Prachanda government's decision to lose at least 30 billion to the state from the telecom license!

Kathmandu. It is seen that the current government's decision to re-issue the GSM cellular mobile service license for Rs 21 crore will cause a loss of at least Rs 30 billion to the state. Even in the case of re-issuance of license in the form of renewal, the state had to bear a huge loss when the council of ministers fixed abnormally cheap fees.

So far, the mobile service providers have been submitting 20 billion license fee (renewal) to the government for five years. But in the name of 're-licensing', the decision of the Cabinet to maintain the license fee for the first five years after the completion of 25 years at only 21 crores has caused a huge loss to the state exchequer.

This cabinet meeting on 27 Baisakh 2080 decided to instruct the authority to re-issue the license for GSM cellular mobile services in the name of Nepal Telecom. Based on the same decision, Telecom has acquired the license of GSM cellular mobile service for the next five years for 21 crores. Santosh Paudel, the spokesperson of the regulatory Nepal Telecommunication Authority, informed that the decision to take the license fee of 21 crores for renewing the license also came from the Council of Ministers. This decision will now apply not only to Nepal Telecom, but also to private sector telecommunication companies as an example.

The strange thing is that the Council of Ministers has made the basis of Section 33 of the Telecommunications Act 2053, Sub-Section 4 while making a decision. And, section 20 has been taken only in the question of giving instructions to implement the decision according to that section.

Section 33 (4) is a subject that can be decided by the regulatory authority itself. Experts and experts in this field have started to consider it as 'abnormal' that administrative decision-making is done by the Council of Ministers and not by the regulator.

The authority had requested the government to take necessary policy decisions regarding the license of Nepal Telecom, whose 25-year period is about to expire, whether to issue a new one or renew it and how much to keep its fee. Correspondingly, the Minister of Communication and Information Technology Rekha Sharma advanced the process of taking this proposal to the Council of Ministers.

“Section 60 should be used as a basis even in cases where telecommunications companies have to renew their licenses after 25 years or issue new licenses and how much the fee will be,” said an expert in the telecommunications sector. Section 20 of the Act mentions the matter of giving instructions to the authority by the government.

“The Government of Nepal may issue necessary instructions to the authority from time to time regarding diversification, expansion and regularization of telecommunication services in accordance with the communication policy of the country and it shall be the duty of the authority to follow such instructions,” said the section. Similarly, Article 60 has provisions related to removing obstacles. According to which, if there is any obstacle in the implementation of the Act, the Government of Nepal can publish a notice in the Nepal Gazette to remove it and issue the necessary order so as not to conflict with the provisions of the Act and such order should be placed before the Parliament.

The suggestion of the regulator and the concession that was not envisaged even by the government's draft bill

The government's decision to fix the license fee of mobile services at 21 crore rupees has not only violated the draft of its own bill but also the suggestions of the regulator and has caused loss to the state exchequer. Not only this, it seems that the government has given concessions that the service providers themselves did not ask for regarding license collection and renewal.

Even though 20 billion rupees is impractical for renewal for five years, service provider companies were positive about paying a certain percentage of their annual income in the form of license fees and renewal fees. In consultation with the service providers, the regulatory Nepal Telecommunication Authority had previously suggested to the Ministry of Communication and Information Technology to maintain the license fee for GSM cellular mobile services and basic telecommunication services at eight percent of the annual income. In accordance with the same, in the bill drafts made by the ministry in 2079 and 2080 to amend the Telecommunications Act 2053, it was proposed that eight percent of the total income should be in the form of license fees.

See the proposed provisions in the Draft Bill to Amend and Consolidate Telecommunications Laws, 2080;

However, the Council of Ministers has set a concessional fee for the service providers, which will hurt the telecommunication companies and cause losses to the government exchequer.

Nepal Telecom for the past 15 years and Ncell for 10 years have been paying license renewal fees at the rate of 20 billion rupees every five years, but for the next five years, Telecom will pay only 21 million rupees. Similarly, the license of Ncell is reaching 25 years in August 2086. Based on the government's recent decision regarding the license of Telecom, even if Ncell's license is renewed or re-issued at that time, 21 crore rupees will be paid for five years. In accordance with the policy of 'level playing field', the decision taken in respect of one company is also applicable in case of another company of similar nature.

Thus, even though a total of 40 billion is coming from Ncell and Nepal Telecom in the form of license renewal fees for five years, the state will get only 42 million rupees instead of that in the future. And 39 billion 58 million rupees coming to the state fund will be lost. Even if the government were to maintain a license fee of eight percent of the annual gross income in practice, the state would receive a revenue of three billion rupees annually from Telecom and Ncell, which are earning around 38 billion rupees. Based on this, it is clear that at least 29 billion 58 million rupees coming from the two companies will be lost in the state treasury in five years.

“In view of the need for mobile service providers to invest heavily in the initial stage of infrastructure construction, a license fee of 21 million rupees was fixed for the first ten years and then 20 billion rupees every five years,” said a former chairman of the authority, who did not want to be named, “but , after completing 25 years, the company has already established network and infrastructure. There is no need to invest as much as when getting a new license. But in this case, maintaining the fee of 21 crores for the initial license is a loss to the state.”

According to him, it can be suspected that the government took such a decision under the pressure of the private service provider company's interests and the telecom employees' union.

Gajendra Kumar Thakur, the spokesperson of the Ministry of Communications, says that the matter of how much the fee will be charged has not been decided by the Council of Ministers and only instructions have been given to the authority to do it according to Section 33 (4). “Right now, the ministry is in the process of amending the law,” he told Tekpana, “that will also address this issue to some extent.”

Last updated: May 2, 2081 17:48


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Rabins Sharma Lamichhane

Rabins Sharma Lamichhane is senior ICT professional who talks about #it, #cloud, #servers, #software, and #innovation. Rabins is also the first initiator of Digital Nepal. Facebook: rabinsxp Instagram: rabinsxp

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