Last Updated on August 16, 2020
Nepal Telecom (NT) has failed to maintain the profit margin in the fourth quarter of the current Fiscal Year 2076/77. As a result, the revenue of the company has declined from last year.
It is evident from telecom revenue that Nepal Telecom is unable to dodge the effect of COVID-19. There is a tremendous drop in the profit and revenue of NT from last year in the same period of Baishakh to Ashad. Let’s find out how much loss does NT has to bear in the fourth quarter of the current FY.
Net profit and revenue
According to the annual financial report of the FY 2076/77 released by Nepal Telecom on Friday, Telecom managed a total revenue of Rs. 41.49 billion, which is a drop from Rs. 43.83 billion in the last year FY.
The total revenue garnered in the fourth quarter of the FY 2076/77 is Rs. 34.57 billion and the net profit of Rs. 9.22 billion only. While in the same quarter of FY 2075/76, total revenue from service sales was Rs 36.86 billion, and the profit was Rs. 11.36 billion.
As Nepal telecom’s overall revenue declines, the profit shrunk by two-thirds from the last year. Revenue declined by more than Rs. 1 billion from the last fiscal year, which is a decline of 6.2%. Telecom lost bulk in revenue in the last quarter of the year due to the lockdown period.
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How did Nepal Telecom’s profit decline?
Apart from the effect of COVID-19, NT listed out various factors that led to a loss in profit and revenue. Some of them are as below.
- Decrease in GSM and PSTN Voice calls – Telecom suffered a sharp drop in revenue from voice services after users started using the OTT service instead of regular phone calls. Although the company managed decent earning in the third quarter of the last fiscal year due to the 4G expansion project, this year COVID-19 pandemic led to a decrease in international roaming service, and an increase in the use of OTT platform. The decline led to a loss of 2.16 billion in GSM and PSTN Voice, 540 million in international roaming, yet an increase of 750 million in data service. Thereby, the income dropped by 15% in the last quarter of the current FY compared to the last year.
- Cost of FTTH and Leased Line – Cost of FTTH and Leased Line – According to the operator, although, Fiber to the home (FTTH), Leased Line, and GSM data service produced a profitable income than other services, the revenue from a fewer number of FTTH and Leased Line could not cover the shortfall. The fall in the economy due to COVID-19 reflected in the Fourth Quarter of the current FY as the revenue decreased by Rs. 2.29 billion from last year.
- Discount replaces Commission – Another factor that aid loss is the discount offer. Telecom changed its strategy for the sale of recharge cars by providing a discount instead of commissions. Since the discount is given in the beginning, there is a decrease in income. NTC says that about 800 million worth of discount was offered in the last financial year. The income decreased by 3.9% from last year.
- Recharge and Data Bonus – During the lockdown period, to help customers to have easy access to the service, NT provided a 100% recharge bonus on Top-Up service, and that summed up to more than Rs 534 million. Similarly, NT provided a service worth of Rs 230 million by giving a 30% discount on data and Zero balance offer of worth Rs. 530 million free of cost.
Although the revenue decreased by about Rs 2 billion in the fourth quarter of the last financial year, the data service of the company helped gain Rs 750 million in the company’s revenue.
Miscellaneous – The company also bore costs risen due to loans provided to employees, 4G expansion, house rent, electricity tariff, and an increase in staff salaries.
Conclusion
As we reach the end of FY 2076/77, NT put forward its financial report of the last quarter of the year to the public. The service revenue and net profit decreased in the fourth quarter of the current fiscal year compared to the same period the last year. It was a challenging year for Nepal Telecom as various factors, including COVID-19, affected the growth of Nepal Telecom. Their contribution to society is noteworthy as NT donated 100 million in Corona Relief Fund though it was soaking in huge expenses. Find the Role of Nepal Telecom in the pandemic.
