Valuation of Smart Telecom is yet to begin

It’s been four months since the government took over Smart Telecom revoking its license but the asset valuation of the embattled telecom is yet to begin.

Smart Telecom lost its telecom license in the third week of April, after failing to clear the dues and renewal fees it owes to the Nepal Telecommunications Authority (NTA). The NTA took over the company on May 2.

After taking over Smart Telecom on May  2, the NTA had formed an asset management committee, headed by its board member Gokarna Mani Sitaula. However, the committee has remained inactive after one of its members—Anup Nepal—refused to be part of it.

Since Smart Telecom is currently under the control of the NTA, it was earlier said that the auction process would be carried out after determining the price of the company. For this, the regulator had advanced the process of setting up a price determination committee in the first week of May itself.

The NTA has so far issued four notices for the formation of a committee to determine the property value of Smart Telecom, seeking a letter of intent from qualified evaluators.

A letter of intent has been invited for the five-member committee including the coordinator, specifying various qualifications. In order to become the coordinator of the committee, one should have a registered evaluator or a  degree in chartered accountancy or a master’s degree in management.

Achyutanath Mishra, assistant spokesperson of the NTA said that a committee has not been formed to determine the value of Smart Telecom. “We have issued notice thrice to form the committee. On Aug 23 again, we issued a notice for the fourth time,” he said.

The company owes Rs 28bn to NTA, of which Rs 23bn is for license renewal and Rs 5bn as dues. While NTA can recover the arrears from Smart Telecom’s assets and income. However, not all arrears cannot be recovered from the company’s assets. For that, the company has to be sold. The authority can make another decision on whether to operate or close the company. However, there is also a possibility that the dues of the government will not be recovered when the company is closed. Therefore, the NTA is forced to collect its arrears by selling the company.

Smart Telecom received the basic telephone services operating license on 15 April 2013, and had to renew the license by paying dues and renewal fees before the permit term expires. However, the company had defaulted in clearing the dues in the past and had sought an extension from the government several times. The then KP Sharma Oli-led government had allowed the company to clear the dues in five installments. Even then, Smart Telecom was not able to clear the outstanding amount.

The Singapore-based Lal Sahu Distribution Pte Ltd has a majority stake of 70 percent in Smart Telecom. By using political influence, the company in the past had been successful in getting extensions to pay dues as well as securing its license even when the regulator revoked it. This time also, the promoters of the company did intense political lobbying to secure the license, but to no avail.

On 29 July 2019, NTA revoked the license of Smart Telecom. However, the company succeeded in rolling back the authority’s decision after it filed a review application at the Ministry of Communication and Information Technology within five months.

Before its license was revoked, the company had 2.2m customers and had 558 towers. It had a frequency of 5 MHz in the 900 band and 12 MHz in the 1800 band.