Nepal Telecom Records 7.86% Profit Decline in FY 2079/80, Despite Increased Revenue

• IT Pana
• Thu,17 August 2023

Nepal Telecom, the cornerstone of the nation's communication infrastructure, faced a 7.86% dip in profits during the Fiscal Year FY 2079/80. As per the latest financial report released by the state-backed telecommunications company, the preceding fiscal year witnessed a profit tally of over NPR 7.80 arab, constituting a decline of more than NPR 66 crores. However, amidst this financial ebb, Nepal Telecom demonstrated an impressive growth trajectory, surging total revenue by over NPR 49 crores to surpass NPR 44 arab.

In the accounting ledger of FY 2079/80, the telecom giant's profit settled at NPR 7 arab, 80 crores, 45 lakhs, and 26 thousand, marking a regression of 7.86%, equivalent to NPR 66 crores, 62 lakhs, and 7 thousand. This downturn follows the preceding fiscal period, where Nepal Telecom achieved a total profit of NPR 8 arab, 47 crores, 7 lakhs, and 33 thousand.

The narrative of revenue unfolds similarly. In FY 2078/79, Nepal Telecom reported a total operating revenue of NPR 37 arab, 91 crores, 97 lakhs, and 89 thousand. Transitioning to the ongoing fiscal year till the conclusion of Ashar in 2080, the revenue stream tapered to NPR 36 arab, 80 crores, 39 lakhs, and 30 thousand. This decrement, though, was quantified at 2.94%, representing NPR 1 arab, 11 crore, 58 lakhs, and 58 thousand.

Notable Revenue Milestone

Amidst the nuanced financial landscape, Nepal Telecom successfully raked in NPR 44 arab, 86 crores, 82 lakhs, and 73 thousand in revenue for FY 2079/80, encompassing the period till Ashar, 2080. Comparatively, the prior fiscal year saw total revenue amounting to NPR 44 arab, 37 crores, 46 lakhs, and 56 thousand. This fiscal progression charted a growth trajectory of 1.11%, equating to NPR 49 crores, 36 lakhs, and 16 thousand.

At present, Nepal Telecom's paid-up capital stands strong at NPR 18 arab, with a substantial reserve totaling NPR 75.82 arab.

However, this financial flux reverberates beyond mere numbers. The decline in profit cast its shadow on the per-share revenue and net worth. In FY 2079/80, Nepal Telecom's per-share revenue amounted to NPR 43.36, a decrement from the preceding fiscal period's NPR 47.06. Similarly, net worth per share dipped from NPR 528.13 in FY 2078/79 to NPR 521.27 in FY 2079/80.

Decoding the Fiscal Dynamics

This trend of dwindling profits within Nepal Telecom over recent years transpired even as the company's user base burgeoned. The reduced reliance on cellular voice, the ascendancy of Over-The-Top (OTT) apps, and the intensified competition driving down data pack prices are all attributed to the company's less than sanguine financial performance.

A multidimensional analysis highlights the driving forces behind this fiscal shift for FY 2079/80, as outlined by the company:

1. Escalated international roaming service usage incurred expenses amounting to NPR 22 crores, 46 lakhs during FY 2079/80.
2. Direct operating service-related costs escalated.
3. Alterations in bank interest rates contributed an increased financial revenue of NPR 1 arab, 85 crores, and 77 lakhs.
4. Foreign exchange fluctuations yielded a gain of NPR 22 crores, 24 lakhs.
5. Adjustment in domestic interconnection tariff structures played a role in the financial fluctuations.
6. A sweeping expansion of 4G coverage and data connectivity across the nation, coupled with economical data packs, weighed on profits.
7. The proliferation of Over-The-Top (OTT) services corresponded to a revenue dip of NPR 68 crores, 37 lakhs.
8. Network outages in select areas due to inadequate power supply and delayed maintenance.
9. Revenue contraction due to modifications in telecommunication service charges as per the Finance Act, 2079.
10. Resumption of capacity-building initiatives paused amid the pandemic, and the subsequent increase in employee wages.
11. Infrastructural damage and network expansion challenges during infrastructure development, maintenance, transfer, and similar endeavors undertaken by municipalities and rural municipalities.
12. Upholding consistent quality services in remote regions with limited expected financial returns.

Nepal Telecom, as the nation's largest communication service provider, remains steadfast in its commitment to providing an array of mobile and fixed-line services. The company's enduring market share in voice and broadband services underscores its enduring role in Nepal's telecommunications landscape.