Nepal Telecom
Message from the Chairman of the Board of Directors
Digitalization and dematerialization have started Telecom in voice services is above 44%. Similarly, to show clear impact on how people live, learn, data/internet penetration rate has reached 31.69%, communicate, commute and work. These global and the Market Share of Nepal Telecom in data trends (i.e. digitalization and dematerialization) services is above 51%. Although these figures are the basic functions of Information and indicate that telecommunications services are Communications Technology (ICT) that convert the reaching the saturation levels, the global trend of ‘physical’ into ‘digital’ or ‘virtual’. Acceptance and personalized devices with multiple SIM cards and adaptation of this trend is permanently transforming location-based services assure that there are still the activities and lifestyles of the people globally. enough spaces to grow, multiply and prosper. User friendly applications (particularly Apps or Mobile With almost a century old legacy of Apps) that ride on data networks are gaining market telecommunications services, Nepal Telecom has and providing huge convenience to the users to been introducing and expanding huge portfolio avail services like weather forecasts, payment of of telecommunications services throughout the invoices, games, music, etc. country. The topographical and climatic challenges where common and less expensive technologies Out of the six telecom service licensees in the country, are generally not feasible, Nepal Telecom has Nepal Telecom is the only telecommunications accepted such challenges not as an obstacle, but as service provider that is serving the nation by an opportunity to provide voice and data services aligning its new business plans with the plans by devising unique, specialized networks. GSM/ and programs of the Government of Nepal. Nepal CDMA technology-based service in extremely Telecom has been providing traditional landline remote mountainous regions via expensive satellite (or, PSTN) services, highly popular GSM-mobile & backbone networks is an example of Nepal Telecom’s CDMA-mobile services, CDMA-WLL services, and determination to serve the general public even in VSAT-based services for geographically challenging extremely remote mountainous areas. terrains. Nepal Telecom is proudly serving more than 1-crore 5-lakh subscribers under its broad portfolio As of April 2014, national voice-teledensity has of services as of May 2014. reached 88.49%, and the Market Share of Nepal
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On the other hand, Nepal Telecom is an ISP (Internet telecommunications services in the competitive Service Provider) that has been continuously environment has a challenge to provide ‘Touch & expanding its Internet foot-print throughout the Feel experience’ of its services to its prospective country. The highly popular ADSL service that customers, and as such has started final works provides High Speed Internet (HSI) through fixed related to establishing ‘Customer Experience Center’ lines, EVDO service on CDMA network and 3G services in 10 major cities throughout the country on high on GSM network are proudly serving more than 43- priority. These centers would provide assurances lakh 45 thousand subscribers. From the perspectives to the prospective customers that Nepal Telecom of district-wise availability of data services, GSM- provides suitable services to the countrymen based 3G service is available in 53 districts, CDMA- on appropriate technologies. In line with this effort, EVDO service in 62 districts, WiMAX (Worldwide selection process to hire a Marketing Consultant is Interoperability for Microwave Access) service in 72 also progressing. Marketing concepts that are new, districts and the Wi-Fi Hotspots targeting crowded attractive and convincing are always important in public places like tourist centers, universities, parks, any competitive market, and Nepal Telecom is trying hospitals are available in 220 locations of 43 districts its best to provide such aspects to its customers and of the country. the prospective customers.
The ambitious project of CRTB & CS (Convergent On the financial front, in comparison to that of the Real Time Billing & Customer Support) would previous year, FY 2069/70 has recorded a growth converge most of the services under Nepal Telecom in its total revenue by 4.22% to Rs. 38.85 billion. In umbrella. Billing, customer care, facility modification the same FY, the Net-Profit-before-tax is Rs. 15.13 and other services under IP-CDMA are already being billion, and the Net-Profit-after-tax stands at Rs. implemented through CRTB&CS system in IP-CDMA. 11.29 billion. Especially due to a huge out-payment After complete customer data migration of GSM on license fees in this FY 2069/70 that were not paid system, CRM (Customer Relationship Management) in previous years due to lack of clarity, the Earnings- of both the CDMA and GSM services would be Per-Share (EPS) of the company has slightly dipped possible through CRTB&CS system. to Rs. 75.33 from Rs. 77.73 of the previous year. However, the Book-Value-per-share has still grown Another interesting service that Nepal Telecom is from Rs. 330.19 of the previous year to Rs. 357.57 in going to launch in near future is the UCS (Unified this FY 2069/70. Communication System). This service will be available as a VAS, and will allow integrated voice, data, and Nepal Telecom has been awarded by the video services apart from social networking services. Government of Nepal for paying the highest income tax in the year 2069/70. The overall strong financial Until a decade back, life used to be simpler. condition and strong cash flow has resulted into Concerning telephone service, there were no other assurances for professional growth in the future. The options, but to visit a nearby telephone office for management and employees have been sincerely payment of dues, line complaints, subscription of engaged in enhancing shareholder’s value, and new services, etc. Now, apart from the option of positively impacting social and economic activities visiting nearby offices, Nepal Telecom’s customers in the country. have the convenience of subscribing some of the new services via their mobile handsets and re- A major breakthrough is expected in the present charging their subscribed services via numerous somewhat-monopolistic & process-oriented means like recharge cards available in neighborhood working style of the company to a competitive & groceries, MPOS machines in shops, ATMs in outlets result-oriented working style after the introduction of commercial banks, KIOSK terminals in super- of Strategic Partner. The selection process for a markets, and even via online banking services. Consultant is almost at the final stages, and then the selection process for the actual Strategic Partner will Nepal Telecom having a huge portfolio of begin.
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It is indeed a pleasure to reiterate here that At this moment, it is our satisfaction to share with investment diversification efforts of Nepal Telecom you that Nepal and the Nepalese are steadily under agreement with Nepal Electricity Authority following the global trend, and Nepal Telecom is for Upper Tamakoshi Hydroelectricity Project and proud to be blessed with favor and good-will of its Trishuli-III-B Hydroelectricity Project are undergoing customers, national/international business partners satisfactorily. Now it is time to seriously consider and the general public! We take this opportunity investments in some subsidiaries that support to extend gratitude to the Government of Nepal, Nepal Telecom directly and the telecommunications government entities, Nepal Stock Exchange Ltd., fraternity in general. As such, processes have Nepal Telecommunications Authority, Office of started to prepare documents for establishing the Company Registrar, national and international an IT-subsidiary company and an Infrastructure agencies including humanitarian agencies for their Development company. trust and support to Nepal Telecom.
Nepal Telecom has been performing not merely as a Nepal Telecom and its services have become a part service provider, but as a responsible entity to impart of the Nepalese lifestyle, and we are determined knowledge on global trends revolving around the to serve Nepal and the Nepalese in all aspects of power of ICT, and putting in its best effort to make the their lifestyles through accessible, affordable and services accessible, affordable and dependable. This dependable telecommunications services. is expected to result into capacity enhancement of the general public, economic prosperity and overall Let me congratulate all of you for being part of national development. Nepal Telecom’s efforts have this achievement. been enabling the general public and providing means for the communities and the government to Thank You! communicate directly with each other, and Nepal Telecom has been successfully proving its worth as a motivator for socio-economic transformation. Suman Prasad Sharma Chairman
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OUR VISION
“Our vision is to remain a market leader in information and technology sector in the country while also extending reliable and cost effective services to all.”
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OUR MISSION
“Nepal Telecom, as a progressive, customer spirited and consumer responsive entity, is committed to provide nation-wide reliable telecommunication services to serve as an impetus to the social, political and economic development of the country.”
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OUR GOAL
“Our goal is to provide cost effective telecommunication services to every nook and corner of the country.”
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Incorporation of Company
Nepal Doorsanchar Company Limited (NEPAL TELECOM) was registered on 5th February 2004 under the existing Companies Act, 2053 (1997) and the then Nepal Telecommunications Corporation (NTC) was converted into Nepal Doorsanchar Company Limited (NEPAL TELECOM) on 13th April 2004.
2069÷70 7 jflif{s k|ltj]bg BoardNepal Telecom of Directors
Chairman Mr. Suman Prasad Sharma Secretary Ministry of Information & Communication
Member Member Mr. Anoop Ranjan Bhattarai Mr. Baikuntha Aryal Managing Director Joint Secretary NEPAL TELECOM Ministry of Finance
Member Member Mr. Kamalshali Ghimire Mr. Sushil Kumar Ojha Joint Secretary Joint Secretary Ministry of Law, Justice & Constituent Ministry of Information & Communication Assembly Affairs
Company Secretary Mr. Buddhi Prasad Acharya 8 2012/13 Deputy Managing Director Annual Report Nepal Telecom Management Team Nepal Telecom
Mr. Anoop Ranjan Bhattarai MANAGING DIRECTOR
CORPORATE OFFICE
Mr. Buddhi Prasad Acharya Mr. Jeevan Ratna Sakya DMD - Company Secretary DMD - Planning and Development
Mr. Niraj Kumar Adhikari Shyam Sundar Prasad Yadav Mr. Rajendra Nakarmi DMD - Internal Audit & Inspection DMD - Operation & Maintenance DMD - Business
Mr. Surya Bhakta Pokharel Mrs. Padma KC DMD - Finance DMD - Human Resource Mgmt.
