The Nepal - Telecoms, Mobile, Internet & Forecasts report includes all BuddeComm research data and analysis on this country. Covering trends and developments in telecommunications, mobile, internet, broadband, infrastructure and regulation. Please review the Executive Summary and Table of Contents for more details.
A number of factors had been slowing the development of Nepal’s telecom network. The country’s topography has made it extremely difficult to develop its telecommunications infrastructure. Furthermore, Nepal had been struggling under an adverse economic situation caused largely by political instability. Acts of terrorism and activities of the Maoist rebels operating throughout the country had also taken their toll on the telecom network. By early 2007, however, hope for Nepal’s transition to a more stable period was certainly on the rise. The country’s first elections for over nine years were finally held in April 2008; a clear victory going to the Maoists who were expected to renounce violence and become a party of government. With this remarkable turnaround following years of difficulty, the scene was set to build on the considerable progress already made in recent years in meeting the growing demand for telephone services. Not only has there been strong subscriber growth, especially in the mobile sector, there was evidence of a clear vision in the sector, including putting a reform process in place and planning for the building of necessary telecommunications infrastructure.
In its early development phase, telecommunications in Nepal were basic and limited, with the first telephone exchange not being established in the country until 1960. However, despite an absence of any substantial foreign investment, telecom services have been steadily expanding since 1995, mainly as a result of assistance provided through foreign grant-aid and the introduction of transparent tendering, which increased threefold the number of lines that could be purchased for the same money. Nevertheless, for a long time the number of fixed-line connections remained woefully low. Unmet demand remained high and waiting time for a fixed-line could be five or more years.
In Nepal’s 75 districts, five did not have a local exchange and needed to use HF radio to link into the network. In some of the districts that did have exchanges, no lines were connected. In total, twelve districts, or roughly 1.2 million people, were without any direct service.
Nepal Telecom Company (NTC), the state-owned incumbent operator, has been the major builder and operator of the national telecom network. For a long time it held a monopoly over all aspects of telecom in the country. With the opening up of the market, NTC lost its monopoly on basic telecom services in 2001 and on mobile telephony services in 2004, with the licensing of United Telecom Ltd and Spice Nepal Pvt Ltd, respectively.
The period from 2006 to 2008 saw notably strong subscriber growth. The total telephone penetration rate in April 2007 stood at about 8%; this comprised 2.7% in fixed-line services (including WLL and Limited Mobility) and 5.3% in mobile services. This was substantially up from the April 2006 figure of 3.7% total telephone penetration (2.1% fixed line, 1.5% mobile).
The mobile subscriber base had expanded by 150% in 2006. With the country’s mobile market growing rapidly, mobile subscriber numbers swept quickly past fixed services in 2006. By 2007 NTC with the help of its private operator rivals was setting what were regarded as ambitious targets for network expansion; it aimed to achieve an overall penetration (mobile and fixed) of 20% by 2010. NTC had rolled out 1.3 million telephone connections by March 2007, including 500,000 PSTN services, 100,000 CDMA connections and 700,000 GSM subscriptions.
In the meantime, mobile operator Spice Nepal claimed it had 450,000 subscribers, while basic telecom operator United Telecom Ltd (UTL) began offering services outside the Kathmandu Valley. Despite all the effort, there remained a significant disparity between the high coverage levels in the cities and the coverage available in the underdeveloped rural regions. Of a total of 3,914 Village Development Committees (VDCs) across the country, 1,886 did not have access to a basic telephone service.
By mid-2009 total telephone penetration had lifted to around 23%, comprising 20% mobile and 3% fixed-line. In order to meet future demand, it was estimated that Nepal needed to invest around US$135 million annually in its telecom sector. At the same time, of a total of 3,915 VDCs across the country, there were only 380 that no longer had access to a basic telephone service. A total of 1,886 Public Call Centres (PCOs) had also been established by that stage.
By mid-2009 mobile penetration in Nepal had quickly moved to 20%, with mobile subscriber numbers having increased tenfold in just three years;
Whilefixed-line growth in Nepal was particularly slow, there were positive signs that this segment of the market was at last picking up;
The challenge was not just to increase the lowly 3% fixed-line penetration, but to continue the expansion program into the severely underserved rural areas;
The deployment of WLL services has certainly provided a boost to the fixed market;
by mid-2009 this platform supported 30% of all fixed line services;
The Internet segment of the market remains sluggish; Internet user penetration was still down below 2% in early 2009;
Broadband Internet remains almost non-existent; with any development heavily dependent on DSL technology, which in turn is dependent on the fixed line network, there does not appear to be an effective way forward on offer at the moment;
Nepal’s economy continued to struggle in 2008/09, but it is hoped that the newly-elected government will see the start of a rebuilding process and further telecom sector reform will be part of this.Nepal - key telecom parameters - 2008 - 2009
Total number of subscribers787,500837,000
Fixed-line penetration (population)2.8%3.1%
Total number of subscribers195,000110,000
Internet subscriber penetration (population)0.3%0.3%
Total number of subscribers (million)4.4 6.0
Mobile penetration (population)15%21%
Note: 1Estimates for both 2008 and 2009.
This report provides an overview of the trends and developments in the telecommunications markets in Nepal. Subjects covered include:
Market and Industry Overviews;
Major Operators (Mobile and Fixed) Regulatory Environment;
Telecom market forecasts for selective years to 2018.