Nepal Telecom Sector — Industry Report 2026

Sector Overview

Nepal's telecommunications sector has 34.73 million mobile subscribers, a voice teledensity of 101.93% (down from a peak of 126.72% as the subscriber count has rationalized), and mobile broadband penetration of 139.53% as of mid-2025. (Source: NTA Annual Report FY2081/82 — Primary.) The sector is regulated by the Nepal Telecommunications Authority (NTA) under the Telecommunications Act 1997 and operates as an effective duopoly following Smart Telecom's licence revocation in April 2023.

Total sector revenue peaked at NPR 98.42 billion in FY2078/79 (approximately USD 739 million at NPR 133/USD) and declined to NPR 90.06 billion in FY2080/81, a 8.5% fall over two years. (Source: NTA Annual Report FY2081/82 — Primary.) Nepal's telecom sector contributes approximately 3.2–3.5% of GDP.

The sector is structurally bifurcating: voice revenue is declining approximately 10% per year as OTT applications (WhatsApp, Viber, TikTok) substitute for voice and SMS; data revenue is growing 11–14% per year as smartphone penetration deepens and 4G coverage expands. The strategic question for both operators is how quickly data growth can fully offset voice erosion at the total revenue level.

Only one telecom company is listed on NEPSE: Nepal Doorsanchar Company Limited (NTC, NEPSE: NTC). Ncell (Axiata Group / Spectrlite UK) is privately held.

Structure of the Sector

Revenue Streams

Nepal's telecom revenue breaks into three major segments:

1. Voice and SMS — still the majority of both operators' revenue, but in secular decline. Domestic voice and outbound international calls face OTT substitution; interconnection revenue from incoming international calls provides some floor.

2. Mobile data (4G/broadband) — the growth engine. NTC's data revenue grew from approximately NPR 11.6 billion (FY2078/79) to NPR 13.9 billion (FY2081/82). NTA mobile internet penetration reached 139.53% of population as of mid-2025 (multiple SIM cards per person; actual penetration of unique users is lower). (Source: NTA Annual Report FY2081/82 — Primary.)

3. Fixed-line and FTTH — a declining legacy for NTC; not material for Ncell. NTC's fixed-line revenue generated NPR 2,137 million in FY2081/82.

Value Chain

The sector's value chain runs from spectrum allocation and licence issuance (NTA) → network infrastructure investment (BTS sites, fiber, core) → service delivery (mobile, fixed, broadband) → distribution (retail outlets, agents, digital channels) → billing and collection. Both operators are vertically integrated from spectrum to retail.

Key infrastructure facts:

• NTC: 4,518 2G BTS, 2,982 3G BTS, 4,402 4G BTS; 4G covering all 77 districts as of October 2025. (Source: NTC FY2081/82 Annual Report — Primary.)
• Ncell: 3,200+ 4G stations; coverage concentrated in urban and semi-urban areas (precise station count from Ncell public communications — Secondary).
• Fiber-optic backbone: NTC has added 1,450 km of additional fiber in FY2024/25 under RTDF-subsidized rural rollout. (Source: NTC FY2081/82 Chairman's Statement — Primary.)
• 5G: No frequency allocation framework exists; NTA revoked NTC's 2.6GHz (n41) band. 5G commercial launch is not imminent in Nepal's current regulatory environment.

Regulatory Revenue Flows

Operators pay the GoN: (a) annual licence fees, (b) royalties on revenue, (c) 2% of revenue to the Rural Telecommunications Development Fund (RTDF), and (d) frequency and spectrum fees. NTC's total fiscal contribution (dividends + taxes + fees) ran NPR 18.5–41.6 billion per year over FY2077/78 to FY2081/82. (Source: NTC Annual Report FY2081/82, Notes 31/32 — Primary.) The government's fiscal dependence on NTC as a state enterprise creates a structural policy constraint.

