Nepal - Telecoms, Mobile and Internet

Executive summary

Strong growth in Nepal’s mobile internet/broadband markets

Over the years, 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. A period in which acts of terrorism were common and the Maoist rebels were operating throughout the country had taken its toll on the telecom network – both directly and indirectly. This has changed with the rebels laying down their arms and becoming part of the political process. But, more recently 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 began in 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 2014/2015 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 95% in 2015.

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.

Key developments:

  • By mid-2015 mobile penetration in Nepal, still relatively low by developed world standards, was moving strongly upwards, with mobile subscriber numbers having increased fivefold in five years;
  • Mobile penetration was set to pass 100% in second half of 2015;
  • Fixed-line growth in Nepal had reached a standstill, with the market effectively ‘flattening out’ at 3% in terms of penetration growth; there were very few signs that it would pick up again soon, even allowing for expansion into underserved rural areas;
  • After being sluggish for years, the internet market has finally started to move forward;
  • Internet user penetration in particular has been increasing;
  • Internet user penetration will have doubled in the four years to end-2015;
  • While broadband represents a high proportion of total fixed internet connections, fixed internet subscriptions remain low overall;
  • By contrast, since 2011 the mobile internet market, including mobile broadband, has been expanding rapidly;
  • In just 4 years mobile broadband subscriber numbers had hit 5 million (penetration of 17%);
  • The NTA is continuing to use the Rural Telecommunications Development Fund (RTDF) to help build a national optical fibre network;
  • The government was moving slowly in preparing the way for the auction of 4G wireless spectrum;
  • The government planned to spend NPR1.48 billion (US$14 million) from the RTDF in the fiscal year to July 2016;
  • In 2015 the government was finalising the development of the ICT Policy 2016;
  • It was reported in February 2015 that two IPTV services were set to be launched in Nepal.
  • The government formally adopted the National Broadband Policy in April 2015.

Companies mentioned in this report

Nepal Telecom; Nepal Doorsanchar Co Ltd (NDCL); United Telecom Ltd (UTL); Ncell; TeliaSonera; STM Telecom Sanchar Pvt Ltd; Nepal Satellite Telecom Pvt Ltd (NSTPL); Smart Telecom Pvt Ltd (STPL).

