NTA proposes renewal fee waiver, tax exemptions to encourage merger
KATHMANDU, April 25: In a bid to consolidate growing number of telecommunication service providers, Nepal Telecommunications Authority (NTA) is mulling over introducing a slew of incentives to encourage operators for merger and acquisitions.
The telecom sector regulator recently conducted a study to draft Merger and Acquisition Bylaws. It has distributed outcomes of the study in the form of consultation to operators and stakeholders, seeking their suggestions and feedbacks.
To encourage operators for mergers and acquisitions, NTA has proposed waiving off license renewal fee of the operator having low renewal fee while undergoing merger. The merged entity will have to renew one of the operating licenses of the merged entities, whichever expires earlier.
It is also mulling over giving six months time to the operators for returning extra frequency if their total frequency is more than the ceiling determined by Radio Frequency Policy Determination Committee.
“We have sent the consultation paper to all the licensees. We expect to get feedback from them within a month of time,” Kailash Prasad Neupane, spokesperson of NTA, said. He further said stakeholders could also contribute to the paper.
The regulator is also positive about announcing tax exemption to operators to compensate for damage of property while undergoing merger. The consultation paper also states that NTA would recommend the government for tax exemption in the case of merger, wherever possible.
Neupane said that any licensee of the NTA could go for merger provided that their market share is less than 40 percent. This means; top two telecommunication service providers -- Nepal Telecom (NT) and Ncell - are ineligible for mergers and acquisitions.
If shareholding of a foreign company becomes more than 80 percent after the merger, the company will be given one year to reduce its stake, said the consultation paper.
The existing Telecommunications Act allows foreign firms to hold up to 80 percent stake.
Only the firms licensed at least four years ago will be eligible for the merger. However, firms will have to clear outstanding royalty to the government before entering into a merger.
The regulator has sought opinions from the operators on what sort of amendment to existing regulation or incentives would be required to encourage them for merger.
Operators, however, said the draft should have focused more on frequency issue as it was the major issue for merger. "Our main demand is allocation of spectrum as per our need which has not been properly addressed in the proposal," a senior official of one of the rural telecom service providers said.