Who is responsible for the Smart Telecom saga? Questions raised over NTA’s actions, Bank auction, and Ncell’s alleged involvement

KATHMANDU: The long-running collapse of Smart Telecom has once again come under scrutiny after Nepal Police’s Central Investigation Bureau (CIB) launched an investigation into the auction of the company’s telecommunications equipment by Nepal Investment Mega Bank.

While the investigation focuses on whether the disposal of Smart Telecom’s assets complied with the law, industry insiders argue that the bigger question remains unanswered: Who is actually responsible for the downfall of Nepal’s third-largest mobile operator—the Nepal Telecommunications Authority (NTA), Smart Telecom itself, or Ncell?

The CIB announced on May 13, 2026, that it had begun investigating the auction of Smart Telecom’s telecommunications equipment and materials. However, according to banking officials and telecommunications sources familiar with the matter, the bank’s actions appear to have been carried out under legal provisions governing secured lending and loan recovery.

Nepal Investment Mega Bank has maintained that it exercised its rights under the Bank and Financial Institutions Act, 2017 and the Secured Transactions Act, 2006, both of which empower banks to recover outstanding loans through the sale of pledged collateral. According to the bank, the auction process followed all applicable legal procedures and was intended solely to protect depositors’ money after Smart Telecom defaulted on its financial obligations.

The controversy, however, extends far beyond the bank’s auction.

According to figures published by the Nepal Telecommunications Authority, Smart Telecom still had approximately 2.4 million mobile subscribers before its services were terminated. Nepal Telecom served around 20 million subscribers, while Ncell had approximately 13.5 million, making Smart Telecom Nepal’s third-largest mobile operator despite its financial struggles.

Telecommunications sources argue that the regulator’s decision to disconnect all Smart Telecom services without first notifying customers or arranging an alternative service provider was unprecedented. They claim that millions of subscribers suddenly lost connectivity simply because the operator failed to pay its licence renewal fee on time.

Industry observers say financial distress is not uncommon in the telecommunications business, particularly for smaller operators facing high regulatory costs and fierce market competition. They question whether the regulator should have explored restructuring or transitional measures rather than allowing millions of consumers to lose service overnight.

Adding to the controversy are allegations made by sources familiar with the case that a vested interest group sought to acquire Smart Telecom’s licence and assets by influencing the then Chairman of the Nepal Telecommunications Authority, Bhupendra Bhandari. These allegations have not been independently verified.

The same sources reject claims that Ncell and Smart Telecom jointly conspired to transfer Smart Telecom’s assets. They argue that no documentary evidence has surfaced to support such allegations.

Instead, they contend that if certain shareholders of Ncell were truly politically influential, as has sometimes been alleged, the regulator would not have imposed restrictions that reportedly prevented the company from expanding its operations for several years.

Another issue drawing attention is the manner in which the authority assumed control over Smart Telecom.

According to industry sources, the NTA publicly announced that it had taken over the management of Smart Telecom while the company’s legal ownership structure remained unchanged. Company registration records reportedly continued to list the same shareholders, raising questions over the legal status of the takeover.

The sources further allege that after managing the company for only about a week, the authority announced that it could no longer operate Smart Telecom and declared the company closed, resulting in the immediate suspension of services for all subscribers.

The closure also affected numerous stakeholders beyond mobile customers, including tower landlords, equipment suppliers, recharge card distributors, contractors and financial institutions with longstanding commercial relationships with the company.

Further criticism centres on subsequent amendments to telecommunications regulations.

Sources claim that amendments approved by the Council of Ministers allowed the authority to assume ownership of Smart Telecom’s assets while leaving outstanding liabilities—including bank loans—with the company’s existing shareholders.

Critics argue that the amendment was introduced approximately six months after the authority had already taken control of Smart Telecom, raising concerns over legal certainty and regulatory consistency. They contend that applying new regulatory provisions to actions that had already occurred contradicts widely accepted legal principles.

The bank loan recovery process has become another major point of dispute.

According to sources familiar with the matter, shareholder Sarbesh Joshi eventually authorized Nepal Investment Mega Bank to auction the pledged telecommunications equipment after repeated demands from the lender to recover outstanding loans.

Banking experts note that even without shareholder consent, lenders generally possess statutory authority to dispose of pledged collateral after borrower default, provided legal procedures are followed.

The sources therefore argue that portraying the auction itself as an unlawful conspiracy overlooks the legal framework governing secured lending.

The controversy has also widened to include Ncell.

Sources allege that during the same period the authority imposed severe operational restrictions on Ncell, reportedly preventing the company from making even routine capital purchases. They argue that no telecommunications law contemplates indefinitely restricting a licensed operator from conducting normal commercial activities.

Meanwhile, sources explain that Ncell’s participation in the auction process reflected a commercial opportunity to acquire approximately 600 telecommunications towers and related network infrastructure formerly owned by Smart Telecom rather than evidence of collusion.

The departure of foreign investors has also resurfaced as part of the debate.

Sweden’s TeliaSonera, which entered Nepal nearly two decades ago with an 80 percent stake in Ncell, eventually exited the country, selling its interest to Malaysia’s Axiata Group. Axiata has likewise sought to divest its investment in recent years.

Industry observers argue that the repeated exit of major international telecommunications investors should prompt policymakers to examine whether Nepal’s regulatory environment provides sufficient certainty for long-term investment.

When contacted regarding the Smart Telecom controversy, former NTA Chairman Bhupendra Bhandari declined to comment.

As the CIB investigation continues, the Smart Telecom case has evolved into more than a dispute over an asset auction. It now raises broader questions about telecommunications regulation, consumer protection, regulatory accountability, investment confidence, and the balance between enforcing licence conditions and safeguarding competition in Nepal’s telecommunications sector.