NTA to allow merger of telecommunication service providers

KATHMANDU: Nepal Telecommunication Authority (NTA) has passed the draft regulations, paving the way for the merger of any telecom companies to each other. After passed the draft regulation, now telecommunication and mobile service provider companies will be able to merge with each other.

The NTA board meeting held September 23, passed the regulation, 2079 regarding merger and acquisition of telecommunication service providers. Along with this, internet service providers and telecom service providers licensed by the authority will be allowed to merge with each other.

The government is about to bring this regulation with the aim of organizing the unorganized telecommunication sector and increasing the scope of business.

Starting from the past few years, after various stages of discussions and consultations, the authority has prepared regulations and passed them from the board. The regulations passed by the regulator have been sent to the Ministry of Communication and Information Technology.

The Ministry will take it to the Council of Ministers for final approval after necessary discussions and amendments.

It will take legal form only after it is passed by the Council of Ministers. In the regulations, it is mentioned that two or more persons who have obtained permits can merge or obtain them after completing the necessary procedures if they wish.

However, for that, there is a provision that the business should have been in business for three years and should not occupy more than 40 percent of the market share.

It is mentioned that the merger of any service provider will not be allowed even if there is a situation where an unhealthy environment is created in the telecommunication sector or monopolies and controlled business practices are maintained. In addition, no company can be merged or acquired even in the case of unpaid dues.

For mergers and acquisitions, the service provider has to apply to the authority along with the action plan. Based on the action plan and other provisions, it has been arranged that the process of merger and acquisition will proceed only after the authority has given theoretical consent after conducting necessary studies.

For that, a detailed analysis of the license period, its conditions, number of customers to be maintained after the merger, frequency, annual gross income, status of payment of radio frequency fee, liability and risk, market price etc.

Also, the structure of the board of directors after the merger and acquisition, the capital structure after the merger, details of employees, share exchange, the proposed action plan with the date of commencement of joint business after the merger, payment basis and action plan including renewal fee, royalty, frequency fee, rural telecommunication development fund fee, etc.

After submitting the application to the authority together with the necessary documents, the authority will conduct necessary studies and grant approval.

Provisions have also been made in the regulations for frequency and numbering management in the case of merger. It is said in the provision, “After merging two or more licensees, the merged organization will receive the radio frequency obtained in the past in any frequency band not exceeding the maximum limit set by the policy.”

This means that in case of merger of two organizations, the service provider will get the maximum frequency specified by the frequency policy by combining all the frequencies of both organizations. If the frequency is higher, the government will return it.

In the same way, after merging the persons who received the numbering permit, the merging organization will receive the number obtained by the former.

In addition to this, the regulation also provides for renewal. After the merger, among the service providers that will be merged, the renewal fee payable by the organization that is higher will be the renewal fee. In this way, the regulations also provide discounts and many other concessions to service providers.