NTcommitted royalty issue resurfaces

The issue of committed royalty and third generation (3G) frequency fee of Nepal Telecom (NT) has resurfaced with the Nepal Telecommunications Authority (NTA) issuing it another order to clear outstanding royalty payments and frequency fees. The state-owned telecom giant owes Rs 3.27 billion in committed royalty, around Rs 951 million in 3G spectrum fee and an unspecified sum in VSAT spectrum charge, said the NTA. The NTA has no idea how much NT must pay in VSAT frequency fee as the government had waived the charges 14 years ago for spreading telecom services to rural areas. According to NTA Spokesperson Kailash Prasad Neupane, they told NT to pay the remaining committed royalty after consulting with legal advisers following a board decision. “NT had paid only 4 percent of its total income as royalty even though it should have paid the committed royalty like Ncell,” he said. The NTA should have collected the committed royalty by 2008, but NT had been refusing to pay it citing legal reasons. As per the licence issued to NT, it is required to pay the committed royalty like Ncell and United Telecom Limited (UTL). However; it had paid only 4 percent of its annual income as royalty for the first 10 years of operations (1998-99 to 2007-08). “We have paid the royalty as per the provision of the Telecommunications Act,” said NT Spokesperson Guna Keshari Pradhan. She added that with the committed royalty issue requiring indepth consultation, they would reach a decision after a necessary study of government provisions. Of the total payable royalty, NT has paid the government Rs 635.19 million under the 4 percent plan. An NT official said that they were insisting on the 4 percent royalty deal as revenues from its mobile service was little in the early years and technology was expensive. NT earned Rs 15 billion from its mobile service in the first 10 years. When NT obtained a licence for GSM mobile service in 1999, it had agreed to pay the licence fee, licence renewal fee and the royalty amount to be pledged by future mobile service operators. Hence, NT has to pay a total of Rs 3.90 billion (as committed by Ncell) for the fiscal years 1998-99 to 2007-08. NT started paying the licence renewal fee of Rs 2.13 billion in instalments from the last fiscal year as per the cabinet’s decision. Similarly, the government had renewed UTL’s licence last year by allowing it to pay the committed royalty in instalments. The NTA revived NT’s committed royalty issue as its adhoc committee received legal backing to make policy decisions in the absence of its chairman. NT owes Rs 3.27b in committed royalty, around Rs 951m in 3G spectrum fee and an unspecified sum in VSAT spectrum charge