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July 2016 Corporate Focus

Published on: 2016-07-29 14:51:00     1713 times read    1  Comments
 Nepal Telecom : Going Strong

The country’s first telecom company has done much to improve how the nation communicates. And with new services it is once again reinventing itself for a new generation of tech savvy customers.

Pratibha Vaidya, Spokesperson and Corporate and Business Strategy Manager Nepal TelecomPratibha Vaidya, Spokesperson and Corporate and Business Strategy Manager Nepal Telecom

With a century long history full of milestones reached in services and high in achievements, Nepal Doorsanchar Company Ltd, popularly known as Nepal Telecom (NT), is a name that has dominated the telecommunication services in Nepal. The company is the single largest provider of telephony, mobile and internet services.  With its network covering all parts of Nepal, it has branches, exchanges and offices in 184 locations across the country.   

The increasing competition in the domestic telecom market has led Nepal Telecom to focus on providing rich and quality network services at affordable prices throughout the country. Over the years, NT has transformed from a government-owned monopoly to a highly business oriented and customer focused commercial enterprise. With the demand of telecommunication and internet services rapidly rising all across the country in the recent years, the company has been able to significantly increase its customer base. Including the telephone lines, PSTN, GSM, CDMA, internet services, it has around 10.44 million subscribers across the country. 

The ICT company is among the country’s top institutional taxpayers. Over the past few years, NT is either first or second in the list of largest taxpayers. 

Journey
It has been a century since telecom services was introduced in Nepal. Back in 1973 BS Rana Prime Minister Chandra Shamsher started the first telco in the country as the Chandra Telecom. The company then gradually evolved to become Nepal Telecom Corporation in 2032 BS. The year 2004 was a major turnaround for the government held entity as it was transformed into a commercial entity by registering as Nepal Doorsanchar Company Ltd. Later it converted to Nepal Telecom Company Ltd in 2060 BS as a publicly listed company.

“Though being a commercial entity, NT is not engaged in its activities from a purely business point of view,” mentions Pratibha Vaidya, Spokesperson and Corporate and Business Strategy Manager of Nepal Telecom. “We are focusing on extending our services to the most remote areas in cost effective ways,” she adds. 

The company has a variety of services depending upon the demand of customers. To meet the increased demand of the internet, for instance, it has been providing services such as FTTH (fiber to the home) and ADSL across major cities of the country at present. 

Customers
Nepal Telecom has 10.44 million -including GSM, CDMA and PSTN- services. In voice services, it has 669,923 customers in PSTN, 122 million in GSM and 1.5 million in CDMA as of Chaitra, 2072 (mid April 2016). Similarly, in data services it has altogether 7.33 million subscribers of GPRS, 3G, EVDO, ADSL, FTTH and Wimax services. “While analysing the market shane, NT occupies a 48 percent share in voice service and a 57 percent share in data services in Nepal,” informs Vaidya. “We are ahead of our competitors by around 28,000 subscribers in the overall mobile service category.”   

As per the report of the third quarter of the fiscal year 2072/73 (i.e. as of mid April 2016), the company’s net profit decreased by 10.66 percent compared to the same period last FY. “The increase in operating costs has been the main factor for the decline in profit. Cost of expansion projects alongside a rise in installation related expenditures, fuel prices and royalty are cause for this,” says Vaidya. “Similarly, also voluntary retirement scheme (VRS) has also contributed to this.” The company has allocated Rs 4.29 billion for the voluntary retirement of 796 employees. 

During the period, the company increased its reserve and surplus by 55.57 percent while the total equity and liabilities rose by 12.99 percent. Similarly, the company’s total income amounted to Rs 34 billion increasing by 11.83 percent compared to  last FY’s corresponding period. NT’s expenditure increased by 29.29 percent to Rs 20 billion. Likewise, the company’s earnings per share has reached Rs 82.82, P/E ratio 8.09 and net worth per share Rs 574.99.

Market Share 
Since 2072, NT is leading in voice and data services. As per the latest statistics, the company holds a 48 percent market share in voice and 57 percent in data services. 

