KATHMANDU, OCT 04 -Nepal Telecom ’s (NT) plan to bring a strategic partner has taken another step forward with the Cabinet agreeing to the proposal in principle. Thursday’s decision has cleared the way for the government to sell part of its stock in NT to the prospective strategic partner. However, the number of shares the government will sell has not been decided.
The Ministry of Information and Communications had forwarded the proposal to bring a strategic partner at NT to the Cabinet. NT has been urging the government to allow it to tie up with a competent partner for the last four years, but it has delayed giving its okay. “The Cabinet has now given the go-ahead to take the process further,” said Janma Jaya Regmi, chief of the public enterprise coordination division at the Finance Ministry.
According to Regmi, who is also a coordinator of the technical sub-committee formed to conduct the procedures, the government plans to divest 30 percent of its shares. He added that their team was currently preparing the expression of interest (EoI) to hire an international consultant to help NT find a partner. NT plans to invite applications for a consultant by November.
The consultant will prepare the bid documents for potential strategic partners and prepare a due diligence report of NT besides performing other tasks. Anoop Ranjan Bhattarai, deputy managing director of NT, said that the long-standing plan would now move towards materialisation as the government had given the go-ahead.
“In order to attract partners, the government must also simplify the procurement process of NT. It will be difficult to make the company competitive by sticking to the Public Procurement Act (PPA),” he added. Based on a study carried out by a committee under the coordination of Baikuntha Aryal, joint secretary at the Finance Ministry, the prospective partner will have to invest Rs 30-40 billion to buy shares. He said attracting a partner would be a tough job. Lack of clear policies and regulations, inadequate voting power in the board even after buying 30-35 percent of the shares and the huge investments required will turn off potential partners. The government has a 92 percent stake in the company.
NT has been mainly pushing for the strategic partnership plan to get around the hurdles posed by the PPA, make procurement smoother and faster and free the company from political interference. NT has been facing stiff competition from Ncell in the private sector.
With the recent issuance of a unified licence to Smart Telecom and the government’s plan to give similar permits to United Telecom Limited (UTL) to allow operation of nationwide mobile service, NT is set to face tougher competition. NT officials said it had become urgent for NT to tie up with a strategic partner in such a situation.
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