Executive summary
A number of factors had been slowing the development of Nepal’s telecom network up until now. Certainly the country’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.
By 2007, however, hope for Nepal’s transition to a considerably more stable time was starting to improve. Things were changing. The country’s first elections for over nine years were finally held in 2008; a clear victory going to the Maoists who were expected to renounce violence and 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), have both been very active in the performance of their respective roles.
In its early development phase, telecommunications in Nepal were basic and limited, with the first telephone exchange not being established in the country until 1960. Despite an absence of any substantial foreign investment, telecom services steadily expanded from 1995 onwards, mainly as a result of assistance provided through foreign grant-aid and the introduction of transparent tendering, which increased threefold the number of lines that could be purchased for the same amount of funding. Nevertheless, for a long time the number of fixed-line connections remained woefully low. Unmet demand remained high and the waiting time for a fixed-line service could be five or more years.
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 just over a decade ago with the licensing of United Telecom Ltd. It subsequently lost its monopoly on mobile services with the licensing of Spice Nepal Pvt Ltd, later known as NCell, in 2004.
The period after 2006 has seen notably strong subscriber growth. The total telephone penetration rate by early 2007 had reached at about 8%; this comprised 2.7% in fixed-line services (including WLL and Limited Mobility) and 5.3% in mobile services. This was substantially up from the figure twelve months earlier of 3.7% total telephone penetration (2.1% fixed line, 1.5% mobile). In other words, the mobile subscriber base had expanded by around 150% in 2006. In that year with the country’s mobile market growing rapidly, mobile subscriber numbers swept quickly past fixed services. By 2007 Nepal Telecom with the help of its private operator rivals was setting what were regarded as ambitious targets for network expansion; it aimed to achieve an overall penetration (mobile and fixed) of 20% by 2010. They turned out to be not so ambitious. By 2010 the total telephone penetration had in fact reached 36%; the 9.2 million mobile subscribers at the time comprised 93% of all telephone subscribers in the country. Fixed-line penetration had remained static at just under 3%, however.
Despite all the effort, there remained 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. Of a total of 3,914 Village Development Committees across the country, only 306 were unserved by December 2009. In order to meet future demand, it was estimated that Nepal needed to invest around US$135 million annually in its telecom sector.
Market highlights:
- By late 2011 mobile penetration in Nepal had quickly moved to around 45%, with mobile subscriber numbers having increased fivefold in just four years;
- Fixed-line growth in Nepal was particularly slow and there was little sign that this segment of the market was picking up;
- The challenge for the fixed market was not just to increase the lowly 3% fixed-line penetration, but to continue the expansion program into the underserved rural areas;
- The deployment of WLL services has certainly provided a boost to the fixed market; by 2012 this technology platform supported around 50% of all fixed-line services;
- After being sluggish for years, the internet segment of the market finally started to move in 2010; user penetration jumped quickly in that year to surge to around 9%.
- As for broadband, subscriptions remain low consistent with a lowly penetrated internet market; broadband however represented around 75% of all internet connections by 2011.
- After years of uncertainty Nepal’s economy continued to struggle in 2011 and into 2012; however, it was hoped that a rebuilding process has finally started.
- Coming into 2012, the telecom sector continued to undergo reforms, although progress is somewhat erratic; most importantly the various government regulators were no doubt having a major impact on the market in the way they are performing their watchdog roles.
Nepal – key telecom parameters – 2010 - 2011
Category
| 2010
| 2011 (e)
|
|---|
Fixed-line services:
|
|---|
Total number of subscribers
| 841,700
| 845,000
|
Annual growth
| 4%
| 0%
|
Fixed-line penetration (population)
| 2.9%
| 2.9%
|
Internet:
|
|---|
Total number of subscribers1
| 142,200
| 180,000
|
Annual growth
| 35%
| 27%
|
Internet subscriber penetration (population)
| 0.5%
| 0.6%
|
Mobile services:
|
|---|
Total number of subscribers
| 9.2 million
| 13.3 million
|
Annual growth
| 21%
| 45%
|
Mobile penetration (population)
| 33%
| 46%
|
(Source: BuddeComm)
Note: 1fixed internet subscribers only, excluding wireless services
This report provides an overview of the trends and developments in the telecommunications markets in Nepal. Subjects covered include:
- Key statistics;
- Market and industry overviews;
- Major operators (mobile and fixed)
- Regulatory environment;
- Infrastructure;
- Mobile market;
- Internet market;
- Telecom market forecasts for 2015 and 2020.