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Service Directorates
Mr. Vishnu Prasad Kasaju Mr. Surendra Prasad Thike Mr. Shiv Bhusan Lal Director Director Director PSTN Directorate (PSTND) Mobile Service Directorate (MSD) IT Directorate (ITD)
Mr. Narahari Dass Joshi Mr. Babu Kaji Shakya Mr. Pratul Kumar Sarkar Director Director Director Wireless Telephone Directorate (WTD) Satellite Service Directorate (SSD) Telecom Training Centre (TTC) Regional Directorates
Mr. Madhusudan Karmacharya Mr. Chetan Ratna Kansakar Mr. Amar Nath Jha Director Director Director KRD, Sundhara ERD, Biratnagar CRD, Birgunj
Mr. Shyam Sukla Prasad Adhikari Mr. Buddha Krishna Manandhar Mr. Sanaullah Khan Director Director Director WRD, Bhairahawa MWRD, Nepalgunj FWRD, Dhangadhi
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1. PSTN Services: calls from both wireline and wireless services. Nepal Telecom is the incumbent service provider and has been providing basic PSTN (Public Switched • Advanced Free Phone (AFS – Toll Free) Telephone Network) telephone service to the service general public. Presently the service is available in Advanced Free Phone service (AFS) all 75 districts via 466 Telephone Exchanges located is most popularly known as Toll Free at 250 different locations, expanding the reach of service. This service is targeted for large telecommunication services to even extremely organizations receiving hundreds of remote areas NT’s services have contributed greatly calls every day. Under this service, to the social, cultural, economic and educational organizations get a single unique spheres of the nation. Globally, wireless services have AFS number and their customers can greatly affected the demand of wireline services, contact them for the information however, in Nepal its demand is still considerable required without paying for the call due to attraction of the general public to its data charges and without worrying about services like ADSL. With the onset of triple play the branch and their locations. The and other value added services, wireline services charging involved in this service is are expected to stay longer. The company plans called “reverse charging” where the to provide broadband triple play (voice, data and called party pays for the calls and the video) throughout the nation by installing state- calling party is not charged. of-the-art IP based soft switch, Media Gateway and MSAN (Multi Service Access Node). This will replace • PSTN Credit Limit (PCL) service TDM based switching exchanges that have been PCL service is a prepaid account service providing narrowband voice and data services. available on an existing landline PSTN telephone number which can be used 1.1 Features available in PSTN service: to make local, STD or ISD calls. For Caller Line Identification (CLI) subscribing to this service, NT’s PSTN Locking Code telephone subscriber can register by Call Hunting simply dialing 1680 from their PSTN Three Party Conferences telephone set and after registration, Call Transfer the PCL prepaid account can be Call Waiting recharged using EasyCall prepaid Home Metering calling card (PCC). This service is in Abbreviated Dialing operation since 4th February 2006. Wakeup Call STD, ISD (IDD, Budget, 1424) Calling facility • Easy Phone IP Call (SIP PPP and SIP Easy Call) service Easy Phone Service is the first SIP 1.2 Value Added Services: (Session Initiation Protocol) based softphone launched by Nepal 1.2.1 Fixed Intelligent Network Telecom on 1st August 2010. With this service, subscribers can make IP • Prepaid Calling Card (PCC – Easy Call) calls at anytime from any place where service broadband internet access is available. Nepal Telecom has been providing Prepaid Calling Card (PCC) service that Easy Phone service requires is more popularly known as EasyCall downloading a small client from service since November 2004. Using NT website and then using account EasyCall service, customers can make number and password to make IP
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calls. Easy Phone service account can there is no answer. Subscribers can listen to be of two types; SIP PPP (Permanent the message using any phone within NT’s Prepaid Phone) and SIP PCC (Prepaid network (PSTN/GSM/CDMA) or from the Calling Card). SIP PPP has a unique internet from anywhere, anytime. VMS can phone account number and password be used by dialing access code from any that is provided on service registration. phone and subscribers do not need to add The account can be used for making any equipment to their telephone sets. Other outgoing international IP calls. It can features available in the VMS service are: also be used to make calls to NT’s PSTN/ GSM/CDMA phones from within as • Voice Mail Box service well as outside Nepal. Moreover, SIP to • Fax Mail Box service SIP calls can also be made from one SIP • Voice and Fax Mail Box service PPP account to another. The account • Notice Board service can be recharged using EasyCall cards and account management Notice Board Service was launched on 26th (such as account recharge, change November 2008. It is a supplementary service of password, balance query etc) are of PSTN VMS service. Through this service, available at www.ntc.net.np. SIP PCC notices that need to be published can be service is onetime use service which recorded from any telephone within NT’s cannot be recharged as the account network (PSTN/GSM/CDMA) by subscribers expires either when the card balance themselves. Such recorded notice can then be is used up or the validity period of the played to a number of people simultaneously card expires. SIP PCC service can be making calls to that telephone number, used to make outgoing international enabled with Notice Board Service facility, calls from Nepal only. without making that phone busy. This service is available free of cost to subscribers of NT’s
1.2.2 PSTN Voice Mail (VMS) PSTN (landline) telephone service. Notice board is especially suitable for publicizing PSTN Voice Mailbox Service (VMS) is a value important notices, urgent/emergency added service based on Intelligent Network notices, commercial notices etc. for (IN) platform which works as an answering organizations of various natures. machine when the phone is busy or when
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1.2.3 Interactive Voice Response (IVR) Service 1.2.4 International Call through Access Code 1424 IVR is a telephony technology which allows a person to interact with a database to acquire Nepal Telecom has introduced access code information or enter data into the database 1424 from 18th September 2007 for making via telephone. The user’s interaction with international IP calls at comparatively lower the database is predetermined depending rates. This service can be used from PSTN, upon the type and purpose of the IVR system. GSM and CDMA phones. Nepal Telecom is currently providing the following IVR services: • 1600 IVR for SLC result enquiry can be used for both regular and supplementary results. Users are charged NRs. 1 per 20 seconds. • 1601 IVR for 10+2 (class 11 and class 12) result enquiry can be used for both regular and supplementary results. Users are charged NRs. 1 per 20 seconds. • 1602 IVR for TU result enquiry. Users are charged NRs. 1 per 20 seconds. • 1606 IVR for PSTN bill enquiry. PSTN subscribers can query their monthly and/or total due bills through this service. Local call charge is applied while using this service. • 1607 IVR for GSM and CDMA sky mobile 1.2.5 Leased Line Service PUK enquiry. GSM (post paid and pre paid) mobile and CDMA Sky phone Nepal Telecom started Leased Line Service users can get their PUK numbers via using copper leased circuit around 20 years this service if their mobile phones back. Similar to PSTN telephone, a dedicated are locked and their PINs are blocked. copper pair is connected up to customers’ Local call charge is levied for PSTN and premises. The company also started dedicated CDMA fixed phone users whereas air data lease to meet the increasing demand of time charge is levied for GSM mobile large organizations. With the onset of NG- and CDMA Sky phone users. SDH four years badk, the company started • 198 IVR for PSTN Phone and ADSL internet and intranet leased services and Complaint Registration and is available ADSL lease service. Likewise, Nepal Telecom free of charge. is providing E1 leased circuit and IPLC • 188 IVR for VoIP Call Complaint (International Private Leased Circuit). Registration. This service can be used for registering illegal international VoIP call complaints and is available free of charge. 2. GSM Mobile Services
Competition in Nepal’s telecommunication market is concentrated in GSM sector. To strengthen its dominance in the market and continue the business success, Nepal
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Telecom has launched 10 million lines GSM 2.1 The basic GSM services are : mobile project. NT believes that this project sets benchmark in delivering reliable, state- 2.1.1 Postpaid Mobile Service of-the-art telecommunication services and address the increasing demand of data • Voice Call services. Further, this project will be helpful • SMS in fulfilling company’s social responsibility • Call Forwarding by providing telecommunication services • Call Waiting to the remote, inaccessible and otherwise • Call Holding unprofitable areas of the nation. Upon • Multiparty Conference Call completion of this project, NT will have • GPRS quantitative and qualitative increment in its • MMS service delivery and realize its vision of digital • 3G inclusion. • CRBT • FNF • International Roaming • Voice Mail • Web SMS • Corporate User Group • MCA
2.1.2 Namaste Prepaid Mobile Service
• Voice Call • SMS • Call Forwarding • GPRS • MMS • 3G • CRBT • MCA • Voice Mail • Web SMS • 3G Data Card
2.2 Value Added Services (VAS)
While voice service has been the main feature of GSM mobile communication, to enhance user experience and increase company’s revenue stream, NT started various value added services in its GSM mobile system. Caller Ring Back Tone (CRBT), Voice Mail Service (VMS), Missed Call Alert (MCA), News, Weather Forecast, Horoscope, Chat, Product and Service Promotion through SMS tops customers’ priority list.
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2.3 Missed Call Alert (MCA) Service employees of any organization in a group along with the recommendation from their Using MCA service facility, subscribers can organization can register to NT’s Corporate get information through SMS about the Connection Offer. Under this scheme incoming calls to their mobile number while registered subscribers receive flat 10 % their mobile was switched off, busy or out of discount on their monthly bill. network coverage. Subscribers can subscribe and de-subscribe the MCA service by sending SMS to short code 5000 and typing SUB or 2.6 3G Service DESUB respectively. Nepal Telecom has introduced WCDMA 2.4 Mobile Point of Sale (MPoS) facility technology based Third Generation (popularly known as 3G) service as an Considering the popularity of lower extended GSM service for its postpaid and denomination recharge, NT has started prepaid subscribers. With 3G service enabled, Electronic Pin Less Recharge Card (Top-up subscribers can avail services like video call, Recharge) and MPoS to let customers recharge video streaming and live TV capture, and their phones with lower denomination. NT’s high speed internet on top of the existing prepaid Namaste GSM mobile users can voice services. Subscribers can upgrade to 3G recharge their accounts in multiples of NRs. service by simply sending an SMS to the short 10, 20, 30, 40, 50, 100, 200, 300, 500 and 1,000 code 1400 with 3G on the message line. from any NT authorized retailer using MPoS system.
