NT refuses to clear outstanding royalty due of Rs 3.27b
KATHMANDU, July 5: Nepal Telecom (NT) has refused to clear outstanding GSM royalty dues of Rs 3.27 billion, which is legally incurred liability, citing low income and low popularity of mobile service in the initial first 5 years.
Interestingly, the period for which the state-owned operator has refused to pay royalty is the period when it enjoyed monopoly in telecom sector.
As it has been deferring the payment of due royalty, Nepal Telecommunications Authority (NTA) on June 17 had directed the operator to instantly clear the committed royalty for the period of first ten years for GSM services.
NT had obtained GSM license in 1999. Going by the existing law, it should have cleared the royalty by 2009. ´Earlier, the state-run operator had shirked off timely payment, saying it will settle it only after Ncell -- which got GSM license in 2005 -- pays the royalty,´ said an NTA official. ´Now it shamelessly says it will not pay royalty for period when it enjoyed complete monopoly in the market,´ he added.
In its letter to NTA, NT, meanwhile, has argued that it was not in a position to clear the committed royalty amount as directed by the authority, as its income for the first years of mobile service remained low. ´The technology too was expensive at that time,´ reads its letter.
Following such refusal of the state-owned operator, NTA has decided to knock on the door of Ministry of Information and Communicaitons (MoIC), referring its current status and seeking help to recover the outstanding dues. ´Our board meeting has decided to approach the government to make its service provider comply with the laws,´ said an NTA board member.
On being queried about the issue, Surendra Thike, NT spokesperson said, ´The second operator (i.e. Ncell) came at a time when GSM service was already popular. So, it is not logical for the regulator to charge us the same royalty amount for the period (of first five years) when the service was not popular.´
The statement of Thike, however, does not match with the condition it agreed to while acquiring the license.
Under the condition, NT in 1999 had agreed to pay royalty amount equivalent to 4 percent of its total income in 10 years or the committed royalty amount of next operator (to enter into the market later; Ncell in this case), whichever is higher as the royalty for license. And NTA had determined Rs 3.90 billion as the license fee as Ncell committed that amount as royalty for license.
As NT has so far paid royalty equivalent to just four percent of its total income, which was Rs 630 million, NTA has accounted remaining Rs 3.27 billion as its outstanding royalty due. ´The condition that NT agreed to does not tie up the royalty amount with the popularity of the GSM. So, the arguement of NT is completely bogus,´ said the NTA source.
Thike, however, stated that the NT was not against paying the royalty for the second five years of the license period. ´We are ready to clear the royalty on NTA-determined basis after Ncell started the service, but not from the beginning,´ he added.
Apart from the royalty, NT also owes license renewal fee of Rs 19.81 billion and frequency fee of Rs 410 million to the authority. It had renewed operating license in 2009, making partial payment of Rs 189 million. Later, it stated it will clear the dues after Ncell pays the renewal fee.
What this means is, NT will not settle the renewal due till 2014, as Ncell can clear it by 2014 end.