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The news was a buzz on online outlets that a Japanese company OCC Corporation was set to acquire SmartCell for NRs 12 billion. However, OCC’s own site has released a short statement declaring the news as “misinformation.”
Update: Apparently the SmartCell takeover was just a baseless rumor that circulated over the internet. We at Nepalitelecom apologize for the misinformation it has caused. While we always do our best to verify our news sources before publishing our contents, this time we were unfortunate. In the future, we will further our efforts to authenticate news pieces before publishing them. This inconvenience is deeply regretted.
OCC Corporation (Ocean Cable and Communication), is the first and only submarine communications cable specialized manufacturer in Japan.
The company is based in Yokohama and manufactures high-quality optical cables. It reached an acquisition deal with Smart Cell back in February where top-level officials were involved from both sides.
The OCC and Smart Cell have reached a sales-purchase deal to this effect on February end and top-level officials of both companies were involved in the agreement process.
According to Fiscal Nepal, an online portal, Sarbesh Joshi, chairman and executive director of Smart Cell Telecom and Satish Lal Acharya, a promoter of Smart Cell inked the agreement on behalf of Smart Cell while Tomokazu Ito, president of OCC Corporation and its director Takato Nishid penned the agreement on behalf of the Japanese firm.
Smart Cell began its telecom service in 2008 AD with a buzz. It was supposed to produce stiff competition to Ncell, and Nepal Telecom and stir their monopoly. However, it could not attract a wide customer base and stood behind in the race. As a result of mismanagement and lack of revenues, It sunk into financial turmoil.
Smart Cell could not benefit as the third-largest telecom company in Nepal due to its financial woes as well as malignant PR over the years. The telecom is yet to pay more than NRs. 4 billion to the government for frequency, license renewal fee, and RTDF, Royalty fees, among others.
Nepal Telecom Authority had, on several occasions, warned SmartCell as well as other to pay their dues to avoid repercussions but it has failed on multiple occasion. It owes more than charges in billion to the NTA but it looks increasingly unlikely that it will pay off the dues.
Last year, NTA had almost revoked its license to operate as telecom in Nepal but it evaded the scrap last moment after the cabinet afforded it leniency.
However, Smart Cell asked for a reprieve from the government. It sent a letter to the Ministry of Communications and Information Technology (MoCIT). It requested the ministry to give the company some time till mid-July time to settle the dues.
After it, the cabinet of ministers decided not to scrap Smart Cell on the condition that it pays its remaining fees in installments. But again the telecom failed to live up to its commitments. As a result, the government froze its assets. Now Smart Cell can’t transfer its assets and shares as reprimands.
OCC Corporation which is taking over SmartCell is wishing for a swift and trouble-free transition. It has demanded SmartCell to clear all of its liabilities to the Nepal Government before it can take over.
Both SmartCell and OCC Corporation have agreed on the Due Diligence Audit (DDA) of Smart Cell. With this, OCC Corporation wants better transparency into the troubled company’s books. SmartCell will have to clear its bank loans and other financial dues then the DDA will go ahead.
After this acquisition completes, a foreign company will enter the Nepali market that could offer competitive services in terms of quality and costs. There are six telecom companies in Nepal. However, Ncell Axiata is the only company with the majority of foreign investments in Nepal.
As for Smart Cell, it can also breathe a sigh of relief as its life in Nepal has been nothing but troublesome. While it never lived up to the hype, it sunk very deep into financial woes. Now coming out of it and allowing a transition to a foreign company could be is best safe-landing.
The arrival of a Japanese-backed company could potentially change the fate of the telecom industry in Nepal.
What do you think of this news? Japan is one of the leading countries in technology and innovation. It is home to some of the world’s largest tech conglomerates. These add up to a very exciting prospect for further telecom advancements in Nepal.
Do you think a Japanese firm acquiring Smart Cell could bring a monumental change in the Nepali telecom industry and produce a true contest to the existing telecoms in Nepal? Let us know your opinions in the comments section below.