'Repatriation of Returns should not be Viewed Negatively'

Michael Foley took over as CEO of Ncell on November 1, succeeding Syed MD Enamul Kabir. He brings more than 20 years of senior management experience in the telecom industry, having previously led Airtel’s French Africa operations across seven countries and served as CEO of Telenor Pakistan, where he achieved market-leading growth, profitability, and employee engagement. Foley has also held chief executive roles at Grameenphone in Bangladesh and Telenor Bulgaria, where he drove a major turnaround. Foley takes charge of Ncell at a time when the country's telecom sector is going through challenging times. Declining revenues, delays in the rollout of 5G services, inconsistent regulations, opaque taxation, and procedural bottlenecks have all affected the business of telecom companies. In a conversation with New Business Age, Foley said policy clarity, streamlined approvals, and fair treatment for foreign operators are essential if Nepal is to attract long-term investment and support technological advancement. Excerpts:

From Ncell’s experience, how predictable and investor-friendly is Nepal’s regulatory environment today? What aspects of the investment climate—legal clarity, license renewals, taxation, dispute settlement—pose the greatest uncertainty for longterm investors?

Nepal has tremendous potential because of multiple factors including nascent digitalization journey and strong connectivity demand. The country’s telecommunications sector has come a long way in terms of technological advancements, service accessibility, and economic impact. Much of this growth has been driven in large part by foreign direct investment (FDI), which has introduced capital, technology, and expertise. However, challenges remain, particularly in the areas of regulatory frameworks, infrastructure development, financial constraints, licensing, tariff and the competition from OTT platforms. To fully unlock FDI and encourage long-term commitments, the regulatory environment must become more predictable, transparent, and consistent. Stability in licensing policies and clarity in taxation are essential, and a reliable dispute-resolution mechanism is critical to ensuring investor confidence.

With the right investments and policy reforms, Nepal's telecommunications sector has the potential to remain a key driver of innovation and growth in the years to come. Since Nepal opened the telecom sector to FDI, the Telia-Axiata deal marked a high point in the FDI climate in Nepal which consistently attracted more investment. After 2020/21, FDI inflows significantly declined by 66% and have not recovered due to this case as well as other reasons like COVID-19.

We have seen a number of international telecom companies leaving the country. That is not the scenario in India, Sri Lanka or Bangladesh, where foreign operators continue to compete for investment opportunities. In Nepal, despite vast potential, both major operators, Nepal Telecom and Ncell, are now facing severe financial pressure. This is a serious situation.

UNCTAD’s World Investment Reports (2018-22) has stated that Nepal’s FDI inflows have remained sluggish due to legal and regulatory unpredictability. I think Nepal still presents an appealing prospect for foreign investors, especially in sectors such as hydropower, infrastructure development, tourism, manufacturing, and information and communication technology (ICT). What makes Nepal unique is that there are two big economies, India and China, in its neighborhood that possess huge potential for markets and trade opportunities. Other features like natural resources, untapped potentials, and availability of workforce makes it an attractive destination for foreign investment.

Large private entities with significant foreign shareholding should play a material role in the development of FDI opportunities for the country not only through the development of internationally competitive ICT infrastructure but also by active participation in the promotion of the country as an FDI destination.

Telecom operators frequently cite inconsistent tax interpretation as a major challenge. How cooperative and predictable is Nepal’s tax administration in practice? How have sudden changes in tax assessments or retrospective taxation affected Ncell’s business decisions?

Telecom companies operate in a sector that, among others, requires large, long-term investments, making tax clarity and predictability essential. In practice, however, Nepal’s tax administration has at times demonstrated inconsistencies in interpretation, especially where the law is silent or open to multiple readings.

It is also important to note that Nepal has one of the highest tax-to-GDP ratios among peer economies. In fact, Nepal, over the past two decades, has followed a revenue maximization through taxation approach, increasing the tax burden by more than 15 percentage points. This has dampened private-sector incentives and discouraged foreign investment. Nepal has the lowest FDI inflows, lowest GDP growth rate and the highest tax to GDP rate among peer countries, even countries with comparable or lower GDP per capita like Rwanda and Ethiopia.

Retrospective taxation, decision and provision directly affect investment planning, risk calculations, and capital allocation. They also prolong disputes, divert operational focus, and can delay digital journey or lets say expansion or modernization plans. For a sector that drives digital connectivity and requires continued reinvestment, predictable and transparent tax administration is critical.

