Nepal Telecom’s third-quarter profit down 16 percent

May 15, 2019

Prahalad Khanal, The Kathmandu Post, May 15, 2019

Nepal Telecom’s third-quarter profit dropped 16 percent year-on-year to Rs3.64 billion which officials blamed on a change in customer tastes and slow labour migration growth. The state-owned telecom utility had posted a profit of Rs4.37 billion during the same period in the last fiscal.

The decline, despite a growth in subscriptions, has been attributed to growing use of over-the-top messaging services like WhatsApp and Facebook Messenger over long distance and domestic voice calls.

“In recent years, due to the popularity of over-the-top services, the interconnection business was negatively affected, and the result is seen in the company’s revenue,’ said Nepal Telecom.

According to the telecom giant, it has taken measures to offset the impact of over-the-top services with new revenue sources.

“There is an industrywide slowdown in revenue from long distance calls, which used to be a major source of income, mainly because of over-the-top services,” said Dilli Ram Adhikari, managing director of Nepal Telecom. “To offset the impact of over-the-top services, we are expanding our 4G network, particularly focusing on rural areas to meet mobile data needs, and replacing ADSL lines with fibre to the home connection.”

According to Adhikari, revenue from regular voice calls and mobile data service has swelled, but the shift in tariff modality from normal rates to packages has also led to slowed profit growth despite an increase in subscriptions and mobile usage.

Last month, Nepal Telecom revealed that it had added 407 base receiver systems and upgraded another 400 to aid its 10 million users in the first nine months of the current fiscal year. It is also expanding its network to replace the current ADSL system with fibre to the home technology. Currently, the telecom company has built a network capable of handling 40,960 fibre to the home connections across the country.

A rise in corporate tax from 25 to 30 percent increased Nepal Telecom’s tax expense by Rs808.56 million, leading to a fall in profit after tax adjustments.

The discount scheme on recharge card sales--that replaced commissions--introduced in March this year also hit the company’s revenue with discounts amounting to Rs100.5 million.



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