Foreign Direct Investment (FDI) in Telecommunication Sector of Nepal

Due to advanced infrastructure and superior technology requirements, FDI in Nepal in the telecommunication sector has increased considerably. International investors in this regard extend their participation in network expansion, internet services, and digital solutions, targeting improved connectivity and service quality for the entire nation.

The Government of Nepal also provides support through regulatory reform and various incentives, such as tax breaks and easier procedures. This influx of foreign capital accelerates the development of telecommunications infrastructure, improves digital accessibility, and increases the pace of innovation.

FDI is likely to play a significant role in connecting the unconnected and supporting the technological advancement of the nation as Nepal’s digital landscape is in a state of evolution.

What is the Telecommunication Sector of Nepal?

Nepal’s telecommunication sector encompasses mobile and landline services, internet, and satellite communications.

It is regulated by the Nepal Telecommunications Authority (NTA), which oversees service providers like Nepal Telecom and Ncell. The sector focuses on expanding connectivity, improving infrastructure, and ensuring quality and affordable services for users.

Which Law & Legal Authority governs the Telecommunication Sector in Nepal?

In Nepal, the telecommunication sector is primarily governed by the Telecommunication Act, 1997. The key legal authority overseeing this sector is the National Communication Authority (NCA), which regulates and manages telecommunication services, licenses, and policy implementation. Additionally, the Nepal Telecommunications Authority (NTA) plays a crucial role in supervising and ensuring compliance with regulations and standards within the sector.

What is the Initial Procedure of FDI in the Telecommunication Sector of Nepal?

·  Market Research: Assess the telecommunication sector, including market demand, competition, and regulatory environment in Nepal.

·  Business Plan: Develop a detailed business plan outlining investment objectives, financial projections, and operational strategies.

·  Regulatory Compliance: Register the business with the Department of Industry (DOI) and obtain necessary licenses from the Nepal Telecommunications Authority (NTA).

·  Investment Approval: Submit an application for Foreign Direct Investment (FDI) approval to the Investment Board Nepal (IBN) or relevant authority.

·  Financial Planning: Secure funding and allocate budget for infrastructure, technology, and operational setup.

·  Local Partner: Consider partnering with a local entity for market entry and regulatory navigation.

What is the Complete Procedure (in 7 Steps) for investment in the Telecommunication Sector of Nepal?

Investing in Nepal’s telecommunication sector involves the following steps:

1. Research and Planning: Conduct thorough research on the market, regulations, and potential opportunities.
2. Form a Legal Entity: Establish a business entity in Nepal, such as a private limited company, through the Office of the Company Registrar.
3. Obtain Approvals: Secure necessary approvals and licenses from the Nepal Telecommunication Authority (NTA) and other relevant regulatory bodies.
4. Apply for a License: Submit an application for a telecommunication license, detailing your business plan and technical capabilities.
5. Fulfill Capital Requirements: Meet the required minimum capital investment and financial commitments as stipulated by the NTA.
6. Set Up Infrastructure: Build or acquire the necessary infrastructure, such as network equipment and facilities, to operate your telecommunication services.
7. Compliance and Operations: Ensure compliance with local regulations, including regular reporting to regulatory authorities, and commence operations as per the approved license conditions.

What is the allowed percentage of Investment in the Telecommunication Sector?

In Nepal, foreign investment in the telecommunication sector is generally allowed up to 80%. However, the exact percentage can vary based on specific regulations and the nature of the investment.

How long does it take to complete FDI in the Telecommunication Sector?

Completing Foreign Direct Investment (FDI) in Nepal’s telecommunication sector typically takes 6 months to 1 year. This timeframe includes obtaining regulatory approvals, compliance with telecommunications standards, and infrastructure setup.

Read More:

• Foreign Direct Investment (FDI) in Energy Sector of Nepal
• Foreign Direct Investment (FDI) in Agriculture Sector of Nepal
• Investment Board Nepal

What are the regulatory approvals required in the Telecommunication Sector?

Regulatory approvals required in Nepal’s telecommunication sector include:

1. License from Nepal Telecommunications Authority (NTA): For operating telecommunication services.
2. Frequency Allocation: Approval for using specific radio frequencies.
3. Infrastructure Permits: Authorization for building and maintaining communication infrastructure.
4. Approval for Equipment: Certification for telecommunications equipment and technology.
5. Compliance with National Standards: Adherence to technical and service standards set by NTA.
6. Consumer Protection Registration: Ensuring services meet consumer protection laws.

What happens after FDI Approval in the Telecommunication Sector?

After FDI approval in Nepal’s telecommunication sector, the following steps are typically required:

1. Business Registration: Register the business with the Office of the Company Registrar.
2. Obtain Licenses: Secure necessary licenses and permissions from the National Communication Authority (NCA) and Nepal Telecommunications Authority (NTA).
3. Infrastructure Development: Set up and develop the necessary telecommunications infrastructure.
4. Compliance: Adhere to sector-specific regulations and standards set by the NTA and other relevant authorities.
5. Operational Setup: Start operations, including recruitment, training, and service deployment.
6. Ongoing Reporting: Regularly report to regulatory bodies and comply with regulatory requirements.

What are the fees associated with Telecommunication Investment Approval?

Fees associated with telecommunication investment approval in Nepal include:

1. Business Registration Fee: Costs for registering the business with the Department of Industry (DOI).
2. License Fees: Fees for obtaining a telecommunication license from the Nepal Telecommunications Authority (NTA).
3. FDI Approval Fees: Charges for processing Foreign Direct Investment (FDI) applications with the Investment Board Nepal (IBN) or relevant authorities.
4. Spectrum Fees: Costs associated with acquiring radio frequency spectrum if applicable.
5. Other Administrative Fees: Additional fees for document processing, legal consultations, and compliance with local regulations.

What are the benefits of investing in the Telecommunication Sector of Nepal?

Why invest in Nepal’s telecommunication sector? Here are some reasons:

• Growing Market: Fast-growing demand for mobile and internet services.

• High Return Potential: Potential for high returns in a developing market.

• Government Support: Favorable policies and incentives for foreign investors.

• Digital Transformation: The opportunity to contribute to Nepal’s digital infrastructure and connectivity goals.

• Untapped Rural Areas: High potential, especially in unserved and rural parts of Nepal.

• Technological Advancement: Opportunities to introduce and expand modern telecommunication technologies.
• Strategic Location: The country is appropriately located beside big markets like India and China.