3. CDMA Service
Nepal Telecom has been providing CDMA services since early 2006. Poor availability of copper network in the rural areas and concentration of GSM mobile in major cities 2.5 Corporate Connection Offer fuelled the demand for CDMA services. This service now has coverage in all 75 districts NT introduced Corporate Connection Offer of the nation. After upgrading to IP-CDMA, for its postpaid subscribers. Ten or more Nepal Telecom has started distribution of
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Evolution Data Optimize, Revised A (EVDO – Lenovo A 600 E REV A) incorporated RUIM card for high speed Lenovo A 765 E internet connectivity. The IP-CDMA project Lenovo A 820 E is concentrated in increasing NT’s wireless Micromax EG 350 customer base and service expansion in remote and inaccessible terrain of the nation. 3.1 With the operation of IP-CDMA service, the EVDO service that provides broadband following features are added in the CDMA internet at the rate of 3.1 Mbps is the main telephony: attraction of IP-CDMA service. Customers can access the internet through Packet Data • International SMS service Serving Node (PDSN) at the rate of 153.6 • Inter-operator SMS service: Currently Kbps in areas devoid of EVDO service. Nepal subscribers can send and receive Telecom is promoting EVDO service by the SMS to/from Ncell subscribers and in brand name “SKY PRO”. User of EVDO service near future all other operators will be can access internet using USB Dongle on their interconnected to SMS service laptop and desktop where as smart phone • To simplify data activation process, all is required for browsing on mobile phone. the RUIM cards issued henceforth will Subscribers can replace their earlier version be data active and does not require RUIM card with EVDO enabled RUIM for free. subscribers to fill a separate form To promote data service through EVDO, the • Web based recharge is a way forward company has started bundling RUIM card to provide subscribers with convenient with data package and a USB dongle. recharge facility. Subscribers can log in to webrecharge.ntc.net.np, provide Considering increasing popularity of EVDO, CDMA number and recharge pin and Nepal Telecom included 500 MB, 2GB, 5GB send the image to recharge their and 10 GB volume based data package since CDMA service 1 September 2013. Active subscribers of CDMA service can purchase data package as per their requirement by simply sending text message to 1456 as below: Features available in post-paid CDMA service: “data500mb” for 500 MB data package Voice Call ”data2gb” for 2 GB data package Short Message Service (SMS) ”data5gb” for 5 GB data package Voice Mail Service (VMS) ”data10gb” for 10 GB data package Call Forwarding Call Waiting Further, customers can query their remaining PDSN Data data volume and validity period by sending Web SMS SMS to 1456 with “BL” on the message line. Addressing customers demand, the company also started bundling handsets with EVDO Features available in pre-paid service. These handsets can function as a CDMA service: hotspot to create a Wi-Fi zone so as to browse Voice Call internet on laptops and tablets. The following Short Message Service (SMS) are the models available with EVDO bundling: Voice Mail Service (VMS) Alcatel D 260 Call Forwarding Alcatel D 920 Call Waiting Alcatel D 990 PDSN Data
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Web SMS ADSL internet service is the right solution. EVDO Data Volume based ADSL means the customer will be provided with fixed usage limit of respective bytes with a fixed validity period 4. Internet Service according to the plan chosen. The service will expire when the usage limit exceeds or the With the launch of internet service in the year validity period exceeds, whichever is earlier. 2000, along with the growth in subscriber Data volume package of 15 GB, 30 GB, 60 base, Nepal Telecom is upgrading the GB and 120 GB valid for 3, 6 and 12 months technology to provide superior browsing respectively at 512 Kbps. experience to its valued customers. Started with fixed-line based Dialup system, NT Unlimited Package: NT started ADSL service further provided its internet service through with monthly and 3-monthly unlimited GPRS, ADSL, GSM based 3G service, IP- subscription packages on prepaid basis CDMA based EVDO service and WiMax as the with available speeds of 192 Kbps, 385 Kbps wireless broadband internet service on 4G and 512 Kbps and 2 Mbps for institutional technology. subscribers. Subscription charge needs to be paid at the time of registration. Recurring With the introduction of broadband internet usage charges (monthly or 3-monthly) can be service, the demand has been increasing in paid on prepaid basis. multiple folds. Of the total 39,70,640 data and internet subscribers till the end of Chaitra 2070, the company has served 8,000 WiMax 4.2 WiMax Broadband Internet Service: subscribers, 1,16,257 ADSL subscribers, 1,36,573 CDMA subscribers, 40,47,521 GSM To provide 256 Kbps broadband internet subscribers, 5,114 email subscribers and 4,712 service in all VDCs and Municipalities of dialup subscribers. According to MIS report Nepal, Nepal Telecom launched WiMax published by Nepal Telecommunication (Worldwide Interoperability for Microwave Authority (NTA) in Chaitra 2070, Nepal Access) service based on 4G technology. Telecom now is serving 50% of the total data WiMax offers wireless broadband internet market of Nepal. service with greater flexibility anytime, anywhere using any WiMax enabled devices, 4.1 ADSL Service be it a laptop, desktop modem, digital phone or even a gaming device. It creates seamless Nepal Telecom launched this service using broadband environment at home, in the ADSL 2+ technology on 29th April 2008. office and on the move. Asymmetric Digital Subscriber Line (ADSL) is a high speed internet service that transforms This service was started on 12th November ordinary phone lines into high speed digital 2012 from the valley and is now available at lines for ultra fast internet access. This service various locations in all Development Region. was started from Kathmandu Valley and now It is most recent and the fastest among the is available in all the 75 districts. This service available internet services in Nepal. High is available in volume based and monthly speed internet service available through unlimited packages. this technology is suitable for institutions like banks, universities, hospitals, diplomatic Volume Based ADSL Package: For missions and technology based enterprises. subscribes looking for high speed internet NT’s WiMax service was distributed to service with access time of a couple of hours institutional subscribers in the first phase. per day only, Nepal Telecom’s volume based Since 27th March 2013, this service is being
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distributed to the general public as well. unavailable or weak, there will be seamless handover to PDSN system. This service is Customer Premise Equipment (CPE) is enabled in the EVDO RUIM provide by NT required to browse internet through WiMax. and it can be used in various devices like USB Outdoor, indoor and USB Dongle CPEs are EVDO modem, PCMCIA EVDO modem, EVDO available in the market suitable for signals up mobile etc. EVDO allows data access at the to 15 kms, 5 kms and 2 kms respectively. Nepal speed of 3.1 Mbps. Telecom is providing this service by bundling it with the Customer Premise Equipment Packet Data Serving Node (PDSN) is available (CPE) supplied by AirMax Technology Pvt. Ltd on C-phone, Sky Phone and Sky Data and the and Unitech Network Pvt. Ltd. through their maximum speed one can browse internet is outlets established at Putalisadak, Durbar at 153.6 Kbps. This service can be used in all Marg, Kupondol and New Baneswor. Further, the areas having CDMA coverage. subscription is available through NT’s counter located at Telecom Office Sundhara and Jawalakhel. Three volume based packages 4.4 GSM Mobile Internet are available at 256 Kbps, 512 Kbps and 1 Mbps or higher browsing speed. Currently WiMax service is available in 70 districts and GPRS and 3G are the two GSM Mobile based remaining districts will be served in near internet services available to the subscribers. future. General Packet Radio Service (GPRS) offers 4.3 CDMA Wireless Internet: ‘always-on’, internet based content and packet based data services in GSM mobile EVDO and PDSN are two wireless internet phones. GPRS enables services as internet services based on CDMA technology. browsing, email and multimedia messages on the move. Besides, GPRS offers complete Evolution Data Optimized (EVDO) is a 3G solutions through which customers can wireless technology for broadband internet always stay online and get connected connectivity in existing CDMA network. It is with their family and friends. This service a wireless protocol for roaming broadband is available in volume based package only. access that makes broadband internet access Post-paid and pre-paid GSM subscribers can easy at any time or place, including real- enable GPRS service by sending an SMS to time video streaming, large-volume data 1400 with vgprs on the message line. downloads and web browsing. EVDO is suited for online games, audio/video streaming, 3G (third generation) system offers 3.6 Mbps voice/video chat, video conferencing etc. of downloading and 384 Kbps of uploading Mobile connectivity is another feature of data speeds. NT’s WCDMA based 3G fulfills EVDO. This service is ideal for people who ever growing demands and need to browse need higher bandwidth no matter whether and access video contents and high speed they are at home, at office or on the move. data connections. Currently this service is available in Kathmandu Valley, Lumbini, EVDO allows moving seamlessly from cell Pokhara, Chitwan, Hetauda and all districts to cell, creating a true mobile wireless in Dhaulagiri zone. Both post-paid and pre- broadband experience. For this service, a paid subscribers can enable 3G service on the modem is required, and an account has to mobile connection by simply sending an SMS be availed from Nepal Telecom. EVDO is to 1400 with 3G on the message line. also backward compatible to PDSN system, meaning that, whenever EVDO signal is either
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5. Internet/Intranet Leased in Dolpa, Sukadhik in Mugu, Khawang in Connectivity Myagdi and Patnalin in Sunsari and CDMA BTS at Langtang in Rasuwa. Besides, satellite Nepal Telecom also provides Leased is being used as backhaul for GSM service Internet Access over dedicated leased in 52 stations and CDMA service in 21 lines. These are very economical means of stations. Earlier these areas were devoid having high-speed internet access around of telecommunication services. Moreover, the clock. It requires leased line modems satellite service is being used as backup at both ends and two pairs of physical for Optical Link and Radio Link. At times of leased lines. Unlike traditional copper wire natural calamities or technical disturbances leased line, Nepal Telecom now provides when Optical Link and Radio Link are not leased connectivity through ADSL and functioning, satellite service is put into Optical Fiber. Intranet leased connectivity operation for service continuity. is available from 128 Kbps onwards and internet leased connectivity is available Likewise, to serve tourist destinations with from 256 Kbps onwards. Geographic areas modern telecommunication service, satellite served with fixed-line network can have is used to provide GSM mobile service at the ADSL and Optical Fiber leased connectivity Everest base camp, Gorekshep. After this whereas areas devoid of fixed-line network BTS is put into operation, tourists and locals can be served through Microwave Radio can make national and international calls at connectivity. reasonable price. NT’s satellite service is being used for tele-medicine and e-education in 6. Satellite Service for Rural remote and inaccessible areas of the country. Communication Agriculture Campus in Sundarbazar, Lamjung is just an example of providing e-education service to its students using NT’s satellite Nepal Telecom has been expanding its service. services to remote and otherwise inaccessible areas of the nation to help bridge the digital divide. Even in present cut-throat competitive environment, Nepal Telecom is expanding its services to the rural areas where profit margin is relatively thin. The company utilizes every possible technology to serve rural community as part of its social responsibility. To provide reliable and cost effective services to every nook and corner of the nation, NT is expanding services through PSTN, NGN, GSM and CDMA technology. V-SAT technology is being used for areas devoid of telecommunication services by the aforementioned technologies. Now, all Municipalites and VDCs of the country are served with modern telecommunication services. Furthermore, 390 tele-centers are being operated via Satellite Services.
KU band based VSAT/DSAT network is used as a backhaul for GSM Mobile BTSs at Rimi
2012/13 19 Annual Report Nepal Telecom
Nepal Telecom’s Achievement Awards
Best Presented Accounts (BPA) Highest Tax Payer Award Award Amongst the government owned public enterprises, Nepal Telecom has been able to consistently bag the Nepal Telecom is one of the strongest companies, “Best Presented Accounts (BPA) Award” presented which contributes to the highest source of revenue by the Institute of Chartered Accountants of Nepal, collection to the government funds in terms of in different categories, in three consecutive years Telecommunication Service charge, Ownership in a row. In 2010, Nepal Telecom bagged the award Tax, VAT, Royalty Charge, Income Tax, property and in “Communication & Information Technology” Vehicle Tax, Rural Telecommunication Development category and in 2011 & 2012 in the “Public Sector Fund, etc. Entities” category. The award is presented based on the evaluation guidelines formulated by the South The Government of Nepal has honoured the Asian Federation of Accountants (SAFA). Managing Director of Nepal Telecom, Mr. Anoop Ranjan Bhattarai with the CIP (Commercially These Awards directly reflects Nepal Telecom’s culture Important Person) Award lately for being the highest of practicing corporate governance in the country, tax paying company and contributing to boost the by making detailed disclosure of information related economic development of the nation. to its financial situation, performance, ownership and governance, relationship with shareholders and commitment to business ethics and values.
