Having acquired a majority stake in STM Telecom, Chaudhary Group (CG) plans to start service under a new brand in next six months. CG Telecom, subsidiary of CG, has raised its stake to 80 percent in the STM Telecom belonging to US-based STM Communications Service Inc.
The group bought 8,000 shares in the name of CG Telecom at $1.5 million as per the share purchase agreement (SPA) between the two firms. STM Telecom, operating under the brand Gramintel, is the country’s first rural telecom service operator. The remaining 20 percent stake of the company is owned by a local company AR Investments.
“We are planning to hit the market with a new name and go for service expansion within six months,” said Binod Chaudhary, president of the CG. He said that five international telecom companies, including Airtel, Vodafone and Singtel, have also been showing interest to join hand with CG Telecom for investment and service operation.
The CG said that it would also buy out the shares of AR Investments, if the later agrees to do so. As of now, STM Telecom has extended telecom services to 628 village development committees in 52 districts and counts around 5,500 subscribers. Initially, the company had received a licence to provide telecom service in 534 VDCs in the Eastern Development Region.
The CG now plans to make initial investment of Rs 2 billion in STM Telecom. As per the plan, CG Telecom will install base transceiver stations based on solar technology. The government had issued an operating licence to STM Telecom in November 2003 for a fee of Rs 100,000 as first rural telecom service operator. With the operating licence of the company expiring this year in November, STM Telecom has also applied for licnece renewal and unified telecom licence to enable it to operate multiple telecom services including the cellular mobile service.
“STM Telecom has notified us about the change in its share ownership last week after applying for the unified licence,” said a source at the Nepal Telecommunications Authority (NTA). The source added that if the Supreme Court gives go ahead for the unified licence provision, the local market would see more players in the cellular telecom service.
Two separate writ petitions against the unified licensing regime are awaiting a decision from the apex court. If the government issues a unified licence to the company, it will be able to operate GSM mobile service like Nepal Telecom and Ncell.
As part of the preparation to issue the unified licence, the NTA last week directed STM Telecom and two other telecom companies who have applied for the unified licence—United Telecom Limited (UTL) and Smart Telecom—to submit their service roll-out plan. The UTL, which has a majority share of the Indian government, has said it would invest an additional Rs 10 billion if the government provides the unified telecom licence. Sources said that Smart Telecom too has been looking for investment partners for its service expansion after getting the unified licence. NTA is re-verifying the criteria to check Smart Telecom’s was eligible for the unified licence. The government had introduced the unified licence provision about 10 months ago, with a view to give a level-playing field to small operators.