In mid-March, during a program in Kathmandu, Bhupendra Bhandari, Chairperson of the Nepal Telecommunications Authority (NTA), announced that the regulatory body would approve 5G within a week of receiving an application from any telecom operator. His statement was directed at Nepal Telecom, the state-owned operator, which had completed a successful 5G trial but remained hesitant to proceed with a full rollout.

In late 2023, the government assigned the 2,600 MHz frequency band to Nepal Telecom for its 5G trials. The company tested the technology in key cities such as Kathmandu, Pokhara and Birgunj. Despite these efforts, public access to 5G has not materialized due to high deployment costs.

When will Nepal get 5G?

Nepal was a pioneer in South Asia when it launched 3G services in 2007 and was an early adopter of 4G technology in 2017. However, despite conducting 5G trials, the country has not yet introduced the technology, which promises internet speeds up to 10 times faster than 4G.

“Yes, we have completed trials, but we are not ready to launch 5G due to significant challenges,” said a senior Nepal Telecom official. “The biggest hurdle is the massive cost of deployment. With revenue already declining, sustaining operations post-launch will be extremely difficult. The required investment is substantial, and our earnings continue to fall.”

When asked about the trials conducted by Nepal Telecom, an official admitted that while the trials had been completed, both the government and the company seemed disconnected from the reality of the company’s financial struggles. “They merely claim that 5G is coming to garner public attention,” the official remarked.

Industry experts estimate that telecom companies would need to invest 7 to 10 years’ worth of profits to cover the introduction and operational costs of 5G. For Nepal Telecom alone, the estimated cost of launching 5G services is a staggering Rs 70 billion.

Nepal Telecom currently generates Rs 42 billion in annual revenue, but its net profit is a modest Rs 6 billion. After paying government taxes, service fees and royalties, little remains for reinvestment. Similarly, Ncell, the other major operator, earns a net profit of around Rs 8-10 billion. Given these figures, recovering a 5G investment could take eight to nine years. This heavy financial burden explains the reluctance of the operators for 5G rollout.

Nepal has two major telecom operators. Nepal Telecom, which has received approval from the NTA for 5G trials and is in the final stages of preparation; and Ncell, which has repeatedly requested approval from the NTA for 5G trials but has yet to receive it. Even if approved, sources suggest Ncell might delay a 5G launch, given the uncertainty surrounding its future. The government’s plan to take control of Ncell in four and a half years adds another layer of complexity to its investment decisions.

Despite these challenges, NTA Chairperson Bhandari remains optimistic, insisting that the fifth-generation network could be launched in Nepal’s eight major cities.

Radhika Aryal, Secretary of the Ministry of Communication and Information Technology, expressed concerns about the telecom sector’s worsening financial situation. She stressed the need for collaboration among regulatory, implementation and planning bodies to address these issues, noting that Nepal’s telecom market, once home to six operators, now relies on just two.

According to Anand Raj Khanal, a former Director of the NTA, now is not the right time for Nepal to introduce 5G. “Revenue is declining, and Nepal Telecom, despite its trials, is operating at a loss. The 5G debate is premature—our focus should instead be on strengthening 4G networks,” he said.

Declining Revenue: A Growing Concern

Officials from both major telecom operators told New Business Age that revenue began dropping after the introduction of 4G services. Consumers shifted from voice calls to data, relying on OTT (Over-the-Top) platforms like WhatsApp and Zoom. While 4G adoption grew, data usage remained low with people using data only when necessary.

The rise of internet service providers (ISPs) offering public WiFi hotspots, viewed by telecom operators as a violation of telecommunications policies, further eroded their market. Moreover, mobile networks are no longer the primary means of internet access for many Nepalis. Approximately 77% of users spend more than 60% of their internet time on WiFi. Despite 4G coverage exceeding 90%, only two out in 10 users regularly use mobile data, averaging 4GB per month. In comparison, 80% of users in Bangladesh, 90% in India and 70% in Pakistan rely on mobile data.

In the fiscal year 2017/18, Nepal Telecom and Ncell together generated Rs 105.95 billion in revenue, with Ncell contributing Rs 60.49 billion. By 2022/23, total revenue fell to Rs 74.24 billion—a 38% drop for Ncell (Rs 37.44 billion) and a decline to Rs 36.80 billion for Nepal Telecom.

