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Nepal - Telecoms, Mobile, Internet and Forecasts


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A number of factors had been slowing the development of Nepal’s telecom network up until now. Certainly the country’s mountainous 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. Over the years, acts of terrorism and the activity of the Maoist rebels operating throughout the country have taken their toll on the telecom network – both directly and indirectly. But of late the tardiness of the government in addressing market reforms and developing national policies has been weighing on the overall development of the telecom sector.

The country has certainly been on a road to recovery from the long years of civil unrest. Nepal’s transition to a considerably more stable nation had begun by 2007. The country’s first elections for over nine years were held in 2008; a clear victory going to the Maoists who were expected to renounce violence and become a party of government. Although the way forward was not necessarily going to be smooth, with this remarkable turnaround following years of great difficulty, the scene was set to build on the considerable progress already made in recent times in meeting the growing demand for telephone services. Not only has there been strong subscriber growth, especially in the mobile sector, but 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. Most importantly, the Ministry of Information and Communications (MoIC) and the telecom regulator, the National Telecommunications Authority (NTA), were both very active in the performance of their respective roles.

In its earliest development phase, telecommunications in Nepal were basic and limited, with the first telephone exchange not being established in the country until 1960. Despite an absence of any substantial foreign investment, telecom services steadily expanded from 1995 onwards, 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 amount of funding. Nevertheless, for a long time the number of fixed-line connections remained woefully low. Unmet demand remained high and the waiting time for a fixed-line service could be five or more years.

The Nepal Telecom Company, 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, Nepal Telecom lost its monopoly on basic telecom services a little more than a decade ago with the licensing of United Telecom Ltd (UTL). It subsequently surrendered its monopoly on mobile services with the licensing of Spice Nepal Pvt Ltd, later known as Ncell, in 2004.

The period after 2006 has seen notably strong subscriber growth, especially in the mobile segment of the market. By 2007, the total telephone penetration rate had reached at about 8%; this comprised 3% in fixed-line services (including WLL and Limited Mobility services) and 5% in mobile services. Within just three years the total telephone penetration had reached 36%; by which stage the 9 million mobile subscribers at the time comprised over 90% of all telephone subscribers in the country. By end-2012 there were an estimated 16.5 million mobile subscribers in the country, for a penetration of 62%. Fixed-line penetration had remained static at just under 3%.

Despite all the effort, there was still a significant disparity between the high coverage levels in the cities and the coverage available in the underdeveloped rural regions. Progress on providing some minimum access had been good, however.

Market highlights:

By late 2012 mobile penetration in Nepal had quickly moved to around 62%, with mobile subscriber numbers having increased fourfold in just four years;

Fixed-line growth in Nepal was particularly slow and there was even a slight decline in numbers; there was little sign that this segment of the market would pick up in the short to medium term;

The challenge for the fixed-line market was not just to increase the lowly penetration, but to expand service into the underserved rural areas;

After being sluggish for years, the internet segment of the market has finally started to move; user penetration has been increasing rapidly in recent years;

While broadband represents a high proportion of total internet connections, internet subscriptions remained low; the proportion of household with broadband connections, for example, was only 3% in 2012;

The NTA confirmed in December 2012 that it will use the Rural Telecommunications Development Fund (RTDF) to help fund the build out of a national optical fibre network;

In 2012, the slowing pace of reforms in the telecom sector was of some concern; the push to find a strategic partner for Nepal Telecom, for example, seemed to lack the commitment from key agencies;

The NTA disconnected UTL in August 2012 in a dispute over unpaid licence fees;

The telecom market was still waiting on the government to auction WiMAX spectrum;

After years of uncertainty Nepal’s economy was continuing to struggle in 2011/2012; however, the government remains committed to prudent fiscal management and it was hoped that a rebuilding process has finally started.

Nepal – key telecom parameters – 2012 - 2013
Category | 2012 (e) | 2013 (e)
Fixed-line services:
Total number of subscribers | 840,000 | 840,000
Annual growth | -1% | 0%
Fixed-line penetration (population) | 2.7% | 2.7%
Internet:
Total number of subscribers1 | 185,000 | 225,000
Annual growth | 32% | 22%
Internet subscriber penetration (population) | 0.6% | 0.8%
Mobile services:
Total number of subscribers | 16.5 million | 19.8 million
Annual growth | 21% | 20%
Mobile penetration (population) | 62% | 73%
(Source: BuddeComm)
Note: 1fixed internet subscribers only, excluding wireless services

This report provides an overview of the trends and developments in the telecommunications markets in Nepal.

