On December 1, Axiata the telecmooouncation giant announced its exist from Ncell with sale and purchase agreement (SPA) with Spectrlite UK Limited. This is the share of the Reynolds Holding Limited, which owns approximately 80 percent equity stake in the Nepal-based Ncell Axiata Limited.
If you look at the new company that acquired the share is the Spectrlite UK, registered in the United Kingdom in September this year. The company is owned by Satish Lal Acharya,a business man from Singapore. Looking ta the dynamic the Sunivera Capital Venture which owns the reaming 20% of necell is owned by his wife Bhavana Singh Shrestha.
The most noticable things is Axiata acquired the share in 2016 for $1.365 billion, was valued at just $50 million in 2023.
The telecom industry is no stranger to controversies and corporate reshuffling. One such case that has garnered significant attention is the Ncell Nepal controversy. In recent years, the departure of Axiata Group from Ncell has made headlines, leading to questions about the reasons behind this decision. In this article, we aim to shed light on the controversy and provide an insight into the factors that resulted in Axiata Group's exit from Ncell. This seems to be very normal but in reality there is a greater master mind that has create a matrix of selling and buying game.
Ncell, a leading telecommunications company in Nepal, found itself in the midst of a controversy regarding capital gains tax (CGT) in 2016. The controversy arose due to the ownership transfer of Ncell from Swedish telecommunications company TeliaSonera to Axiata Group.
The Nepali government, through the Large Taxpayers' Office (LTO), claimed that TeliaSonera owed a substantial amount of CGT on the transaction. It argued that the capital gain generated by TeliaSonera's sale of Ncell shares should have been subject to taxation in Nepal, as Ncell owned valuable assets within the country.
The tax authorities demanded payment of the outstanding CGT, which amounted to a staggering sum. The case became highly contentious and attracted widespread public concern, as the sum was considerably larger than what the government usually collected in taxes. The controversy took a legal turn, with ongoing disputes and appeals between the government and Ncell, leading to further uncertainty and speculation.
Axiata Group's Withdrawal:
In 2018, amid the ongoing controversy, Axiata Group made the decision to exit Ncell. The reasons behind Axiata Group's withdrawal were multi-faceted and influenced by various factors:
1. Regulatory Uncertainty: The unresolved tax dispute and the uncertain regulatory environment surrounding Ncell created uncertainty for Axiata Group. Operating in a business environment with significant legal disputes can be challenging for any company, affecting long-term planning, investment decisions, and potential growth prospects.
2. Reputational Risk: The controversy surrounding Ncell's tax liability had a negative impact on the company's reputation. Aligning with a company involved in such a high-profile legal dispute could have potential implications for Axiata Group's overall brand image and stakeholder relations.
3. Investment Priorities: Like any multinational corporation, Axiata Group had to prioritize its investments and allocate resources strategically. Considering the capital-intensive nature of the telecom industry, Axiata Group may have chosen to focus its efforts on other markets and opportunities with more favorable investment climates.
The Ncell Nepal controversy, specifically the capital gains tax dispute, had significant implications for Axiata Group, ultimately leading to its departure from Ncell. The unresolved legal disputes and regulatory uncertainties, combined with reputational risks and a competitive investment landscape, likely influenced this decision.
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