It’s been 10 months since Sunil Paudel was appointed as the Managing Director of Nepal Telecom. Before joining the government-owned telecommunications services provider, he was Executive Director at National Information Technology Center for almost four years. Paudel, who has an M.Sc in Global IT Technology Program from the Korean Advanced Institute of Science and Technology has, a challenging time ahead as Nepal Telecom prepares for the 5G service rollout in the country as well as sustaining the company’s growth. The HRM caught up with Paudel to talk about Nepal Telecom’s future plans and growth strategies. Excerpts:
You are the first Managing Director of Nepal Telecom appointed from outside of the company. The employee unions of NT had opposed your name during your appointment. How has your tenure as Nepal Telecom MD been in the last nine months?
I do not feel like I came from outside of the organization. I am well aware of the functioning of the government ministries and the entities/organizations under the ministries. I may be new to a telco environment and to Nepal Telecom, but it’s been quite a while since I have been serving in the government organization. It has been almost a year since my joining Nepal Telecom as the Managing Director and I have been getting full support and assistance from all the higher-level staff and everyone here in NT.
We all are together for the betterment of NT and for the expansion of our services all over Nepal. For this, NT is continuing its endeavors of expansion of its existing services as well as with the introduction latest technology, that at an affordable price to every part of the country. For this, NT is striving to expand its state-of-the-art technology-based services along with quality enhancement and diversification. We understand that we are not just a service provider but also an enabler for many other digital activities for the development of the country.
The company is continuing its support of the Digital Nepal endeavor by working towards ensuring the availability of telecom and internet infrastructure and services to every nook and corner of the country. We have been successful in reaching out to 739 local levels across 77 districts of the country, where 4G/LTE service is available. The remaining 14 local levels are very remote and we have started studying the various possible ways to expand the high capacity 4G/LTE for those areas as well. Presently, 3G is already available even in those areas, which would also assist in the Digital Nepal initiative until the availability of 4G/LTE.
As for the wired high bandwidth service, we have already reached 68 districts where the FTTH (fiber-to-the-home) service is available and we are continuing our expansion all over the country. During this period, we have expanded our FTTH services to areas such as Taplejung, Rasuwa, Jajarkot and Rolpa. During the same period, a total of existing 43 TDM-based exchanges having copper networks have been migrated to fiber-based FTTH service, expanding our services to 12 additional local levels. Further, we have expanded our services to eight remote areas by transporting our equipment by helicopters, without considering the capex as well as opex costs for those areas. In terms of new network sites, we have added 164, 159 and four sites of 2G, 3G and 4G respectively. Further, we have also been providing services at the same tariff rates in some areas where the satellite is the only means of connectivity and we have to bear the high operational cost of satellite bandwidth.
We have also been able to cater to a few matters related to the well-being and facilities of the employees. We understand that satisfied employees will help to build a successful business. To sum up, I can say that we have been able to work towards our goal of providing cost-effective telecommunication services to every nook and corner of the country through the latest technology. We have also been able to move forward with service quality enhancement and overall organizational efficiency enhancement.
The decline in profit of NT in the first quarter of this fiscal year has raised some concerns. The overall income Of Nepal telecom companies including NT has been shrinking in the last few years. Why income and profits are declining?
If you observe the profit trend of the telcos globally, you can observe this decline everywhere. There could be a slight difference in the ratio of profit drop individually, but there has not been a single telco that has not been affected. Telcos invest heavily in infrastructure and networks. However, the largely unregulated over-the-top (OTT) mobile applications that ride on top of the services of telcos, are enjoying the revenue chunk without any investment or the need to pay any taxes. The voice and SMS services are being replaced by such OTTs causing a sharp decline in the revenue and profits of telcos globally. On top of that, the ever-decreasing tariff due to fierce competition has further aided in magnifying the effect.
We are trying to overcome the profit drop by expanding our prioritized services, viz. FTTH and 4G/LTE to all over Nepal. We have also studied the small-sized pockets where 4G/LTE reach has been seen to be worth improvement and have moved forward with the plans to cover such areas. We have been also looking at the introduction of various value-added services (VAS) to our customers. One such initiative is Namaste Pay, NT’s subsidiary, in addition to other many VAS services we have already been providing. For us to be able to provide all the upcoming VAS services, we have been able to amend our VAS regulations.
Moreover, we have initiated the improvement in customer support and betterment of the quality of service. With all these, we are confident that we will be able to reverse the trend of profit decline.
Namaste Pay when it was launched in September last year, was touted as the next big thing from NT. One year down the line, how is Namaste Pay doing in the digital wallet ecosystem?
We have to understand that Namaste Pay entered the scene when a number of such providers had the advantage of first movers. So, it is natural that it will take some time for Namaste Pay to penetrate the scene. Namaste Pay has unique features that are not available in other wallet services. For instance, the possibility of use of the wallet services in the absence of internet connectivity through various other media such as IVR and USSD channels.
Namaste Pay is continuously adding more services, features, merchants and very attractive promotion schemes. So, we are confident that with time, Namaste Pay will be able to succeed.
A survey conducted by the Nepal Telecommunications Authority survey has shown call drops, call set-up time, and high balance cut complaints in NT’s service. What NT is doing to resolve these issues?
First of all, we need to understand that we are providing services through the air interface which is highly unpredictable. And in our country, the surrounding environment is continuously changing. You will see a multistoried building, where there used to be unutilized land or a one-storied shed, being constructed in less than a year. And the mobile network there would have been planned with the consideration of the previous surroundings. Some places would have a tree that grows up and blocks the signal. In some places, a tree would be present while planning and sometime might have been cut down. Some areas that previously had minimal or no inhabitation would have appreciable inhabitation within a small time. All these lead to the effect of the mobile signals moving unpredictably or insufficient capacity for the existing infrastructure.