20 2012/13 Annual Report Nepal Telecom
Interconnection and International Carrier Business
1. Use of Automated System in Call bypass control: of HK PoP, NT is able to migrate the matured With the advent in technology, call bypass (or expired) satellite bearers in int’l links and systems have become more sophisticated day replace them with E1/DS3 levels. As the cost by day. Considering the fact that the traditional of satellite bearer is quite high as compared to system of call bypass control including raids optical bearer, HK PoP has helped to minimize and manual interventions are not sufficient the operational cost of ILD trunk resources in to control gray calls, especially GoIP system addition to providing better quality in telecom has serious impact and threat to maintain or services. grow the inter-administrative revenue of the company. In order to minimize the impact of 4. Promotion of Int’l outbound calls via Access gray in Int’l incoming traffic, an automated Code 1424 to Australia, UK and other system was brought into operation as a pilot for destinations 3 months period and further extended to other Australia, UK and Europe are the major 3 months. It was noticed that the gray calls regions where skilled Nepalese people are were controlled to a large extent resulting into residing for study and/or jobs. Such skilled significant increase in international incoming manpower have the access and knowledge traffic during operation of the automated to use the latest technology and services like system. Skype, Viber etc compared to the non-skilled migrant workers in other countries. In order to 2. Start of old gateway migration into new Int’l provide cost effective communication services Gateway to the families of Nepalese people in these One of the highest priority projects of Nepal countries, the outbound rate for Australia, UK, Telecom is IGW. This was brought into operation some destinations in Europe were reduced in the mid of this FY. In the initial phase, NT FIN significantly. Similarly, the retail rate for China Gateway was completely migrated to IGW. In and HK was also reduced to provide attractive the second phase, most of the Int’l partners benefits to NT’s customers. connected to NT old gateways (Patan ISC & Central ISC) were migrated into new int’l 5. Int’l SMS Service to CDMA subscribers gateway. The migration has minimized total Earlier, international SMS was available only time duration required for generating invoices to GSM subscribers of NT, but now NT’s CDMA of inter-administrative data of the concerned subscribers are also able to send and receive operators, resulting into timely collection of international SMS worldwide with their CDMA revenue. It has also provided more flexibility handsets. in billing and account settlement processes specially during data reconciliation and dispute resolutions.
3. Benefit of Hong Kong PoP to the company Hong Kong PoP has wide range of trunk capacity arrangement ranging from E1/DS3/ STM1 level and FE/GE ports. With the operation
2012/13 21 Annual Report Nepal Telecom
Financial Statements
22 2012/13 Annual Report Nepal Telecom
2012/13 23 Annual Report Nepal Telecom Statement of Financial Position As at July 15, 2013(Ashadh 31, 2070) (Figures in Rupees) Current Year Previous Year Assets Schedule 2069-70 2068-69 Non- Current Assets Intangible Assets ( Note 19) 3,388,511,550 7,415,448,551 Property, Plant and Equipment 1 16,290,282,239 14,013,277,408 Capital Work-in-Progress 2 6,838,734,769 5,821,932,463 Investments 3 24,987,793,818 22,155,095,746 Deferred Tax Asset 3,735,538,092 3,256,421,994 55,240,860,468 52,662,176,162 Current Assets Inventory 4 1,385,963,902 1,049,688,996 Trade Receivable 5 3,188,946,955 4,339,424,927 Cash & Cash Equivalents 6 26,774,785,622 25,274,204,651 Loan, Advance & Others 7 26,822,422,498 22,421,596,092 Short Term Investments 3 812,150,000 224,818,000 58,984,268,977 53,309,732,666 Total Assets 114,225,129,445 105,971,908,828 Equity and Liabilities Share Capital ( Note 26) 15,000,000,000 15,000,000,000 Reserve and Surplus 8 38,635,694,828 34,528,141,489 Total Equity 53,635,694,828 49,528,141,489 Non-Current Liabilities 9 24,020,203,023 25,598,558,814 Current Liabilities and Provisions Current Liabilities 10 12,077,703,351 10,757,853,131 Provisions 11 24,491,528,243 20,087,355,394 36,569,231,594 30,845,208,525 Total Equity and Liabilities 114,225,129,445 105,971,908,828
Schedule 1 to 11 are an Integral Part of This Statement As per our report of even date
Dhruba Prasad Sharma Anoop Ranjan Bhattarai CA. Kuber Sharma Chairman Managing Director Kuber & Co. Chartered Accountants
Baikuntha Aryal Kamal Shali Ghimire Sushil Kumar Ojha Director Director Director
Tanka Lal Shrestha Pramod Kumar Gurung Director Director
Sudhir Prasad Aryal Nabaraj Pudasaini Deputy Managing Director(Finance) Manager
Date: Poush 28, 2070 Place: Kathmandu
24 2012/13 Annual Report Nepal Telecom Statement of Profit or Loss For the year ended July 15, 2013(Ashadh 31, 2070) (Figures in Rupees) Current Year Previous Year Particulars Schedule 2069-70 2068-69 Income Income from Services 12 34,140,807,888 32,848,899,228 Interest Income 13 3,246,096,011 3,738,065,194 Miscellaneous Income 14 258,544,352 309,281,527 Exchange (Loss)/Gain 1,212,812,728 387,530,059 Total Income 38,858,260,979 37,283,776,008 Expenditure Personnel Costs 15 3,516,661,517 3,453,610,032 Operation and Maintenance 16 6,738,316,670 5,771,246,739 Administrative Costs 17 1,352,307,266 1,893,457,357 Royalty 1,364,337,257 1,312,300,929 Contribution to Rural Telecom Development 682,168,629 656,150,464 Fund Interest on Subscriber’s Deposit 50,254,936 53,058,836 Depreciation 3,492,247,687 3,336,096,194 Licence Fee 4,026,937,000 4,026,937,000 Frequency Fee 1,657,270,784 267,248,676 Staff Bonus Provision 388,162,616 386,015,020 Telecom Allowance Provision 458,564,052 456,884,313 Total Expenditure 23,727,228,414 21,613,005,560 Net Profit Before Tax 15,131,032,565 15,670,770,448 Provision for Income Tax Current Tax (4,310,972,666) (4,634,539,999) Deferred Tax 479,116,098 622,620,569 Net Profit Taken to Statement of Changes in 11,299,175,997 11,658,851,018 Equity Earnings Per Share (Basic) 75.33 77.73
As per our report of even date Schedule 12 to 17 are an Integral Part of This Statement
Dhruba Prasad Sharma Anoop Ranjan Bhattarai CA. Kuber Sharma Chairman Managing Director Kuber & Co. Chartered Accountants
Baikuntha Aryal Kamal Shali Ghimire Sushil Kumar Ojha Director Director Director
Tanka Lal Shrestha Pramod Kumar Gurung Director Director
Sudhir Prasad Aryal Nabaraj Pudasaini Deputy Managing Director(Finance) Manager
Date: Poush 28, 2070 Place: Kathmandu 2012/13 25 Annual Report Nepal Telecom Statement of Cash Flows For the year ended July 15, 2013 (Ashad 31, 2070) (Figures in Rupees) Current Year Previous Year Particulars 2069-70 2068-69 Cash Flow from Operating Activities Net Profit Before Tax 15,131,032,565 15,670,770,448 Adjustments Depreciation 3,492,247,687 3,391,515,252 Income from Investment & Bank Deposit (3,246,096,011) (3,738,065,194) Amortization of License & Premium on Investment 4,057,281,345 4,026,937,000 Provision for Liabilities 1,986,549,377 2,766,180,554 Decrease/(Increase) in Stock (336,274,906) (335,067,465) Decrease/ (Increase ) in Account Receivable 1,150,477,972 (866,969,550) Decrease/(Increase ) in Interest Accrued 65,435,017 33,856,500 (Increase)/Decrease in Advance-Tax and VAT (3,660,451,255) (5,747,852,049) (Increase)/Decrease in Other Advances (805,810,167) 129,969,218 Increase/(Decrease) in Payable 1,204,730,489 434,500,950 Adjustment of Prepaid Outstanding Liabilities - (385,180,628) Decrease/(Increase ) in Non Current Liability (2,462,368,000) 65,739,000 Last Year Adjustment 257,750 (291,984,653) Payment of Earned Leave (67,980,159) (71,770,227) Payment of Pension / Gratuity Expenses (165,570,499) (156,358,512) Payment of Bonus & Telecom Allowance (679,391,673) (677,018,819) Total Adjustments 533,036,967 (1,421,568,623) Net Cash flow from Operating Activities (A) 15,664,069,532 14,249,201,825 Cash Flow from Investing Activities Acquisition of Property, Plant and Equipment (5,795,790,639) (4,093,939,780) Decrease/ (Increase) in Capital Work in Progress (1,016,802,306) (1,197,856,658) Decrease/ (Increase) in Investment (3,450,374,417) 2,512,059,810 Income from Investment & Bank Deposit 3,246,096,011 3,738,065,194 Net Cash Flow from Investing Activities (B) (7,016,871,351) 958,328,566 Cash Flow from Financing Activities Increase/ (Decrease) in Capital - - Dividend Paid (7,146,617,210) (6,702,530,618) Net Cash Flow from Financing Activities ( C ) (7,146,617,210) (6,702,530,618) Net Increase in Cash (A+B+C) 1,500,580,971 8,504,999,773 Cash at Beginning of the Year 25,274,204,651 16,769,204,878 Cash at the End of the Year 26,774,785,622 25,274,204,651 As Per Our Report of Even Date
Dhruba Prasad Sharma Anoop Ranjan Bhattarai CA. Kuber Sharma Chairman Managing Director Kuber & Co. Chartered Accountants
Baikuntha Aryal Kamal Shali Ghimire Sushil Kumar Ojha Director Director Director
Tanka Lal Shrestha Pramod Kumar Gurung Director Director
Sudhir Prasad Aryal Nabaraj Pudasaini Deputy Managing Director(Finance) Manager
Date: Poush 28, 2070 Place: Kathmandu
26 2012/13 Annual Report Nepal Telecom
Statement of Changes in Equity For the year ended July 15, 2013(Ashadh 31, 2070) (Figures in Rupees)
Particulars Share Capital Retained Earning Total Opening Balance as on 16 July, 2012 15,000,000,000 34,474,560,053 49,474,560,053 Previous Year Adjustments (Omission) 53,581,436 53,581,436 Restated Opening Balance Before Prior 15,000,000,000 34,528,141,489 49,528,141,489 Period Adjustment Prior Period Income 59,761,994 59,761,994 Prior Period Expenses (51,384,652) (51,384,652) Amended Assessment Tax - - Adjustment of Prepaid /Outstanding Liabilities - - Opening Balance (Restated) 15,000,000,000 34,536,518,831 49,536,518,831 Dividend for F.Y. 2068/69 (7,200,000,000) (7,200,000,000) Net Profit After Tax for This Year 11,299,175,997 11,299,175,997 Closing Balance as on 15 July, 2013 15,000,000,000 38,635,694,828 53,635,694,828
As Per Our Report of Even Date
Dhruba Prasad Sharma Anoop Ranjan Bhattarai CA. Kuber Sharma Chairman Managing Director Kuber & Co. Chartered Accountants
Baikuntha Aryal Kamal Shali Ghimire Sushil Kumar Ojha Director Director Director
Tanka Lal Shrestha Pramod Kumar Gurung Director Director
