Foreign Direct Investment (FDI) in Nepal’s Telecommunications Sectors

Telecommunications is one of Nepal’s most profitable and rapidly growing foreign investment industries. The Nepal Telecommunication Authority’s liberalization policy is to blame. In Nepal, there are currently six mobile service providers and over 40 domestic and foreign internet service providers.

The telecom sector attracts more FDI as a result of increased private sector participation in total telephone connections. Foreign telecom players, such as Ncell, have been present in Nepal for nearly a decade. NTC has had a monopoly on telecommunications and internet services for over a decade.

It was the only industry that had served Nepalese customers for decades. Spice Nepal Private Ltd., Nepal’s first private mobile operator, broke NTC’s monopoly in 2004. In September 2005, the company launched its services under the “Mero Mobile” brand. Malaysian telecommunications behemoth Axiata and Swedish telecommunications behemoth Telia.

Foreign direct investment (FDI) in the telecom sector was permitted at a rate ranging from 80% to 100%, subject to the requirement that companies bringing in FDI obtain the necessary licenses from the Nepal Telecommunications Authority (NTA).

Foreign investments are classified as either foreign portfolio investments or direct investments. Foreign portfolio investment, also known as indirect investment, is nothing more than a financial transaction.

Licensing Procedure

1. Public Notice

According to Article 22 of the Telecom Act of 1996, in order to grant a license or provide services, the concerned stakeholder must publish a public notice in accordance with the law. When the public notice is published in a national newspaper, it should include the number of permissions to be granted, the services for which the permissions are to be granted, and the types of telecommunications. It should also include the timeframe for the application period.

2. Safeguard foreign investors

The Nepal Telecommunications Authority (NTA) does not permit foreign investment based on the investor’s needs. Once a telecommunications company grants permission to invest in telecommunications services, the permission is valid for five years and does not allow the company to start new services for the same purposes. It safeguards the investors’ investments.

3. Invest at any time

After obtaining permission and a recommendation letter, the government of Nepal can submit an application in accordance with the law to begin telecommunications services. The Nepal Telecommunications Authority (NTA) (NTA).

4. Choose an option from the Application

Companies that responded after the public notice was issued are participants, and the company that is able to pay the amount and the individuals are to be informed of the permission letter fees, renewal fees, and royalties, and the highest bidder is granted permission to operate the services.

5. Duration of the license

License period – The Nepal Telecommunications Authority (NTA) grants a permission letter for a period of 25 years to anyone who meets the application requirements.

6. Create a Company

First, permission from the Nepal Investment Board and the Nepal Telecommunications Authority (NTA) must be obtained, and the company must be registered with the Office of Company Registar, with a 20% investment from a Nepali investor and an 80% share subscription from a foreign investor.

7. Send a proposal to Nepal Telecommunications Authority (NTA)

Anyone interested in providing telecommunications services in Nepal should submit a proposal to the National Telecommunications Authority (NTA). The application form should be accompanied by a proposal that includes the following details.

1. Aspects of finance
2. Capital Estimated
3. Investment Proposal
4. Investment Source
5. Operating Cost
6. Estimated Income
7. Budgeted Expenditure
8. Profit/Loss Estimate
9. Marketing Considerations:

Following license acquisition, a detailed timetable detailing the start of infrastructure setup and provision of service to customers is provided.

Report on the financial and technical studies related to the telecom service and work operation plan.

8. Joint Venture

If the service will be operated in collaboration with a foreign organization/company, a copy of the Agreement or Memorandum of Understanding will be submitted to Nepal Telecom Authority.

9. Pay the Fee

Foreign investors interested in investing in Nepal’s mobile services sector must first obtain a license. A minimum of 35,75,000.00, which translates to 35 million 75 lakh, is required to obtain Basic Telephone and Mobile Services, with an annual fee of approximately 5 million payable to the Nepal Telecommunications Authority (NTA). And the payment rises year after year this fee will be determined on January 5, 2013. No new licenses for basic telephone and mobile services will be issued until 2004 A.D.

In Conclusion

Private participation has ensured that consumers receive the best services at reasonable prices. Because of the increased number of telecom companies, competition has improved consumer experience by allowing them to choose between these networks.

The Nepal telecom sector is expanding at a steady pace as more people become connected. Because the subscriber base is growing at a healthy rate, the investment opportunities are vast. As a result, the Indian telecom sector is very appealing and promising to foreign investors.

Corporate Lawyer Nepal has long provided services in the telecommunications industry. It provides telecom services such as agreement drafting, joint venture agreements, and all types of foreign investment legal procedures. Please connect with us if you need such legal assistance, please contact us at +977-9849517735 or by email info@corporatelawyernepal.com.np