KATHMANDU, NOV 17 -Nepal Telecom (NT) posted a 32.50 percent drop in its profits in the first quarter despite growth in revenues. The state-run telecom service provider posted a profit of Rs 2.42 billion in the period between mid-July and mid-October, down from Rs 3.63 billion in the same period a year ago. Revenues, however, grew by 1.93 percent to Rs 10.03 billion compared to Rs 9.84 percent last year, according to the company’s unaudited report for the first quarter released on Friday.
The decline in NT’s profits has been attributed to the rise in expenditures such as frequency and licence renewal fees and operation and maintenance, among others. Total expenditure for the quarter increased by 33.46 percent to Rs 6.62 billion from last year’s Rs 4.96 billion.
“The profit has come down mainly because of licence renewal fee which the company has to pay to the government each year,” said NT Deputy Managing Director Buddhi Acharya, adding the company allocates Rs 1 billion each quarter to pay the licence fee. NT spent Rs 1.93 billion for operation and maintenance, Rs 1 billion in licence fees and Rs 249.61 million in frequency fees in the review period. Administrative costs, contribution in Rural Telecommuni-cations Development Fund (RTDF) and royalty of the company also increased.
The administrative expenses increased to Rs 593.18 million against Rs 514.64 million a year ago, according to the report. The company also contributed Rs 183.95 million to the RTDF and paid Rs 367.9 million as royalty to the government. Last year, the figures were Rs 181.53 million and Rs 363.06 million, respectively.
For the current fiscal year, NT has targeted Rs 41.65 billion in earnings and projected to pay Rs 21.35 billion in revenues to the government.
Its income in the last fiscal year was Rs 38.22 billion, as per the unaudited annual financial report of the company. NT officials are convinced the target will be achieved given the rise in the number of subscribers, especially in data services like EVDO, WiMax.
Despite a rise in the subscriber base, the company’s profit growth rate has been declining for increased expenses and comparatively low earnings as a result of competition in the market.
As per the Q1 report, rapid development in telecom technology in the international market, competition, call bypass and failure to maintain good service quality are some of the challenges the company faces.
This year, NT plans to attract 2 million new customers in its GSM mobile service, expand the IP CDMA service across the country, start fibre to home service and install 500 Wi-Fi hotspots based on the WiMax technology, among others.
Under its 10 million GSM lines project, it has replaced mobile towers in Kathmandu Valley and is planning to replace old towers with the new ones in the Eastern, Mid- and Far-western regions this year to add network capacity and improve the service quality.
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