Table of Contents

  • 1. Executive summary
  • 2. Key statistics
  • 3. Country overview
    • 3.1 Background
    • 3.2 Economy
    • 3.3 Political crisis and resolution - background
    • 3.4 Earthquake: April 2015
  • 4. Telecommunications market
    • 4.1 Overview of Nepal’s telecom market
    • 4.2 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 Infrastructure sharing
      • 5.9.2 ISP and NSP licences
      • 5.9.3 Renewal of operator licences
      • 5.9.4 Proposed 4G auction
      • 5.9.5 Spectrum sale
  • 6. Basic telephone service providers in Nepal
    • 6.1 Nepal Telecom (formerly Nepal Doorsanchar Co Ltd)
      • 6.1.1 Overview
      • 6.1.2 Financials
      • 6.1.3 Background
    • 6.2 United Telecom Ltd (UTL)
      • 6.2.1 Overview
      • 6.2.2 Background
      • 6.2.3 Unified operator licence
      • 6.2.4 Dispute over licence fees
    • 6.3 Nepal Satellite Telecom (NST)
    • 6.4 Smart Telecom (STPL)
      • 6.4.1 Unified operator licence
    • 6.5 STM Telecom
  • 7. Telecommunications infrastructure
    • 7.1 National telecom network
      • 7.1.1 Overview
      • 7.1.2 Statistics
      • 7.1.3 Forecasts – fixed-line market – 2015; 2017; 2020
    • 7.2 International infrastructure
      • 7.2.1 Overview
      • 7.2.2 Proposed satellite
    • 7.3 Voice over Internet Protocol (VoIP)
  • 8. Internet market
    • 8.1 Background
    • 8.2 Internet statistics
    • 8.3 Forecasts – Internet services – 2015; 2017; 2020
    • 8.4 Broadband internet
      • 8.4.1 Overview
      • 8.4.2 WiMAX
      • 8.4.3 WiFi
      • 8.4.4 FttH
    • 8.5 ISP market
    • 8.6 Internet Exchange
    • 8.7 Internet Protocol TV (IPTV)
  • 9. Mobile communications
    • 9.1 Overview
    • 9.2 Background
    • 9.3 Mobile statistics
    • 9.4 Forecasts – mobile market – 2015; 2017; 2020
    • 9.5 Third Generation (3G)
    • 9.6 Fourth Generation (4G) / LTE
  • 10. Major mobile operators
    • 10.1 Nepal Telecom (NT)
    • 10.2 Ncell (formerly Spice Nepal)
      • 10.2.1 Overview
      • 10.2.2 Developments
      • 10.2.3 Financials
    • 10.3 Satellite mobile
    • 10.4 M-commerce
  • 11. Notes on forecasting
  • 12. Related reports
  • Table 1 – Country statistics Nepal – 2015
  • Table 2 – Telephone network statistics – July 2015
  • Table 3 – Internet user statistics – 2014
  • Table 4 – Mobile statistics – July 2015
  • Table 5 – National telecommunications authorities
  • Table 6 – Nepal’s GDP real growth rate – 2006 - 2016
  • Table 7 – Licences issued for telecom services – July 2015
  • Table 8 – Fixed subscribers by operator – wireline and WLL – July 2015
  • Table 9 – Nepal Telecom’s fixed subscribers – wireline and WLL – 2006; 2011 - 2015
  • Table 10 – UTL’s subscribers – limited mobility and WLL – 2011 - 2015
  • Table 11 – Smart Telecom’s subscribers – limited mobility and fixed-line – 2011 - 2015
  • Table 12 – STM’s subscribers – limited mobility and fixed-line – 2013 - 2015
  • Table 13 – Historical - fixed-lines in service and teledensity – 1995 - 2005
  • Table 14 – Fixed-lines in service and teledensity – 2006 - 2015
  • Table 15 – Fixed WLL subscribers – 2006; 2008 - 2015
  • Table 16 – Fixed-line subscribers – wireline and WLL – 2010 - 2015
  • Table 17 – Forecast fixed line subscribers – 2015; 2017; 2020
  • Table 18 – Historical - internet users and penetration rate – 1997 - 2005
  • Table 19 – Internet users and penetration rate – 2006 - 2015
  • Table 20 – Fixed internet subscribers – 1999 - 2015
  • Table 21 – Internet subscribers by technology – 2014
  • Table 22 – Internet subscribers by technology – July 2015
  • Table 23 – Percentage of households with internet – 2009 - 2015
  • Table 24 – Fixed broadband subscribers – 2007 - 2015
  • Table 25 – Fixed broadband subscribers and household overview – 2014
  • Table 26 – Internet bandwidth capacity – 2001 - 2015
  • Table 27 – Forecast fixed internet subscribers – 2015; 2017; 2020
  • Table 28 – DSL broadband subscribers – 2007 - 2015
  • Table 29 – Mobile subscribers, annual change and penetration rate – 1999 - 2015
  • Table 30 – Mobile operators, subscribers and annual change – July 2015
  • Table 31 – Mobile operators and market share – July 2015
  • Table 32 – Mobile broadband subscriptions – 2010 - 2015
  • Table 33 – Mobile internet subscribers – 2011 – 2015
  • Table 34 – Forecast mobile subscribers – 2015; 2017; 2020
  • Table 35 – Nepal Telecom (NDCL) - mobile subscribers – 2006 - 2015
  • Table 36 – Ncell’s mobile subscribers – 2006 - 2015
  • Chart 1 - Nepal Telecom's fixed subscribers - wireline and WLL – 2006 - 2015
  • Chart 2 - Fixed lines in service, annual change and teledensity - 2006 - 2015
  • Chart 3 - Internet users and penetration rate 2006-2015
  • Chart 4 - Mobile subscribers, annual change and penetration - 2006-2015
  • Exhibit 1 – Level of competition by market segment – 2014

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