Competitive Landscape

Nepal Telecom (NTC)

• Market share: 53.33% of mobile subscribers; 55.66% of mobile internet users (mid-March 2026). (Source: NTA MIS data via nepalitelecom.com — Secondary.)
• Coverage edge: ubiquitous rural 4G; RTDF-subsidized; the only carrier reaching all 77 districts at 4G.
• Revenue advantage: NPR 33,895 million core telecom revenue (FY2081/82) with 41.6% core EBITDA margin.
• Structural advantage: 91.5% state ownership creates financing security, implicit sovereign guarantee, and privileged spectrum access — but also sets dividend policy by government budget need.
• Balance sheet: approximately NPR 43 billion in cash and liquid investments (NPR 239 per share at 180 million shares outstanding); zero financial debt.

Ncell (Axiata Group / Spectrlite UK)

• Market share: 46.66% of mobile subscribers; 44.34% of mobile internet users.
• Revenue: Ncell does not publish audited public accounts; revenue estimates range NPR 40–55 billion based on NTA aggregate data and interpolation.
• Urban premium: stronger coverage density in Kathmandu Valley and major cities; historically priced at a premium for data speeds.
• Governance uncertainty: Ncell's licence legally expires 31 August 2029 under the Telecommunications Act 1997 (Section 25, 25-year maximum). Its owner (Spectrlite UK, formerly Axiata's Nepali holding vehicle) is in an unresolved dispute involving capital gains tax, spectrum rights, and an attempted ownership transfer. The Nepal government has asserted NPR 60+ billion in capital gains tax claims. (Source: myRepublica, Fiscal Nepal, 2025–2026 — Secondary.) The licence expiry and ownership dispute together constitute the sector's single most consequential near-term event.

Smart Telecom (licence revoked)

Smart Telecom's licence was automatically revoked in April 2023 after it failed to settle approximately NPR 30 billion in outstanding state dues (licence fees, royalties, RTDF). Its infrastructure and spectrum sit with NTA. With Smart gone, the last price-disciplining fringe player has been removed, hardening the duopoly structure. (Source: nepalitelecom.com / Ratopati, 2024–2025 — Secondary.)

Market Share Summary (mid-March 2026)

Source: NTA MIS subscriber and internet data, March 2026, via nepalitelecom.com — Secondary, citing NTA primary data.

Regulatory Framework

Nepal Telecommunications Authority (NTA) is the sector regulator, operating under the Telecommunications Act 1997 and subsequent NTA Directives. Key regulatory provisions:

1. Licence tenure (Section 25): Maximum licence duration of 25 years. Ncell's original licence (issued 2004) expires 31 August 2029 — the most load-bearing regulatory date in the sector over the next five years.

2. RTDF (Rural Telecommunications Development Fund): Operators contribute 2% of revenue. Funds subsidize rural fiber and connectivity. NTC, as the primary RTDF beneficiary, receives preferential access to rural infrastructure grants — an asymmetric regulatory advantage.

3. Interconnection rates: NTA sets domestic interconnection tariffs (mobile termination rates). NTC's interconnection revenue was NPR 2,574 million in FY2081/82.

4. Tariff regulation: NTA maintains tariff ceilings but in practice both operators have significant pricing flexibility, particularly on data bundles.

5. Spectrum policy: 5G spectrum allocation is effectively stalled — NTA revoked NTC's 2.6GHz (n41) frequency band and no 5G policy framework has been published. This delays 5G commercial launch across both operators.

6. Quality of service (QoS) directives: NTA issues QoS standards; operators have been periodically penalized for coverage or call-drop violations.

Financial Benchmarks

Sector-level data is available from NTA annual reports and interpolated from NTC's audited accounts (the only publicly reported set). Key benchmarks:

Interpretation of the EBITDA swing. NTC's core EBITDA margin improved from ~31.6% (FY2080/81) to ~41.6% (FY2081/82) primarily because the regulatory-fee line fell 41% — likely reflecting a large GSM licence-renewal payment in FY2080/81 that did not recur. The underlying margin improvement from cost discipline is real but materially smaller. This regulatory-fee timing effect is important for reading sector profitability trends.

Macro Tailwinds and Headwinds

Tailwinds

1. Broadband growth runway. Mobile broadband penetration at 139% is measured by SIM cards, not unique users. The number of Nepalis owning smartphones with active data subscriptions is meaningfully below this headline. As device affordability improves and digital services (remittance apps, government e-services, streaming) drive utility, data consumption per user will compound.