Having said that, we need to continuously study environmental changes through drive tests and other tests, which we undertake regularly. With the results of the tests, we take steps to overcome the effects of the changed environment or the number of users. In some cases, we can do so comfortably through a change in parameters, configuration, or antenna alignments.
In other cases, we need to introduce new infrastructure. But obtaining hardware for the new infrastructure might take some time. Nevertheless, the network optimization process is continuous, and we are always in the process of improvement. We have also continuously performed tests for the over-charging if any, and we have not had results authenticating significant overcharging. However, we are continuously improving the billing system as required too.
NT is preparing to start the trial of 5G in Nepal. How the company is planning to introduce 5G in Nepal?
We are all set to initiate the trial at the earliest. We have observed that the devices available in the local market are very limited. We are now exploring the different devices supporting 5G in the 2600 MHz band so that we have visibility of the devices before the trial. Further, we also need to test the various available devices before we start the trial to the public. We will start the trial initially from Kathmandu and subsequently from other parts of all seven provinces of the country. We will be doing the 5G trials in at least one place in every seven provinces.
As 5G technology is expensive at present, we will have to wait some time for the technology to be affordable. The neighboring countries have also initiated the commercial introduction of the 5G network. With the trial, we will learn more about it in addition to the customers experiencing the service. Similarly, we will be closely watching the experience in the neighboring countries with the commercial deployment. With the knowledge gained from the study and observation of our trial and neighbors’ commercial deployment, we can then move forward with our own commercial introduction. Also, our regulatory body is yet to allocate the frequency band for 5G to telecom operators for commercial operations.
People say because of the duopoly of Nepal Telecom and Ncell in the Nepali telecom market consumers are deprived of quality services while telecom service price is also costlier. Don’t you think Nepal needs a third player which would make the market more competitive?
If you study the tariff in the SAARC countries, the average tariffs in the South Asian nations are comparable. Having said that, the market size also determines the cost and subsequently the tariff. Most of the things (equipment, bandwidth, etc.) we need to deliver our services are required to be purchased from abroad. And in the case of the internet, we need to procure international internet bandwidth. Also, for all the things we procure, the pricing will most certainly depend on the volume of the procurement.
In spite of this, we have had a continuous decline in the affordability of telco services. On top of that, we have one of the highest total taxes to be paid, with different tax items under different categories. Despite this, you will not see any other commodity item that has had its tariff declining over the years in spite of the inflation rate. Now coming to your question about the additional operator, we already have three active operators. And we have seen in the past that some other operators having licenses for rural telecommunication could not sustain.
The competition between telcos in Nepal is healthy and fierce at the same time. The players have been focusing on bettering the service quality and affordability. So, I think the present number of operators in Nepal is adequate for healthy competition in order to ensure quality and affordable services to consumers. To ensure this, we need to have good health and strength of the telcos and be ready for continuous investment.
Even at this time, with continuously declining tariffs and profits, the telcos are continuing the introduction of the latest technology and services and expanding their networks. Hence, for sustainability, the telcos also need regular cash flow and a profit margin, albeit small. In its absence, some operators cannot sustain and close their services and the market will collapse, as we have seen in the case of our neighbors.
Why both voice and data prices are still higher in Nepal?
The tariff is at par considering the capital and operational expenditure. And as I said earlier, the tariff is continuously declining with the passing of time. In order to ensure the continuity of reliable service to customers, a healthy telecommunication industry with constant growth needs to be ensured. To sum up, we can say that the tariff rates are not high considering the costs involved. Further, the rates are comparable even with bigger countries and markets.
It is said the current billing system of NT is outdated and the NT board in July had decided to invite a tender for procurement of a new billing system. However, the NT management refrained from the tender process. Instead, it went for the upgradation of the upgradation process. When will NT bring a new billing system as directed by the board?
I first want to mention that the operational billing system was obtained through a contract via an international tender in 2011. Every contract has a provision as allowed by the company’s financial rule and is in line with the procurement act, which requires the supplier/provider to provide additional features as required using the same platform with minimal cost. This ensures the maximum utilization of the already procured system and resources. This is even more important for such a large system as the billing system.
After having already procured this system in 2011 and operating it since then, we have had minor upgrades and updates in the system in order to cater to the requirement of billing of systems/services which had not been envisioned while preparing the requirement of the billing system (and the requirement for the billing system was prepared during 2009/2010).
We successfully implemented the 4G/LTE and FTTH, the billing for which had not been incorporated into the billing system. Billing for the same was incorporated into the existing billing system through minor upgrades, which of course had a cost-benefit analysis.
We cannot change the vast billing system every time we introduce a new service. The current billing system is designed to cater to 31 million wired/wireless subscribers enjoying services through different technology. The tender and subsequent contract will take some time as the system is a very complicated system and will have numerous different modules for billing the various services. Every feature/function requirement needs to be ensured and tested as required (through a prototype) before finally signing the contract.
Further, we need to have this system up and running till the completion of the migration of all of NT services to the new system. NT has various services using different technologies; we have different services being provided from various technologies ranging from CDMA (though being shut down soon), GSM 2G/3G/4G, and FTTH. If we try to migrate all the subscribers at once or try to squeeze in the migration process in a short time period, all of our services may suffer inferior quality or even get impacted more. So, the migration of all the subscribers to the new billing system will take some time. The outgoing billing system needs to be up and running at least until the time all our subscribers are migrated to the incoming billing system.
This is what we have tried to do; we are trying to ensure the satisfactory operation of the existing billing system till we come up with a tender and subsequently sign the contract, through minimal required upgrades and with the minimum amount. We always conduct cost-benefit analysis while any purchase, be it through upgrades or through tenders.