The causes of UTL's current ordeals are said to be its inability to judge and adapt to the current market and customer demand.
Once regarded as a quality telecommunication service provider, which had successfully built a strong presence within and beyond Kathmandu valley, United Telecom (UTL) is gradually declining. This decline can be blamed equally on the frequent and increasing financial losses, the continuous decline in customer demand, and the complications associated with its administration. These shortcomings have tarnished UTL's illustrious history.
A mere 12 years after entering Nepal with the backing of major players of the Indian telecommunication market, UTL's future is already being questioned. Due to this, the policies and credibility of major companies such as Tata Communications, Telecommunication Consults India Limited and Mahanagar Telephone Corporation are under doubt. The latter two are affiliated to the Indian government.
The causes of UTL's current ordeals are said to be its inability to judge and adapt to the current market and customer demand. Unlike Mero Mobile, which was able to assess the market efficiently and rebrand itself as Ncell, UTL seems to be struggling to do the same.
As a result, the company has been enduring consistent loss over the years. Its customer network has also been reduced from 200,000 to a mere 88,000, among which many are inactive. This in turn is a result of UTL's inability to comprehend the basic fact that a good customer network is built on good service.
Another weakness of UTL's incompetent administration is its tendency to defy decisions of Nepal Telecommunication Authority (NTA)– which acts as the regulatory body – and try to force decisions in its favour. During the royal rule, the company succeeded in reducing amounts owed in royalties (in accordance with a rule at that time) from 200 million to 20 million rupees.
The company has repeatedly notified NTA of its inability to pay licensing fees. It has not been able to submit royalty charges for its license, obtained one and half years ago from the United Telecommunication Services. Meanwhile, Smart Telecom, which also received the license at the same time, has already submitted all the royalty.
Another cause for UTL's current ordeal is the increasing dispute between the employees and administration of the company. While the company is requesting the Labour Department for permission to reduce personnel, it is also requesting the Department of Industry for permission to increase investment which will require more employees. These disputes are causing major obstructions in services and the administration has failed to display the required level of seriousness.
UTL's future is further in doubt due to its inability to diversify its services in today’s highly competitive market. If UTL is unable to learn from its mistakes and diversify its services, solidify investment and administration and improve and expand its customer network, then UTL's downfall is inevitable.
UTL is preparing to increase technical and financial investment although it has been facing accusations of slacking in extension of services. The company had written a letter to the Department of Industry last October to double the current 30 billion rupees investment. According to sources, despite increasingly frequent disagreements between the administration and the employees, the company is speeding up the process to increase investment. A knowledgeable source said that the company’s administration has decided this move in an effort to introduce new manpower under pressure of the demands raised by the current employees.
The plan to acquire 20 administrative and 40 technical personnel, as cited in the letter given to the Department of Industry, has also been presented as a basis for the increase in investment. But ironically, the company had previously written to the Labor Department to remove 60 of its employees. A plan to increase in electrical consumption from the previously agreed 500KW to 1500KW (also cited in the letter) has also been cited as a cause for additional investment. In preparation to increase investment, the company has already invested an additional 450 million rupees in the current fiscal year 2014/15.