While Ncell has always complied with all applicable tax laws and engaged proactively with the authorities, we have experienced situations where tax positions were reinterpreted retrospectively. These kinds of actions create uncertainty not only for us but for any investor evaluating Nepal as a long-term destination.

We remain committed to full cooperation with tax authorities, but greater clarity, consistency, and timely resolution of disputes would significantly improve the investment climate and reinforce investor confidence in the telecom sector. Ncell has spent around Rs 360 billion in taxes and fees in Nepal since its inception and is constantly one of the highest taxpayers in Nepal, contributing to 0.6% of the GDP and 1.7% of government revenue in 2023/24.

Several foreign investors say Nepal’s procedures change “with every desk.” What specific bureaucratic bottlenecks has Ncell encountered while operating, expanding services or executing share transfers? Are these procedural hurdles improving, or getting more complicated?

From Ncell’s perspective, Nepal has the potential to become far more investment-friendly with clearer, more simplified or harmonized procedures and predictable implementation across all relevant authorities. Streamlining approvals, standardizing requirements, and ensuring uniform interpretation of rules would go a long way in strengthening investor confidence.

One example is our foreign exchange facilitation. Ncell is required to go through multiple layers of process involving various authorities, including the Department of Industry, Nepal Telecommunications Authority (NTA), the Ministry of Communications and Information Technology and Nepal Rastra Bank (NRB). A similar situation applies to installing new towers or laying fiber at the local level where numerous clearances are required. There has been progress in digitization and some efforts can be seen toward standardization. However, many procedures are still complex, multi-layered and less predictable. What matters most is consistency in how rules are applied.

Foreign investors get attracted to markets that offer hurdle-free processes and easy repatriation of dividends. For companies like ours, multiple regulatory bodies, often with overlapping requirements, create challenges for smooth operations, introduction of new services, capital enhancement, and access to foreign exchange facilities.

In recent years, many firms with foreign investment, including Ncell, have faced delays in repatriating legally earned profits. How difficult is it to send dividends back to shareholders? What reforms would make the repatriation process more transparent and time-bound?

As a responsible entity, Ncell has always complied fully with the local laws and tax requirements. However, creation of a transparent, consistent, and time-bound repatriation system would significantly strengthen the investment climate. We are of the view that predictability in repatriation is a key signal to potential global investors that Nepal welcomes and protects long-term foreign investment. 

Investors do business for return and profitability which makes their business sustainable. When companies earn profit, it is natural for investors to repatriate their returns. But in Nepal, this is often viewed negatively, and the process is cumbersome despite the Foreign Investment and Technology Transfer Act promising easy repatriation facilities. If investors make profit, they should be allowed to repatriate returns easily. As a foreign investment entity, we have repeatedly raised this issue and I am very much hopeful that upcoming regulatory changes will streamline the process. This is because any bottleneck in repatriation will scare potential investors.

Nepal’s telecommunications sector has made significant progress over the years, yet several challenges continue to restrict further growth and limit its broader economic development. Fitch Ratings recently assigned Nepal a sovereign credit rating of ‘BB-’. Despite persistent social and political challenges, recurring natural disasters, and global economic slowdowns, the continued rating demonstrates Nepal’s capability. This has raised optimism for foreign investment and has boosted investor confidence, particularly regarding foreign exchange risks. However, to attract more FDI, the government must address key regulatory and operational challenges in the sector.

Although the government has pledged to protect foreign investment, ensure returns, and facilitate profit repatriation, significant barriers still remain. The rating report itself highlights that cumbersome procedures for repatriating profits and other regulations on external transactions have historically constrained FDI inflows. This means the concerned authorities have to work proactively. There is a need for improvements in governance standards and regulations that are necessary to foster private and foreign investment. Reforms in the telecommunications sector should prioritize over the top (OTT) regulation, spectrum utilization, and tax rationalization to create a more conducive environment for investors.

Even though the amendment to the Telecommunications Act remains pending for a long time, the Telecommunications Regulations were recently revised to allow the issuance of new licenses to companies with up to 50% foreign investment once they complete 25 years of operation. However, the amendment fails to address the crucial issue of operators like Ncell which held more than 50% foreign investment at the time of licensing. This legal ambiguity weakens investor confidence and creates uncertainty for the sector’s future growth.

