After LTO, NTA tells Ncell to ‘clear all dues’

Kathmandu, December 23

Private telecom company Ncell risks losing additional frequency blocks it won in spectrum auction held last week if it is unable to clear the applicable outstanding capital gains tax, as well as the bid amount for the spectrum, by January 2.

Ncell, which was allowed to participate in the auction for residual frequency blocks in the 1,800 megahertz bandwidth on the condition that it would clear all its outstanding dues to the government, was the highest bidder with a bid amount of Rs 58 million per frequency block of 1 MHz, surpassing Nepal Telecom.

While the highest bidder has to pay the bid amount within 15 days of auction, Ncell also needs to clear its outstanding CGT within that period or else it will lose the spectrum to the next highest bidder, as per Nepal Telecommunications Authority.

“Should Ncell fail to comply with both these provisions within the stipulated time, Nepal Telecom, which was the second-highest bidder, will automatically become the successful bidder in the spectrum auction,” informed Purshottam Khanal, chairman of NTA.

Initially, Ncell was not eligible to participate in the spectrum auction, as a provision in the NTA’s specification states that any applicant for spectrum auction must have cleared all tax dues. However, the NTA board allowed Ncell to participate in the auction on the condition that if it won the bid, it would be awarded frequency blocks only after clearing its tax liabilities, including CGT to the government.

NTA allowed Ncell to participate in the spectrum auction also because otherwise NT would have been the sole bidder, as other telecom firms did not meet NTA specifications for the auction.

Once it complies with the stated provisions, Ncell will be able to purchase maximum of nine out of 16 1 MHz frequency blocks available in the 1,800 MHz bandwidth. This is because NTA has limited telecom firms to use a maximum of 20 1 MHz frequency blocks in 1,800 MHz bandwidth and Ncell is already using 11 1 MHz blocks in this bandwidth.

The Ncell CGT issue should have been settled by now after the latest verdict of the Supreme Court determined Rs 22.44 billion as remaining outstanding CGT in the Ncell buyout deal. But the International Centre for Settlement of Investment Disputes — an international tribunal — last week issued an interim order to the government asking it not to initiate CGT collection process from Ncell.

To further complicate things, the Large Taxpayers Office yesterday gave an ultimatum to Ncell to clear its outstanding capital gains tax dues within 15 days, in contradiction to the ICSID’s interim order.