The Ministry of Information and Communications has asked the Nepal Telecommunications Authority (NTA) to clarify within a week its position regarding the controversy surrounding the transfer of Ncell shares. 

After majority shareholder TeliaSonera revealed that it would be selling its stake in telecom giant Ncell to Malaysian-based Axiata, the announcement had set off a flurry of discussions. Several government agencies have stated that they are unaware of the planned transfer of 80 percent of the shares.

“Our laws and policies are unclear regarding the jurisdiction of the various authorities. However, we feel that the NTA, being the regulatory body of the telecommunications sector, should be ‘formally aware’ about what is going on,” said Dinesh Kumar Thapaliya, secretary of the ministry, speaking at a meeting of the parliamentary Public Accounts Committee (PAC) on Tuesday. “We have asked the NTA to submit a report on the matter within a week.” 

Last month, the NTA had expressed concern over the share purchase agreement (SPA) signed between Sunivera Capital Ventures and Neeraj Govinda Shrestha for the sale of his 20 percent stake in Ncell. This means that the NTA was also unaware about the planned transfer of shares held by a local investor along with the majority stake. 

The NTA had asked the Industry Department in a letter sent through the Industry Ministry to inform it about the proposed deal based on Telecommunications Act 1997. 

Article 27 of the act states that in case a licencee desires to sell or transfer the licence to any other person, the licencee and the buyer or the transferee of the licence have to submit a joint application to the NTA stating the reason along with the terms and conditions mutually agreed for its approval.

Likewise, Clause 2 of Article 27 states that upon receipt of the application, the authority, after making an inquiry, shall grant approval for such sale or transfer within 30 days of receiving the application if it deems appropriate to sell or transfer the licence to the person mentioned in the application; and if the authority deems it inappropriate to permit the sale or transfer, a notification with the reason shall be given to the applicant.

Meanwhile, a debate is also going on whether the transfer of shares is related with the transfer of the licence or not. During a recent meeting of the parliamentary Development Committee, NTA Director Ananda Raj Khanal had questioned whether an agency responsible for granting a licence after judging the operator’s capability should know about the transfer of ownership.

“We are of the view that the NTA, being the primary regulatory body, should be aware about the ongoing deal,” said Secretary Thapaliya. Since there is also the matter of crossholding in the telecommunications sector which is forbidden by Nepal’s laws, the NTA should be aware about such transfer of ownership, he added. 

TeliaSonera and Axiata plan to seal the deal by mid-2016. 

Tuesday’s PAC meeting could not be formalized because only a few lawmakers were present. 

IRD still ‘studying the matter’

KATHMANDU: The Inland Revenue Department (IRD) is unlikely to provide a timely response to Malaysia-based company Axiata which had filed an application on December 22 asking whether it would have to fulfil any tax liabilities with regard to the transfer of shares between TeliaSonera and Axiata. In the letter, the company had also mentioned that capital gains tax would not be applicable on the share transfer based on several agreements and legal premises of Nepal. 

As per legal provisions, the IRD is required to provide a response within 45 days. The deadline expires on Thursday. “Since this is a serious issue and a study is underway, it will take some time. We are equally 

conscious about making sure that the country gets optimum benefits from the transfer of Ncell shares and that our decision does not impact the foreign direct investment (FDI) climate,” said Chudamani Sharma, director general of the IRD. (PR)