Nepal - Telecoms, Mobile, Internet and Forecasts

Executive summary

Nepal’s telecom sector sees growth pick up, with mobile internet access increasing rapidly

Efforts to expand the telecom sector in Nepal have met with many challenges. Nepal’s mountainous topography has made it extremely difficult to develop its telecommunications infrastructure. Furthermore, Nepal had been struggling under an adverse economic situation caused largely by political instability. Over the years, acts of terrorism and the activity of the Maoist rebels operating throughout the country have taken their toll on the telecom network – both directly and indirectly. Of late, it has been the tardiness of the government in addressing market reforms and developing national policies that has been weighing on the overall development of the telecom sector.

The country has certainly been on a road to recovery from the long years of civil unrest. Nepal’s transition to a considerably more stable nation had begun by 2007. The country’s first elections for over nine years were held in 2008; a clear victory going to the Maoists who were as a result to become a party of government. Although the way forward was not necessarily going to be smooth, with this remarkable turnaround following years of great difficulty, the scene was set to build on the considerable progress already made in recent times in meeting the growing demand for telephone services. Not only has there been strong subscriber growth, especially in the mobile sector, but there was evidence of a clear vision in the sector, including putting a reform process in place and planning for the building of necessary telecommunications infrastructure. Most importantly, the Ministry of Information and Communications (MoIC) and the telecom regulator, the National Telecommunications Authority (NTA), both became very active in the performance of their respective roles. However, as already noted, by 2013/2014 there was evident concern that some of the momentum of the reform process had been lost.

The Nepal Telecom Company, the state-owned incumbent operator, has been the major builder and operator of the national telecom network. For a long time it held a monopoly over all aspects of telecom in the country. With the opening up of the market, Nepal Telecom lost its monopoly on basic telecom services a little more than a decade ago with the licensing of United Telecom Ltd (UTL). It subsequently surrendered its monopoly on mobile services with the licensing of Spice Nepal Pvt Ltd, later known as Ncell, in 2004. The period after 2006 saw notably strong subscriber growth, especially in the mobile segment of the market. Mobile penetration went from 5% in 2007 to more than 70% in 2014.

Despite all the energy that has gone into the sector, there was still a significant disparity between the high coverage levels in the cities and the coverage available in the underdeveloped rural regions. Progress on providing some minimum access had been good, however.

Market highlights:

  • By mid-2014 mobile penetration in Nepal, still relatively low by world standards, was moving steadily upwards, with mobile subscriber numbers having increased fivefold in just five years;
  • Fixed-line growth in Nepal had almost reached a standstill, with the market effectively ‘flattening out’ in terms of penetration growth; there were very few signs that it would pick up again in the short to medium term, even allowing for the expansion into the underserved rural areas;
  • After being sluggish for years, the internet segment of the market has finally started to move; user penetration in particular has been increasing in recent years;
  • While broadband represents a high proportion of total fixed internet connections, fixed internet subscriptions remain low;
  • By contrast, since 2011 the mobile internet market, including mobile broadband, has been expanding rapidly;
  • The NTA is continuing to use the Rural Telecommunications Development Fund (RTDF) to help fund the build out of a national optical fibre network;
  • The slowing pace of reforms in the telecom sector was of concern;
  • finding a strategic partner for Nepal Telecom, for example, seemed to lack the commitment of key agencies, although it was still on the agenda;
  • In 2013, after a long delay, Nepal Telecom finally launched its full WiMAX service for business and residential;
  • The Commission for Investigation of Abuse of Authority (CIAA) gave its approval in 2013 for the government to begin issuing unified telecom licences to alternative operators;
  • The NTA was revising the terms and conditions for ISP and NSP licences;
  • The government was preparing the way for the auction of 4G wireless spectrum.

Nepal – key telecom parameters – 2013 - 2014

Category
2013
2014 (e)
Fixed-line services:
Subscriber penetration
2.7%
2.7%
Internet:
Subscriber penetration (fixed)1
0.8%
0.9%
Mobile services:
Subscriber penetration
72%
84%

(Source: BuddeComm)

Note: 1fixed internet subscribers only, excluding mobile services

This report provides an overview of the trends and developments in the telecommunications market in Nepal. Subjects covered include:

  • Key statistics;
  • Market and industry overviews;
  • Major operators (mobile and fixed)
  • Regulatory environment;
  • Infrastructure;
  • Mobile market;
  • Internet and broadband markets;
  • Telecom market scenario forecasts (fixed-line, internet, mobile subscribers) for 2015 and 2020.