Has regulatory uncertainty influenced Ncell’s willingness or ability to reinvest profits back into Nepal’s telecom infrastructure? What policy or procedural changes would meaningfully encourage reinvestment in 4G/5G expansion, digital innovation and rural connectivity?

Our commitment to Nepal remains strong, but a more predictable and transparent environment would significantly enhance reinvestment and help unlock the full potential of the country’s telecom and digital ecosystem. You may have noticed that after the Nepal Telecommunications Authority (NTA) eased certain facilitation processes, we have aggressively been enhancing our 4G network to ensure access to high-quality voice service and high-speed mobile broadband. By the end of December, we will have added around 200 new towers to our network.

However, the deployment of advanced technologies such as 5G requires clarity on Ncell’s license to operate beyond 2029. This underscores the urgency of policy reforms. Deploying 5G will need a huge investment. Our estimation shows that two operators would need to invest around $500 million to expand the service nationwide. Telecommunications is a major pillar of the government’s Digital Nepal vision, and we are committed to supporting that aspiration. As telecom companies across the globe are converging and transforming themselves to digital technology companies, the government must facilitate this transition by simplifying processes, eliminating the requirement for multiple permits for multiple services, and reviewing license and renewal fees. Only digitalization, innovation and connectivity can bridge the huge rural -urban divide.

If you could advise the government on three urgent reforms to attract and retain serious foreign investors, what would they be? Are there global best practices—tax certainty, fast-track approvals, independent dispute resolution—that Nepal should consider adopting?

Greater regulatory predictability, long-term policy stability, streamlined approval processes and efficient dispute-resolution mechanisms, as highlighted by you, are essential for building investor confidence. In our sector, the first urgent reform could be eliminating the Build-Operate-Transfer (BOT) model. Applying this model to the telecom and ICT sector discourages investment because network development requires continuous, not one-time, capital expenditure. We updated ourselves from 2G to 3G, 3G to 4G and now we are in the process of transitioning to 5G.

Second, there should be investment protection. Investors build businesses, make profit, and share those profits with the government. Their investment must be secure, and dividend repatriation must be far more streamlined. Nepal ranks 94th in the World Bank’s Ease of Doing Business index. Current practice requires investors to seek approval from multiple government authorities like the Department of Industry, NTA, Ministry of Finance, and NRB. Securing these approvals takes significant time and raises questions about predictability. This directly affects Nepal’s international competitiveness and how the country is perceived on the global stage.

The third reform is ensuring a level playing field. Equal treatment of foreign investors is essential. Sadly, it does not exist. For example, the state-owned telecom operator was allowed to pay its final five-year renewal fee at the end of its license term, whereas we were asked to pay in advance. Even though installments were offered, interest was imposed and renewal carried conditions. Likewise, Ncell is required to obtain foreign-exchange approval for every remittance of more than $5,000—a process that can take six months to a year—while the government-owned operator only requires prior approval for amounts above $100,000.

Nepal has made commendable progress in telecommunications and ICT, and aspires to remain on par with developed economies. However, without timely policy-level interventions, the market risks falling behind in this fast-paced, technology driven world.

In the months before my arrival in Kathmandu, and throughout my time here so far, I have been consistently impressed by Nepal’s potential as a foreign direct investment destination. Its unique geographical position is only one of several advantages. I also see enormous potential for ICT sector growth, provided the telecommunications industry is given the operational space needed to build the infrastructure essential for both this sector and the wider economy. The current underinvestment by foreign entities is a challenge that can be resolved through close partnership between the state and companies capable of creating an environment that is welcoming to foreign investors. We fully intend to play our part. While the issues that I have highlighted are significant, they do not absolve us of our responsibility as corporate citizens to promote Nepal as an FDI destination.

It would be disingenuous for me not to mention the current dynamic socio-political environment in Nepal. While our company has been intimately affected by the recent events, I also recognize that this is not a unique set of circumstances. Numerous societies around the world namely Madagascar, Bangladesh, Sri Lanka, and even my home country of Kenya, to name a few, have all felt the impact of youth-led movements. It is important to note that the largest ICT market segment in all these markets is among the younger population of society. As a company, we need to engage more, listen more, integrate youth into our decision making more, and act with alacrity.

(This interview was originally published in December 2025 issue of New Business Age magazine.)