Subjects covered include:

Key statistics;
Market and industry overviews;
Major operators (mobile and fixed)
Regulatory environment;
Infrastructure;
Mobile market;
Broadband and internet markets;
Telecom market scenario forecasts for 2015 and 2020.


1. Executive summary
2. Key statistics
3. Country overview
3.1 Background
3.2 Economy
3.3 Political crisis and resolution
4. Telecommunications market
4.1 Overview of Nepal’s telecom market
4.1.1 Background
4.1.2 NTA report – September 2011
4.1.3 NTA report – September 2012
5. Regulatory environment
5.1 Regulatory authority
5.1.1 Nepal Telecommunication Authority (NTA)
5.2 Telecommunications Policy 1999
5.2.1 Universal service
5.2.2 Rural Telecommunications Development Fund (RTDF)
5.3 Telecommunications Policy 2004
5.4 Telecom sector liberalisation and licensing
5.5 Foreign assistance
5.6 Privatisation of Nepal Telecom
5.7 Broadband policy
5.8 Regulatory developments
5.8.1 2012
5.8.2 2011
6. Basic telephone service providers in Nepal
6.1 Nepal Telecom (formerly Nepal Doorsanchar Co Ltd)
6.1.1 Overview
6.2 United Telecom Ltd (UTL)
6.2.1 Dispute over licence fees
6.3 Nepal Satellite Telecom (NST)
6.4 Smart Telecom
7. Telecommunications infrastructure
7.1 National telecom network
7.1.1 Overview
7.2 Forecasts – fixed-line market – 2015; 2020
7.2.1 Nepal East West SDH project
7.3 International infrastructure
7.4 Voice over Internet Protocol (VoIP)
8. Internet market
8.1 Overview
8.2 Internet statistics
8.3 Forecasts – Internet services – 2015; 2020
8.4 Broadband internet
8.4.1 Overview
8.4.2 WiMAX
8.5 ISP market
8.6 Internet Exchange
8.7 Internet Protocol TV (IPTV)
9. Mobile communications
9.1 Background
9.2 Mobile statistics
9.3 Third Generation (3G)
9.4 Fourth Generation (4G)
9.5 Forecasts – mobile market – 2015; 2020
9.6 Major mobile operators
9.6.1 Nepal Telecom (NT)
9.6.2 Ncell (formerly Spice Nepal)
9.7 Satellite mobile
9.8 M-commerce
10. Notes on forecasting
11. Related reports
Table 1 – Country statistics Nepal – 2012
Table 2 – Telephone network statistics – October 2012
Table 3 – Internet user statistics – October 2012
Table 4 – Mobile statistics – October 2012
Table 5 – National telecommunications authorities
Table 6 – Nepal’s GDP real growth rate – 2006 - 2013
Table 7 – Licences issued for telecom services – October 2012
Table 8 – Fixed subscribers by operator – wireline and WLL – October 2012
Table 9 – Nepal Telecom’s fixed subscribers – wireline and WLL – 2006; 2012
Table 10 – Fixed-lines in service and teledensity – 1995 - 2012
Table 11 – Fixed WLL subscribers – 2006 - 2012
Table 12 – Fixed-line subscribers – wireline and WLL – 2010 - 2012
Table 13 – Forecast fixed line subscribers – 2015; 2020
Table 14 – Estimated internet users – 1997 - 2013
Table 15 – Internet subscribers – 1999 - 2013
Table 16 – Fixed broadband subscribers – 2007 - 2012
Table 17 – Broadband subscribers by technology – October 2012
Table 18 – Fixed broadband subscribers and household overview – October 2012
Table 19 – Internet bandwidth capacity – 2001 - 2012
Table 20 – Forecast fixed internet subscribers – 2015; 2020
Table 21 – DSL broadband subscribers – 2007 - 2011
Table 22 – Mobile subscribers, annual change and penetration rate – 1999 - 2013
Table 23 – Mobile operators, subscribers and annual change – October 2012
Table 24 – 3G mobile subscribers – 2008 - 2010
Table 25 – Active mobile broadband subscriptions – 2010 - 2011
Table 26 – Forecast mobile subscribers – 2015; 2020
Table 27 – Nepal Telecom (NDCL) - mobile subscribers – 2006 - 2012
Table 28 – Ncell’s mobile subscribers – 2006 - 2012
Exhibit 1 – Level of competition by market segment – 2012

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