Ncell's chief has painted a grim picture of Nepal's telecommunication industry, warning that without urgent government policy reform, both private and state-owned operators face financial ruin, jeopardizing the nation's digital future, including the rollout of 5G.
Kathmandu – In a stark and sobering press conference on Thursday, Jabbor Kayumov, the CEO and Managing Director of private telecom operator Ncell, delivered a grave warning: Nepal's entire telecommunications sector, including state-owned giant Nepal Telecom (NTC), is on a trajectory toward collapse.
"We are in the same boat, and it's sinking," Kayumov metaphorically stated, highlighting that an eight-year continuous decline in industry revenue threatens the viability of both major players.
The briefing, titled "The Economics of 5G," was intended to outline a path for next-generation mobile technology. However, Kayumov's somber demeanor quickly shifted the focus to the fundamental economic crisis plaguing the industry. He argued that unless the government intervenes with critical measures like tax relief, the colossal investment required for 5G is not just difficult, but financially impossible.
A Sector in Crisis: The Alarming Financials
At the heart of the issue is a sustained revenue downturn. Kayumov presented data showing that the combined annual revenue of Ncell and Nepal Telecom plummeted from NPR 97 billion eight years ago to NPR 73 billion last year. Projections indicate a further slide to NPR 56 billion if the current trend continues.
This financial squeeze, he warned, is pushing both companies toward negative net profits within the next three years.
"Whether 5G arrives or not, if the current situation doesn't improve, Nepal's telecom sector will fail," Kayumov declared, emphasizing that his analysis included the financial reports of his competitor, Nepal Telecom.
The CEO outlined the staggering costs of a 5G rollout:
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Nationwide Investment: Approximately NPR 46 billion per operator.
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Kathmandu Valley Only: An initial NPR 15.5 billion is required just for the Kathmandu and Lalitpur metropolitan areas.
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Operational Costs: Spectrum and maintenance fees are estimated to reach around NPR 18.5 billion over five years.
"With the current state of business, no operator can generate the expected cash flow from 5G," Kayumov explained. "Even with a subscription model, it would take 7 to 8 years to see a return, which is not an investor-friendly scenario."
The 5G Conundrum: Ready Market, Unready Operators
Despite the dire financial outlook, Kayumov presented data showing that Nepal is technically and demographically ready for 5G.
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5G Handset Penetration: Expected to grow from 16% in 2024 to 59% by 2030.
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Data Consumption: Projected to rise from an average of 6 GB per month in 2024 to 21 GB by 2030.
This creates a paradox: the market demands better technology, but the operators are financially crippled and unable to invest.
Kayumov expressed a sense of national urgency, tinged with regret. "Whether I am with Ncell or in Nepal in the next 3-4 years is uncertain, but Nepal must not fall behind on 5G," he said. "Nepal was a fast mover in South Asia with the commercial launch of 3G. We fell behind in 4G, and now we are significantly behind in 5G. This is a matter of shame."
Globally, 343 telecom operators across 126 countries have already commercially launched 5G services.
A Call for Government Intervention
To salvage the industry and enable the 5G transition, Kayumov laid out a clear "blueprint" of requests for the government:
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Free Spectrum Allocation: To remove a major upfront cost barrier.
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Customs Duty Waivers: On the import of telecom equipment.
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Tax Reduction: A fundamental reassessment of the heavy taxes levied on the sector.
"In Nepal, telecommunications is taxed like a luxury item, not the lifeline that it is," he argued.
Ncell’s Strategic Shift
In preparation for a potential 5G future, Ncell is already reallocating its resources. Kayumov announced that the company plans to phase out its 3G services this year and its 2G services within the next two years. This move aims to free up spectrum and infrastructure to focus exclusively on 4G and the eventual rollout of 5G, which he believes will have a faster adoption rate than 4G.
The press conference serves as a critical alarm bell for policymakers. The future of Nepal's digital economy now hinges on whether the government will heed the industry's call for a new, sustainable regulatory framework or watch as its two primary telecom operators head toward insolvency.