Table of Contents

  • 1. Executive summary
  • 2. Key statistics
  • 3. Country overview
    • 3.1 Background
    • 3.2 Economy
    • 3.3 Political crisis and resolution
  • 4. Telecommunications market
    • 4.1 Overview of Nepal’s telecom market
      • 4.1.1 Background
  • 5. Regulatory environment
    • 5.1 Regulatory authority
      • 5.1.1 Nepal Telecommunication Authority (NTA)
    • 5.2 Telecommunications Policy 1999
      • 5.2.1 Universal service
      • 5.2.2 Rural Telecommunications Development Fund (RTDF)
    • 5.3 Telecommunications Policy 2004
    • 5.4 Telecom sector liberalisation and licensing
    • 5.5 Foreign assistance
    • 5.6 Commission for Investigation of Abuse of Authority (CIAA)
    • 5.7 Privatisation of Nepal Telecom
    • 5.8 Broadband policy
    • 5.9 Regulatory developments
      • 5.9.1 2014
      • 5.9.2 2013
      • 5.9.3 2012
      • 5.9.4 2011
  • 6. Basic telephone service providers in Nepal
    • 6.1 Nepal Telecom (formerly Nepal Doorsanchar Co Ltd)
      • 6.1.1 Overview
    • 6.2 United Telecom Ltd (UTL)
      • 6.2.1 Overview
      • 6.2.2 Dispute over licence fees
    • 6.3 Nepal Satellite Telecom (NST)
    • 6.4 Smart Telecom
    • 6.5 STM Telecom
  • 7. Telecommunications infrastructure
    • 7.1 National telecom network
      • 7.1.1 Overview
    • 7.2 Forecasts – fixed-line market – 2015; 2020
      • 7.2.1 Nepal East West SDH project
    • 7.3 International infrastructure
      • 7.3.1 Overview
      • 7.3.2 Proposed satellite
    • 7.4 Voice over Internet Protocol (VoIP)
  • 8. Internet market
    • 8.1 Overview
    • 8.2 Internet statistics
    • 8.3 Forecasts – Internet services – 2015; 2020
    • 8.4 Broadband internet
      • 8.4.1 Overview
      • 8.4.2 Broadband Policy
      • 8.4.3 WiMAX
      • 8.4.4 WiFi
      • 8.4.5 FttH
    • 8.5 ISP market
    • 8.6 Internet Exchange
    • 8.7 Internet Protocol TV (IPTV)
  • 9. Mobile communications
    • 9.1 Background
    • 9.2 Mobile statistics
    • 9.3 Third Generation (3G)
    • 9.4 Fourth Generation (4G) / LTE
    • 9.5 Forecasts – mobile market – 2015; 2020
    • 9.6 Major mobile operators
      • 9.6.1 Nepal Telecom (NT)
      • 9.6.2 Ncell (formerly Spice Nepal)
    • 9.7 Satellite mobile
    • 9.8 M-commerce
  • 10. Notes on forecasting
  • 11. Related reports
  • Table 1 – Country statistics Nepal – 2014
  • Table 2 – Telephone network statistics – August 2014
  • Table 3 – Internet user statistics – August 2014
  • Table 4 – Mobile statistics – August 2014
  • Table 5 – National telecommunications authorities
  • Table 6 – Nepal’s GDP real growth rate – 2006 - 2015
  • Table 7 – Licences issued for telecom services – August 2014
  • Table 8 – Fixed subscribers by operator – wireline and WLL – August 2014
  • Table 9 – Nepal Telecom’s fixed subscribers – wireline and WLL – 2006; 2011 - 2014
  • Table 10 – UTL’s subscribers – limited mobility and WLL – 2011 - 2014
  • Table 11 – Smart Telecom’s subscribers – limited mobility and fixed-line – 2011 - 2014
  • Table 12 – STM’s subscribers – limited mobility and fixed-line – 2013 - 2014
  • Table 13 – Fixed-lines in service and teledensity – 1995 - 2014
  • Table 14 – Fixed WLL subscribers – 2006; 2008 - 2014
  • Table 15 – Fixed-line subscribers – wireline and WLL – 2010 - 2014
  • Table 16 – Forecast fixed line subscribers – 2015; 2020
  • Table 17 –Internet users and penetration rate – 1997 - 2014
  • Table 18 – Fixed internet subscribers – 1999 - 2014
  • Table 19 – Internet subscribers by technology – August 2014
  • Table 20 – Percentage of households with internet – 2009 - 2014
  • Table 21 – Fixed broadband subscribers – 2007 - 2014
  • Table 22 – Fixed broadband subscribers and household overview – 2013
  • Table 23 – Internet bandwidth capacity – 2001 - 2014
  • Table 24 – Forecast fixed internet subscribers – 2015; 2020
  • Table 25 – DSL broadband subscribers – 2007 - 2014
  • Table 26 – Mobile subscribers, annual change and penetration rate – 1999 - 2014
  • Table 27 – Mobile operators, subscribers and annual change – August 2014
  • Table 28 – Mobile operators and market share – August 2014
  • Table 29 – Mobile broadband subscriptions – 2010 - 2014
  • Table 30 – Mobile internet subscribers – 2011 – 2014
  • Table 31 – Forecast mobile subscribers – 2015; 2020
  • Table 32 – Nepal Telecom (NDCL) - mobile subscribers – 2006 - 2014
  • Table 33 – Ncell’s mobile subscribers – 2006 - 2014
  • Chart 1 - Nepal Telecom's fixed subscribers - wireline and WLL – 2006 - 2014
  • Chart 2 - Fixed lines in service, annual change and teledensity - 2000 - 2014
  • Chart 3 - Internet users and penetration rate 2003-2014
  • Chart 4 - Mobile subscribers, annual change and penetration - 2006-2014
  • Exhibit 1 – Level of competition by market segment – 2013

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