Nepal Telecom saw its net profit fall by 12.30 percent to Rs8.55 billion in the last fiscal year, largely due to a drop in voice, international and roaming calls, its main money-making segments.

More people are using communication apps to make phone calls instead of the traditional phone system, the state-owned company said.

A series of events prompted by Covid-19—mass return of foreign migrant workers, government directives to give a 30 percent discount on mobile data and internet, and halt in tourism—combined to drag down profits in the last fiscal year that ended mid-July.

The company's interim fourth quarter financial report released on Friday shows that Covid-19 shaved Rs1.2 billion off its earnings. Fierce competition in the market and external factors like over-the-top (OTT) applications that allow people to make phone calls using the internet hit income, Nepal Telecom said.

Dilli Ram Adhikari, managing director of Nepal Telecom, said that a reduction in economic activity due to the lockdown that lasted nearly four months slashed the company's revenues.

“Following the lockdown, demand for major revenue earning services like voice call, international call and roaming service shrank with people being confined to their homes,” he said. These three services account for 60-70 percent of the company's revenues.

According to the report, the telecom giant’s gross income reached Rs41.49 billion in the review period, down from Rs43.83 billion in the previous fiscal year 2018-19. The company earned Rs34.57 billion by selling these services in the last fiscal year, against Rs36.86 billion in the previous fiscal.

Nepal Telecom’s profit has been dropping since 2018-19 when its net profit took a 44.19 percent dive, mainly due to increased use of smartphones that led to massive use of apps like Viber, WhatsApp, Messenger and IMO, among others, to make phone calls, reducing incoming calls from foreign countries, including domestic voice calls.

Increased expenditure on telecommunication infrastructure also reduced its net profit, the company said.

As demand for data services is increasing faster than for voice, Nepal Telecom is focusing on enlarging data services.

The expansion of LTE advanced 4G services, high speed internet, quality telephone and television from a single line (FTTH) and value-added services that increase data demand are expected to boost company revenues in the upcoming year, it said.

The number of voice calls declined during the four-month-long lockdown, said Adhikari. People stayed home with their families and business came to a complete stall, as a result of which demand for voice calls plunged, he said.

On the bright side, the number of users of mobile data increased by 30-40 percent and of fixed broadband by 40 percent with a rise in international bandwidth utilisation. Daily bandwidth capacity utilisation rose to 75 percent from 70 percent of the total, said Adhikari.

“YouTube was the most visited site followed by Facebook and TikTok during the lockdown,” he said. Adhikari said that data users were using data almost all the time, with traffic spiking during the mid-afternoon and evening to late evening.

Despite the competitive telecom environment, higher operating expenses and operational unease created by Covid-19, the company said it managed to record noteworthy performance by expanding products and services.

“Due to changes in customer tastes and preferences, and the wide choices available in the market for customers, catering to fast-changing customer expectations is challenging,” said the company’s report.

Nepal Telecom plans to establish mobile financial services in collaboration with Rastriya Banijya Bank to explore new avenues of revenue.

Nepal Telecom’s 4G LTE service has been implemented nationwide, reaching all 77 districts in the country.