Problems and Challenges
The transformation has brought many changes, but as the government still has almost a 92 percent stake in the company, it has not been able to free itself from the shackles of bureaucracy and hence it has not been able to function purely as a company. The main hurdle for the company is complying to government procurement rules and regulations that it needs to follow for its entire project works.  This causes delay in NT’s decision making process and the implementation of all strategic plans. Though converted into a publicly listed company, it has not been able to work as other private companies. "We need to follow almost all the rules and regulations as a government organisation ultimately resulting in the slow decision making," says Vaidya. According to her, the company is planning to tie-up with a strategic partner so as to remove these hurdles.  

Despite the burgeoning business, NT considers the highly competitive market, changing technological trends, changing customer habits, demands and alternative choices, threats from new entrants and the bargaining power of suppliers and customers as the main challenges to its current supremacy.

Market Strategies 
Nepal Telecom is strategically planning to achieve its targets to maintain its position as a leader in the domestic telecom market. The company has been continuously announcing new offerings for various target groups across mobile and internet services. "Focusing on the new generation of customers, we have introduced unlimited data packages for night time to GSM Prepaid subscribers," mentions Vaidya. Similarly, NT is planning to offer similar other attractive packages to all its subscribers.

As a large company simultaneously providing multiple services across different platforms at a time, NT is exploring ways to effectively market its services. "Not only newspapers and broadcast and digital media, now we are also using social media to advertise our products and to inform customers about our various services. Proper marketing is important for NT as it has a variety of services and people might get confused about them," mentions Vaidya. 

Business Diversification
“We are focused on balancing the supply and demand chain, maintaining quality of service, customer care and support, developing efficient manpower and business diversifications,” says Vaidya. “We have invested in hydropower projects as a part of business diversification.”  NT has already invested in the Upper Tamakoshi Project. The investments were made with a certain percent put up as loans and a certain percent as shares. Also, the company aims to invest in the Trishuli B Hydropower Project. Though the size of the investment has not been finalised yet, the company can invest up to 50 percent in the proposed project, according to Vaidya.  

Human Resource Resizing
NT is among the biggest companies in Nepal in terms of human resources with 4,365 employees at present. NT is engaged in resizing it to ensure efficiency in delivery of services and effectiveness in business activities. The resizing drive has led the company to announce voluntary retirement schemes over the past few years resulting in the downsized number of employees at present which was around 6,000 a decade ago. As a part of its human resources restructuring efforts, the company has come up with its latest VRS offering.  "About 1,500 employees are expected to be laid-off out of which 826 have already retired under the scheme," says Vaidya. 

Upcoming Services
NT is planning to launch LTE network in the near future after the frequency allotment is cleared by the regulatory authority. The company believes its customers will be able to access high speed internet connectivity with the introduction of the new mobile data network.  The company is the first Nepali telecom services provider to introduce 4G services in the country. "We are providing Wimax in data package which is already a 4G service but most customers don't know about it," says Vaidya. 

NT has various other services in the pipeline.  Customer Contact Center (CCC) is one such upcoming service through which customers can access a single platform to inquire and lodge complaints regarding all services of NT. The company plans to integrate different services to the CCC platform in a phased manner. 

Progress on FTTH and 3G Network Expansion  
The company has started its FTTH service from five different locations namely, Sundhara, Naxal, Patan, Babarmahal and Chhauni for Kathmandu Valley and Pokhara and Bharatpur for outside Kathamandu Valley. “In the near future, we will be launching FTTH service in Dharan and Birgunj,” informs Vaidya.

NT's 3G network coverage has reached 73 districts, except Dolpa and Humla. The company targets to extend the mobile internet service in these districts as well this year. As per Vaidya, NT is expanding its 2G and 3G networks with enhancements in coverage and data speeds.

