Ncell ownership dispute nears end, Supreme court puts NTA in charge

KATHMANDU: The nearly three-year-long Ncell ownership dispute has moved closer to a possible resolution after the Supreme Court of Nepal declined to cancel the 80 percent share transfer involving Ncell and instead directed the Nepal Telecommunications Authority (NTA) to regulate the transaction in accordance with prevailing telecommunications laws.

The Supreme Court’s latest ruling has effectively shifted the long-running Ncell share transfer controversy from the courtroom to the regulatory process, leaving the next major decision to the country’s telecommunications regulator.

The ruling is significant for Ncell because the Supreme Court has neither declared the 80 percent share transaction invalid nor ordered its cancellation. Instead, the court has clarified that the legality and regulatory consequences of the transaction should be addressed by the Nepal Telecommunications Authority through the applicable legal and regulatory framework.

With the Supreme Court’s decision, the Ncell ownership issue is now expected to move forward through a regulatory process rather than an outright judicial cancellation of the share transaction.

Supreme Court Gives NTA Authority to Resolve Ncell Ownership Issue

The Supreme Court’s decision means that the NTA can now exercise its legal powers under the Telecommunications Act, Telecommunications Regulation and relevant share transfer bylaws to determine the appropriate regulatory action concerning Ncell’s ownership transfer.

The regulator may assess the transaction based on applicable laws and regulations and determine whether any additional compliance requirements, approvals, regulatory measures or penalties are necessary.

For Ncell, the ruling provides an important degree of regulatory clarity. The company is not facing an immediate judicial order cancelling the ownership transfer. Instead, the matter will now be addressed through the regulator that has statutory jurisdiction over telecommunications companies and their ownership structures.

The Supreme Court’s interpretation has also reinforced the principle that regulatory matters should, in the first instance, be resolved by the competent regulatory authority under the law.

What Is the Ncell Ownership Dispute?

The dispute centres on the transfer of 80 percent ownership of Ncell from Malaysian telecommunications company Axiata to Spectrlite UK, a company based in the United Kingdom.

The transaction took place on December 1, 2023, when Axiata transferred its majority ownership in Ncell to Spectrlite UK.

The transaction subsequently became the subject of regulatory and legal scrutiny, particularly over the requirement for prior approval from the Nepal Telecommunications Authority.

Under the Telecommunications Regulation, 2054, the purchase or sale of more than five percent of the paid-up capital of a telecommunications service provider requires prior approval from the NTA.

The NTA had maintained that prior approval had not been obtained before Axiata transferred its 80 percent stake in Ncell to Spectrlite UK. Consequently, the regulator had not formally recognised the ownership transfer, leaving the transaction in a prolonged state of regulatory uncertainty.

However, the latest Supreme Court ruling has now established a clearer legal pathway for the regulator to address the issue.

Supreme Court Rejects Plea to Cancel Ncell Share Transfer

The ownership controversy was taken to the Supreme Court by Amresh Kumar Singh, who sought the cancellation of the share purchase and sale agreement between Axiata and Spectrlite UK.

However, a joint bench of Justices Sapana Pradhan Malla and Tek Prasad Dhungana dismissed the writ petition.

The court’s decision, issued on December 27, 2024, and the full text of which was made public recently, provides important clarification regarding the role of the NTA in resolving the Ncell ownership dispute.

The Supreme Court concluded that there was no need to issue a writ of mandamus directing the NTA to take a particular action as long as the regulatory authority was performing its legal duties.

Similarly, the court found no basis to issue an order of certiorari to cancel the share purchase and sale agreement simply because the NTA had not granted prior approval.

This is a key aspect of the ruling. The court has effectively avoided directly intervening to cancel the Ncell share transfer and has instead left the regulatory determination to the competent authority.

Ncell Share Transfer Now in Regulatory Process

The Supreme Court’s decision does not automatically declare the Ncell share transfer valid. At the same time, it does not invalidate or cancel the transaction.

Instead, the court has placed the issue within the regulatory jurisdiction of the NTA.

This means that the Ncell ownership transfer can now be addressed through the established regulatory process. The NTA can review the transaction and take a decision based on the Telecommunications Act, Telecommunications Regulation, relevant bylaws and the conditions attached to Ncell’s operating licence.

This regulatory route is particularly important for Ncell because it creates an opportunity to resolve the ownership issue through legal compliance rather than facing an automatic cancellation of the transaction.

The company can now engage with the regulator and fulfil any applicable regulatory requirements determined under the existing legal framework.

NTA Has Powers to Take Action Under Telecommunications Law

The Supreme Court has highlighted the legal powers available to the Nepal Telecommunications Authority under the Telecommunications Act, 2053.

According to the full text of the ruling, the NTA has the authority under Section 15 to issue necessary orders and directions. The regulator also has powers under Section 28 concerning telecommunications licences and under Section 47 to impose fines on companies that violate applicable conditions.

The court’s interpretation indicates that the regulator has sufficient legal authority to deal with the Ncell ownership issue within the framework of existing telecommunications laws.