Minister for Communication and Information Technology, Prithvi Subba Gurung, acknowledged the sector’s struggles and called for restructuring. He urged operators to come up with new business strategies to counter declining revenue and assured that the government would push for legal reforms. Acknowledging gaps in the regulatory framework, Minister Gurung revealed that a new Telecommunications Act is currently being drafted and that the updated law will address issues such as license fees and emerging technologies.

He also directed the NTA to act impartially and added that the regulator should serve as a facilitator rather than an obstacle He added that the government would revise the Rs 20 billion license renewal fee which has long been a financial burden on operators. “The government is committed to addressing challenges in the telecom sector, as it plays a vital role in Nepal’s digital transformation. With revenue declining year after year, we are committed to take decisive steps to stabilize the industry,” he added.

Limited Data Usage and Weak Infrastructure

Experts argue that Nepal should prioritize expanding its 4G user base and improving existing infrastructure before transitioning to 5G. Although 4G coverage exceeds 90% nationwide, Nepal has the lowest mobile data usage in South Asia, with only two in ten users regularly using mobile data and consuming an average of just 4GB per month.

Ncell has announced plans to discontinue its 3G services by 2025 and has urged the government to tighten regulations on the import of non-VoLTE (Voice over LTE) phones to facilitate a smoother shift to 4G and future technologies.

According to NTA, Ncell currently has 138,600 active 3G users, while 11.8 million of its subscribers have upgraded to 4G. Nepal Telecom, meanwhile, still has 782,300 3G users, while 13.37 million have upgraded to 4G.

Speaking at a program organized recently, NTA Chairperson Bhandari stressed the need for full 4G coverage within a year before considering further upgrades. He suggested phasing out 3G first rather than immediately shutting down 2G.

Bhandari also acknowledged declining telecom service quality and called for urgent improvements. He dismissed claims that the telecom sector is shrinking, noting that business has shifted from telecom operators to ISPs. With declining new investments, he called on the operators to focus on strategies to expand business and sustain growth.

Countries like India, the Maldives and Sri Lanka have successfully introduced 5G despite having limited local users, largely due to high tourist inflows that justify high-speed internet. Nepal, however, receives only around one million international tourists annually—far too few to commercially justify 5G investment.

Without a robust user base, sufficient infrastructure and high data consumption, telecom operators are hesitant to move forward with 5G implementation, according to former NTA Director Khanal. “With such low mobile data usage currently, where would 5G find its subscriber base? Are we looking to serve only a privileged few with this technology?” he questioned.

Lack of Ecosystem for 5G

Nepal faces significant challenges in adopting 5G technology due to infrastructure and market limitations. the necessary ecosystem to support it. Despite growing discussions about implementation, the country lacks the necessary ecosystem to support next-generation networks. Experts say adoption has been slow even with 4G technology. They added that many people are using 4G as an alternative to traditional voice calls and that this technology has not been fully implemented across the country.

While 5G can be up to 10 times faster than 4G, some question whether Nepal even needs such high-speed internet? The reality is that Nepal does not yet have an ecosystem that can justify or sustain 5G technology. For 5G to be useful, there must be demand for high-speed data services. However, Nepal lacks a strong OTT (Over-the-Top) platform ecosystem—services like Netflix, Amazon Prime and local alternatives are not widely used. While some OTT services are available, most people still rely on traditional television, YouTube or social media rather than streaming platforms that require high-speed internet. Additionally, there is no widespread mechanism for Nepalis to purchase subscriptions to OTT platforms. Another significant issue is smartphone penetration. The majority of mobile phone users in Nepal still do not own 5G-compatible smartphones. Even those with 4G phones often use limited data due to high costs or poor network coverage. Without affordable and widely available 5G devices, adoption will remain slow.

“The number of 5G-compatible handsets is limited, making it difficult for consumers to access the technology. Additionally, 5G requires a dense network of towers for smooth connectivity which demands a significant amount of electricity. However, Nepal faces power shortages, particularly during the dry season,” Khanal explained.

Affordability is another major obstacle. Fixed mobile broadband using 5G could cost around $150 per month. Given Nepal's economic conditions, this price point may be prohibitively expensive for many consumers. Experts suggest strengthening the existing 4G network and expanding its user base before making the leap to 5G.

Nepal's 4G network itself is not fully developed. “If Nepal is still struggling to make full use of 4G, introducing 5G may not be practical at this stage. The infrastructure is expensive, and telecom companies are already facing declining revenues. Without a functional 4G ecosystem, investing in 5G could be premature and may not offer significant benefits,” said Khanal.

(This news report was originally published in   April 2025   issue of New Business Age Magazine.)