KATHMANDU, OCT 01 -Nepal Telecom (NT) plans to hire an international consultant to help it with the preparations to find a strategic partner. The consultant will be employed to carry out a due diligence audit (DDA) report and prepare the bid document. NT plans to select the consultant by November.
A sub-committee, assigned to carry out legal and procedural activities, is expected to complete drafting the expression of interest (EoI) soon. “We will complete the EoI preparations within one month and submit it to the NT board," said Basu Sharma, undersecretary at the Ministry of Finance (MoF), who is also a member of the sub-committee.
According to Sharma, the NT will be able to call the EoI based on the terms of reference prepared by them without seeking the approval of the Cabinet. “It will take 45 days to receive the EoI from interested consultants once the notice is called,” he added.
The sub-committee, headed by the MoF Joint Secretary Janma Jaya Regmi, includes officials from the Ministry of Law and Justice, the Ministry of Information and Communications and the NT. With increasing competition in the domestic telecom market, the state-owned company has been seeking a partner for over three years, however work to this effect has failed to progress due to procedural delays.
The privatisation committee, under the MoF in July 2013, decided to form the sub-committee to accelerate preparations regarding the strategic partner matter. Once the consultant completes the tasks of preparing the bidding documents and contract papers, a proposal will be sent to the Cabinet for approval, according to a member of the sub-committee. The consultant will be mandated to prepare bases for the evaluation of tender, share purchase agreement, research share price and an overall evaluation of the NT.
A study conducted by the government last year concluded that it would take at least two years to bring in a partner and start working conjointly. A high ranking official at the NT said that with yet another company preparing to start service after receiving the unified licence, it has become an urgent priority to bring in a partner to prepare for more competition in the domestic market. The NT is prepared to offer 26-30 percent of its share to the strategic partner.
The state-owned company has lagged behind the private sector provider, Ncell, in the competitive telecommunication sector. Now, with the entry of the Smart Telecom as a nationwide GSM mobile operator, competition is expected to grow more among the companies. The Smart Telecom has acquired the unified licence, also known as “basic telephone service”, which enables it to provide multiple telecom services, including cellular mobile, across the country.
Since May 2010, the government conducted four studies on a potential strategic partnership of the NT. All the studies have suggested that the NT requires a strategic partner to remain competitive among stiff competition.
The study report, prepared last year by a committee under the Joint Secretary Baikuntha Aryal, suggested that introducing a strategic partner in the NT should be executed in two phases: the first phase includes calling the EoI for hiring a consultant and preparing the NT’s DDA report, while the second
phase includes preparing the bid documents and conditions of contracts, calling tender and selecting a partner.
Stating that it will take at least two years to complete the task of finalising a strategic partner, the Aryal-led committee also suggested awarding a short-term management contract to a competitive firm, in order to help the NT develop better management practices to attract foreign investors. However, there have been no such preparations, the NT official said.
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