March 14, 2023 Startups

About Ncell

The country's first private mobile service provider is Ncell Axiata Limited which was previously known as Ncell Private Limited. The company is committed to developing the best-in-class mobile network experience, providing digital communication services to some of Nepal's most remote regions.

Evolution of Ncell

Andy Chong the key person who started Mero Mobile in 2004. After 4 years, it was acquired by Reynolds Holding Company whose parent company is Telia Company who rebranded it as Ncell in 2010.  On April 12, 2016, Ncell joined Axaita Group Berhad and was transformed into a public limited company. On August 3, 2020, Ncell's name was changed to "Ncell Axaita Limited."

The Underlying Ownership Structure of Ncell:

  • 80% of Ncell Pvt. Ltd. (Nepal) is held by Reynolds Holdings (Mauritius)
  • 100% of Reynolds Holdings (Mauritius) is held by Telia Sonera Norway Nepal Holdings (Norway)
  • 100% of Telia Sonera Norway Nepal Holdings (Norway) is held by Telia Sonera Norway Asia Holdings As (Norway)
  • 75.45% of Telia Sonera Norway Asia Holdings As (Norway) is held by Telia Sonera UTA Netherlands (Netherlands) and 24.55% of Telia Sonera Norway Asia Holdings As (Norway) is held by SEA Telecom Investment BV (Netherland)
  • 100% of Telia Sonera UTA Netherlands (Netherlands) is held by Telia Sonera Finland (Finland) 
  • 100% of Telia Sonera Finland (Finland) is held by Telia Sonera AB (Sweden)

Capital Gain Tax Dispute

A Swedish-Norwegian company named Teliasonera sold 80% shares of Ncell to a Malaysian company, Axiata in 2016 which was a 144 Billion deal. The transaction was done at abroad as Axiata purchased Reynolds Holding Company (which was owned by Teliasonera). The dispute was all about whether the deal is taxable in Nepal or not. Teliasonera asked the Inland Revenue Department whether the deal was taxable or not, but the tax authority remained silent. In January 2016, the director-general of the Inland Revenue Department informed the Parliamentary Development Committee that Nepal has a bilateral double taxation avoidance treaty with Norway, implying that no tax was due on the buyout. There was a high political pressure to the parliamentary Finance Committee in order to facilitate the closing of the deal.

The anti-Ncell campaign started after the publication of 54th annual report of the Office of the Auditor General and they said that; As per the Clause 57 of Income Tax Act the government have to raise Rs32 Billion capital gain tax for the transaction of Rs144 Billion in exchange of 80% stakes of Ncell. 

The Case started in January 2018 by filing a writ at the Supreme Court by the Sukdev Bhattarai Khatri after retiring from the Auditors General Office with civil society members Dwarikanath Dhungel and Jagadish Chandra Baral. On February 6, the Supreme Court gave the verdict that Ncell have to pay all the capital gain taxes. It is the general principle of the Tax law that the seller has to pay the capital gain taxes. The buyer must be aware of the tax obligations of the seller. Therefore, if the seller does not meet his obligation, the buyer is responsible for satisfying the capital gain tax due. So, as per the court decision Axiata have to pay the taxes as the previous owner Teliasonera left Nepal without paying capital gain tax. After two foreign investors transferred ownership of a Nepalese telecom company, the situation became controversial. Since TeliaSonera has already departed Nepal, the court ruled that the purchaser is responsible for capital gains tax if the seller did not pay it. Here the tax haven is used which is Nevis. The petitioner argued that those who claimed that Ncell shares were not sold and that just two foreign businesses were involved in the purchase were making a false claim to avoid paying taxes. On April 16, the Large Taxpayer’s Office determined the tax liability of Ncell at Rs62.63 Billion. The company only paid the Rs23.57 Billion and asked to pay the Rs39.06 Billion within one week. Ncell’s response was it went to the court challenging the order that its outstanding liability was only Rs14.36 Billion.

