leaders, parliamentary committees, and some civil society groups regarding the Ncell share issue, Finance Minister Dr. Prakash Sharan Mahat has called for foreign investment in Nepal. It is important to note that Dr. Mahat has also expressed concern about Ncell's reported deal.

During a discussion with development partners at the Finance Ministry about the upcoming 3rd Investment Summit on April 21st and 22nd in Kathmandu, Finance Minister Mahat identified hydropower, tourism, information technology, and agriculture as the most promising sectors for investment in the country.

He also noted that Nepal offers opportunities for investment in small and medium-sized enterprises.

The country has significant potential for investment. The government has been working to remove obstacles in the investment sector.

However, senior advocate and corporate lawyer Gandhi Pandit expressed disappointment in a recent interview due to the reactions to the Ncell deal. Foreign investors may be discouraged from investing in Nepal after reading the statements and reactions of political leaders, parliamentarians, and intellectuals regarding the Ncell deal.

It is important to clarify our position on foreign direct investment. Senior advocate Pandit, the only lawyer openly defending the rights of foreign investors, stated, 'It is unfortunate that we welcome foreign investment but oppose disinvestment.'

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Following the deal between Ncell and foreign company Axiata, there has been a blame game among politicians regarding their involvement and kickbacks in the deal. Senior advocate Gandhi emphasized the importance of reading the law and regulations before making any scandalous or politicized statements about the deal. If the deal is fair and lawful, there is no reason to create unnecessary commotion.

In response to the scandal and controversy, Ncell has released a public statement clarifying its position. In a press release, Ncell announced that it is now a 100% Nepali-owned company and that its focus is on creating value for Nepali consumers and contributing to the government's Digital Nepal vision.

Here are some key facts that need to be communicated to shed light on recent developments in Ncell's shareholding:

Satish Lal Acharya, a shareholder of Spectrlite UK and of Nepali origin, stated that Axiata conducted a competitive process to sell its shares in Reynolds Holdings, a company based in St. Kitts. Spectrlite emerged as the winner among several bidders, and the pricing and structure of the transaction were determined through a willing buyer and seller basis. Based on the agreed deal structure, Axiata will receive a base payment and additional benefits in the form of profit-sharing for the next five years, until 2029. The transaction places the enterprise value of Ncell at approximately $400 million USD, to be realized gradually over time contingent upon the company’s performance. This deal represents a significant step towards greater Nepali-origin ownership and management of Ncell..

Axiata provided transparent details of the transaction in their press releases.

The Tax Office has verified that Ncell has fulfilled its tax obligations to date. Any taxes applicable to this deal will be handled in strict accordance with the laws of Nepal. Ncell is committed to upholding tax compliance throughout this process, reassuring stakeholders of its responsible financial practices.

Ncell is currently in discussions with the Nepal Telecommunications Authority (NTA) to secure the necessary consents.

Despite ongoing changes, customers can be assured that the quality of services provided will not be affected. The company is fully committed to delivering high-quality services to all of its customers.

In conclusion, Ncell is committed and capable of diversifying its digital services, enriching the lives of millions of Nepalis. The continuous expansion of network infrastructure, beyond mobile connectivity, presents significant opportunities for the country. Ncell is not only adapting to change but also actively contributing to the digital evolution of Nepal.

During a recent meeting with Nepal's development partners, Finance Minister Dr. Mahat made several promises. Parliament is expected to pass a bill related to Anti-Money Laundering soon. Before the investment summit, we will finalize Nepal's Sovereign Credit Rating. Our objective is to address all issues and challenges.

Nevertheless, recent political scandals have harmed Nepal's reputation as a secure location for foreign investment.

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