Sudhir Prasad Aryal Nabaraj Pudasaini Deputy Managing Director(Finance) Manager
Date: Poush 28, 2070 Place: Kathmandu
2012/13 27 Annual Report Nepal Telecom
2069 16,448,659 54,223,185 As at at As 563,662,239 322,235,906 253,822,550 1,098,303,309 Ashadh 31, Ashadh 11,704,581,560 13,310,852,881 14,013,277,408
16,018,161 65,071,588 2070 As at at As 564,404,150 286,551,820 251,189,485 1,310,212,134 Ashadh 31, Ashadh 13,796,834,901 14,013,277,408 16,290,282,239 Written Down Value (Rs.) Value Written Down -
2070 As at at As 916,453,496 174,138,197 137,737,586 997,560,947 681,056,977 Ashadh 31, Ashadh 27,754,525,993 27,142,687,365 30,661,473,196 - 162 (254) 4,698 (8,330) (2,298) 26,544,166 55,419,058 26,538,144 Adjustment Adjustment - Year Year 6,730,277 18,870,532 85,793,314 Depreciation (Rs.) (Rs.) Depreciation 118,422,700 118,149,371 During the 3,144,281,493 3,336,096,194 3,492,247,687 -
2069 As at at As 798,030,634 167,408,174 118,862,356 879,419,906 595,265,961 Shrawan 1, Shrawan 24,583,700,334 23,751,172,112 27,142,687,365 2070 As at at As 564,404,150 190,156,358 202,809,174 932,246,437 Ashadh 31, Ashadh 2,226,665,630 1,284,112,767 41,551,360,894 41,155,964,773 46,951,755,410 - - - - - (1) 921,958 (14,502) (907,457) For the year ended 31 Ashad, 2070,(July 15, 2013) ended 31 Ashad, the year For Adjustment Adjustment 741,911 6,299,525 28,801,675 82,471,458 83,157,926 331,239,144 Additions Additions 5,263,079,000 4,093,939,780 Original Cost (Rs.) (Rs.) Original Cost 5,795,790,639 During the Year Year During the
2069 As at at As 563,662,239 183,856,833 173,085,541 849,088,511 1,896,333,943 1,201,655,812 Shrawan 1, Shrawan 36,288,281,894 37,062,024,993 41,155,964,773 Schedule Forming Part of the Financial Statements of the Financial Part Schedule Forming Schedule 1: Property, Plant and Equipment and Equipment Plant Schedule 1: Property, Description LAND BUILDINGS PLANT & MACHINERY LIGHTING HEATING, & AIR-CONDITION FURNITURE & FIXTURE OFFICE EQUIPMENTS VEHICLES TOTAL FIGURES YEAR’S PREVIOUS
28 2012/13 Annual Report Nepal Telecom
Schedule 2: Capital Works-in-Progress (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Capital Works 3,020,854,881 1,667,234,578 Stock of Equipment under Installation 2,254,529,413 3,445,763,605 Advance to Suppliers and Contractors 1,563,350,475 708,934,280 Total 6,838,734,769 5,821,932,463
Schedule 3: Investment (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 A. Non-Current Investments with Citizen Investment Trust 1,780,731,542 1,273,151,693 Government Securities 2,879,125,000 3,691,275,000 Unamortized Premium on Government Securities 47,302,720 77,647,065 Corporate Securities 120,000,000 20,000,000 Balance with Banks in Term Deposit 17,013,153,000 15,627,400,000 Investment in Upper Tamakoshi Hydropower Co. 635,400,000 540,000,000 Loan in Upper Tamakoshi Hydropower Co. 2,502,081,556 920,621,988 Investment in Trishuli 3B Hydro Project 10,000,000 5,000,000 Sub-total 24,987,793,818 22,155,095,746 B. Current Government Securities 812,150,000 12,500,000 Corporate Securities - 212,318,000 Sub-total 812,150,000 224,818,000 Grand Total 25,799,943,818 22,379,913,746 (Details as Per Note 22)
Schedule 4: Inventory (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Telephone Sets, Dropwire & Accessories 122,168,273 128,721,647 Cash Cards 106,839,779 115,240,323 Spares and Others 1,156,955,850 805,727,026 Total 1,385,963,902 1,049,688,996
Schedule 5: Trade Receivable (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Sundry Debtors 4,850,745,896 6,001,223,868 Doubtful Receivable (1,661,798,941) (1,661,798,941) Total 3,188,946,955 4,339,424,927
2012/13 29 Annual Report Nepal Telecom
Schedule 6 : Cash and Cash Equivalent (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Balances with Banks 26,759,209,179 25,243,074,371 Cash in Hand & in Transit 15,576,443 31,130,280 Total 26,774,785,622 25,274,204,651
Schedule 7 : Loan, Advances & Others (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Interest Accrued 237,920,402 303,355,419 Advance IncomeTax (Note 38) 22,578,999,870 18,918,548,615 Advance to and Claims Against Others 938,858,816 899,683,136 Advance to and Claims Against Employees 2,838,796,135 2,105,500,136 Prepaid Expenses 227,847,275 194,508,786 Total 26,822,422,498 22,421,596,092
Schedule 8: Reserve and Surplus (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Retained Earnings 38,635,694,828 34,528,141,489 (As per Statement of Changes in Equity) Total 38,635,694,828 34,528,141,489
Schedule 9: Non- Current Liabilities (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Provision for Pension & Gratuity 7,287,946,023 6,403,933,814 Subscriber Deposit 1,732,257,000 1,694,625,000 GSM License Fee Payable 15,000,000,000 17,500,000,000 Total 24,020,203,023 25,598,558,814
30 2012/13 Annual Report Nepal Telecom
Schedule 10 : Current Liabilities (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Sundry Creditors - Suppliers 6,017,150,570 4,296,573,232 Sundry Creditors -Inter -Administration 82,795,476 318,229,603 VAT Payable 15,698,309 (260,805,103) Other Fee Collection Payable 293,307,806 250,924,023 Royalty and Contribution to RTDF (Note 33) 2,046,505,886 1,968,451,393 Subscriber Deposit - Current Portion 798,374,852 875,644,471 Advance from Subscribers 665,966,481 594,186,975 GSM License Fee Payable 1,900,000,000 2,311,000,000 Others Liabilities 257,903,971 403,648,537 Total 12,077,703,351 10,757,853,131
Schedule 11: Provisions (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Income Tax Provision (Note 38) 21,983,449,915 17,672,477,249 Provision for Leave Encashment 721,821,891 699,562,048 Provision for Telecom Allowance 1,012,078,801 986,912,392 Provision for Staff Bonus 774,177,636 728,403,705 Total 24,491,528,243 20,087,355,394
2012/13 31 Annual Report Nepal Telecom
Schedule 12 : Income from Services (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Basic Telephone Service Local/ Domestic 3,411,471,874 3,464,273,178 International Trunk 192,034,057 203,223,925 Leased Circuits 103,329,572 116,875,396 IN Services 17,109,285 7,244,279 Internet 710,001 6,118,663 ADSL 1,274,265,243 996,083,866 SIP Phone - 36,203 Wi-Max Income 30,469,302 - Others 124,607,855 127,944,152 Total Revenue from Basic Telephone Service 5,153,997,189 4,921,799,662 GSM Mobile Service Local 1,389,316,532 1,171,016,192 International Trunk 119,048,183 98,878,617 Roaming 218,976,912 190,693,504 Pre-paid Card 197,010,256 97,138,434 Re-charge Card 14,261,859,064 13,330,220,637 GPRS 31,308,934 45,307,636 Others 254,733,170 194,618,015 Total Revenue from GSM Mobile Service 16,472,253,051 15,127,873,035 CDMA Service Local/ Domestic 145,962,135 257,139,572 International Trunk 6,096,698 8,800,685 Data Services 4,887,661 9,962,737 Pre-paid Card 13,917,948 325,784,250 Re-charge Card 1,357,048,292 1,395,313,197 ERC - 26,918,782 Others 19,824,513 21,889,102 Total Revenue from CDMA Service 1,547,737,247 2,045,808,325 Revenue from Inter -Administration 10,934,443,941 10,712,042,196 Total Revenue from Services (A) 34,108,431,428 32,807,523,218 Sales of Telephone Sets and Other goods (B) 32,376,460 41,376,010 Total Revenue (A+B) 34,140,807,888 32,848,899,228
Schedule 13 : Interest Income (Figures in Rupees) Particulars Current Year 2069-70 Previous Year 2068-69 Interest on Government Development Bonds 351,330,017 278,650,347 Interest on Corporate Bonds and Debentures 200,101,060 18,156,783 Interest on Bank Deposits 2,569,907,264 3,366,581,662 Interest on Pension fund 124,757,670 74,676,402 Total 3,246,096,011 3,738,065,194
32 2012/13 Annual Report Nepal Telecom
Schedule 14 : Miscellaneous Income (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Deferred Income Against the Government Grants - 58,570,928 Performance Bond, LQD & Others 258,544,352 250,710,599 Total 258,544,352 309,281,527
Schedule 15 : Personnel Costs (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Salaries & Wages 1,151,556,871 1,149,345,824 Allowances 775,866,706 591,505,981 Uniform Allowances 56,887,502 46,168,560 Contribution to Providend Fund 101,096,616 100,683,477 Leave Encashment 90,240,002 271,423,587 Overtime Allowances 34,013,345 36,169,641 Medical Expenses 252,174,178 251,888,048 Defined Contribution Plan (Note 35) 5,243,590 3,263,246 Defined Benefit Plan (Note 35) 1,049,582,707 1,003,161,668 Total 3,516,661,517 3,453,610,032
Schedule 16 : Operation and Maintenance (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Maintenance - Office Equipment 56,530,907 34,854,773 Maintenance - Buildings 149,386,352 65,617,963 Maintenance - Plants/ Machinery 463,421,772 442,004,707 Power, Heating & Lighting 961,377,159 730,116,533 Fuel for Vehicles 122,069,929 98,653,440 Maintenance vehicles 59,382,622 58,454,706 Freight & Carriages 13,512,368 14,299,769 International Channel Rent 1,195,519,206 1,031,725,032 Cost of Telephone Sets and Other goods 50,514,549 50,844,307 Cost of Cash Card 192,793,147 126,877,514 Inquiry Service Expenses 25,682,472 13,800,070 Value Added Services Expenses 125,224,409 122,719,704 Data Entry & Sales Commission 747,621,960 55,001,890 Interconection Expenses 2,575,279,818 2,926,276,331 Total 6,738,316,670 5,771,246,739
2012/13 33 Annual Report Nepal Telecom
Schedule 17 :Administrative Expenses (Figures in Rupees)
Particulars Current Year 2069-70 Previous Year 2068-69 Travelling Expenses 223,914,642 127,476,270 Rates and Local Taxes 42,467,847 57,858,565 Rent and Leasehold Cost of Land and Buildings 249,395,740 227,078,140 Board Meeting Allowance 1,376,000 1,167,000 Other Meeting Allowances and Expenses 37,591,909 39,581,823 Printing and Stationery 52,879,479 56,638,170 Advertisement 100,718,272 105,288,688 Bank Charges 9,523,283 5,884,848 Training Expenses 102,761,770 86,985,005 Hospitality Expenses 16,303,289 15,530,159 Office Furnishing 12,207,216 9,963,703 Insurance 151,056,841 142,149,608 Statutory Audit 650,000 650,000 Tax Audit Fee 250,000 250,000 Audit Expenses 1,217,001 1,799,060 Trade Commission 1,450,777 13,448,743 Postage 1,191,242 1,163,080 Books and Periodicals 5,515,685 4,681,156 Legal and Professional fees 1,899,886 1,576,195 Assets Impairment (Written off) - 49,839,986 Write Down Charge for Doubtful Advance 17,406,846 19,974,936 Write Down Charge for Doubtful Receivables - 432,287,525 Security Expenses 86,689,532 82,496,320 Membership Fee 4,329,006 2,474,342 Telephone Expenses 111,874,672 115,050,027 Anniversary Expenses 39,142,613 46,043,453 Annual General Meeting Expenses 2,055,612 1,925,854 Donation 3,734,700 3,595,080 Impairment Charge of Assets - 196,433,505 Miscellaneous Expenses 74,703,405 44,166,116 Total 1,352,307,266 1,893,457,357
