Authority Expects Concessions in ISP Merger-Acquisition Law, Similar to Other Sectors
कात्तिक २६, २०८२ १४:१९
Kathmandu: The Nepal Telecommunications Authority (NTA) is preparing to restart the process of drafting a merger and acquisition law for Internet Service Providers (ISPs). The regulator has begun these efforts after intense competition and a price war made it difficult for ISPs to sustain operations.
In 2079 BS, the Authority had submitted its recommendations and draft framework to the Ministry of Communications and Information Technology, stressing the need for a merger and acquisition law for ISPs. However, a complete legal framework has not yet been finalized.
Earlier, in 2076 BS, the Authority had implemented the ‘Nepal Telecommunications Authority (Purchase and Sale of Shares by Licensed Persons) Regulations’, which requires service providers to self-declare that they have no cross-holdings in other service providers. The regulation also mandates approval from the Authority before buying or selling more than five percent of the paid-up capital of any licensed entity. However, it does not include full provisions related to mergers or acquisitions.
The NTA continues to receive complaints about cross-investments among ISPs. During mergers or acquisitions, integration of billing systems between companies also creates technical challenges that can weaken regulatory oversight. According to NTA Chairman Bhupendra Bhandari, such challenges could affect ISPs’ financial stability and reduce their income.
Bhandari acknowledged that delays in enacting the merger and acquisition law have significantly impacted the ISP sector. He said the Authority will now follow up with the ministry to finalize the process. “We sent it to the ministry in 2079. Now, we will follow up regularly and finalize it. Mergers and acquisitions are a policy matter, but we also need to define what concessions service providers will get once it’s implemented. This requires coordination among ministries,” said Bhandari.
Chairman Bhandari and NTA officials have been meeting the Finance Minister and ministry representatives to discuss possible concessions for ISPs that pursue mergers or acquisitions. The Authority has urged the Ministry of Finance to extend the same type of policy concessions given to banks and financial institutions during their merger and acquisition drives.
When banks went through mergers and acquisitions, Nepal Rastra Bank (NRB) provided regulatory relaxations and tax exemptions. Based on that model, the NTA has asked for similar regulatory and financial incentives for ISPs. The NRB had introduced its merger and acquisition regulations for banks and financial institutions in 2073 BS. “Banks that merged were given capital gains tax exemptions for a few years. What does our industry get? Could loans flowing into the ISP and telecom sectors be classified under the priority sector?” Bhandari questioned.
The NTA hopes to move forward with the same legal and concessionary framework for ISPs. Many ISPs that invested heavily in infrastructure are now struggling as smaller providers undercut prices to attract customers.
This competition, driven by promises of high speed and cheap packages, has created instability. Except for a few large ISPs, most are financially fragile and could face collapse at any time.
Although the Authority has repeatedly directed ISPs to expand services only after tariff approval, those instructions are often ignored. Reena Dangol, Director of Nepal Telecom’s FTTH service, said pricing practices in the fiber internet market require serious monitoring. “ISPs often set arbitrary high prices until the telecom network reaches an area. But once the telecom service becomes available, they start offering services at less than half the price to retain customers. This trend needs proper study and regulation,” Dangol said.
Such practices have prevented fair competition and increased the risk of financial instability among ISPs. Recently, the licenses of several ISPs unable to pay dues or renew operations have been revoked. According to NTA data, the number of licensed ISPs (including email service providers) has now fallen to 108, down from more than 150 at one point.
The Authority expects that mergers and acquisitions among ISPs will help reduce the number of companies, lower unhealthy competition, and optimize investments in network expansion.
पछिल्लो अध्यावधिक: कात्तिक २६, २०८२ १४:१९
