The Nepal Telecommunications Authority has named Ncell as the highest bidder for the remaining mobile frequency under its 1800 megahertz band, but it will award the frequency only after the private telecom giant clears its outstanding capital gains tax to the government, the regulator said.

The Supreme Court in November said Ncell could pay Rs21.10 billion in capital gains tax against the Rs39.06 billion determined by the tax authorities.

“We have named Ncell as the successful bidder, but the process has not been concluded,” said Purushottam Khanal, chairperson of the Nepal Telecommunication Authority. “Other actions before the company is awarded the frequency will only be initiated after it clears its back taxes as per the court order.”

The unprecedented auction for 16 megahertz of cellular frequency took place on Wednesday, where Ncell outbid state-owned Nepal Telecom and bagged additional transmission capacity for Rs58 million per megahertz.

State-owned Nepal Telecom had quoted Rs50.1 million per megahertz in the final round of the auction.

This has come after multiple directions to the Communications Ministry and the telecom regulator from the parliamentary Development and Technology Committee that unwarranted stockpiling of cashable frequency and poor management had led to loss of revenue and hindered the expansion of telecommunications services.

Out of the available 75 megahertz bandwidth under the 1800 spectrum, 59 megahertz is currently assigned to five telecommunications companies, and the Nepal Telecommunications Authority has now auctioned the residual frequency of 16 megahertz.

However, Ncell can only utilise additional bandwidth of up to 9 megahertz because of regulations imposing a ceiling to allow a company to use a maximum of 20 megahertz under the 1800 band.

Ncell currently utilises 11 megahertz under 1800 band to relay cellular and data 4G Long Term Evolution (LTE) services, and 8 megahertz under the 900 band to provide 3G services in remote and rural areas.

According to the telecom regulator, the residual frequency has been auctioned to ensure quality telecommunications services and create an environment for maximum utilisation of limited available frequency and cellular technology such as 4G while contributing to the economic development of the country.

The auction has also come amid a writ filed by CG Telecom at the Supreme Court demanding an interim order to halt the public sale.

The Chaudhary Group subsidiary filed the writ on Sunday stating that the regulator had not provided it with a GSM licence despite its eligibility to obtain one, and set the terms of the auction preventing it from participating in the bidding.

The regulator while announcing the auction, a year ago, had said that only those companies with permits to operate GSM services and without arrears would be eligible to take part in the auction.

A court decision on the writ by the single bench of Justice Prakash Kumar Dhungana on Wednesday has asked the government to clarify why CG has not been given a permit to operate GSM services, and why it was not allowed to take part in the bidding.

But the decision did not come before the bidding process concluded and as per the company’s plea to halt the auction.

When asked whether Ncell and Nepal Telecom had accounts in arrears and what if the court in its final verdict renders the auction invalid, Khanal said the companies had no arrears and that the regulator would have to abide by the court orders.

Last year, the telecom regulator initiated the process to auction residual frequencies under the 900, 1800 and 2100 megahertz bands. The auction has taken place for frequencies under the 1800 band as only one company each applied for the other two bands.

Upon successful completion of the acquisition process, it is expected that Ncell will be able to expand and add to the quality of its voice and data services in urban areas.

In recent months, the company has undertaken a drive to expand high-speed data services from an existing base of over 30 major cities. The bandwidth under the 1800 megahertz band is utilised by telecom companies to provide data services in areas with a dense population, and the 900 megahertz band is suitable for relaying frequencies in rural areas with a scattered population.

As per the International Conference on Electromagnetics in Advanced Applications, spectrum demand is increasing dramatically in most developed markets, due to soaring demand for mobile broadband access and the ability to cover larger areas with the same power levels, and the need for providing broadband access to digital divide areas is currently one of the major issues in the field of wireless communications.