ADSS (All Dielectric Self- Supporting) Fiber Optic Cable Project 
To boost the internet coverage, NT has been engaged in ADSS Fiber Optic Cable Project to interconnect the country’s rural and peri-urban areas.  Apart from connecting district headquarters via optical fibers, this project also connects intermediate stations like exchanges, repeaters and BTSs along the routes. Recently, the company completed an optical fiber cross border connectivity to China from Rasuwagadhi which will be commercialised soon. The project is seen as a milestone in the country’s internet network connectivity to end Nepal's sole dependency on India for internet bandwidth and connectivity to the outside world. Similarly, NT has also finalised a workout plan of laying optical fibers stretching 931 kms across the Mid-Hill Highway connecting Chiwabanjyang of Taplejung to Panchkhal of Kavre.

Unique Services
Nepal Telecom has many unique services in its portfolio. It is the only telecom operator in the country providing PSTN (fixed line) service which includes value added services namely, IVR (198 automatic complaint registration, 1600-slc results, 1601-10+2 results, 1606-PSTN bill enquiry, 1607-PUK enquiry), voice mail, notice mail, notice board, AFS (TollFree), EasyPhone and many more other enquiry and complaint registration services for VOIP, GSM, CDMA and PSTN subscribers. 

The company is the only provider of CDMA service in Nepal. Similarly, it has also been providing services including NTPro and WebSMS for GSM Postpaid, Meet Social Media Network and 4G services to its customers via WiMax. With the NTPro service, GSM Postpaid users can use their phones from outside Nepal to make and receive calls using local SIM cards.  

CSR activities
NT has been a major contributor in many sectors including in health, environment, sports, education, ICT, agriculture alongside various social groups with its CRS initiatives. The company has been maintaining the greenery by upkeeping the planted trees along Maitighar to Tinkune road since Mangsir 2071. It disbursed Rs 11.4 million to Kathmandu Valley Development Authority to plant the trees. Nepal Telecom has been helping the government’s initiatives to clean the Bagmati river by sending a free SMS to all mobile users with invitation to participate in the programme held each week. 

To support sports development, the company has been sponsoring the men's and women's football team of Nepal Police since 2068 BS and 2070 BS respectively. Similarly NT has been sponsoring the senior men's and women's cricket team since 2071 BS Chaitra.

The health sector is among the company’s top priority for CSR activities. NT has been distributing free SIM/RUIM to female community health volunteers of 57 districts in hilly and mountainous regions since 2070 BS. The company is in the process of constructing public toilets at Tilganga and Pashupati areas.

The company is also helping farmers. NT joined hands with the Ministry of Agriculture Development (MoAD) to distribute free SIM cards to farmers initially at eight districts to disseminate agro-information to farmers. Likewise, Nepal Telecom has been offering SMS services to hearing impaired people at 20 paisa since 2070 BS.

The ICT company took its social responsibility to the next level after last year’s disastrous earthquake. It provided free telecommunication services worth Rs 1.46 billion during the period. The initiative received widespread applause nationally and internationally as the company effectively continued its services despite suffering damage to its network. It donated Rs 250 million to the Prime Minister's Relief fund to aid the earthquake victims. 

The company, meanwhile, has made a commitment to contribute Rs 1 billion for the reconstruction and rehabilitation of heritage sites and community schools etc over the period of three years.

SWOT Analysis

Strengths
•    Strong brand name
•    Diverse Technology and portfolio of services
•    Nationwide coverage
•    Huge well established nationwide infrastructure and assets
•    Massive manpower and technical expertise
•    Sound financial condition
•    Positioning in the telecom market as a leader in telecom sector
•    Government-owned Company with all Nepalese stakeholders, hence regarded as a stable company 

Weakness 
•    After sales support and customer care
•    Maintaining quality of service
•    Marketing strategies
•    Human resource management issues

Opportunities
•    Huge scope in data business and penetration, growing data users
•    Divestment opportunities
•    Infrastructure sharing 
•    Untapped market 
•    Growing enterprise business and its association with mobile service
•    Growing demand of value-added service (VAS) 
•    New service introductions with rapid technological changes

Threats
•    General weaknesses in a government organisation such as bureaucratic structure, risk management, national culture 
•    Regulatory uncertainties 
•    Choice of options and bargaining power of customers
•    Low growth in economy
•    Customer churning
•    Interference on management activities by trade unions


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