KATHMANDU: The telecommunications sector, a vital service categorized by the government as essential, is facing a severe crisis due to the ongoing delays by regulatory bodies in providing foreign currency payment recommendations.
Telecom operators, including Nepal Telecom and Ncell, are at risk of major service disruptions as they are unable to replace aging equipment necessary to maintain service quality. Regulatory delays have now left telecom companies vulnerable, with the possibility of interrupted services at any time. This situation has become more critical following the Nepal Telecommunications Authority’s (NTA) eight-month freeze on foreign currency payments.
The Nepal Telecommunications Authority, responsible for overseeing the sector, has halted all foreign currency transactions required for upgrading and maintaining telecommunications infrastructure. Without this approval, telecom companies cannot pay for essential foreign services like software upgrades, equipment replacement, and consultation services, all of which are key to maintaining uninterrupted telecommunications services.
Risk of Disrupted Telecommunications Services
Telecommunications services in Nepal are at the brink of collapse as telecom companies are unable to procure new equipment or upgrade existing systems. The current state of crisis has been further exacerbated by recent floods and landslides that have damaged critical infrastructure in several areas across the country. Due to the unavailability of foreign currency for the import of repair equipment, many areas face severe service disruptions.
As the telecommunications sector grapples with maintaining service quality, the NTA has cited several reasons for its decision to block foreign currency payments. Among the key factors is an ongoing investigation into WorldLink’s suspicious bandwidth purchase, which has prompted the regulatory body to implement stricter controls. This action has led to a sweeping freeze on the entire telecommunications sector, affecting all companies, despite their compliance with legal procedures.
Telecom Giants Nepal Telecom and Ncell Impacted
Even major players like Nepal Telecom and Ncell have not been spared. Both companies are currently embroiled in legal battles concerning outstanding dues related to the 2100 MHz frequency fee. Nepal Telecom, a state-owned enterprise, has filed a lawsuit against the Nepal Telecommunications Authority, and Ncell has also sought legal recourse, arguing that the freeze is unjustified.
The situation has become so dire that the NTA has frozen recommendations worth an estimated three billion rupees for both Ncell and Nepal Telecom. Without access to foreign currency, these companies are unable to replace essential telecommunications equipment, increasing the risk of nationwide service interruptions.
This blockage of recommendations has persisted for over eight months, leading to major disruptions in procurement processes for even routine items such as bandwidth and software upgrades. The government’s regulatory inaction is threatening to create a long-term crisis in Nepal’s telecommunications sector.
Foreign Direct Investment and Nepal’s Economic Landscape
The inability of the Nepal Telecommunications Authority to resolve this issue is also damaging Nepal’s appeal to foreign direct investment (FDI). The telecommunications industry, a key sector for potential investors, is witnessing increased instability. The delay in resolving the arrears and facilitating payments has tarnished Nepal’s reputation as a favorable destination for FDI.
This regulatory bottleneck could potentially discourage international businesses from investing in Nepal’s growing telecommunications market, further exacerbating the economic challenges faced by the country. The uncertainty surrounding the NTA’s decisions has cast a shadow over the broader business environment in Nepal, raising concerns about the country’s ability to attract and retain foreign investors.
Government Indifference Exacerbating the Crisis
The government’s failure to address this crisis has raised questions about its commitment to ensuring reliable telecommunications services for the public. Despite the sector being declared essential, political leadership has shown little initiative in resolving the ongoing disputes. The Ministry of Communication and Information Technology has not received any recommendations from the NTA regarding the foreign currency payments, and there seems to be little political will to intervene.
Ministry spokesperson Gajendra Thakur expressed frustration over the lack of action, stating that “the problem has become more complex, but the primary responsibility lies with the authority. We are not in a position to intervene.”
Meanwhile, NTA Chairman Bhupendra Bhandari’s personal handling of the issue has only worsened the situation. His decision to freeze all foreign currency transactions, initially prompted by a single company’s misconduct, has now led to a full-blown sector-wide crisis. This rigid stance has resulted in severe delays, even after the Supreme Court dismissed a writ petition challenging the arrears dispute as far back as Baisakh (April).
Calls for Immediate Action
As the situation deteriorates, there are growing calls for the government to step in and provide clarity on the arrears settlement process. Without a clear directive from the government, telecom companies remain in a state of uncertainty, unable to make necessary payments to ensure the continuity of their services.
An official from an internet service provider echoed the frustrations of many within the sector, stating, “We’ve been asking the government to clarify how much and in what way we need to pay. But they are waiting for a full explanation, and we’re not going anywhere. Why are they holding this up?”
Without swift intervention, the telecommunications sector’s ability to provide uninterrupted services could be severely compromised, leading to widespread dissatisfaction among the public and potential economic repercussions.