Axiata take charge of Ncell from TeliaSoneraGovt unsure about levying capital gain tax on acquisition by Malaysian telecom giant
Nepal’s leading mobile service operator Ncell officially became part of the Axiata Group Berhad, a Malaysian telecommunications giant operating in 10 countries in Southeast and South Asia, after it completed the acquisition from TeliaSonera, a Swedish telecommunication giant, on Monday in the biggest such deal in Nepali history.
The acquisition was completed with the sale of its 60.4 percent stake in Reynolds Holding, which owns Ncell, at an enterprise value of $1.03 billion. The Malaysian company spent around four months to complete the acquisition.
TeliaSonera will be paid for Ncell’s cash position in proportion to its economic interest of 80.4 percent. Furthermore, TeliaSonera has dissolved its economic interests in the 20 percent local ownership in Ncell and received approximately $48 million from Sunivera Capital Ventures, Singapore.
TeliaSonera first announced its planned divestment in December 2015 which was followed by a national debate regarding whether capital gains tax should be levied on the offshore deal.
According to Dato Sri Jamaludin Ibrahim, president and group CEO of Axiata, they have received the go-ahead from all the relevant government authorities involved in the acquisition process in both Nepal and Malaysia.
“The addition of Ncell into the Axiata network of mobile operators marks yet another significant milestone for the group, in terms of solidifying our strong hold in the South Asian region,” said Ibrahim in a press statement. “The unique mix of a controlling stake of a well-managed number one player in a healthy, growing market presents Axiata the perfect expansion opportunity of its footprint.”
Along with the acquisition, there has been a change in the top leadership of Ncell with Axiata appointing a new managing director Simon Perkins. The newly appointed Managing Director Perkins said, “I am particularly inspired to be part of the exceptional team here at Ncell and working together with them in taking Ncell to the next level of excellence and performance.”
Authorities unsure about capital gains tax
Government authorities were not sure whether the government should levy capital gains tax on the acquisition of Ncell by Axiata. Also, they had expressed confusion over whether the government could intervene in the pricing of the shares. Different prices was maintained for the shares owned by Ncell’s foreign shareholders and Nepali joint venture partner, and the authorities had said that the share price of a private company depends on the understanding between the seller and the buyer.
The response of government agencies to six issues raised by the parliamentary Development Committee was also vague citing lack of clarity in the law. On January 26, the House committee had asked for responses over various issues from the Inland Revenue Department (IRD), Department of Industry, Ministry of Information and Communication, Office of the Company Registrar and Nepal Telecommunications Authority (NTA).
IRD Director General Chudamani Sharma said that they would determine the capital gains tax on the off-shore transaction of Ncell’s 80 percent stake after TeliaSonera reports the transaction to the Large Tax Payers’ Office. However, the local partner Neeraj Gobinda Shrestha has paid Rs2.83 billion in capital gains tax for the sale of 20 percent of the shares to Sunivera Capital Venture owned by Bhavana Singh Shrestha.
Ncell Axiata Roam offer unveiled
On the occasion of Ncell becoming a part of the Axiata Group, Ncell has unveiled the Ncell Axiata Roam offer under which all Ncell customers travelling to Malaysia, Sri Lanka, Bangladesh or Cambodia will get discounts on roaming rates while staying connected through the Axiata Group network.
Under the offer, Ncell prepaid and post-paid customers will be able to communicate back home at a flat rate of Rs15, including taxes, when latched with the Celcom Axiata network (Malaysia), Dialog Axiata network (Sri Lanka), Robi Axiata network (Bangladesh) and Smart Axiata network (Cambodia), the company said in a statement.
The Ncell Axiata Roam offer comes into effect on April 13 and will remain valid until further notice. Customers will enjoy this rate once they activate the roaming service.
Prepaid customers can activate the roaming service by typing A and sending an SMS to 900228, while post-paid customers can visit the nearest Ncell Centre for the activation. (PR)