Malaysia Telecom Giant Axiata Group Berhad has decided to pull out its investment from Nepali private telecom operator Ncell after eight years. The parent company has been reporting the downturn of revenues from Ncell and that seems to be the main reason for its exit. Find the falling revenues data and info on who will buy Ncell next.
Vivek Sood, Axiata Group’s Chief Executive Officer (CEO) and Managing Director (MD) pointed out the challenges in the Nepali market as a determining factor behind this major decision. Sood said:
“The outlook in Nepal is increasingly challenging,” Sood pointed out, “the Board has decided to exit Nepal and accordingly reclassify Ncell as an asset held for sale. We believe this move will place Axiata in a much stronger position to deliver on our strategic priorities and is in the best long-term interest of all our shareholders.”
Axiata holds Ncell as an asset held for sale and will exit Nepal
He said that Axiata is “on a journey of transformation” and seeks to bolster the long-term value for shareholders. He added, “Axiata is on a journey of transformation, and we will continue to further optimize our portfolio, capture opportunities that will enable us to enhance our performance, accelerate value creation, build rigor on capital allocation, and ultimately deliver long-term shareholder value via sustainable growth and portfolio actions.”
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Who will buy Ncell after Axiata decides to leave Ncell?
Soon after the decision emerged, speculation spiraled regarding Ncell’s potential buyers. Many named Chaudhary Group as the frontrunner for this mega acquisition. This makes sense given the Nepali conglomerate’s years-long pursuit of unified license and frequency.
However, it’s been reported that Axiata made the decision after doing its exit homework. Apparently, Axiata’s local partner Sunivera Capital Ventures Pvt Ltd which holds a 20% share in the private operator is likely to take over the company. Sunivera is owned by the Acharya brothers- Satishlal Acharya and Sachinlal Acharya. As per reports, the deal between Sunivera and Axiata is “almost” done. Axiata bought Ncell from TeliaSonera back in 2015.
You may also want to read: Important Numbers/USSD Codes in Ncell for Subscription, Offers
Falling revenues and political challenges!
Axiata’s prime reason to sell its shares in Ncell is down to its financial struggles. In 2015, the year when Axiata acquired Ncell, it posted Rs 57.72 billion in revenue however, the recent years haven’t been as fortunate. In Fiscal Year FY 2076/77, the company brought in Rs 46.77 billion, in FY 2077/78, Rs 40.22 billion, and in FY 2078/79, the revenue decreased to 39.51 billion. Then again, in the last Fiscal Year FY 2079/80, the private operator saw another down to Rs 37.44 billion. Also read: Ncell refutes misleading news about sharing user data, studying TERAMOCS integration
|Amount (In billion rupees)
Additionally, the company also sunk into a conflict with the government and lost the infamous Arbitration case that dragged on for 4 years. Ncell’s capital gain tax case has been a PR disaster for the Malaysian telco giant. But the main rationale here is the falling economy of the company.
Check out: Challenges of Telecom Operators in Nepal
The Nepali public has long talked of Nepal Telecom (NTC) and Ncell boasting their duopoly in Nepal’s telecom market. Many even entertained the idea of a third new telecom company to disrupt the market after Smart Telecom’s brutal failure. However, Axiata will itself bid farewell which again leaves the possibility of only two telecom companies operating in Nepal, more so if CG gets to buy the company. The demand has been for cheaper data packs and voice, consistent penetration, and quality services across the country. The next buyer of Ncell might consider those factors that could not just fulfill customers’ desires but also make a leap in Nepal’s telecom market.
Axiata hasn’t revealed at what value it will sell its shares and its timeline. So, we will keep you all updated when we have more from official sources. What’s your take on Axiata Group deciding to leave Ncell? Do you think it puts a stark impression on Nepal’s telecom market or something better could come of it for the end customers? Do share your opinion in the comments below.
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