Nepal Telecom, the government-owned telecom operator has seen a huge dip in their profit for the Fiscal year 2075/ 2076. With the latest Interim quarterly financial report, the income of NTC decreases by around 1.8 billion in the last year. Similarly, EBITDA and profit also reduce sharply. Find the details below.
Nepal Telecom (NTC) had an annual income of NRs 45 billion and 269 million in the Fiscal year 2074/75. Whereas for the FY 2075/76, the income goes down by 4% to NRs 43 billion and 482 million. Out of the total income, the income from its customers decreases by NRs 2.3 billion but there is a slight increment of income from other sources like the bank interests.
Similarly, the EBITDA (Earnings before Interest, Tax, Depreciation, Amortisation) also decreases by 8.7%, from NRs 26 billion and 689 million to NRs 24 billion and 357 million. Which is a decrement of around NRs 2.3 billion (2.3 Arba).
Regarding the profit of the company, it takes a huge decline of 41%. This should be the largest dip of the profit for the No. 1 telecom company of Nepal. The profit of the company goes down by mammoth NRs 7 billion and 275 million ( 7.2 Arba).
Although there is a decrement of 2.3 Arba (billion) with Ntc income, the profit goes down heavily. It is also due to the mobile license renewal fee of Nrs 4 billion (Arba) which is the first installment of the NRs 20 billion amount. Only after the payment of that amount, Nta renews the mobile telephony license of Ntc.
With the decrement in the profit, the earnings per share of the company drop to Rs 68 from Rs 116. The current price of the Ntc share in the market is Rs 693 which was 721 last year.
Here are the details of the NTC financial statement for FY 2075/76 in comparison to FY 2074/75.
Interim financial results (FY 2075/ 2076)
Profit before Tax
Reasons for the profit decrease
Ntc with its financial report published in Gorkhaptra blames the OTT service popularity for income loss. They write, “Due to the OTT services, the interconnection business was negatively affected and the result of which is seen in the company’s revenue from that service”. They also iterate to find effective measures to offset the internet revenue from new revenue sources.
Another reason for the profit decline is also due to the payment of the first installment of mobile license renewal of NRs 20 billion. Despite the dispute with the regulator NTA for the payment of GSM license renewal fee, the company had to pay the whopping 20 billion amount with rescheduling to pay in 5 installments.
Other reasons include the change of corporate tax from 25% to 30%, discount in recharge card sales.
With such a challenging business environment, Ntc has initiated many strategies to make up for the profit decline. NTC also plans to expand the 4G network throughout the country, with the roll-out work already started. They are also launching FTTH fiber internet in several areas of the country for home broadband.
Earlier, Ncell, the private telecom operator also saw a decline of profit by NRs 3 billion in the year 2018. Read more about the Ncell profit decline.
What do you think of the NTC profit decrement by such a huge amount?