The government is preparing to review the license renewal fees for telecommunication companies, which currently impose a significant financial burden on service providers.

Under Nepal's Telecommunications Regulations, companies must pay Rs 20 billion for license renewal. Over a 25-year period, with three renewals, this amounts to Rs 60 billion, in addition to other fees such as the rural telecommunication service fee.

Amid complaints from telecom operators about these high costs, Minister for Communications and Information Technology Prithvi Subba Gurung stated that the government is serious about reforming the telecommunication law. Speaking at an event organized by the Society of Economic Journalists of Nepal (SEJON) on Wednesday, he said efforts are underway to ease the financial strain of the Rs 20 billion renewal fee. "The government aims to modernize the telecom sector with innovation," he added.

According to Gurung, a draft of the new Telecommunications Act is being prepared, addressing issues such as license fees and emerging technologies. Currently, telecom companies are struggling with financial challenges due to high renewal costs. Smart Telecom, for instance, was only able to pay Rs 750 million of its Rs 20.13 billion renewal fee, leading to the revocation of its license.

The Nepal Telecommunications Authority (NTA) had recently recommended allowing telecom service providers to pay renewal fees in installments. However, operators argue that the fees are unsustainable and could push companies into financial distress. At the event, Jabbor Kayumov, CEO and Managing Director of Ncell, warned that Nepal’s telecom sector is nearing a crisis. He noted that the country’s ranking on the Global Mobile Services (GMS) index has dropped from 117th to 119th due to a lack of foreign investment.

"As the telecom business declines, tax revenue for the government is also decreasing. It's time for serious action," Kayumov said. He criticized the NTA for focusing more on revenue collection than facilitating service providers.

Telecom expert Manohar Kumar Bhattarai pointed out that companies require Rs 6 billion annually to maintain services, but declining revenue is making this increasingly difficult. He noted that the telecom sector’s contribution to Nepal’s GDP has fallen from 3.6% to 1.8%.

Additionally, he highlighted that 48% of telecom companies’ total income is absorbed by taxes and other state fees, calling for reforms to improve the industry's financial viability.

NTA Chairman Bhupendra Bhandari emphasized the need to boost investment in the sector. He said that while 4G coverage is not yet nationwide, efforts are underway to complete it within a year. He suggested that, rather than shutting down 2G immediately, it would be more appropriate to phase out 3G first, based on consumer needs.

Bhandari also expressed concerns over declining service quality and the shift in revenue from telecom companies to internet service providers (ISPs). He stressed the need for regulatory improvements.

Minister Gurung echoed these concerns, stating that the telecommunications sector must be made more systematic to address its challenges. He called for telecom operators to adopt new business strategies to counter declining revenues.

He also emphasized that the NTA should act as an impartial regulator rather than being biased toward revenue collection. "The authority must function as a facilitator and a strong regulator," he said, reaffirming his commitment to addressing the sector’s challenges, which are crucial for Nepal’s digital transformation.

Radhika Aryal, Secretary at the Ministry of Communications and Information Technology, expressed concern over the deteriorating financial health of telecom companies. She urged all regulatory, implementation, and planning bodies to collaborate in finding solutions.

Aryal also pointed out that the reduction of telecom service providers from six to just two has increased risks in the sector. She called for strict adherence to regulations to ensure a stable and competitive telecom industry.