NTA to bar Ncell from launching 4G service

  • Says it’ll abide by the fresh directive issued by the Public Accounts Committee
- Post Report, Kathmandu

May 28, 2017-

The Nepal Telecommunications Authority (NTA), the telecom sector regulator, has said it would abide by the fresh directive issued by the parliamentary Public Accounts Committee (PAC) and bar Ncell from launching the 4G service.

The House panel had recently directed the NTA to prevent Ncell from operating the 4G service until the capital gains tax issue was settled. This directive was issued without holding a meeting with members of the PAC, as most of these lawmakers are in their home districts to prepare for the second phase of local elections scheduled for June 14.

The PAC had decided to issue the directive swiftly after the telecom sector regulator did not abide by its previous instruction to prevent Ncell from expanding 4G network.

The regulator, has, however, said Ncell was allowed to roll out 4G network on the back of green signal extended by the parliamentary Development Committee on April 26.

The Development Committee, which is also overseeing the Ncell’s capital gains tax issue, had previously paved the way for the Ncell to operate 4G service arguing that preventing the telecom service provider from introducing new technology would hit consumers, state coffers and foreign investment environment.

But in a move that overrules the directive issued by the Development Committee, the PAC has barred the country’s second largest telecommunications service provider from upgrading its technology. The PAC has also directed the NTA to submit a report on implementation of the directive issued by the committee within three days.

“I have heard about the PAC decision, but haven’t read it. However, I can assure that the NTA will abide by the directive issued by the house committee,” NTA Chairman Digambar Jha said, adding that the regulatory body was in a fix as it has to abide by directives issued by all the parliamentary committees. “We will have to hold a board meeting and make a decision in line with PACs directive.”

According to PAC Chairman Dor Prasad Upadhyay, the committee had to issue the directive as the explanation furnished by the NTA was “confusing”.

When the PAC asked for an explanation recently, the NTA had said it hadn’t allowed Ncell to use additional frequency to roll out 4G services.

However, in the same document, the NTA had also stated that it had allowed Ncell to operate 4G service from June 1 in its existing frequency of 900 MHz and 1800 MHz as per the technology neutral spectrum provision. The provision of technology neutrality is incorporated in the Frequency Policy 2016, and it allows service providers to launch or implement any technology or service in the frequency band they own.

In the biggest corporate buyout deal in Nepal, Swedish telecom giant TeliaSonera sold its stake in Ncell to Malaysian company Axiata for $1.03 billion in 2015. The government has clearly said that 25 percent of the profit made from the sale of Ncell should be deposited as capital gains tax, but it has not mentioned the amount.

Following pressure from the government, Ncell has so far deposited Rs9.97 billion as 15 percent withholding tax, or tax deductible at source for capital gains. The payment of this tax amount means the seller earned Rs66.46 billion by divesting its shares in the telecom company. This tax amount was calculated by Ncell itself. Meanwhile, the Large Taxpayers’ Office (LTO), which is supposed to clarify the government’s position on Ncell’s capital gains tax, is assessing the issue and is likely to come up with a decision soon.

Published: 28-05-2017 08:14

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