What started as a store-and-forward email service over a dial-up link in a room with a single computer in 1995 by a 22-year-old Dileep Agrawal is now the Nepali internet giant WorldLink Communications Limited. The company is regarded for innovative and reliable services that it has expanded to nooks and corners of the country. Recently, the company received Rs 1.98 billion in foreign investment from British International Investment (BII), which the company will invest in expansion plans and other strategic initiatives. the HRM sat down with Agrawal, Chairman and Managing Director of WorldLink, at his office in Kathmandu, to talk about the foreign financing the company has received, its plans, market prospects, and challenges, among other topics. Excerpts:
Q. WorldLink Communications recently received Rs 1.98 billion in funding from the British International Investment (BII) and Dolma Impact Fund which is the largest combined in the internet sector in Nepal to date. How is the company utilizing this investment?
A. The World Link has brought the biggest FDI in Nepal’s corporate history worth USD 31 million in two phases. But this has also presented a challenge for us to utilize the fund and provide good profits to the investors. If successful, it will set a benchmark and attract more FDI to Nepal.
There is a question of why foreign investment is required in the internet services business. It is because, to provide basic internet service, massive investment is required to expand the fiber network service. However, this investment will take time to yield returns. At present, domestic investors are not interested to invest in this sector and banks do not have the necessary funds due to liquidity issues.
Q. What areas the company is focusing on with this investment?
Currently, urban households and major towns already have broadband internet access. However, the focus now is to expand to more rural areas across all corners of the country. The target is to provide internet access to 70 percent of households through WorldLink. The network has already reached 2.2 million units of land, which means people in those areas can connect to the network. Currently, our total number of subscribers is 780,000.
Q. What changes have been there in services and coverage of WorldLink from previous foreign investments?
The first FDI was used to build fiber networks in smaller towns in Nepal. Prior to that, WorldLink did not have a presence along the East-West Highway. However, the investment enabled and motivated us to work better and we gained confidence. It wasn’t just the size of the investment, but also the validation that WorldLink is doing great work.
Q. It has been almost three decades since WorldLink started. How has the company contributed to the development of internet services in the country?
A. Over the past 27 years, WorldLink has always believed that connectivity is important. The company has worked with the ethos of connecting everyone, anywhere, all the time, and has been at the forefront of expanding connectivity. For example, WorldLink was the first company to expand its services outside of the Kathmandu Valley, even before state-owned Nepal Telecom. Despite not having access to technology like spectrum and ADSL service, WorldLink innovated and found new ways to serve customers through wireless and cable services.
In a country where affordability is a major concern among consumers, WorldLink has always been trying to push the boundaries for connectivity. Nepal has the lowest GDP per capita compared to other economies in South Asia, which means WorldLink has had to build its product and price it in a way that is affordable. We have been successful in doing so. Moreover, Nepal is the only country in the world where the majority of users consume the internet not through mobile networks but through WiFi, thanks to WorldLink’s push for high-speed, unlimited fiber connectivity where telcos were limited to voice. WorldLink’s role in Nepal has been to democratize data and make connectivity accessible to everyone.
Q. How do you see the changes occurring in the internet connectivity landscape in Nepal?
A. The growth of internet use is exponential, with each internet-connected household now using around 180 GB of data per month. This is due to several reasons, including high-speed internet, unlimited data, widespread access to smartphones, and the abundance of data to consume. Likewise, social media platforms like TikTok, YouTube, and Facebook have contributed to the increase in data consumption. I believe that this trend is unlikely to change anytime soon.
Q. What would it take to make competition fair? Has the Nepal Telecommunications Authority (NTA) been playing its role as the regulator to ensure fairness in the market?
A. I believe that competition to provide better services is good. However, the competition has been unhealthy due to some service providers undercutting prices. In some cases, the pricing is even lower than the cost of buying bandwidth from overseas. This is a very unhealthy form of competition. Pricing should always remain fair to avoid predatory pricing in the market. Service providers should not enter the market just to gain customers and then jack up the price later.
In India, Jio offered internet at a cheap rate but later increased the prices. The long-term impact of predatory pricing can result in consumers eventually paying higher prices for internet services.
