Ntc profit declines by 49% in the third quarter of FY 2081/82

Nepal Telecom (NTC) has posted a dismal profit record according to its financial report for the third quarter of FY 2081/82. The company reported a 48.67% loss in profit compared to the same period from FY 2080/81.

NTC loses profit in a big margin in third quarter of FY 2081/82

According to the Ntc financial report, the company generated Rs 2 arba, 84 crore, 22 lakh, and 89 thousand in the third quarter of FY 2081/82. In the previous fiscal year 2080/81, the company posted Rs 5 arba, 53 crore, 75 lakh, and 62 thousand. So, that’s a year-to-year decline of 2 arba, 69 crore, 52 lakh, and 73 thousand or 48.67%.

The company’s total operating revenue in Q3, FY 2081/82 stood Rs 25 billion, 31 crore, 76 lakh, and 13 thousand. During the same period in the previous fiscal year, FY 2080/81, the same figure stood at Rs 25 arba, 48 crore, 12 lakh, 89 thousand. That marks a slim fall of Rs 16 crore, 36 lakh, and 75 thousand or 0.64%.

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Ntc total revenue in Q3 FY 2081/82

The company’s total revenue reached Rs 28 arba, 43 crore, 15 lakh, and 66 thousand. To compare, in FY 2080/82 third quarter, the company generated a total revenue of Rs 31 arba, 20 crore, 48 lakh, 58 thousand. So, here too, the company saw a fall of Rs 2 arba, 77 crore, 32 lakh, and 91 thousand. That’s 8.89% fall in comparison.

Ntc says that during the period, the company generated Rs 14 arba, 19 crore, 21 lakh, and 92 thousand in Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). This one is a positive figure in this rather humbling report. During the third quarter of the previous fiscal year, the company’s EBITDA was Rs 13 arba, 40 crore, 29 lakh, and 45 thousand. That is an increase of Rs 78 crore, 92 lakh, 43 thousand or 5.89%.

The company’s per share income now stands at Rs 21.05.

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Ntc gives reasons for its financial performance in third quartrer of FY 2081/82

These are the reasons, according to Ntc that have factored in for its financial showing in the third quarter of FY 2081/82:

• Users’ growing use of OTT apps has affected incoming international calls and earnings for interconnection. According to the company, the very reason it saw a decline in revenue of Rs 53 crore, 55 lakh, 66 thousand from Q3 of the previous fiscal year
• The company also says that OTT services have overall negatively affected earnings from both voice and SMS.
• The company had to pay a lump sum of Rs 20 billion for its third license renewal.
• As per the decision of the Board of Directors, the company allocated Rs. 4.97 arba for the pension provision of employees last year. Also, it allocated about Rs. 13.15 billion up to the third quarter of this fiscal year. Due to the decrease in investment and the gradual decrease in interest rates, interest income has decreased by over Rs. 2.38 arba (or 46.02%) compared to the third quarter of the previous fiscal year.
• The company also claims that ISPs’ WiFi mobility service has forced a decrease in Ntc data pack subscriptions. Don’t miss: NTA prepares to close Free WiFi Mobility Service across Nepal
• The company also says that the expansion of services in rural and remote areas and maintenance increases its expenses.
• Due to changes in policies and regulations related to service rate determination, service rates have been reduced, adversely affecting revenue.
• The company maintains that it has been impacted by deferred tax arising from the accounting of the contribution-based pension plan expense in accordance with Nepal Accounting Standard 19 Employee Benefits (NAS 19) and the additional allocation of Rs 13.15 arba to Defined Benefit Assets this fiscal year.
• Some of the issues that the company had in its contingent liabilities until last year were resolved this year, and the additional financial burden on the company has been provided for in the current year.

The latest financial report gives another stark reason to make more effort to save and enhance Nepal’s telecom industry. Ntc and its private competitor Ncell have both suffered huge financial losses in recent years, which has raised questions about the industry’s future.

Both companies maintain that huge taxes, license renewal fees, spectrum licenses put an unbearable burden on the company. It affects not just their operation but also service operation and hinders to bring new cellular technologies such as 5G.

So, it looks to be critical time that the government, NTA, and telcos all come together and table talk to find a way to restore financial confidence in the operators.

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Do you think that the financial report is an alarming bell to the comany and the government? Do share your ideas in the comments below.