Increasing operational cost hurts Nepal Telecom profit

Increasing operation cost and investment in infastructure pulled the profit of the Nepal Telecom (NT) down.

The NT has posted a net profit of Rs 10.77 billion — only Rs 600 million more compared with a fiscal year ago — during the fiscal year 2009-10. It had registered a net profit of Rs 10.17 billion during the fiscal year 2008-09.

“Due to huge increase in operational cost and investment on infrastructure, the profit ratio has decreased,” said Surendra Prasad Thike, spokesperson at the NT. “Our profit rate was good in 2008-09 but last fiscal year, we could not achieve the growth rate as expected,” he added.

On December 27, talking to the Finance and Labour Relations Committee of the Legislature-Parliament, the NT officials had informed that the company has been witnessing a loss of 10 per cent in its profit growth rate every four months in the current fiscal year. “If the situation continues, NT’s profit rate will further dip in the current fiscal year,” according to them, who also suggested strategic partner for the NT.

Despite drop in its net profit growth, the company was the largest tax payer in the fiscal year 2009-10. It had paid Rs 9.66 billion to the government.

The state-owned company has been divested after it sold its shares to the public three years ago.

In the fiscal year 2009-10, the company had distributed 35 per cent cash dividends to its shareholders from the net profit of Rs 10.17 billion — an increment by 31 per cent over a fiscal year ago. The per share income has — in the fiscal year 2009-10 — also increased to Rs 67.85, an increment of 28 per cent compared to a fiscal year ago,” according to it.

As the domestic market has three major telephone service providers, it is under tremendous pressure to invest on infrastructure also. The NT has expanded its services and its costumer base has also increased to 61,92,000. “Of them, 45,60,000 are GSM users,” it said.(Source:THT)

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