United Telecom has submitted its clarification to the Nepal Telecommun-ications Authority (NTA) regarding the royalty issue. In the clarification, it has refused to pay the royalty as pledged, said a source at the authority.
As per the commitment, it has not paid Rs 896 million in revenue to the government. Last week, the authority had sent a letter to pay the dues within a week or furnish the reason for not paying the committed annual royalty to the government. It has stated that it would not pay the royalty as committed citing losses and the negative impact on the image of the company because of the service disruption during the royal regime, said the source. Two major operators, Nepal Telecom and Ncell, are also paying only 4 percent. This is also one of their concerns.
While obtaining the license to operate the telecom service eight years back, United Telecom had agreed to pay 4 percent of the total annual income or the committed royalty fee, whichever is higher.
We received the explanation from United Telecom yesterday, said Kailash Neupane, spokesperson of the authority. He said that the authority was studying the information forwarded and would come up with its decision within a week. Authority officials did not share information about the clarification submitted by United Telecom saying that the matter was confidential.
United Telecom, which started service as first private sector telecom service operator with CDMA technology, has been paying 4 percent of its total income annually like Nepal Telecom and Ncell. It has around 600,000 subscribers across the country.
According to the authority, it has paid Rs 160.57 million in revenue to the government based on the condition of the 4 percent arrangement in the last eight years. However, even after deducting the amount it has paid, United Telecom is liable to pay Rs 896 million as committed royalty fee.
Starting from the fiscal year 2002-03 to 2009-10, United Telecom had made a commitment to pay Rs 1.24 million, of which the government had waived Rs 189.45 million for its loss faced during disruption in its service by the royal regime. However, it had demanded Rs 4.44 billion compensation from the government for the loss.
The two other leading market playersNepal Telecom and Ncellhave also been paying 4 percent of the total income as revenue to the government. Nepal Telecom has not paid any committed royalty so far as agreed while obtaining the license to operate GSM service, said an official at the authority. It was supposed to pay the royalty as committed by Ncell. But demanding the same treatment, Ncell too has not cleared its committed royalty since the last two fiscal years, and a case to this effect is also in the Supreme Court.
As of the last fiscal year since the fiscal year 2004-05, Ncell had committed to pay Rs 957 million as royalty. It has paid Rs 750.90 million as 4 percent of the total income.
Ncell has to pay Rs 206 million as committed royalty if the court gives the final verdict against it, said the authority official. Nepal Telecom is also liable to pay Rs. 957 million as committed by Ncell.
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