Nepal’s telecom sector faces imminent collapse, Ncell CEO warns of dire financial crisis

KATHMANDU: Nepal’s telecom industry is teetering on the edge of collapse, with private operator Ncell warning that both itself and state-owned Nepal Telecom are at risk due to eight years of continuously declining revenues. In a stark address to journalists in Kathmandu, Ncell’s CEO and Managing Director, Jabbor Kayumov, painted a grim picture, stating that both companies are “in the same boat” and could sink without urgent government intervention, particularly in the form of tax relief.

Kayumov outlined the challenges facing the telecom sector while offering a potential blueprint for rolling out 5G in Nepal. Despite his subdued demeanor, which hinted at underlying frustrations, he emphasized the urgency of keeping pace with global technological advancements. “In three to four years, I may or may not be with Ncell or in Nepal, but Nepal must not lag in 5G. Nepal was among the first in South Asia to commercially launch 3G, but we fell behind in 4G. Now, we are significantly behind in 5G, which is a matter of shame,” he said.

The telecom industry, known for its capital-intensive nature, has seen both Ncell and Nepal Telecom struggle to grow their businesses for seven consecutive years. This stagnation has led to hesitation in investing in new technologies and quality improvements. “Investing requires immense courage, but failing to do so risks falling behind in technological advancements,” Kayumov noted. He warned that without government action to address declining revenues, the entire sector could collapse. “Whether 5G comes or not, if the current situation doesn’t improve, Nepal’s telecom sector will fail,” he stated.

The financial outlook is bleak. Eight years ago, Nepal Telecom and Ncell collectively generated NPR 97 billion in revenue, which plummeted to NPR 73 billion last year. If this downward trend continues, Kayumov projects the total turnover could shrink to NPR 56 billion. He further cautioned that within three years, both operators risk negative net profits. “I’ve been monitoring the financial reports of both Ncell and Nepal Telecom. Both companies are in the same boat,” he said, underscoring the shared vulnerability of the two major players.

The prospect of rolling out 5G adds another layer of complexity. Kayumov estimated that each operator would need to invest NPR 46 billion, with a cash flow requirement of NPR 64.5 billion. For Kathmandu and Lalitpur metropolitan areas alone, the rollout would cost NPR 15.5 billion, including NPR 8 billion for equipment and infrastructure per operator. Over five years, spectrum and maintenance costs are projected to reach NPR 7.5 billion, with total spectrum and maintenance expenses estimated at NPR 18.5 billion. “Adopting 5G is not just an upgrade—it’s essential to stay relevant, connected, and future-ready,” Kayumov emphasized.

However, the current business climate makes such investments daunting. “In the current business environment, no operator can generate the expected cash flow from 5G. Even with a subscription model, it would take seven to eight years to achieve the desired cash flow. This isn’t a straightforward or investment-friendly scenario,” Kayumov said.

He urged the government to implement critical reforms, including providing free spectrum, reducing customs duties, and lowering taxes on the telecom sector. “Telecom is treated as a luxury item in Nepal, not a lifeline,” he lamented.
Kayumov also highlighted the need for industry-wide changes to make 5G viable. “Without industry-level interventions and key policy changes, 5G rollout is not possible for Ncell and not sustainable for the industry,” he stated. Specific measures include adopting an industry-wide subscription-based model linked to pack purchases, rationalizing taxes and fees, and providing clarity on Ncell’s license to operate beyond 2029.

Despite the challenges, Kayumov pointed to a growing market readiness for 5G, driven by increasing adoption of 5G-enabled smartphones. In 2024, 16% of Nepal’s population owned 5G handsets, a figure projected to rise to 59% by 2030. Average monthly data consumption, currently at 6 GB, is expected to reach 21 GB by 2030. To prepare for this shift, Ncell plans to phase out 3G services starting this year and 2G services by 2027, recognizing that 2G, 3G, and 4G will soon become obsolete. “Approximately 12% of Ncell’s network sites currently operate on 3G. 5G expansion will be faster than 4G’s rollout,” Kayumov noted.

Globally, the 5G landscape is far ahead. Over 600 operators in 183 countries are investing in 5G through tests, pilots, license acquisitions, and deployments. Of these, 343 operators in 126 countries have already launched commercial 5G services, underscoring the technology’s critical role in shaping connectivity and enabling advancements across sectors. Nepal’s lag in 5G adoption, Kayumov argued, risks further isolating the country in the global digital race.

The challenges are compounded by regulatory and financial hurdles. Kayumov’s call for government support echoes broader industry concerns about the sustainability of Nepal’s telecom sector. Without prompt action to address declining revenues and create a conducive environment for investment, the sector faces an uncertain future. The government’s response to these warnings will be pivotal in determining whether Nepal can catch up in the 5G era or risk further decline in its telecom industry.