2. Remittance-driven demand. Nepal received foreign remittances of approximately NPR 1.4 trillion in FY2081/82. (Source: Nepal Rastra Bank — Primary.) Remittance recipients are active mobile money and international call users, sustaining a revenue floor in Nepal's mostly rural subscriber base.

3. Ncell 2029 option for NTC. A disorderly Ncell licence transition could result in NTC acquiring spectrum, network assets, or a large subscriber base at below-market cost — an unquantified upside option.

4. NRB rate easing. NRB's policy rate cut to 4.5% (FY2082/83) has reduced NTC's cost of deposits on its large cash portfolio marginally, but more importantly supports the broader Nepali economy and consumer spending.

Headwinds

1. OTT voice and SMS substitution. WhatsApp, Viber, and similar applications are structurally eliminating voice call and SMS revenue. This trend is irreversible and has driven NTC's voice revenue lower every year since FY2077/78. The rate of decline (~10% per year) has not slowed despite NTC's growing subscriber share.

2. Falling voice teledensity. Teledensity fell from 126.72% (FY2078/79 peak) to 101.93% (FY2081/82), reflecting both rationalization of multiple SIM cards per subscriber and SIM deregistration under NTA's real-name registration requirements.

3. 5G delay and spectrum uncertainty. Nepal is one of the few South Asian markets without an active 5G deployment. The regulatory vacuum on 5G spectrum delays capacity upgrades and limits both operators' ability to monetize next-generation broadband.

4. Regulatory and political risk. Both operators face unpredictable fiscal demands (licence-renewal payments, royalty reassessments). Ncell's unresolved capital gains tax dispute illustrates the genre; NTC, as a state entity, faces the analogous risk that the government's budget needs increase its fiscal extraction without commensurate return.

5. Revenue pool has peaked. Total sector revenue is approximately 8.5% below its FY2078/79 peak. Without a data-driven re-acceleration, the pool continues to shrink.

Companies to Watch

Nepal Telecom (NEPSE: NTC) — The only listed telecom. Analytically interesting as a sum-of-the-parts (cash portfolio plus declining operating telecom) rather than a conventional growth investment. The approximately NPR 43 billion cash position (NPR 239 per share) provides downside cushion at reference price NPR 860 (23 July 2026). Key monitoring metrics: quarterly core revenue growth (data versus voice), management of the cash portfolio, and progress (or absence) on the qualified audit opinion resolution. Full profile at NTC Company Profile.

Ncell — Not listed on NEPSE. The August 2029 licence expiry is the most important sector event over the next three years. Investors with NTC exposure should track: (a) NTA's public statements on licence renewal terms, (b) any Ncell ownership transfer filings, and (c) whether a new buyer for Ncell emerges before August 2029. A smooth Ncell licence renewal maintains the current duopoly equilibrium; a disorderly transition is asymmetrically positive for NTC.

References

1. NTA Annual Report FY2081/82 — Nepal Telecommunications Authority. Sector revenue, subscriber data (mobile, internet), teledensity, interconnection data. nta.gov.np. Primary (regulator).

2. NTC Audited Annual Reports FY2077/78–FY2081/82 — Nepal Doorsanchar Company Ltd. Core revenue, EBITDA, capex, regulatory fees, RPT disclosures. ntc.net.np / SEBON filings. Primary, company self-reported.

3. NTC FY2082/83 Q1–Q3 Unaudited Quarterly Reports. Primary (unaudited).

4. nepalitelecom.com — "NTC vs Ncell Market Share 2026," March 2026. Subscriber share, 4G subscriber counts citing NTA MIS. Accessed 2026-08-01. Secondary.

5. myRepublica / Fiscal Nepal — Ncell licence expiry, capital gains tax dispute, Spectrlite UK ownership. 2025–2026. Accessed 2026-08-01. Secondary.

6. Ratopati / nepalitelecom.com — Smart Telecom licence auto-revocation, April 2023. Accessed 2026-08-01. Secondary.

7. Nepal Rastra Bank — Annual Report FY2081/82, remittance receipts NPR 1.4 trillion. nrb.org.np. Primary (regulator).