State-owned Nepal Telecom (NT) has cancelled its Rs 5bn procurement of a new billing system from Chinese technology giant Huawei, even though the bidding process had reached its final stage. The decision ends a tender that had been controversial from the beginning and raises fresh questions about governance, data security, and geopolitics in the country’s strategic telecom sector.
NT opened a tender for the system on March 18 last year. Although it shortlisted Huawei and WhaleCloud, the latter was disqualified at the technical proposal-stage. On Aug 31, NT formally invited Huawei’s representatives for the opening of the financial proposal scheduled for September 15.
The process, however, never reached that point. The financial proposal opening was first postponed to Sept 24 following the GenZ protests of Sept 8 and 9 that toppled the KP Oli-led government. It was again postponed on Sept 4 until further notice. Days later, NT cancelled the entire procurement process, stating that a new tender would be called shortly.
Although then Minister for Communication and Information Technology Jagdish Kharel had given the go-ahead to the Nepal Telecom management, sources say the cancellation came after instructions from higher authorities. According to officials familiar with the process, geopolitics played a decisive role.
Huawei faces heavy restrictions in several countries, including the United States, over national security concerns. Western governments have repeatedly warned that Chinese telecom equipment could expose sensitive data to state influence. Although Nepal has not formally banned Huawei, the pressure of operating a state-owned telecom company in a polarized global technology environment is growing.
But geopolitics was not the only factor. The tender had been disputed since its announcement. Critics accused NT of structuring the bid to favor a single vendor and undermining fair competition. Questions were also raised about the violation of a directive order issued by the Supreme Court, which had clearly warned against awarding both the core network and billing system to the same supplier.
The court, in its order dated 10 Sept 2024, had stated that the billing system procurement must ensure the protection of fundamental rights, including personal data. It said that the vendor supplying the billing system should not be in a position to access personal data through the core network. It also warned that using the same supplier for both systems could create a conflict of interest and pose information security risks. In simple terms, the ruling effectively meant that Nepal Telecom should maintain separate vendors for its core network and billing system.
In a telecom network, the core network is the central system which handles all voice calls, data routing, switching, roaming, and mobility management. It also generates call detail records (CDRs), which contain sensitive information about who called whom, when, and for how long. The billing system is responsible for converting network usage into money. It calculates charges, prepares invoices, deducts balances, and enables packages and offers. It can work in real time, such as through an online charging system, or in non-real time, through offline billing. Since both systems are critical and sensitive, many telecom operators globally use separate vendors for them. This separation reduces security risks, avoids monopoly control, and makes fault isolation easier when something goes wrong.
Nepal Telecom’s core network is built by Huawei. Its existing billing system, however, has been supplied by Asia Info since 2011. The original contract was for three years, but instead of launching a fresh tender, NT repeatedly extended Asia Info’s contract. Citing irregularities in the contract extension process, the Commission for the Investigation of Abuse of Authority (CIAA) filed a case at the Special Court against former managing director Sangeeta Pahadi Aryal and others. The case is still under consideration.
The attempt to replace Asia Info with Huawei would have brought both the core network and billing system under a single vendor. That triggered alarms among experts and regulators.
Ganesh Gautam, associate professor at Pulchowk Campus, had advised NT that although a single-vendor model might offer minor operational convenience, the risks far outweighed the benefits. He warned of data security vulnerabilities, reduced transparency, difficulty in fault diagnosis, and the danger of vendor lock-in.
“If one system is compromised, the same method can be used to breach the other,” he explained. “When systems are supplied by different vendors, the chance of identical security weaknesses is very low.”
Gautam also said that if one system goes down due to a technical flaw, the other may also fail if both are supplied by the same company.
Global Telco Consult, an international advisory firm, had also advised NT that awarding both systems to the same vendor could create conflicts of interest.
Many leading operators have separate vendors for core and billing systems. Even Ncell, Nepal’s private telecom operator, initially used Huawei for both. In 2018, it brought ZTE on board as its billing system provider to reduce dependence on a single vendor.
The cancellation of the Huawei contract, therefore, appears less like a sudden decision and more like the inevitable outcome of legal, technical, and political pressure converging at one point. The larger question now is whether Nepal Telecom can restart the process in a transparent and competitive manner.
