State-owned telco Nepal Telecom (NTC) will allocate a 22% share to the customers in the next fiscal year. So, if you are an NTC customer, then you will be getting some stocks from the telecom company this year.
The finance minister hon. Bishnu Prasad Poudel announced the decision on his FY 2078/79 budget speech from Singh Durbar on Jestha 15.
The telco currently has a 91.50% share owned by the government while the general public has 8.47% and Citizen Investment Trust funds claims 0.03% of shares.
The government is disinvesting its shares by selling offering 22% to the stakeholders. By doing this, it will be drawing a hefty amount of capital and allow wider public participation in the country’s largest telecom operator.
But it must be noted that only NTC customers will be eligible to apply for a share in NTC. To apply, you must be either a SIM card user, Landline, or ADSL/FTTH subscriber of the company. If you are neither of them, the easiest workaround would be, getting an NTC SIM soon.
This confirmation likely puts an end to rumours of NTC divesting 30% of its shares to an unspecified Telecom company as part of a strategic partnership. Let’s wait and see how this unfolds.
Nepal Doorsanchar Company Limited’s (NTC) current paid-up value is NRs. 15,000,000,000 (15 billion). The government owns 13 crores, 72 lakhs, 50 thousand shares. The 22% of it will equate to 3 crores, 1 lakh, and 95 thousand units of shares.
Currently, NTC has only 66 lakhs and 60 thousand actives shares. Due to the low amount of shares, its price has remained high. Last time NTC’s share was traded for NRs.1,356.
However, after the disinvestment, the number of shares will amount to 4 crore, 27 lakhs, 69 thousand, and 500 units. This may contribute to a lower price for each unit of share. But the telco will undergo some work before the price is finalized for its share.
NTC will first conduct its DDA and conclude on its minimum share price per unit. It will be followed by an auction and the bid for the highest amount will determine the final price of NTC’s price per unit of share.
The price will also boil down to its demand among the investors. The high demands will likely inflate the price or the way round, a traditional inverse relationship between demand and supply ratio.
NTC’s shares will be one of the draws when it hits the market with this new policy next fiscal year. As we know, Nepal Telecom is the largest telecom operator of Nepal with a 53.81% market share in telecom and has over 20mn active customers.
Apart from being a telecom operator, it is also an Internet Service Provider. Nepal telecom has heavily invested in optical fiber providing next-gen FTTH fiber internet and also replacing the ADSL service with it.
As for economics, NTC has always performed soundly, managing exceptional revenues except for a slight decline in net income due to lockdown. However, NTC will likely bounce back much stronger after COVID-19 impact thaws.
As NTC is backed by the state, it has no shortage of means and resources to sustain and compete with other telecom giants. Therefore, it will remain stable due to its ever-expanding network and services. For any potential investor, NTC would be a strong entry into their portfolio.
By inviting wider public participation, the government seeks to reduce its ownership with 91.50% of shares. It is expected that NTC will finalize its final price and issuance by the end of coming Ashadh.
Finally, the largest telecom operator NTC has made its large portion of shares available for the public. How excited are you about this announcement? Will you be applying for the Ntc shares next fiscal year? What is your take on it? You can drop your opinion in the comments section below.