I don’t understand why people are after NCell. What NCell did was nothing wrong. In fact, NCell (Axiata) faced national-level bullying. Back then, NCell was controlled by a Norwegian company. They didn’t directly invest in NCell; they invested through a holding company (Reynolds Holding Ltd.) based in a tax-haven country. Axiata took over NCell by purchasing Reynolds Holding Ltd. Capital gain tax is paid by the seller; however, Axiata was forced to pay the capital gain tax (1). This is like, you purchased a share in NEPSE for Rs 200, and instead of the seller, you are forced to pay the tax. While NCell is labelled as tax evader, they are one of the higest tax payer in Nepal.
**Now let’s look at the current situation.**
Axiata decides to exit. Suddenly, people are butt-mad. Some even filed a writ order against NCell to stop sales. Well, this is beyond the jurisdiction of the Nepali government or even the constitution. An entity is free to sell its assets. Again, this takeover isn’t happening in Nepal. The 80% sale is happening through that holding company (Reynolds Holding Ltd.). And the Nepali government cannot stop sales or purchases. I wonder how no one even understands this. And is filing the case for cheap populairty.
**NCell Valuation**
NCell was sold for 6arba something. Many call it dirt cheap. Some politicians even came forward and said the government should buy it or IPO it. I wonder how even these politicians are not aware that, as per the agreement, after 25 years (which is 6 years from now), all Renold Holding assets will be transferred to the Nepali government. If Axiata sells their holding today, they get 6 arba. If Axiata holds, after six years they will get 0 and all their holdings will be transferred to the government. What would they choose? 6Arab or 0? The current buyer has 6 years to recover their investment.
Their operating income was 57,102 million back in 2017; as of 2023, it is 37,442 million. And it is estimated to go lower, not only in Nepal but also globally (3) (4).
After 6 years Nepal Government will have absolute monopoly in telecom, they might even merge NCell with NTC.
There are bigger issue like bhutani sarnarthi, 100kg sunkanda, tea estate kanda which makes NCell amount look peanuts.
This is the reason foreign companies doesn’t want to invest in Nepal. Nepal has higest corporate tax rate and red tapes everywhere. On the other hand, neighbouring countries are giving tax discounts for FDI.
*References:*
1. [https://myrepublica.nagariknetwork.com/news/axiata-s-ncell-exit-smacks-of-intention-to-evade-capital-gains-tax/](https://myrepublica.nagariknetwork.com/news/axiata-s-ncell-exit-smacks-of-intention-to-evade-capital-gains-tax/)
2. [https://kathmandupost.com/money/2023/12/02/axiata-concludes-sale-of-ncell-exits-nepal](https://kathmandupost.com/money/2023/12/02/axiata-concludes-sale-of-ncell-exits-nepal)
3. [https://www.icranepal.com/wp-content/uploads/2021/04/143.-Rationale\_Ncell-Axiata\_Fresh-BLR\_March-2021.pdf](https://www.icranepal.com/wp-content/uploads/2021/04/143.-Rationale_Ncell-Axiata_Fresh-BLR_March-2021.pdf)
4. [https://www.icranepal.com/wp-content/uploads/2023/10/A.420-Ncell-Axiata\_BLR-Surveillance\_September-2023.pdf](https://www.icranepal.com/wp-content/uploads/2023/10/A.420-Ncell-Axiata_BLR-Surveillance_September-2023.pdf)
View on r/Nepal by captainright1
Its clear that the politicians want their share of commission, thus are creating this unnecessary drama.
And there is news floating around about 66 arba, IDK who to trust but Ncell never paid any tax despite making so much money. It exploited the government too and so many corrupt people made a living
Agree that government is not clean on this either but it’s wrong to say that Ncell did nothing wrong. Ncell was supposed to inform NTA before declaring sale of the company and they did not do so. They are not just allowed to sell whenever and wherever they want. This is not a new rule. It was created before Axiata bought Ncell from Telia Sonera.
The valuation is also really suspicious because it is extremely low, like more than half of the price that it was bought for. The valuation is extremely low that it is almost impossible for share price to go that low unless there is a major scandal. So the question is, why is Axiata selling the company for less than half of what it was bought for when any business would want to make a profit. Why is it taking such a huge loss?
The guy buying the company is also suspicious. His company Spectrlite UK was registered only few day before the sale was announced. The guy will now also own 100% of Ncell since his wife owns the remaining 20% of Ncell.
