Ncell’s Illegitimate Business

Significant revenue loss to the state as a result of the illegitimate expansion of services, telecom remain silent on legal violations

Himalaya Times
Read Time = 4 mins

While the country's big business houses are getting involved in scams and controversies, the telecommunications service provider Ncell has also been drawn into the controversy due to suspicious activities. However, it is not the first time that Ncell has been involved in controversy. Since the issue of tax evasion, this company has been in the limelight regarding violations of national law. It has been exposed that Ncell has been involved in illicit financial activities by swaying the people of the state's higher bodies. Ncell, which once suffered a setback in the tax evasion case, has now been operating beyond the law.

Ncell Axiata Limited (Ncell) is a for-profit company established under the Company Act 2063 as a company limited by foreign investment to carry out work related to telecommunications. Ncell has only obtained permission for GSM cellular mobile operation from the Department of Industry. There is a legal requirement that you obtain separate permission from the department prior to providing any other services. Ncell, however, has been operating without authorization, offering services including GSM Cellular Mobile ISP (Internet Service Provider), NSP (Network Service Provider), and Data Center Services.

Arbitrary extension of services without obtaining the required permission
According to the Foreign Investment and Technology Transfer Act 2075, a company has to pay the fees and revenue and undergo procedures in accordance with the prescribed legal provisions in relation to the work it does or the service it seeks to provide. Additionally, there is a legal provision for a foreign direct investment (FDI) company to further invest its profit in other sectors within Nepal after the approval of the Department of Industry. Ncell, however, has ignored the law and grown its company without getting permission to participate in new ventures.

Assistance of  Nepal Telecom
Nepal Telecom is also in favor of Ncell. The Nepal Telecom Authority issued an Internet Service Provider (ISP) license and a Network Service Provider (NSP) license to Ncell. Nepal Telecom issued ISP License No. FL.A. 1-37 and NSP License No. VI.JA.6-21 in 2062 B.S. and 2073 B.S., respectively.

A specific clause clearly states that Ncell must request authorization from the Department of Industry in order to run the Data Service Center as it operates through FDI. However, Ncell has not acquired the permission.

The restrictive phrase of Section 15(3) of the Foreign Investment and Technology Transfer Act, "provided that the natter requiring license or permission under the prevailing law for the purpose of registration of an industry or company or tax or any other business shall be governed accordingly," and in accordance with the legal provisions in Section 44 of the same Act, 'a foreign investor shall comply with the terms as prescribed, in addition to the terms referred to in this Act,' Nepal Telecom Authority has also violated the legal order by misusing its legal obligations and granting license to Ncell to operate more services than the permission obtained.

Nepal Telecom has issued the license for services for which the company has not acquired permission as per the prevailing law. The Telecommunication Act 2053 precisely mentions the functions, duties, and powers of the telecom authority. Section 3(1) of the Act reads," To provide suggestions to the Government of Nepal on the policy, plan, and program to be adopted by the Government of Nepal for the development of the Telecommunications Service."

Ncell has violated the legal provisions of Sections 15 and 44 of the Foreign Investment and Technology Transfer Act, in which Nepal Telecom plays a supporting role.

Attempt to monopolize the market through unhealthy competition

Nepal Telecom is a publicly traded corporation that was founded and is run with the financial support of Nepalese citizens. On the other side, Ncell was founded and run with foreign direct investment. However, it has profited financially and technologically, posing a threat to Nepal Telecom, a publicly traded corporation, and other businesses and institutions supported financially by Nepali citizens. Due to unhealthy competition, Ncell has played a significant role in the financial and technological losses experienced by domestic companies. It appears that even business owners who obtained licenses in accordance with the law and wished to start up are unable to do so, resulting in revenue loss to the nation.

Ncell is investing in other sectors while disobeying the law and monopolizing the market through unfavorable competition. As a result, other industries' operations progressively failed and descended into chaos.

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