Kathmandu – Nepal's telecommunications service providers have warned the government of an impending major crisis. While Nepal Telecom, being government-owned, has not openly expressed concerns, private sector company Ncell has raised alarms with the government and stakeholders.
Officials from Nepal Telecom have stated that the possibility of further development and investment is declining due to the challenges of maintaining existing infrastructure and business operations.
The rise of new technological ecosystems has contributed to a decline in legacy telecom business, even as the need for investment has increased. This issue is not unique to Nepal Telecom—telecom companies worldwide face similar pressures.
According to the latest GSM report, global mobile connections recently grew by 4.7 percent year-on-year, reaching 7.7 billion. However, while connections increased, revenue only grew by 2.18 percent, with revenue per subscriber falling by 2 percent.
Telecom companies globally are under pressure to meet the rising demand for better quality services and infrastructure, which require significant investment, even as their incomes decline. Many are rethinking traditional business models, implementing cost-cutting measures, and preparing for structural changes.
In Nepal, the global telecom crisis has had a more intense impact. Officials note that while business growth in developed countries is often limited, telecom revenues in Nepal are declining despite being a developing nation.
This income contraction has jeopardized Nepal's ambitions for 5G rollout. Two primary factors contribute to Nepal's telecom crisis compared to global and regional markets:
Licensing System: In Nepal, legacy telecom companies operate only wireless services, while wired internet services require separate licenses and are handled by different companies. This has fragmented the market, limiting telecom companies’ business opportunities.
Data Consumption: In countries like India, increasing data consumption has offset the decline in voice call revenues, driving continuous income growth. However, Nepal’s telecom companies have not seen similar growth in data usage.
Nepal's data consumption remains at just 4 GB per subscriber per month, one of the lowest in South Asia. In comparison, Bangladesh averages 13 GB, Pakistan 9 GB, and India 20 GB. The global average is now 20 GB per month, highlighting Nepal’s lag.
While internet service providers in Nepal dominate the wired data market, telecom companies have struggled to capitalize on mobile data. The lack of data consumption growth has prevented telecoms from compensating for the decline in voice call revenues.
The ecosystem necessary to boost data demand, such as streaming services, is underdeveloped in Nepal. For instance, in India, platforms like Netflix and Amazon Prime have driven data consumption. However, in Nepal, low income levels and inadequate digital infrastructure hinder such growth.
Jabbor Kayumov, managing director and CEO of Ncell, recently warned that Nepal’s telecom sector is on the brink of crisis. He emphasized that without systemic reform, the telecommunications industry, a strategic sector, will continue to decline.
An official from Nepal Telecom seeking anonymity highlighted that without overall economic reforms to raise income levels, digital demand will not grow. Increased income levels could spur demand for digital consumption in education, healthcare, and entertainment, but this is yet to materialize in Nepal.
'For Nepal's telecom sector to recover, a conducive regulatory environment, improved infrastructure, and an ecosystem that drives data consumption are critical. Without these changes, the crisis in Nepal's telecommunications industry will deepen further.'
