Inline with Government direction to decrease the no. of telcos, NTA had already sought a Merger policy for the telcos. As known, the regulator NTA has revoked their earlier plan to allow Telcos inside Nepal to merge, using the Merger Policy. So, the Telcos Merger Policy has been pending for a long time.
Merger policy of telcos was already in pipeline in NTA’s schedule for policies. Spectrum Policy also had raised the issue of Maximum frequency bandwidth for the telcos to come under Merger and Acquisition. As per THT, MoCIT and other stakeholders raised questions in the draft prepared by NTA. Due to which, NTA withdrew their decision to formulate the Merger and Acquisition Policy.
“The leadership at MoCIT wanted to give an equal share to merging firms in the new company which is not possible. As we could not come to a common understanding of different provisions of the draft, we revoked the plan to allow mergers among telecom firms,” An official states the above line to THT on condition of anonymity.
NTA believes the merger policy will help to increase sustainable development and competition in the telecommunication sector of Nepal. Directly one may say more the no of telcos, more the competition. But the question remains “Will those telcos sustain in the market and have a stable position ?”.
There are altogether six telecom operators in Nepal namely, Ntc, Ncell, Smart Telecom, UTL, CG Telecom, and Nepal Satellite. As we wrote in our post for “How many telcos are actually needed in Nepal?, Minister Mr. Gokul Baskota had expressed his views to reduce the no of telcos to three. NTA seems to have been working on the same track to reduce the no of telcos to three using Merger and Acquisition Policy. Now, the recent news reveals the reason for the pending of the Policy.
Condition for Merging
NTA had also put a condition in the draft that any telcos with more than 40 percent market share would not be allowed to take part in Merging. With that, Ntc and Ncell could not participate in the merge, as they already have more than 40% market share. The main reason for that is to stop the merged telco to have a Monopoly in the market.
The draft had only allowed telcos with lesser market share to take part in the merging. But with the condition that their combined market share should not cross 40%.
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