Nepal Telecom sees profit decline in FY 2080/81 by 16.44%

The profit of Nepal Telecom (NTC) aka Nepal Doorsacnhar Company Limited declined in fiscal year (FY) 2080/81. According to the company’s latest condensed consolidated statement, the growth of OTT, license renewal payment, and other factors affected its revenue stream for the fiscal year that ended Ashar 31, 2081. Here are all the details.

In FY 2080/81, Nepal Telecom posted a profit of Rs six billion, six hundred seventeen million, and seven hundred seventy-six thousand (Rs 6.61 arba). It’s less by Rs one billion, three hundred two million, three hundred seventy-eight thousand (Rs 1.30 arba) or 16.44%. In FY 2079/80, Nepal Telecom registered a profit of Rs seven billion, nine hundred twenty million, and one hundred fifty-five thousand (Rs 7.92 arba). But it was also a loss in profit by 7.86% in the year. That means, the company has posted another loss in profit for a consecutive year.

At the same time, the company’s total revenue fell by 3.32% in FY 2080/81. According to the financial statement, the company’s total revenue stood at Rs forty-one billion, six hundred seventeen million, and one hundred seventeen thousand (Rs 41.61 arba) in FY 2080/81. It’s negative by Rs two billion, eight hundred six million, five hundred thousand (Rs 2.80 arba) or 6.32% against the previous figures. In FY 2079/80, the company posted revenue of Rs forty-four billion, four hundred twenty-three million, six hundred eighteen thousand (Rs 44.42 arba).

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Nepal Telecom total operating revenue declined in FY 2080/81

The company’s fall in profit is directly related to its decline in total operating revenue (TOR) as well. According to the report, the state-backed company’s total operating revenue stood at Rs thirty-four billion, four hundred sixty-one million, one hundred thirty-five thousand (Rs 34.46 billion) which is a decrease of Rs one hundred eighty-one million, three hundred and fifteen thousand (Rs 1.81 arba) from FY 2079/80 or by 4.99%. In that fiscal year, the company’s TOR was Rs thirty-six billion, two hundred seventy-one million, four hundred fifty thousand (Rs 36.27 arba).

At the same time, the company’s per-share revenue stands at Rs 36.77 while its profit before tax declined by 3.91%. In FY 2080/81, in FY 2080/81, the profit before tax was Eleven billion, seven hundred seventy-nine million, eight hundred four thousand (Rs 11.77 arba). But in the previous financial year FY 2079/80, it was Rs 11 billion, eight hundred forty-two million, five hundred sixty-two thousand (Rs 11.84 arba).

Nepal Telecom states reasons for profit and revenue losses in FY 2080/81

The state-backed Nepal telecom has attributed the following reasons behind its profit and revenue decline in FY 2080/81:

• The growth of OTT services has impacted the company’s revenues from voice and SMS. Likewise, the company witnessed a decrease in international service and interconnection revenue by about 1 billion 43 crore 84 lakh 48 thousand than last year
• The company states that the profit took a hit due to the increase in the cost of service expansion and quality improvement even in rural and remote areas. The nation’s state-backed company prioritizes service expansion even in remote areas with less revenue potential and less financial returns.  
• Due to changes in the policies and regulations related to service rate determination, the service rate has been cut and the revenue has been adversely affected, according to the company.
• Nepal Telecom has not been able to invest since Poush 2080 to manage resources for the payment of the third license renewal fee of Rs 20 billion for the GSM license.
• In addition, after the payment decision was made in Baisakh 2081, the fixed deposits in some banks were released and paid before the maturity period. So, due to the change in the bank interest rate, the financial income decreased by about 1 billion, 29 crore 73 lakh.
• The company also implemented a Defined Benefit contributory pension scheme in FY 2080/81 for employees joining after Kartik 1, 2066. However, due to the change in this rule, the company states that there has been some financial impact as per NAS 19 “Employee Benefit”.

The company’s financial struggles in recent years only corroborate that the country’s telco industry is going through hard times at present.

Do you think it’s time that the government, Nepal Telecommunications Authority (NTA), operators, and stakeholders talked about lifting the telecom industry now as companies continue to post falling income reports? Do share your opinion in the comment section below.