Government To Take Over Smart Cell, Auction Off its Assets

Telecom regulator Nepal Telecommunication Authority (NTA) could soon complete a takeover of Smart Cell after the latter has failed to pay off its dues to the government. The authority is now making the necessary preparation to acquire the failed private operator as it remains close to losing its unified license.

Gokarna Sitaula, one of the board members, is to coordinate a 5-member team to complete a takeover of the telco.

Smart has long struggled to keep its finances stable which has also affected its service delivery. Already low in coverage, the company has presumably stopped its services in many parts of the country. We have covered a post on Smart’s network disappearance in many areas in Nepal. The telco has reasoned that it’s due to the maintenance work but it’s all pointing to its financial struggles.

Smart Cell has Rs 30 billion to clear off

Smart Cell has failed to pay off its huge sum of arrears to the authority. Likewise, the decade-long deadline to clear its bills is ending this Chaitra. Under various headings such as Rural Telecommunication Development Fund (RTDF), royalty, frequency charges, and fines, the private telco’s total payable amount reaches Rs 30 billion. Reportedly, it also has bank loans in the region of around Rs 7 billion.   

On previous occasions, the company saved its existence due to the reprieve from the existing provisions including the clemency from the Council of Ministers. It sought for lenient payment facility in the past but chances for such favor are extremely low now.

NTA’s telecommunication act, of 2053 holds that a telecom operator must submit an application to the authority including the charges within a fixed timeframe. Failing to do so means NTA will terminate the company’s license. The regulation is found in the act’s section 25 (5).

After the takeover, the company has to hand over its assets to the authority. This includes land, buildings, equipment, and other infrastructures to the authority.

Also read: Telecom Companies Could Also Merge, NTA Passes Regulations

Smart Cell’s assets to go under the hammer

As per the Telecommunications Act 2053, after the company Smart Telecom’s license is revoked, according to Rule 18 of the Property Management Regulations of Telecommunications Service Providers 2079, all assets and telecommunications infrastructure, structures, telecommunications systems, and Telecommunications Authority will be taken over by NTA.

To issue a new license, the infrastructure, structure, telecommunication system, telecommunication network, and property of Smart Telecom will be sold through an auction. In the meantime, the government’s pricing committee will determine the price. This scenario raises the stakes for CG’s much-talked possibility of getting the unified license to start its telecom service. Read this: Is CG Telecom Getting Smart Cell’s Frequencies?

Additionally, the salary of its employees, allowance, savings fund, and other benefits of workers and employees, bank loans taken as property mortgage or mortgage, rent or lease of houses, land, devices, equipment, and other assets will also come under assessment.

The committee will assess the valuation of Smart Cell in six months. After it, it will submit the report to the authority.

Smart Cell provides 4G and 2G services and has over 1.07 lakh user base. Its losing the license could, directly and indirectly, benefit Chaudhary Group which has been waiting for years to get its own to start a “Jio-like revolution in Nepal. Do you use Smart Cell service? If you do, then do share with us how you feel about its painful state in the comments below.