Amaresh Singh challenges sale and purchase of NCell shares

Malaysia based company Axiata’s decision to exit Nepal by selling its stake in Ncell to a newly established UK-based firm has sparked controversy and triggered debate in the government, Parliament, streets and the court, reigniting challenges for the embattled telecom giant.

On December 1, Axiata announced that it had entered into an unconditional sale and purchase agreement (SPA) with Spectrlite UK Limited for the sale of Reynolds Holding Limited, which owns approximately 80 percent equity stake in the Nepal-based Ncell Axiata Limited.

Spectrlite UK, registered in the United Kingdom in September this year, is owned by Satish Lal Acharya, a Nepali origin man currently based in Singapore. Sunivera Capital Venture, owned by his wife Bhavana Singh Shrestha, has a 20 percent stake in Ncell.

But, the regulatory agency—Nepal Telecommunications Authority (NTA)—said it is in the dark over the deal even though the Telecommunications Regulation 1997 makes it mandatory for the licensed entity to get prior approval from the NTA to sell or purchase more than five percent of the paid-up capital. In fact, the NTA said it has already sought details about the reported deal from Axiata through Ncell.

Even though Axiata has pointed out an unfavourable investment climate in Nepal as the reason for its exit, officials point out that a lot of things, including the terms of the deal, are unclear and suspicious.

Last week, Prime Minister Pushpa Kamal Dahal “Prachanda” called a meeting of ruling parties to discuss the matter. The Prime Minister’s Secretariat said besides Prime Minister Prachanda, Nepali Congress President Sher Bahadur Deuba, CPN (Unified Socialist) chair Madhav Kumar Nepal, Janata Samajbadi Party leader Rajendra Shrestha, Loktantrik Samajbadi Party chair Mahantha Thakur and several other leaders and government ministers were also present at the meeting.

Ruling party leaders reached consensus that the SPA deal on Ncell was suspicious and the government needed to investigate the matter.

“The government will investigate whether existing laws and international norms have been followed,” the Ministry of Information and Communication said in a statement. “Likewise, its impact on Nepal’s telecommunications sector, foreign investment and the government revenue.” The ministry has also warned that the government would initiate strong legal action if any irregularities are found during the probe.

Many have questioned how the company, which Axiata bought in 2016 for $1.365 billion, was valued at just $50 million in 2023.

According to Axiata, key terms of the SPA include a fixed consideration and a conditional consideration. The fixed consideration is $50 million, of which $5 million is payable within six months of the completion of the transaction and the remainder is payable after 48 months.

Meanwhile, the high court, Patan, on December 1, acting on a petition against the SPA, issued a show-cause order in the name of Axiata. The court had invited both sides for a hearing on December 11.

The legal challenge brought forth by independent Lawmaker in the House of Representatives, Amresh Kumar Singh, relating to the sale and purchase of Ncell shares, has been assigned to Judge Binod Sharma’s bench in the Supreme Court.

Last week, lawmaker Singh registered a writ petition, and despite the payment being stipulated, yesterday, during the session presided by Judge Kumar Regmi, the execution of the payment was not examined.

Singh’s writ alleges that the shares were traded in a non-transparent manner, circumventing Nepal’s legal processes and causing detriment to the state. The petition has urged the SC not to recognize the purchase and sale of Ncell shares.

The respondents in the writ include the Office of the Prime Minister and the Council of Ministers, the Ministry of Communications and Information Technology, the Nepal Telecommunications Authority, the Office of the Registrar of Companies, the Internal Revenue Department, and Ncell. Lawmaker Singh has claimed that important political leaders of Nepal are also involved in NCell’s share deal. Having taken benefit some Nepali political figures are trying to prevent the telecom giant from falling under government ownership, he pointed out. Pointing to the fact that NCell would ultimately become the asset of Nepali citizens in four years, Singh urged the people to protest against the current opaque transactions and take to the streets to safeguard their interests.