The committee formed to study the controversial Ncell share buyout has concluded that the Malaysian company Axiata Group’s claim that Nepal's market was becoming increasingly challenging to do business was baseless.

Axiata, Ncell’s parent company, cited unfavourable business climate in Nepal while exiting from the country in November last year.

But the company's allegation is baseless, the committee said in its statement on Monday.

A Cabinet meeting on December 7 formed the study committee led by former auditor general Tanka Mani Sharma after the telecom company's share buyout courted controversy.

Secretary Phanindra Gautam, Joint Secretary Baburam Bhandari, Joint Secretary Ritesh Kumar Shakya and President of the Institute of Chartered Accountants of Nepal Sujan Kumar Kafle were the members of the committee.

The inquiry committee countered Axiata's claim that “the outlook in Nepal is increasingly challenging, thus the board has decided to exit Nepal and accordingly reclassify Ncell as an asset held for sale.”

According to the committee, the company had transferred its shares and ownership 14 times since it was established 22 years ago in Nepal. “All those deals were done as offshore transactions outside Nepal but the records and details about such transactions were not provided to Nepal's authorised bodies,” the committee said. “Payments of the transactions of some Nepali shareholders were made outside the country, not through Nepali banking system.”

The company, which has distributed 13 million sim cards and operating mobile phone services in the country, has so far paid Rs302 billion in taxes and non-tax revenues combined to the Nepal government.

Since it started its business in Nepal, the company has so far made Rs80 million foreign investment and Rs20 million in domestic investment. It, however, earned profits of over Rs100 billion and sent over Rs68 billion abroad, the committee said.

The inquiry team also said the share transaction’s professional value and various conditions of the contract that were made public were “unnatural”.

It has said that the transaction between the Axiata Group Berhad and Spectrlite UK wasn't as per the Arm's Length Principle. “The party selling the shares seems to have played a dominating role as it imposed some unnatural conditions on the buyers,” the committee said. “It can't be taken as a natural deal as the seller will get benefits of the shares for years, it can file a case while the seller will not have to bear the company's loan and liability.”

The committee submitted the report to Prime Minister Pushpa Kamal Dahal on Monday. The prime minister said people from all walks of life were curious to know about the findings of the report.

“I hope this report will help the government to take the right decision on this issue,” Dahal said.