If the NTA determines that there has been a regulatory violation, it can take action within its statutory jurisdiction, including imposing penalties where legally justified and determining the appropriate regulatory status of the transaction.

This provides a potential route through which the ownership dispute can be resolved without disrupting Ncell’s ongoing telecommunications operations.

Supreme Court Directs Ncell to Follow All Laws and Licence Conditions

The Supreme Court has also issued a directive concerning the regulation of Ncell and other licensed telecommunications service providers.

The court has directed the NTA to ensure that telecommunications companies and relevant parties are effectively regulated under prevailing laws, including in cases where required documents have not been submitted.

At the same time, Ncell has been directed to operate transparently and in accordance with the law.

The company must comply fully with the Telecommunications Act, 2053, Telecommunications Regulation, 2054, the Nepal Telecommunications Authority (Share Purchase and Sale of Licensed Persons) Bylaw, 2076, and all conditions attached to its telecommunications licence.

The directive reinforces Ncell’s responsibility to maintain regulatory compliance while also placing responsibility on the NTA to exercise its statutory powers effectively.

Ncell Ownership Uncertainty Could Finally End

For nearly three years, uncertainty surrounding the ownership transfer has remained a major issue for Ncell and Nepal’s telecommunications sector.

The latest Supreme Court ruling has changed the direction of the dispute. The possibility of the share transaction being directly cancelled through a judicial order has effectively been removed, while the remaining regulatory questions can now be addressed by the NTA.

The next step will therefore depend largely on the regulator.

The NTA is expected to review the matter, assess compliance with applicable laws and regulations, and take a decision within its legal jurisdiction.

If the regulatory process is completed in a clear and transparent manner, the ownership dispute that has remained unresolved for almost three years could finally reach a formal conclusion.

Why the Supreme Court Decision Matters to Ncell

The timing of the resolution is particularly important for Ncell because the company’s telecommunications operating licence has only around three years remaining.

Continued uncertainty over ownership could affect long-term business planning, investor confidence and future investment decisions.

A clear regulatory decision could therefore provide greater certainty for Ncell and help the company focus on its core business, including telecommunications infrastructure, digital services, network expansion and customer service.

The resolution of the ownership issue could also improve the broader investment environment in Nepal by demonstrating that complex foreign investment transactions can be addressed through established regulatory mechanisms.

Ncell’s Concerns Over Foreign Ownership Rules

The Ncell ownership dispute is also connected with provisions concerning foreign investment in telecommunications companies.

Under the Telecommunications Act, when a company’s operating licence expires, provisions exist under which the company’s assets and ownership could transfer to the government if more than 50 percent foreign ownership remains.

Ncell has raised concerns over this provision and has argued that the legal arrangement effectively targets the company and does not reflect the fundamental spirit of the Telecommunications Act.

The company has been urging the government to reconsider the relevant legal and regulatory provisions.

Ncell has also indicated its willingness to explore an initial public offering (IPO) as a potential route to reduce foreign ownership below the 50 percent threshold, in line with the government’s preferred framework.

However, the government has yet to take a final decision on these broader policy matters.

Regulatory Clarity Could Boost Ncell’s Future Investment

The Supreme Court’s ruling has created an opportunity to resolve the ownership dispute through a transparent and legally grounded regulatory process.

For Ncell, a timely resolution would help remove uncertainty surrounding its ownership structure and provide greater predictability for future business decisions.

As one of Nepal’s major private-sector telecommunications operators, Ncell plays a significant role in the country’s telecommunications and digital economy.

The company has invested heavily in telecommunications infrastructure and services over the years. Greater regulatory certainty could help create a more favourable environment for further investment, technological upgrades and service expansion.

The development is also relevant to Nepal’s broader foreign investment climate. Investors closely monitor how regulatory authorities and courts handle major cross-border transactions and ownership changes.

A predictable and transparent resolution of the Ncell case could therefore strengthen confidence in Nepal’s regulatory institutions.

NTA Now Holds the Key to Ncell Ownership Resolution

The Supreme Court’s ruling has brought the Ncell ownership dispute to a crucial turning point.

The court has not cancelled the 80 percent share transfer involving Axiata and Spectrlite UK, nor has it automatically declared the transaction valid. Instead, it has made clear that the Nepal Telecommunications Authority must exercise its legal authority and determine the matter under the applicable telecommunications laws and regulations.

The responsibility now rests with the NTA to take a clear, transparent and legally sound decision.

If the regulator completes the necessary process and provides a definitive regulatory outcome, the nearly three-year-old Ncell ownership controversy could finally move toward closure.

For Ncell, the Supreme Court’s decision offers a clearer regulatory pathway and removes the immediate threat of judicial cancellation of the share transaction. A timely resolution could bring much-needed certainty to the company, support long-term investment and business planning, and contribute to a more stable telecommunications sector.

The outcome will also be closely watched by Nepal’s foreign investment community. How the NTA handles the matter could have implications extending beyond Ncell, influencing perceptions of regulatory predictability, foreign investment protection and the future direction of Nepal’s telecommunications industry.