34 2012/13 Annual Report Nepal Telecom
Nepal Doorsanchar Company Limited Notes to the Financial Statements For the year ended July 15, 2013(Ashadh 31, 2070)
A. Constitution and Ownership a) Nepal Doorsanchar Company Limited (Nepal Telecom) was incorporated on Magh, 2060 (February, 2004) under the Companies Act, 2053 with the main objective of providing national and international telecommunication services. The company is the continuation of the erstwhile Nepal Telecommunications Corporation, where all assets and all liabilities of the corporation were transferred to the incorporated Company with equity being transferred to the Government in lieu of the government’s ownership. Since, certain portion of the government’s shares has been divested to the employees and general public. The current shareholding structure is as per Note 26. b) The Company has been providing range of telecommunication services using state of the art technology. Company endeavours to continue providing up-to-date telecommunication and related services in line with technological advances. c) Government of Nepal and Citizen Investment Trust were the promoters of the Company. Government of Nepal who substantially owns the Company disinvested certain portion of its holdings in favour of the Company’s employees and the general public.
B. Significant Accounting Policies 1. Basis of Preparation
a) The financial statements are prepared under the historical cost convention as per the Company’s Accounting Policies. These policies are in line with the Companies Act 2063 and Nepal Accounting Standards (NAS). Generally Accepted Accounting Principles as practiced in Nepal are followed where specifically not provided in the NAS. The Company’s accounting policies require the management to exercise judgment in the use of accounting estimates.
b) The figures for the previous year are rearranged and reclassified wherever necessary for the purpose of comparison. Appropriate disclosures are made as follows: - Note 28: for the effect of any change in accounting policy, accounting estimate and adjustment of error.
c) The figures are rounded off to nearest rupee.
d) The financial statements are prepared, generally, on an accrual basis. However, income and expenses are accounted on a cash basis, for practical reasons, on Revenue from Internet Services and interest on staff loan. Management believes that the impact of recognising those revenues on accrual basis will not be materially different from the current practice.
e) Management has applied estimation while presenting financial statements. Such specific estimates are disclosed in individual sections wherever they have been applied.
2012/13 35 Annual Report Nepal Telecom
2. Foreign Currency Transactions The transactions in foreign currency are recognised at the prevailing rate on transaction date.
The balances of monetary assets and liabilities in foreign currencies are translated at closing rate (note 39 a). The resulting gain or loss due to the translation is taken to profit and loss.
2.1 Functional and Presentation Currency Items included in the financial statements of the Company are measured and presented using the currency of the primary economic environment in which the Company operates (the functional currency), which is the Nepalese Rupees (indicated as Rs. in short).
3. Intangible Assets Licenses: These are stated at cost less accumulated amortisation and any identified impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of the license over its estimated useful life, at the period specified in Note 19 and is charged to Profit and Loss for the year.
4. Property, Plant and Equipment
a) Property, Plant and Equipment are stated at cost and are inclusive of all expenses, which are incidental to commissioning of assets to use less accumulated depreciation and impairments (if any). Property, Plant and Equipments are recognised as an asset, if and only if it is probable that future economic benefits associated with the item will flow to the Company; and the cost of the item can be measured reliably.
b) Gain and/or loss on disposal of the assets arising in the ordinary course of business are taken to profit and loss.
c) Land held by the Company is recognised and reported at cost.
d) The estimate for useful life of Property, Plant and Equipment has been made upon consideration of future economic benefits embodied in the assets and the experience of obsolescence in the industry with each estimate being reviewed by the management periodically. Depreciation is measured and recognised in the Straight Line Method for the useful life of the assets estimated by the management as below.
Useful life in Classification Sub-Classification year Building Permanent Structure 25 Building Temporary Structure 5 Plant & Machinery Underground Network 15 Plant & Machinery Optical Fiber and Overhead Network 10 Plant & Machinery Marts 10 Plant & Machinery Other than Network and Tools 7 Plant & Machinery Tools, Internet Equipment and Subscriber Equipment 5 Heating, Lighting, Air-conditioning, Furniture, 5 Other Items Fixtures, Office Equipment, Vehicle e) Depreciation on additions during the year is charged from the month subsequent to the date when available for use.
36 2012/13 Annual Report Nepal Telecom
f) Assets that have been decommissioned or has been identified as damaged beyond economic repair or rendered useless due to obsolescence are written off whenever identified.
5. Capital Works-in- Progress The expenditure incurred in acquisition and installation of new systems and equipment till the date of commissioning or in construction of civil works till the date of completion is taken to Capital works- in-progress. The value of Capital works-in-progress includes stock of equipment lying in store or in transit for the purpose of getting used in the installation. The value also includes the balances with contractors and suppliers of the systems and equipment for the value to be received. The equipments are capitalised upon commissioning and the civil works are capitalised upon handing over for use.
6. Investments a) Investment is carried at cost or market-value whichever is lower. However, bonds procured at premium are stated at the nominal value and the premium paid is amortised over the period up to the investment’s maturity. Discounting has not been applied for long term investments considering the impact which is less than significant.
b) Term deposits held in banks are also classified as Investment.
c) Investments that mature within next 12 months have been classified under current assets.
7. Inventory a) Inventory includes stock in hand of goods being held for sale and spares that are not eligible for capitalisation.
b) Inventories are valued at lower of cost or net-realizable value. Cost is determined on First in First out basis. Net realizable value is the sale price as fixed by management in the ordinary course of business, less the estimated costs, if any, necessary to make the sale. Further, adjustments are made for those inventories identified by management as obsolete (more than five years old), non-moving (non movement for 2-5 years) and slow moving (non movement for 1-2 years).
8. Doubtful Receivables Receivables not realised for more than twelve months as at the reporting date are classified as doubtful receivables and equivalent write down is made against such doubtful debts. The assumption is reviewed by the management on a regular basis.
9. Cash and Cash Equivalents Cash and cash equivalents are carried at cost. They include cash-in-hand, cash-in-transit (bank transfers and cheques in collection which are collected in the subsequent period), and deposits with banks which may or may not bear interest, except term deposit which are classified as investment as per Note 6 (b) above.
10. Subscriber Deposit The Company has a policy of collecting subscriber deposit from customers for the various types of services. However, the Company pays interest at the rate of 3% per annum in the case of PSTN subscriber deposit only. A portion of the deposit is classified as Non Current Liability as per the management estimate, which is limited to 90% of the total number of PSTN connections.
2012/13 37 Annual Report Nepal Telecom
11. Trade and Other Payables
Liabilities for creditors and other payables are carried at cost which is the fair value of the consideration to be paid in the future for the goods / services received, whether or not billed to the Company.
12. Provisions Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the reliable estimate of the amount can be made. Provisions are reviewed at each statement of financial position date and are adjusted to reflect the current best estimate.
13. Employee Benefits a) Salary, allowances and other benefits and perquisites are provided to employees as per Employee Regulations, 2061.
b) The retirement benefits are accounted for in accordance with NAS 14 classifying them into Defined Contribution Plans and Defined Benefit Plans.
i. Defined Contribution Plan – which includes provident fund and the contributory pension scheme as provided for in the Employee Regulation. Employer’s contributions to such plans have been expensed and paid.
ii. Defined Benefit Plans – which included (a) Pension liabilities of both in-service and retired staff and (b) Gratuity liabilities; these were recognised until previous year in accordance with the actuarial assessment and similar actuarial assumptions have been extrapolated for the current year to estimate and provide for those liabilities by charging to the profit and loss.
c) The liability on account of accumulated home leave and sick leave is fully provided as per the Employee Regulation. Such liability is classified as Current Liability.
d) The liability on account of staff bonus is provided for on the basis of eligibility as per Bonus Act, 2030.Subsequent adjustment is effected, if necessary, to limit the liability to the ceiling as approved by the Government of Nepal. The liability on account of Telecom Allowance is provided in accordance with the bylaws relating to staff benefits.
