Concerns and Controversies Surrounding Axiata’s Exit from Ncell Spark Calls for Investigation

The reason behind the decision of Axiata Group, the parent company of Ncell, to exit Nepal.

KATHMANDU: The contentious departure of Axiata from Ncell has raised alarms among analysts and political figures, with fears that it could have severe repercussions on the country’s future foreign direct investment. The controversial deal has prompted demands from the Rastriya Swatantra Party (RSP) for a thorough investigation.

Sumana Shrestha, an RSP lawmaker, filed an appeal with the parliamentary Education, Health, and Technology Committee, asserting that the suspicious agreement might allow Axiata and Ncell to circumvent capital gains tax, potentially reducing it from 25 percent to five percent over the next six years.

Shrestha emphasized the potential damage to the country’s international reputation, expressing concerns that such deals could discourage foreign direct investment. The recent exit announcement by Axiata Group, which acquired 80 percent of Ncell’s shares in 2016, has sparked further controversy.

Axiata initially purchased the shares from Reynolds Holding for Rs 143 billion but is now selling its stakes for a significantly lower value of Rs 6.65 billion.

Adding to the skepticism, Ncell’s operating license is set to expire in August-end 2029, triggering automatic ownership transfer to the government according to legal provisions.

Shekhar Koirala, a senior leader of the Nepali Congress, has pointed fingers at an alleged alliance between politicians, bureaucrats, and businesspersons, characterizing it as a well-planned plot to exploit loopholes and gain undue benefits outside of governmental oversight.

The Public Accounts Committee (PAC) of the House of Representatives has raised concerns about potential tax evasion in the sale of Ncell shares and has written to relevant authorities, including the Nepal Telecommunication Authority, the Company Registrar’s Office, and the Inland Revenue Department.

The PAC is scheduled to convene a meeting to delve into the impact of the Ncell shares sale on service delivery, revenue, income tax, and potential violations of laws during the transfer of rights.

Protests have also erupted, with the All Nepal National Free Students Union (ANNFSU) staging a demonstration claiming manipulation in the purchase and sale of Ncell’s shares.

The protestors wielded placards with slogans such as ‘No Tax, No SIM,’ ‘Reject Ncell,’ and ‘Tax cheating is a crime.’ Meanwhile, Ncell has responded to the Nepal Telecommunications Authority (NTA) regarding the transfer of its shares. The NTA has initiated an assessment of Ncell’s reply.

On a political front, Prime Minister Pushpa Kamal Dahal engaged in discussions with leaders of ruling parties, including Nepali Congress President Sher Bahadur Deuba and CPN Socialist Chairman Madhav Kumar Nepal.

The aim is to establish a common opinion on addressing concerns surrounding the non-transparent sale of Ncell shares by Axiata Group, characterizing it as a potential significant financial scandal for the telecom company.

Fiscal Nepal |
Wednesday December 6, 2023, 12:20:14 PM |

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