Revenue of Telecom Industry down by a staggering 25 %, Ncell says

KATHMANDU, AUGUST 27: Nepal's telecom industry has suffered a 25% revenue decline over the past five years, as reported by Ncell. The private telecom operator attributes this loss to intense competition from Over-the-Top (OTT) services, reduced International Long Distance (ILD) income, and stagnant growth in data services despite increasing demand.

Once contributing 5% to Nepal’s GDP, the industry now accounts for just 2%, with its market value dropping from NPR 100 billion to below NPR 75 billion, largely due to the ongoing revenue losses.

If these challenges persist, a further revenue drop of NPR 16 billion is projected over the next five years, potentially leading to an NPR 3.7 billion loss for the government. "The swelling revenue losses threaten the financial sustainability of Nepal's two major telecom operators—Ncell and Nepal Telecom," said a source from Ncell, adding that this could also result in poorer network performance, negatively impacting consumer experience."

In contrast, the telecom industries of neighboring countries like Bangladesh and Sri Lanka are growing at an average rate of 40%. Unfortunately, the Nepali telecom sector faces constant revenue declines, inhibiting its growth.

Exorbitant taxes, GSM license renewal fees, and the high cost of maintaining network infrastructure are also major burdens on telecom companies. They are required to pay around 50% of their income to the government in taxes, along with a staggering NPR 20 billion GSM license renewal fee every five years. Additionally, telecom operators must invest two to three times their earnings just to maintain network infrastructure.

The upcoming deployment of 5G technology requires an investment of NPR 60 billion. However, given the current financial challenges facing the telecom companies, securing this amount seems daunting.

To address these issues, the government must devise a strategic plan, according to a Ncell source. "Such a plan could also help achieve the government's goal of exporting IT-related services worth NPR 3 trillion and creating 500,000 direct and 1 million indirect jobs over the next ten years."