Kathmandu - The Government of Nepal has announced plans to launch 5G services in Kathmandu and Pokhara within the upcoming fiscal year, as outlined in its annual budget and policy programme.

Minister for Communications and Information Technology, Prithvi Subba Gurung, stated that 4G services will be expanded to all local levels, while 5G services will begin in Kathmandu and Pokhara.

To support high-speed mobile internet and enhance digital quality, the government plans to introduce policy and other incentives to create a favourable environment for service rollout.

However, despite the announcement, telecom operators are currently not in a financial position to implement 5G. Both of Nepal’s major telecom companies are facing financial challenges. 

Operators have openly stated that under current conditions and regulations, rolling out 5G—which requires investment of several billion rupees—is not viable.

Ncell CEO Jabbor Kayumov acknowledged the government’s 5G announcement as a positive step but emphasised that companies themselves are in financial distress. 

Unlike 4G, 5G is primarily geared toward industrial applications and demands major investments.

For instance, just deploying 5G in Kathmandu Valley alone could require up to Rs 15 billion in additional funding from a single company.

Telecom Company representatives say that such an investment is not only unmanageable with current revenues but also extremely difficult to finance under existing income levels. 

According to the Nepal Telecommunications Authority (NTA), service providers' revenues have declined by more than Rs 20 billion in the past five years.

The rapid rise of OTT (Over-The-Top) platforms has undercut the voice service market, causing persistent revenue losses.

Although discussions have occurred on introducing a revenue-sharing model—requiring OTT platforms to compensate telecom operators—no policy has materialised. 

As a result, OTT platforms continue to freely use telecom infrastructure developed through billions in investments.

This decline in revenue has also affected government tax collection. 

According to the Inland Revenue Department, Nepal Telecom—once honoured as the highest taxpayer—has seen its income tax payments fall by nearly 65 percent over the past six years. It paid Rs 4.87 billion in FY 2075/76, but only Rs 1.7 billion in FY 2080/81. Compared to FY 2076/77, when it paid Rs 6.91 billion, this marks a 75 percent drop.

Nepal Telecom's VAT payments have also fallen by about 25 percent, from Rs 4.6 billion in FY 2075/76 to Rs 3.14 billion in FY 2080/81. 

Over the same period, dividends paid to the government dropped by 13 percent, from Rs 7.54 billion to Rs 6.58 billion.

Ncell has faced similar challenges. 

In FY 2075/76, Ncell contributed Rs 76.67 billion in total revenue (including payments to the federal reserve and NTA). By FY 2080/81, this figure had fallen to just Rs 20.3 billion.

With falling revenue and steady operating costs, Nepal Telecom is no longer generating operating profits. 

Ncell’s situation is similarly strained. In such financial conditions, these companies are in no position to fund large-scale 5G deployments.

Globally, 5G is being used across sectors—from manufacturing and agriculture to healthcare and public safety—thanks to its low-latency wireless capabilities. 

Numerous studies have already demonstrated the technology’s economic benefits. 

While Nepal was once a South Asian leader in launching 3G services, it now finds itself trailing behind in the 5G race.

Experts argue that the first step should be to help telecom companies expand revenue opportunities. 

Many countries offer various incentives, including tax relief and regulatory easing, to encourage investment in 5G. 

Ncell CEO Kayumov recommends several measures: transitioning to a subscription-based model, reducing sector-specific taxes, easing spectrum charges, and clearly defining licence durations for operators.

If implemented, these steps could help make Nepal’s 5G rollout financially sustainable and timely.