KATHMANDU: After failing to raise approximately 31 billion rupees to save its operating license, United Telecom Limited (UTL) has reached the verge of exiting Nepal’s telecommunication sector. However, the loss of its license does not extinguish the company’s heavy financial liabilities toward the state.

Following the automatic expiration of its license, the Nepal Telecommunications Authority (NTA) has dispatched a formal notice to UTL to recover an outstanding balance of approximately Rs 8.05 billion. This due is no longer treated as a standard commercial transaction and is set to be recovered through official government arrears collection procedures.

In a board meeting held on Bhadra 24, the NTA decided to invoke statutory recovery protocols for the pending revenues and additional fines. The regulatory body is advancing processes to instruct relevant agencies to freeze UTL’s bank accounts as well as its movable and immovable properties.

According to NTA Spokesperson Min Prasad Aryal, formal notice has already been served to UTL to clear the dues. Failure to pay the specified amount within the deadline will trigger further stringent state recovery actions. This marks a new phase in UTL’s decade-long regulatory and financial crisis—where its legal operational rights are terminated, and state apparatuses step in to secure unpaid public revenue.

How a 30 billion shrank to 8 billion

A major point of confusion surrounding UTL has been the total outstanding liability versus the specific amount being pursued by the NTA. Previous authority records indicated that UTL shouldered a total liability of roughly Rs 30. 80 billion, with the lion’s share attributed to basic telephone service license renewal fees.

Available records show that the basic telephony license renewal fee alone stood at over Rs 23.03 billion. Combined with frequency fees, Rural Telecommunication Development Fund (RTDF) contributions, royalties, committed royalties, fines, and other charges, the total cumulative liability surpassed Rs 30.80 billion.

However, with the license now officially invalidated, the renewal fee cannot be pursued under the same operational framework. Consequently, the NTA has separated the roughly Rs 23 billion renewal component, shifting its immediate focus to recovering unpaid revenues, regulatory fees, fines, and accumulated penalties totaling over Rs 8.05 billion as government arrears.

This Rs 8.05 billion demand does not represent UTL’s entire historical liability, but rather the mandatory arrears the company must pay to the state even post-cancellation. The NTA noted that this figure incorporates cumulative late penalties up to Bhadra. Past regulatory obligations—such as royalties, frequency charges, and RTDF contributions—do not get waived simply because the operating license lapsed.

License expiry paves the way for asset freezing

The crisis has shifted from license renewal debates to asset management. In 2022 (2079 BS), the government introduced dedicated regulations for managing assets of telecommunication service providers whose licenses are no longer valid.

With UTL’s license legally revoked, this regulatory framework has automatically activated. The NTA’s decision to freeze bank accounts and seize assets signals that the authority is shifting past polite payment reminders. A similar precedent was set during the collapse of Smart Telecom, where the NTA seized infrastructure and assets following a license revocation over unpaid dues totaling over Rs 4.19 billion.

Given UTL’s much larger liability scale, the asset management and government arrears recovery process is expected to be significantly more complex. The NTA has signaled further legal actions if UTL defaults, forcing the company to shift focus from reviving its license to managing its massive legacy debts.

Failed attempt to secure USD 95 million 

In a last-ditch effort to avert disaster, UTL attempted to inject foreign investment into the company. UTL Chairman Raj Bahadur Singh advanced a proposal to bring in foreign direct investment worth USD 95 million (approximately Rs 14.5 billion) originating from Mauritius.

An application was filed with Nepal Rastra Bank (NRB). NRB Information Officer Sudha Shrestha noted that while the application was received, the file could not advance due to insufficient documentation.

UTL’s strategy was contingent on foreign investment approval, promising to clear a major chunk of arrears immediately and resume operations with fresh capital. Initially, the company proposed paying Rs 13.46 billion within 30 days of foreign investment approval, followed by long-term installments. Later, it revised the offer to an immediate payment of Rs 13.53 billion with the remainder on an installment basis.

UTL also explored foreign loans, claiming agreements with a Mauritius-based entity to source USD 55 million. However, these rescue attempts failed to secure timely regulatory clearance. Throughout this period, UTL lobbied the government for installment facilities, foreign loan approvals, and technology upgrades—specifically proposing a transition from 2G/3G to 5G infrastructure.

The regulator’s stance, however, remained unwavering: zero tolerance for license renewals without clearing legacy arrears and renewal dues.

Hoarded frequencies and stalled network expansion

UTL’s crisis extends far beyond unpaid bills. Long-standing disputes have persisted between the regulator and the company regarding service expansion, spectrum utilization, and infrastructure development.

Regulators have repeatedly accused UTL of hoarding valuable radio frequencies for years without effectively expanding services. Records show the company held 5 MHz in the 800 MHz band, 10 MHz in the 900 MHz band, and 24 MHz in the 1800 MHz band—much of which remained underutilized.

In the telecom industry, spectrum is a scarce public resource. Hoarding frequencies while defaulting on revenue obligations is viewed as a severe regulatory breach. Furthermore, UTL was implicated in stalled rural telecommunication projects, notably a roughly Rs 3 billion optical fiber network expansion project along the Mid-Hill Highway.

Following implementation disputes and subsequent legal battles, the Supreme Court issued a verdict in Magh 2080 BS. With UTL failing to advance the project, the NTA transferred the mandate to Nepal Telecom, highlighting UTL’s poor operational performance alongside its financial defaults.

Indian ownership, nepali partners, and high stakes

UTL is not a standard domestic private firm. Its ownership structure features prominent Indian state-owned enterprises.

Available records indicate that India’s Mahanagar Telephone Nigam Limited (MTNL) holds a 26.68% stake in UTL, while Telecommunications Consultants India Limited (TCIL) and Tata Communications each hold 26.66%. The Nepali partner, Nepal Ventures Pvt. Ltd., holds the remaining 20% stake and is associated with UTL Chairman Raj Bahadur Singh.

Consequently, UTL’s license cancellation and debt recovery transcend a routine corporate default inside Nepal. It intersects with international investments, Indian state-owned entities, domestic telecom regulations, and state revenue recovery.

While UTL has argued that it faced discrimination—pointing out that Nepal Telecom and Ncell were granted installment facilities for renewal fees—the NTA maintains that UTL failed to meet deadlines and statutory bulk payment requirements necessary for renewal.

The two paths ahead for UTL

With its operating license automatically revoked, UTL faces two primary legal and commercial paths:

• Clearing Dues: Clear the remaining statutory liabilities exceeding Rs 8.05 billion and navigate the asset management and recovery framework legally.

• Legal Confrontation: Challenge the license revocation process through legal reviews or compensation claims.

Although UTL previously hinted at pursuing legal action and compensation if the government unilaterally canceled its license without facilitation, the central issue remains recovering public revenue.

The NTA’s move to freeze bank accounts and properties indicates that state recovery has entered a rigorous phase. Although the total liability shrank following the removal of the basic telephony license renewal fee, the remaining Rs 8.05 billion stands as a direct state recovery target.

According to NTA records, UTL’s Basic Telephone Service license bore the number BTSL-02 with an issuance date of Bhadra 20, 2073 BS. Its initial 10-year term expired on Bhadra 19, 2083 BS. Failing to renew the license with required fees within the legal timeframe has permanently closed the door for UTL to continue operations under its old license.

Ultimately, upcoming asset management initiatives, bank freezes, state arrears enforcement, and potential legal resistance will determine the final chapter of UTL. Its license may have expired, but its financial accounting with the state is far from over.