Why is the guy willing to buy this company when it will be nationalized in six years? The CGT case has not been resolved and Supreme Court might tell him to pay 56 arba or however much the tax is. He will be liable since he is going to buy the company and assume all debt. The sale agreement also says that he will continue to pay Axiata dividends until the end of the license period. So why would any businessman take so much risk? The entire thing is suspicious.
Calling Ncell did nothing wrong is like calling Enron did nothing wrong. They have been trying not to go public using the loophole in system and the corrupt government is pretending like they do not know.
> Nepali government cannot stop sales or purchases. I wonder how no one even understands this. And is filing the case for cheap populairty.
You know, that’s not a thing in ANY country, right? It’s highly dependent on the land of the law of individual countries. Even the free marketeer western nations routinely stops merger and acquisitions on various grounds. Be it, anticompetitive, vague National security concerns, lobbying e.t.c . NTA is saying Ncell is not following the correct procedure and Gov has opened an investigation.
I don’t know how you’ve come to the conclusion that NCELL did Nothing wrong and moreover a “VICTIM”
> Capital gain tax is paid by the seller; however, Axiata was forced to pay the capital gain tax (1). This is like, you purchased a share in NEPSE for Rs 200, and instead of the seller, you are forced to pay the tax.
Cleary, you seem to be more Knowledgeable than International Centre for Settlement of Investment Disputes (“ICSID”).
*for context:
Ncell/Axiata Sued Nepal in the International Centre for Settlement of Investment Disputes (“ICSID”) after the CGT fiasco. They lost the case, ICSID ruled in FAVOUR of Nepali Government just* **this July**
BOYS, **The more tax they evade, the larger share of tax burden will fall on OUR shoulder.** I don’t know about you, but I don’t want to pay MORE tax so that guys like Satish Lal Acharya can hide even more money in his dodgy tax heaven.
> There are bigger issue like bhutani sarnarthi, 100kg sunkanda, tea estate kanda which makes NCell amount look peanuts.
You know, you can walk and chew gum.
Telia sonera had to pay CGT but i dont know how they got away with this. If the seller doesnt pay CGT obligation, the buyer has to clear out the dues. Hence, Ncell was forced to pay CGT.
How can some company make a money in a country and sell their shares aborad just because they have to pay tax to our country. How is it valid?
Agree with you 100% , the way you attract foreign investment is by making it easy for them to invest.
This incident is going to have long term impacts, its not like ncell is closing shop. For the public, the service is going to normal. Its just a change of ownership. Ncell has some really attractive pay packages for its employees which kept many young people working in the country.
Many of companies with great pay packages are companies with foreign investment
Foreign Company exiting the Nepali market is not a good sign for future investment by Foreign companies . My opinion
The bigger question should be why is there such a law that automatically forces a company to get nationalized?
Well, I shouldn’t be expecting anything better from this Banana republic.
Ncell is just an example, If you notice, from the political level to the public level, investors, industrialists, entrepreneurs, foreign investors and companies are bullied and harassed and vilified in this country.
Ncell exist was a bad PR, so they are trying to save their face by blaming Ncell.
Opening a business in Nepal is like making a deal with the devil himself. Can get ugly real fast if you don’t have certain connections. Every major industry have failed because of these same old goddamn braindead politicians. Industrial age on Nepal was stopped by these same old politicians and they are still in power. Our country is suffering from a massive brain drain with young people leaving by thousands every day. Nepal economy might hit so low that India might annex Nepal and this puppet government won’t do shit.
Did Axiata recover their investment through profits over the years? Surely, they had done this analysis prior to purchase.
Great write up.
[https://youtu.be/QUuvVrZtL1M](https://youtu.be/QUuvVrZtL1M)
I still remember people needed to wait for months just to get a sim card. Getting a simcard was a lottery in a sense. Then mero mobile(later ncell) came and changed the game. So whatever Ncell did or didn’t do Ncell has a net positive impact on all of us.
Given their huge contribution I don’t care even if they didn’t pay any tax, it wasn’t going to be utilised by the government in any sensible way either.
This.
foreign investment vandai halla nagara, ncell ka sab customer je gareni nepali nai hun, naaki kunai foreign.
Appreciated .
?? What happened??
1. Axiata took over NCell by purchasing Reynolds Holding Ltd
2. Axiata was forced to pay the capital gain tax
“This is like, you purchased a share in NEPSE for Rs 200, and instead of the seller, you are forced to pay the tax.”
This statement is false. It’s more like you bought a share from yourself.
I do agree that the government should make it a bit easier for Foreign investors to do business and not see them as evil corporation (which they could be e.g. “CocaCola”).