14. Revenue Recognition Revenue comprises of the fair value of the considerations received or receivable for the provision of telecommunication, broadband and related services in the ordinary course of the Company’s activities.
Revenue is recognised, when it is probable that the economic benefits associated with the transactions will flow to the Company, and the amount of revenue, and the associates cost incurred or to be incurred, can be measured reliably, and when specific criteria related to revenue recognition have been met.
15. Income Tax a) Current Tax: The liability on account of corporate tax is provided as per the self-assessment
38 2012/13 Annual Report Nepal Telecom
return for the year in accordance with the prevalent tax laws and regulations. Contingent liability on account of penalties and additional tax claims, which has been disputed by the Company, is separately disclosed in note 29.
b) Deferred Tax: Deferred Tax is provided on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using applicable corporate tax rate.
16. Changes in Accounting Policies and Estimates Changes in Accounting Policies and Estimates are made to comply with the relevant reporting standards and for better presentation. Changes, if any, are disclosed in specific sections.
17. Impairment of Assets a. Property Plant and Equipment has not been separately assessed for impairment. Assets’ carrying value is expected to reflect appropriately, the economic value embodied on such assets considering the expected future stream of revenues.
b. Items pending capitalisation has been recognised under CWIP. The value of slow and non- moving items under this heading has been considered to be impaired on prudential basis and written down 100%, 50% and 25% for those that have remained idle for more than 5 years, 2-5 years and 1-2 years respectively.
c. Receivables are assumed to have been impaired if have been due for more than one year except for those specifically identified.
18. Contingent Liabilities A contingent liability is disclosed when the Company has a possible obligation as a result of past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events, not wholly within the control of the Company; or the Company has a present legal or constructive obligation, that arises from past events, but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.
C. Explanatory Notes
19. Intangible Assets Intangible Assets includes the License fees for operating the various telecommunication services paid to Nepal Telecommunication Authority. These fees are being amortised over the licences’ validity period. Rs Service Life - License Total Fee Expensed Unamortised Years period during the year balance PSTN (Renewal) 5 067.10.13- 95,061,275 26,883,000 68,178,275 072.10.12 GSM 5 066.01.29 – 7,320,237,260 4,000,000,000 3,320,237,260 071.01.28 Internet 5 067.01.14 – 150,015 54,000 96,015 072.01.13 License Renewal Fee for GSM services has been described in Note 39 (e). 2012/13 39 Annual Report Nepal Telecom
20. Property, Plant and Equipment a. The value of Land represents the cost paid on acquisition of freehold premises located at the various operating locations of the Company. The value of Buildings includes cost of all civil works.
b. The value of Plant and Machinery includes the cost of the various telecommunication systems in operation including mainly PSTN, GSM, CDMA, ADSL and other systems. However, values of Plant and Machinery for individual service lines have not been segregated in the financial statements.
c. The Company also holds leasehold premises at the various locations for erecting towers for installing BTS. Annual rents on such leaseholds are paid in advance. As a general practice, lease agreements are for a period of ten years. Rent payable for the lease period at the current rate has been disclosed as Commitments in Note 29.
d. The Company hold various plots of land whose title has not yet been transferred to the Company. However, the cost of civil works constructed on such premises has been included in the value of Buildings.
21. Capital Works-in- Progress a. The value of additions in the various projects under progress and the value of capitalisation either to Buildings or to Plant and Machinery during the year were as per detail below. Rs Opening balance 1,667,234,578 Additions 6,947,938,447 Capitalized - Building (331,239,144) - Plant& Machinery (5,263,079,000) (5,594,318,144) Closing balance 3,020,854,881
b. Advance payment amounting to Rs 140,000,000 had been made to acquire land at Kamerotar, Madhyapur Thimi municipality in previous period(s) by recognising as Capital Works-In-Progress pending the final deal settlement. The deal has now been settled with Rs. 20,338,875 remaining as recoverable after adjusting for the land price and advance refunded till date. The balance recoverable has been recognised as receivable under current assets. (Refer Note 30)
22. Investments a. Investments with Citizen Investment Trust Rs Investment to CIT’s recognized retirement fund earmarked against 1,780,731,542 the liability for Pension and Gratuity. Total 1,780,731,542
40 2012/13 Annual Report Nepal Telecom
b. Government Securities Rs. Title of scripts Maturity Nominal Unamortised Date Value Premium 7.50% Development Bond 2072 Ka 2072.12.18 78,475,000 1,101,670 9 % Development Bond 2071 Kha 2071.03.16 540,975,000 3,465,234 9 % Development Bond 2073 Ka 2073.03.28 428,600,000 11,884,426 9 % Development Bond 2072 Kha 2072.02.27 322,775,000 3,592,289 9 % Development Bond 2072 Ga 2072.03.17 500,000,000 489,041 9.75% National Bond 2072 2072.10.05 500,000,000 - 10% National Bond 2072 2073.03.25 800,000,000 - 8.50% Development Bond 2071 Gha 2071.12.21 249,275,000 18,382,233 8% Development Bond 2070 Ka 2070.09.27 271,175,000 8,387,827 Total 3,691,275,000 47,302,720 c. Corporate Securities Rs. Title of Scripts Maturity Date Nominal Value 8.50% Laxmi Bank Debenture 2072.08.08 20,000,000 Siddhartha Bank Debenture 2077.01.05 100,000,000 Total 120,000,000 d. Balance with banks in term deposit Rs. Term deposits Amount Remarks Balances in Rupees 14,685,653,000 i,ii Balances in US dollars ($ 24,500,000) 2,327,500,000 iii Total 17,013,153,000 Remarks: i. Balances in Rupees include Rs.1,000,000.00 which has been earmarked for an Endowment Fund. The interest income from the Fund is to be utilized for welfare of retired staff. ii. Rates of interest on the term deposits in Rupees ranged between7% and 11.50%. iii. Rates of interest on the term deposits in US dollars ranged between 3% and 3.90% e. Investment amounting to Rs.635,400,000 (6,354,000 shares @ Rs. 100 per share) was made by subscription to the share capital of Upper Tamakoshi Hydropower Limited. This investment has been made in the capacity of the promoter of the company, which is 6% of the total issued capital Rs. 10,590,000,000.
In addition to the above investment further loan amounting to Rs. 1,413,878,595 has been disbursed to M/s Upper Tamakoshi Hydropower Limited as per the loan agreement. Interest accrued at the rate of 12% amounting to Rs 167,580,973 on such loan has been capitalised. Total outstanding, including opening balance principal disbursed during the year and capitalised interest, as at the year-end, is Rs. 2,502,081,556.
2012/13 41 Annual Report Nepal Telecom
f. The Company has made an equity investment of Rs 10,000,000 as subscription of 20% of 50% shares in the capacity of a Promoter in M/s Trishuli Hydropower Co. Limited. The total paid up capital of M/s Trishuli Hydropower Co. Limited is Rs 100,000,000.
23. Deferred Tax Deferred tax asset/liability represents the differences of carrying amount and tax base of assets and liabilities in accordance with NAS 09. Corporate tax rate of 25% is used for recognising Deferred Tax. Rs SN Particulars Carrying Amount Tax Base Temporary Diff 1 Property, Plant & Equipment 16,290,282,239 19,030,900,290 2,740,618,051 2 Provisions for Expenses 12,201,534,315 Nil 12,201,534,315 Total 28,491,816,554 19,030,900,290 14,942,152,366
24. Inventory Inventory has been taken at lower of cost or net realisable value. Inventory’s realisable value has been estimated at 0%, 50% and 75% for obsolescence, non and slow moving items that have remained idle for more than 5 years, 2-5 years and 1-2 years respectively. No any adjustment to that effect is given during the year to profit and loss account as the Provision for Inventory made on FY 2068.69 is considered adequate by the management to account for the realisable value of inventory.
25. Impairment of Receivables No any impairment of Receivables has been charged to profit and loss of the current year. The provision for doubtful receivables amounting to Rs. 1,661,798,941 been done in previous year (FY 2068/69) is considered adequate by the management to account for the realisable value of receivables. (See Note 32)
26. Share Capital There has been no significant change during this year in Company’s shareholding structure as compared to the previous year. Shareholding as at 2070.3.31(15.07.2013) Rs. Particulars 2069/70 2068/69 Authorized Capital 250,000,000 Ordinary Shares of Rs. 100 per Share 25,000,000,000 25,000,000,000 Issued, Subscribed and Paid up Capital 150,000,000 Ordinary Shares of Rs. 100 per Share 15,000,000,000 15,000,000,000
Shareholder Category No. of Shares % of holding Government of Nepal 137,239,950 91.50% Citizen Investment Trust 50,000 0.03% General Public 6,358,265 4.24% Employees 6,351,785 4.23% Total 150,000,000 100.00%
42 2012/13 Annual Report Nepal Telecom
27. Non Current Liabilities Entire Provision for Pension and Gratuity has been classified as non-current as substantial portion of the liability is expected to be due after more than 1 year. Subscriber deposit has been segregated into current and non-current on the basis of the estimate made by the management (refer Note 10). Rs. Particulars 2069/70 2068/69 Provision for Pension & Gratuity 7,287,946,023 6,403,933,814 GSM License Renewal Fee 15,000,000,000 17,500,000,000 Subscriber Deposit (Total) 2,530,631,852 2,570,269,471 Less: Current portion (798,374,852) (875,644,471) Balance (Non-Current Portion) 1,732,257,000 1,694,625,000
28. Effect of changes in accounting policies, accounting estimates and errors Policies and Estimates With respect to the Sales of Telephone Sets & Other Goods and the Costs of such goods, the company has changed its Accounting Policy from netting of sales and costs incurred resulting into showing only the profit on such sales to separately recognising the sales in Income and recognising the costs in Expenditure.
Errors Errors have been adjusted in accordance with the requirements of NAS 2.
