Kathmandu- Eight years ago, Nepal's telecom companies, mainly Nepal Telecom and Ncell, earned Rs 97 billion annually, with profits at 30 percent of their income. These two telecom giants allocated Rs 18 billion yearly for capital expenditure. Today, this scenario has drastically reversed.
Revenue has fallen to Rs 68 billion , and profit margins have dropped to seven per cent. Telecom companies now face the challenge of investing more than their profits just to maintain service quality.
Experts warn the situation will worsen within five years if the government does not implement policy reforms. By then, the sector's income is projected to decline to Rs 56 billion , leading to financial losses. Operators will still need to invest at least six billion rupees annually to sustain operations.
The push to roll out 5G further strains companies struggling to expand 4G coverage. A decade ago, the industry thrived due to high voice-call demand, but the rise of internet-based communication apps like WhatsApp and Viber has drastically reduced voice revenues.
Globally, telecoms have compensated for declining voice calls with increased data consumption. However, Nepal lags in data usage, with an average of just 4 GB per subscriber monthly-one of the lowest in South Asia-compared to Bangladesh (13 GB), Pakistan (9 GB), and India (20 GB).
While global data consumption now averages 20 GB per month, Nepal remains stuck at 2017 levels. Regulatory issues, high fees, and taxes have prevented Nepal’s telecom sector from benefiting from data growth, unlike India, where operators have turned data usage into a revenue driver.
Ncell CEO Jabbor Kayumov has cautioned that Nepal's telecom sector is heading toward a crisis. Speaking at an event in Kathmandu last week, he emphasized that without changes to the current system, this vital industry is certain to face significant challenges.
