In a surprising move, Axiata Group, the main owner of Nepal's telecom leader Ncell, has announced plans to sell its shares and leave the company. This decision comes because of tough business conditions in Nepal. Axiata's board feels that stepping away from Ncell fits with their long-term plans and aims to help investors in the future. This announcement might worry foreign investors as Nepal tries to bring in more outside money. Ncell itself explains the decision by saying they haven't expanded enough and their earnings have gone down. They earned 37.44 arba rupees in 2023, less than the 39.72 arba rupees in 2022 and way less than the highest 57.10 arba rupees in 2017.
Axiata's Exit from Ncell: Shifting Tides in Nepal's Telecom Realm || what is it's affect in share market?
Ncell blames the drop in its market share on fewer users, showing a decrease from 61% in 2020 to 54% now. The company started in 2001 as Spice Nepal Pvt Ltd, then became Ncell in 2016 after being bought by TeliaSonera. Axiata took over 80% of Ncell in 2022, and in that year, Ncell made 57% of its money from data services.
Even though it's leaving, Ncell says it's been a big part of Nepal's economy, contributing 1.3% to the GDP in 2021/22. It claims to have paid over 2.83 kharba rupees in taxes and done social work worth more than 1.75 arba rupees. Ncell says it contributed 1.9% of the Government of Nepal's revenue in 2021/22 and has provided jobs to more than 23,000 people.
As Axiata gets ready to step away from Ncell, Nepal's telecom industry faces uncertainty, and attracting foreign investment might get harder due to this major exit.
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