29. Capital Commitments and Contingent Liabilities a. Capital Commitments Rs Commitment for Civil Works 288,104,105 Commitment for Procurement of Plant and Equipment 23,062,213,414 Commitment for Rent of Leasehold Premises for BTS 83,601,823 Total 23,433,919,342
b. There were 12 legal cases against the Company pending in the court of law. Liability if it is decided against the Company could not be assessed reliably; such liability would not be substantial that would call for disclosure.
c. Reassessment order of Value Added Tax was issued by Large Tax-Payers Office on the Self Assessment Tax Return filed by the Company for the financial year 2064-65. The Company has opted to appeal against the order and consequently has applied for an Administrative Review with the Director General, Inland Revenue Department but the verdict went against the company. The company has then applied to Revenue Tribunal against the decision of the Director General. Pending resolution of the matter, contingent liability of Rs. 127,796,453 would have existed against the Company for the year 2064-65, if the appeal goes against the Company.
d. Reassessment order of Value Added Tax was issued by Large Tax-Payers Office on the Self Assessment Tax Return filed by the Company for the financial year 2065-66. The Company has opted to appeal against the order and consequently has applied for an Administrative
2012/13 43 Annual Report Nepal Telecom
Review with the Director General, Inland Revenue Department. Pending resolution of the matter, contingent liability of Rs. 223,327,553 would have existed against the Company for the year 2065-66, if the appeal goes against the Company.
e. With respect to the frequency used by the company for providing telecom services from FY 2056/57 to FY 2067/68, Nepal Government (Nepal Telecommunication Authority-NTA) raised a demand of Rs. 745,434,000 as Frequency Fee. Out of the Frequency Fee demanded, Rs. 253,604,676 was paid by the company on FY 2068/69. The remaining fee amounting to Rs. 491,829,324 is still in dispute with the NTA. Pending resolution of the matter, contingent liability of Rs. 491,829,324 would have existed against the Company, if the matter goes against the Company.
30. Kamerotar Land With reference to Note 21(b), land (area of 49-10-08-0.8 Ropani) amounting to Rs. 89,330,625 has been received from the land development committee relating to acquisition of land at Kamerotar. Further, partial payment of Rs. 6,014,000 was received in F.Y. 2068/69 and Rs. 24,316,500 has been received during the year . The amount yet to be received is Rs. 20,338,875.
31. Government Grant for Rural Telecom Development No any Government Grants has been received from Nepal Telecommunications Authority towards rural telecom development during the year.
32. Trade Receivable The outstanding balances of bills receivable from the various categories of customers as on Ashadh 31, 2070 were as below. Rs. Net increase in More than 1 year Category Total receivables for old the year General Public & Employees 2,616,337,034 1,400,530,735 1,215,806,299 Government offices 148,725,525 43,476,688 105,248,837 Domestic Inter- administration 325,691,236 303,433,935 22,257,301 International Inter- administration 1,759,992,101 1,739,710,849 20,281,252 Total 4,850,745,896 3,487,152,207 1,363,593,689
33. Royalty and Contribution to RTDF The liabilities have been provided for on account of 4% Royalty as per Telecommunication Rules, 2054 and 2% Contribution to Rural Telecommunication Development Fund (RTDF) as per conditions laid down by the Nepal Telecommunications Authority for operating license on the Operating revenue amounting to Rs. 34,108,431,428.
34. Prior Period Adjustments The following adjustments were made from opening balance of Equity for income and expenditure relating to prior periods:
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Rs. S.N. Particulars Expenditure Income Excess Staff Bonus & NT Allowance Provision for 1 228,903 34,657,737 2067/68 Written Back 2 Inter-Administration Settlement 13,034,017 1,460,734 3 Inter-Unit Adjustment 7,635,172 - 4 Assets Adjustment 26,538,144 - 5 Bill Adjustment 651,939 - 6 Debtors Adjustment 713,413 520,040 7 Operating Expenses & Income 1,971,703 6,332,758 9 Liabilities Written Back - 333,482 10 Additional Depreciation 101,288 - 11 Non-Operating Income - 16,364,020 12 House Rent 108,101 - 13 Salary Adjustment 401,972 93,223 Total 51,384,652 59,761,994 The net prior period amount of Rs. 8,377,343 has been adjusted directly to the equity through Statement of Changes in Equity.
35. Employee Benefits a. Defined Benefit Plans - Pension (for existing and retired employee) and Gratuity liabilities have been provided as per the actuarial assessment. Entire assessed amount has been provided for with the charge to the Income Statement. The movements are given as below,
Retirement Fund Liabilities Rs. Particulars Pension(Rs.) Gratuity(Rs.) Total Opening Liability for FY 2069.70 4,467,276,105 1,936,657,708 6,403,933,813 Interest Cost @ 8% ( being current 8.0% market rate of FD) 357,382,088 154,932,618 512,314,706 Current Service cost ( estimated on the basis of past actuarial 480,933,398 56,334,605 537,268,003 assessment) Less: Pension and Gratuity Paid (161,808,524) (3,761,975) (165,570,499) Closing Liability 5,143,783,067 2,144,162,956 7,287,946,023
Retirement Fund Assets Rs. Opening Assets 1,273,151,693 Investment Returns for the year 120,878,000 Investment Returns for the previous year 3,879,670 Additional Investment during the year 500,000,000 Payments during the year (117,177,821) Closing Assets 1,780,731,542
2012/13 45 Annual Report Nepal Telecom
• Rs. 1,049,582,707 being the interest cost and current service cost for pension and gratuity (Rs. 838,315,486 for Pension & Rs. 211,267,221 for Gratuity) has been charged to the current year profit and loss. • All retirement fund assets have been invested in Citizen Investment Fund, which is promoted by GoN.
b. Defined Contribution Plans – The expense during the year pertaining to Provident Fund employer’s contribution amounted to Rs. 101,096,616 and the expense during the year pertaining to Contributory Pension Fund amounted to Rs. 5,243,590.
c. Staff Bonus and Telecom Allowance – Staff bonus has been provided according to guidance and directive provided by GoN. Telecom Allowance has been provided at as per the rules approved by the Board of Directors. The total number of regular employees as at 2070.3.31 was 5,451. (5,483 previous year).
d. Staff Welfare Fund – Staff Welfare Fund is separately managed by a committee of employees. The committee is responsible for accounts of the Fund. The assets and liabilities of the Fund are not consolidated in the Company’s financial statements.
36. Related Party Disclosures • Board Meeting Fees, Board Meeting Expenses, Audit Committee Fees, and Audit Committee Expenses have been Rs. 1,376,000, Rs. 608,863 Rs. 312,000 and Rs. 98,563 respectively. • Rs. 59,774,566 has been remuneration and other payments being paid to the key managerial personnel of the company which included 57 officials in level 10 and above.
37. Dividend Dividend is yet to be proposed by the Board of Directors.
38. Income Taxes a. Rs. 4,310,972,666 has been provided for as income tax liability for the period by way of self assessment as per the Income Tax Act, 2058. Rs. 3,630,931,796 has been paid as advance tax during the year and Rs. 1,100,000,000 has been claimed as excess income tax paid in FY 2068/69, the total advance tax paid thereby being Rs. 4,730,931,796.
b. The company’s final income tax assessment has been completed for the Income Year2064/65. For the remaining financial years the assets and liabilities have been recognised and carried as under. Rs. Income Years Provision for Tax Advance Tax Paid (as per self assessment) 2065/66 3,642,589,401 3,678,233,721 2066/67 4,467,919,801 4,516,864,233 2067/68 4,927,428,048 4,933,519,853 2068/69 4,634,539,999 5,819,450,267 2069/70 4,310,972,666 3,630,931,796 Total 21,983,449,915 22,578,999,870
46 2012/13 Annual Report Nepal Telecom
39. Other Information a. Rate of Exchange – The closing rates of US Dollar and European Euro applied to translate the balances of monetary assets and liabilities as on Ashadh 31, 2070 was Rs.95.00 (for Buying) and Rs.95.60 (for Selling) and Rs.124.08 (for Buying) and Rs.124.87 (for Selling) respectively.
b. Inter- Unit Transactions – Rs 17,406,846 (debit) pending in the financial statement on account of unadjusted inter unit balances do not represent amount recoverable and has been provided for with equivalent charge to profit and loss for the current period.
c. Earnings Per Share – The Company’s earnings per share (EPS) is Rs 75.33 (Previous Year Rs 77.73). The company does not have any convertible instruments, therefore computation and disclosure of Diluted EPS is irrelevant.
d. Operating Segment – Reporting operating segments under NAS 23 Segmental Reporting is under voluntary compliance. However the company has disclosed its revenue from its various business/service segments separately under Schedule 12 of the financial statements.
e. License Renewal Fee –The Company had the obligation to pay the license renewal fee for GSM services on 2066/1/29, which was disputed for settlement. The GoN Cabinet decision dated 2069/6/14 confirmed the liability of NRs 20 Billion, but deferred the payment schedule with the due amount to be paid on eight instalments of NRs 2.5 Billion each every year.
The Company has accounted for the liability by charging NRs 4 Billion pertaining for the current year in the profit and loss. The unpaid liability has been segregated into current and noncurrent in accordance with its payment schedule. The balance unamortised portion has been recognised as license fee under intangible asset (also refer note: 19)
f. Increase in Data Entry & Sales Commission is owing to the grossing up of the commission expense during the current year. Comparatives have not been restated due to the lack of information.
2012/13 47 Annual Report Nepal Telecom
g. Contribution to Government Treasury - The Company made the following contributions to the government treasury. The list is not exhaustive and includes the data as per currently available information, which is not exhaustive. Rs Description 2069/70 2068/69 Remarks Advance Income Tax 3,630,931,796 5,270,097,766 Claimable against tax liability Value Added Tax 3,560,090,151 2,452,619,293 Net VAT collections. Telecom Service Charge 2,086,608,511 2,064,912,800 TSC collection deposited. Ownership Fee 434,301,255 486,978,078 Fee collection deposited. Customs Duty 527,922,968 122,224,497 Paid on import. Royalty and RTDF 1,968,451,393 1,584,570,186 Liability paid. Dividend 6,587,517,600 6,175,797,750 Dividend paid. Property and Vehicle Tax 42,332,576 44,945,892 Liability paid. Total 18,838,156,250 18,202,146,262
As Per Our Report of Even Date
Dhruba Prasad Sharma Anoop Ranjan Bhattarai CA. Kuber Sharma Chairman Managing Director Kuber & Co. Chartered Accountants
Baikuntha Aryal Kamal Shali Ghimire Sushil Kumar Ojha Director Director Director
Tanka Lal Shrestha Pramod Kumar Gurung Director Director
Sudhir Prasad Aryal Nabaraj Pudasaini Deputy Managing Director(Finance) Manager
Date: Poush 28, 2070 Place: Kathmandu
48 2012/13 Annual Report