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Boston, MA -- (ReleaseWire) -- 05/14/2014 --Executive summary

Momentum of the reform process in Nepal's telecom sector is showing fresh signs of a slowdown

A number of factors had been slowing the early development of Nepal's telecom network. Certainly the country's mountainous topography has made it extremely difficult to develop its telecommunications infrastructure. Furthermore, Nepal had been struggling under an adverse economic situation caused largely by political instability. Over the years, acts of terrorism and the activity of the Maoist rebels operating throughout the country have taken their toll on the telecom network - both directly and indirectly. But of late the tardiness of the government in addressing market reforms and developing national policies has been weighing on the overall development of the telecom sector.

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The country has certainly been on a road to recovery from the long years of civil unrest. Nepal's transition to a considerably more stable nation had begun by 2007. The country's first elections for over nine years were held in 2008;

a clear victory going to the Maoists who were as a result to become a party of government. Although the way forward was not necessarily going to be smooth, with this remarkable turnaround following years of great difficulty, the scene was set to build on the considerable progress already made in recent times in meeting the growing demand for telephone services. Not only has there been strong subscriber growth, especially in the mobile sector, but there was evidence of a clear vision in the sector, including putting a reform process in place and planning for the building of necessary telecommunications infrastructure. Most importantly, the Ministry of Information and Communications (MoIC) and the telecom regulator, the National Telecommunications Authority (NTA), both became very active in the performance of their respective roles. However, as already noted, by 2013 there was evident concern that some of the momentum of the reform process had been lost.

The Nepal Telecom Company, the state-owned incumbent operator, has been the major builder and operator of the national telecom network. For a long time it held a monopoly over all aspects of telecom in the country. With the opening up of the market, Nepal Telecom lost its monopoly on basic telecom services a little more than a decade ago with the licensing of United Telecom Ltd (UTL). It subsequently surrendered its monopoly on mobile services with the licensing of Spice Nepal Pvt Ltd, later known as Ncell, in 2004. The period after 2006 saw notably strong subscriber growth, especially in the mobile segment of the market. Mobile penetration went from 5% in 2007 to more than 60% in 2013.

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