We have been advocating for fair pricing in the market and urging the NTA to monitor the pricing of internet services. I think the NTA should ensure that the pricing is fair by taking into account the procurement capacity, operating cost, and manpower cost of the service providers. NTA should set a minimum price below which the service providers cannot go. This will prevent predatory pricing and ensure that companies are pricing their services logically.
Q. What challenges exist for an ISP like WorldLink at present? How is the company facing those challenges?
A. We have been facing a number of internal and external challenges that are hindering the growth of my company. One of the biggest internal challenges is finding and retaining good manpower. We’ve had discussions with our HR team to come up with solutions to this problem.
On the external front, taxation has become a major hurdle for us. We have aspirations to expand our services to the rural market, but affordability is a major issue there. Providing the same service in Kathmandu and Karnali comes at a significantly higher cost in Karnali, almost 40 percent more.
Unfortunately, people in rural areas cannot afford to pay those prices. We’ve approached the government for a solution to this problem, and we believe that reducing taxes for service providers in rural areas will help improve penetration and benefit the people there.
Currently, we sell internet in Kathmandu for Rs 1,000 a month out of which Rs 300 go directly to the government as taxes. If these taxes are removed or lowered, we could offer more affordable prices to our customers. As it stands, only the rich in rural areas are able to afford our services. To address this, we’ve started providing free WiFi hotspots in every marketplace.
Overall, we believe that the government needs to prioritize digital infrastructure and encourage service providers in order to achieve their e-governance and digital Nepal plans. Reducing taxes for service providers in rural areas would be a big step towards achieving these goals.
Q. Is WorldLink planning to expand beyond internet services such as mobile services? How is the company working to step into the mobile services business in the foreseeable future?
A. Our current primary focus is on WorldLink, and we are working hard to secure an additional 40-50 million dollars in investment for the company. This is our top priority, and we are fully dedicated to achieving this goal.
While we remain committed to staying ahead of industry trends, we understand the importance of not blindly following them. Instead, we believe that it is crucial to focus on our core business and ensure that we are delivering the best possible service to our customers.
However, we do have plans for the future, and one of our goals is to become a mobile operator if the government grants us a license. We recognize that wired internet connections are not feasible for all households, and providing wireless services is essential to reaching more people and offering high-quality internet access.
We are actively working towards achieving this goal and are committed to investing the necessary time and resources to make it a reality. Ultimately, our aim is to provide reliable, high-speed internet access to as many people as possible, regardless of their location or circumstances.
Q. Are telecom companies a threat to internet service providers (ISPs) in Nepal?
A. It is unlikely that telcos will be able to surpass ISPs in Nepal at this point. Consumers in Nepal have become accustomed to receiving unlimited data at a very low price point. For example, if there are four people in a household and pay Rs 1,000 per month for internet services, each person is only paying Rs 250, with no data cap. Additionally, WorldLink consumers can also take advantage of free WiFi outside of their homes. The speed at which ISPs are improving their services is much faster than that of mobile operators.
However, there is still a niche market for mobile operators. For instance, when people need data while on the move, mobile operators are the go-to option. In these situations, the convenience and reliability of mobile operator services are essential.
Q. You said during WorldLinks’s 26th anniversary that the company is planning to issue IPO to go public. Where has this plan reached?
A. We have started discussions with issue managers to explore the possibility of issuing shares to the general public. As a public limited company, we are audited by international audit agencies due to our investment from BII; our governance is highly robust as BII has been a board member and shareholder in the company for five years.
However, our main concern regarding issuing IPS is the process of book building. No company in Nepal has successfully listed through book building, and we are unsure if the market has the appetite to subscribe to an IPO through this method. Therefore, we are carefully assessing the market conditions and exploring all available options before proceeding.
If market conditions permit, we plan to proceed with the IPO in the next fiscal year. We are optimistic about the potential benefits of this move and are working diligently to ensure that all necessary preparations are made.
Q. Where would you like to see WorldLink 10-15 years down the line?
A. WorldLink’s long-term vision is to transform into a comprehensive digital infrastructure company that provides a broad range of digital services to its customers. We plan to expand our services beyond internet connectivity to cloud computing services through the establishment of data centers. Our goal is to meet the growing demand for cloud-based solutions in Nepal.
Likewise, we plan to expand our mobile services to reach more customers and offer a full spectrum of digital services. Our aim is to provide a one-stop shop for all the digital needs of our customers, including internet, mobile, cloud computing, and other digital services.
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