Nepal’s telecom sector in crisis, experts and stakeholders demand urgent reforms

KATHMANDU: Nepal’s telecommunications industry is sliding toward a critical tipping point, with stakeholders warning of a revenue collapse and calling for swift government action to avert disaster. At the ‘Revitalizing the Telecom Industry’ event hosted by the Society of Economic Journalists-Nepal (SEJON) on Wednesday in Kathmandu, experts, operators, and policymakers painted a grim picture of a sector battered by declining profits and inadequate regulation, urging reforms to safeguard its role in Nepal’s digital future.

Telecom expert Manohar Kumar Bhattarai, presenting a working paper, underscored the sector’s fading economic clout. “Its contribution has dropped from 3.6% to 1.8% in recent years,” he said, citing data that reflects a shrinking footprint despite heavy investments in 4G infrastructure. With 90% of Nepal’s population under 4G coverage, only two in ten users regularly tap mobile data—a stark lag behind neighboring countries. Bhattarai pointed to a vicious cycle: operators pour funds into networks to stay afloat, but returns dwindle, leaving them cash-strapped. “They need NPR 6 billion annually just to keep services running,” he warned, noting that persistent revenue drops signal an unsustainable path.

Ncell’s CEO and Managing Director Jabbor Kayumov amplified the alarm, declaring the sector “on the edge of a major crisis.” Nepal’s global telecom ranking has slipped from 117th to 119th on the GSMA index in two years, a slide he blamed on an investment-hostile environment. “Foreign capital isn’t coming, and government tax revenue from telecom is falling,” he said, critiquing the Nepal Telecommunications Authority (NTA) for prioritizing revenue collection over operator support. Kayumov revealed Ncell’s plan to shutter 3G by 2025, urging a ban on non-VoLTE phone imports to ease the transition. He also pushed for 5G spectrum auctions—pledging participation if spectrum availability is guaranteed—and a shift to a subscription-based business model to halt the financial bleed.

NTA Chairman Bhupendra Bhandari offered a counterpoint, promising full 4G coverage within a year and rejecting claims of a shrinking sector. “Business is shifting to ISPs, not collapsing,” he argued, though he admitted service quality has dipped—a pain point for consumers. With new investments scarce, Bhandari called for growth-focused strategies and dismissed 5G’s high-cost narrative, eyeing rollout in eight major cities. “We’ll approve operator applications in a week,” he said, addressing Wi-Fi mobility’s revenue drain and the 48% tax burden on telecom firms, which he deemed excessive.

Minister for Communication and Information Technology Prithivi Subba Gurung, the event’s keynote speaker, acknowledged the sector’s disarray but framed it as fixable. “We must organize telecom and pull it through these challenges,” he said, urging operators to rethink their approach with “new styles of work.” He signaled government seriousness on legal reforms, revealing a new telecom bill in the drafting stage to tackle licensing fees, emerging tech, and the NPR 20 billion renewal cost burden. Gurung pressed the NTA to shift from revenue enforcer to facilitator, directing it to shed bias and bolster regulation. “This sector’s network is key to Nepal’s digitization—I’m committed to fixing its problems,” he said, vowing to reverse the tax revenue slide.

The urgency is stark against Nepal’s broader economic backdrop. Nepal Rastra Bank data shows reserves at NPR 2.369 trillion ($17.05 billion USD) and exports up 46.5% to NPR 127.20 billion ($950 million USD), yet domestic demand lags with just 10% import growth. Telecom, a digital linchpin, risks undermining this if it falters. Ministry Secretary Radhika Aryal added weight, noting operators’ worsening finances. “Once we had six providers; now it’s two—that’s a red flag,” she said, calling for unified action across regulators and firms.