Nepal Telecom Suffers 40% Profit Decline in the Q1 FY 2077/78

Nepal Telecom (NT) has recently released a first-quarter business result/report of the current fiscal year 2077/78, which clearly shows that NT has failed to generate more profit. Similarly, Nepal Telecom faced a tremendous downfall in revenue compared to the same period of last year. As per the report, Ntc profit has declined by 40% to that of last FY, 1st quarter (Q1).

Ever since our nation faced a lockdown due to the COVID-19 pandemic, Nepal Telecom witnessed a loss in its income for the period Shrawan to Ashoj. Nepal Telecom is not even able to achieve the profit and revenue of last year. Let’s find out how much loss does NT has to bear in the first quarter of the current FY.

This decline is actually the continuation of what Ntc witnessed in the fourth quarter of the last quarter of 2076/77.

Net Revenue  

According to the company’s recently released financial statements for the current fiscal year 2077/78 from Shrawan to Asoj, the company has lost Rs. 500 million in total revenue in the first quarter of the current FY.

In the first quarter of the previous fiscal year, the company earned Rs. 9.04 billion from customers, while Rs. 1.56 billion from other sources. The company achieved a total of Rs. 10.6 billion in the same period last year.

The company has earned Rs 10.1 billion in the first quarter, which is the sum of subsistence income of Rs 8.63 billion and other income of Rs 1.46 billion. The total income is less by Rs. 500 million compared to the same period of the previous year.

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Net Profit

Along with the decline in the company’s revenue, there has also been a sharp decline in telecom’s first-quarter profit. Last year, Nepal telecom gained a profit of Rs. 2.54 Billion in the first quarter. The net profit of telecom in the first quarter of the current fiscal year is only Rs. 1.51 Billion. On this basis, the company’s profit has decreased by Rs. 1.03 billion in the first quarter of the current fiscal year. This profit drop is actually 40% to that of the previous year’s same period.

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Expenses Control

Though the revenue from the customers of the state-owned Nepal Telecom Company Limited has declined significantly, the company is able to reduce administrative costs.

The administrative expenditure of the company in the first quarter of the current FY was Rs. 249.6 million. This expenditure was Rs. 371.5 million in the corresponding period of the previous year. Although telecom managed to reduce administrative costs, the operation and maintenance costs, sales, and marketing costs surged.

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The financial report of the previous FY was not fruitful for Nepal Telecom as it had lots of challenges to face due to the COVID-19 pandemic, and it seems the effect has not left the financial territory of Nepal Telecom. NT has suffered a massive loss of Rs. 1 Billion in profit, while its revenue has declined by Rs. 500 million in the first quarter of the current fiscal year 2077/78.

Challenges

Apart from COVID-19 pandemic challenges, Nepal Telecom lists the reason behind the revenue and profit deterioration. Some of the external reasons for the profit decline are market competition, subscriber behavior with the shift from voice to data service, OTT applications, the decline of migrant workers.

While they also cite the internal reasons within the company for the revenue and profit slump. The company mentions employees working style, lengthy process for service expansion, delay in service delivery, and maintenance in remote areas, delay in network roll-out.

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Tell us what do you think of Nepal Telecom’s revenue and profit decline in the first quarter (Q1) of FY 2077/78.