Why Ncell's Axiata group exit 80 percent shares from Nepal ?

Axiata Group, the Malaysian multinational telecommunications conglomerate holding an 80 percent stake in Ncell, has decided to exit from the Nepali market.

The company has opted to put all of its Ncell shares up for sale. According to Vivek Sood, the Group Chief Executive Officer and Managing Director of Axiata, the decision to withdraw from Nepal was made by the Board of Directors.

Axiata obtained the company's shares from the Swedish telecommunications giant TeliaSonera in April 2016. The board has decided to sell the shares in Ncell citing a failing business. "The outlook in Nepal is increasingly challenging, thus the Board has decided to exit Nepal and accordingly reclassify Ncell as asset held for sale," the company said in a statement.

Axiata Group Berhad took an 80% stake in Ncell through Reynolds Holding Limited and Sunivera Capital Ventures Pvt Ltd in 2022. Notably, in the same year, Ncell generated 57% of its income from data services.

Despite its decision to exit, Ncell asserts its significant contribution to Nepal's economy, citing a 1.3% contribution to the gross domestic product in the year 2021/22. The company claims to have paid over 2.83 kharba rupees in taxes to the government and contributed more than 20 arba rupees in taxes and fees, along with over 1.75 arba rupees in social work.

In terms of revenue collection, Ncell asserts a 1.9% contribution to the Government of Nepal for the fiscal year 2021/22. The telecom giant has been a substantial employer, directly and indirectly providing jobs to more than 23,000 individuals.

As Axiata Group prepares to divest from Ncell, the telecom industry in Nepal faces uncertainty, and the government's efforts to attract foreign investment may encounter challenges in light of this significant exit.