April 29: The government has decided to take control of the assets of the private sector telecommunication company Ncell after five years.

Section 33 of the Telecommunication Act 2053 allows the government to take control of the land, buildings, devices, equipment and structures related to telecommunication services after the expiry of the 25-year license period of a telecommunication company with more than 50 percent foreign investment.

If the same company wishes to renew the license, it can do so by paying the full price fixed after evaluating the company’s property.

After realizing that the ownership of the assets of Ncell would be transferred to the government, Malaysia-based Axiata which owned majority of shares of Ncell, announced on December 1, 2023 to sell the shares of Reynolds Holding Company, which owns 80 percent of the shares in Ncell, to Spectralite UK Limited. Axiata owns 100% of the shares in Reynolds Holding, which is registered in St. Kitts.

Spectralite UK Limited is owned by Satishlal Acharya, a Singspore-based businessman of Nepali origin. This is a company registered in Britain in September 2023. Acharya's wife, Bhavna Singh, owns 20% of Ncell shares under Sunivera Capital Venture.

Axiata’s decision to sell its stakes in Ncell was criticized by the Nepal Telecommunication Authority, the regulatory body of telecommunication sector of Nepal, stating that the agreement was reached without the consent of the NTA.

The government constituted a high-level inquiry committee led by former Auditor General Tankmani Sharma. After studying the committee's suggestions, the government decided not to implement the agreement between Axiata and Spectralight UK Limited. The Council of Ministers took this decision on February 18 but the decision was made public only on last Friday.

Ncell's GSM Cellular Mobile Service License issued on September 1, 2004, is about to expire at the end of August  2024. The company will have to renew its license for the third and final time for the next five years, i.e., by 2029. The government has decided to renew the license only on the condition that the company comes under government ownership after August 31, 2029. The government will decide whether the renewal will be conditional for a period of five years. Additionally, the government will further study the recent change of ownership of Ncell, which is in the process of license renewal.

To ensure the continuity of the services operated by the company, the government has decided to renew the license on the condition that the licensee has confirmed technical, financial, and administrative capacity and comes under government ownership after 25 years.

As per the cabinet decision, the government has decided to take regulatory action against buying and selling shares without prior approval.

Axiata Berhad had referred a tax-related dispute to the International Center for Settlement of Investment Disputes (ICSID), which decided in favor of the government last June. The Council of Ministers refuted Axiata Berhad's allegations of imposing unfair tax in Nepal as baseless.

Given that the company's tax audit is pending from the financial year 2076/77, the government has decided to immediately conduct the tax audit and determine the tax liability. The government will assess whether tax liability, including capital gains tax or institutional income tax, is created under the Income Tax Act, 2058, and assess and collect such liability.