Kathmandu, 11 Nov: The Nepal Telecommunications Authority (NTA), the regulatory body, has projected that the businesses of voice service providers are at an increased risk of shutting down due to the rise in internet-based activities. The regulator concludes that this risk has emerged primarily because the income of these service providers is continuously decreasing.
On one hand, rising operating costs due to excessive taxes, and on the other hand, the impact on service prices, have led the regulator to see challenges for the future of voice service providers. The annual report for the last fiscal year 2081/82, recently made public by the Authority, has highlighted the need to employ regulatory tools to reduce the possibility of business closure. The report mentions, ‘Regulatory tools need to be employed to maintain the income level of service providers and increase operating income in the coming days.’
While seeing the very existence of voice service providers in crisis, the Authority has also mentioned the challenge of increasing the revenue generated from such services to ensure the financial security of the service providers. Service providers have been complaining that they are beginning to face difficulties in service operations because the government has imposed an excessive tax burden on this sector.
The telecommunications sector is currently going through a critical phase due to decreasing income on one side and increasing operating costs on the other.
Currently, in Nepal, government-owned Nepal Telecom and privately operated Ncell are providing voice services. The income these companies generate from voice services has been continuously decreasing lately.
13 Billion Lost in Five Years
It appears that the income of voice service providers has decreased by 13 billion rupees annually over the last five years. According to the Authority’s statistics, these service providers had a total income of 81 billion 20 crore rupees in FY 2076/77, which has shrunk by 13 billion rupees to 68 billion 11 crore rupees in FY 2080/81. The details for the last FY have not been included in the report as the time for submitting the final details until Poush is still remaining. Looking at the income trend of service providers over five years, it appears to be in a continuous declining pattern. Service providers, who had an income of 75 billion 71 crore rupees in FY 2077/78, increased it slightly to 77 billion rupees the next year, but immediately after that, in FY 2079/80, income decreased to 72 billion 84 crore rupees.
The aggressive market expansion by internet service providers and the increasing use of Over-The-Top (OTT) services like Messenger, WhatsApp, and Viber for phone calls have reduced the income from voice calls for telecommunications service providers. Voice service providers have reached a state of income contraction, as OTT service providers have siphoned off the highly profitable income from international calls, and they are also under pressure from the burden of a dozen taxes.
Voice service providers have been currently paying over six billion rupees annually to the Nepal Telecommunications Authority under headings like license fee, spectrum charge, Rural Telecommunications Development Fund, and royalty. In addition, service providers have the obligation to pay around two billion rupees annually for frequency charges and a similar amount for renewal fee installments. Similarly, under headings like Value Added Tax, excise duty, customs duty, property tax, telecommunications service charge, and TDS, these service providers have been depositing billions of rupees annually into the government’s revenue account.
According to the latest statistics from the Authority, 413,000 people use voice service through fixed lines, while 29.3 million SIM cards have been sold, which the Authority classifies as mobile voice users. Out of the total mobile voice users, 15.768 million are customers of Nepal Telecom and 13.981 million are customers of Ncell. Similarly, for internet, there are 3.257 million customers, including 292,500 of private service providers and 331,000 of Telecom’s FTTH. Likewise, the Authority’s statistics show that the number of people using the internet via mobile is 25.8 million, among which 834,000 are 3G users and 25.8 million are 4G users.