Then Ncell filed an application at ICSID (International Centre for Settlement of Investment Disputes) claiming that the Nepal’s decision on the capital gain tax to Axiata is against the Bilateral Investment Treaty between Nepal and the United Kingdom. After that on August 26 the Supreme Court abandoned the tax determined by the Large Tax Payers Office for Ncell by asking the tax determination process and court decided the outstanding tax that was only Rs21.1 billion. On December 6 the Large Tax Payers Office determined the tax liability of Rs24.44 Billion including fines. The ICSID issued a temporary ruling suspending the tax clearance process on December 18. The Large Taxpayers' Office sent Ncell a follow-up letter on December 22 requesting that the outstanding balance be paid within 15 days.

The government response on ICSID said that the ICSID deals with the investment related issues but the tax issues comes under the jurisdiction of Nepal’s legal System. The government hasn’t participated in the appointment of arbitrators at the ICISID tribunal. Axiata and Ncell appointed their arbitrators and got the provision in their favor. Experts said that it is not the issue of investment dispute. There is no any legal provision or agreement between Ncell and Nepal government for settling the tax issue through the international arbitration methods. Semanta Dahal says refusing to comply with the ICSID ruling could send a negative message about Nepal's investment climate and deter foreign investors. "We are aware of the issue with Ncell here, but international investors are less informed. They notice just how the foreign investor was treated in violation of international agreements. 

On December24, 2018 the court refused to register writ for the review of verdict. Tax officials said that there is unclear provision in the income tax law for the problems related to international capital gain taxes. Using this loop holes Teliasonera left Nepal by using applicable political and governmental official sources.

Many companies and individuals made Billions of Money and didn’t paid any taxes by using Ncell. Upendra Mahato, Ajeya Raj Sumargi, Birendra Mahato are also supposed to be involved in the scam. Upendra Mahato with other 11 forigners set up a company called Tipologia. Upendra Mahato and Romeo Adobo had joint ventures as Spartely Ventures, Belarusian-Nepali-Kazakhstan Group Limited in Belarus. When Adobo was the chairman of Ncell (2006-2012), and in this time Upendra Mahato bought 20% stakes of Ncell through Synergy Nepal Private Limited. On March 2012 Upendra sold his shares to NRN Niraj Govinda Shrestha which was also partner of them in investments in tax haven countries. Shrestha then sold his stakes to Bhagwat Singh Shrestha in that transaction Rs11 Billion taxes were occurred but Supreme Court ordered not to recover taxes from the company.  ICIJ in 2017 revealed that Mahato has investments in tax haven countries. He involved in two companies Formia and Primi Limited registered in Seychelles which have investments in Pankur and Spartely. Airbell company founded by Ajeya Raj Sumargi of Muktishree Group, director Arjun Sharma and with 11others including Mohammed Amresi (senior advisor to Teliasonera and board member of Spice Nepal Private Limited, the investor of Mero Mobile). Sumargi found to be in the money laundering from Airbell, Zodhar and Tipologia under FDI for the transfer of total $63185533 in nine installments. Till date Sumargi firms laundered Rs9b into Nepal. Wife of Abdo, also deposited $249, 968 in Muktishree’s Nabil Bank Account. Zodhar sold 1510 units to Teliasonera, Teliasonera bought 20 units and 40 units of Rs2 Billion and Rs3.98 Billion respectively from Sumargi’s Airbell, Zhodar sold 1,060 units of its share to World Wide Incredible. These acquisitions and its investment in Ncell through holding companies occurred simultaneously. After eight years of operation, TeliaSonera, which was connected to all of these companies through cross interests, sold its investment in Ncell in Nepal to another company. It evaded 61 billion rupees worth of capital gains tax (now Rs73 billion). Teliasonera also wrote a thank you letter to PM KP Oli in his tenure. In 2016, the then-prime minister Dahal presented in a Cabinet meeting his plan to tax TeliaSonera for its acquisition of Ncell and exempt Ncell from taxation, which was met with huge opposition from three cabinet secretaries. Later, during his stint as prime minister, Deuba neither supported tax exemption nor took steps to collect tax arrears. 


The Supreme Court decision seems to be driven by the logic that any buyer should first inquire about the liabilities of the seller before any purchase. Other retired revenue officers argue that blaming Axiata and asking it to pay capital gains tax that TeliaSonera should have paid is unreasonable. The really guilty party here are the politicians who allowed TeliaSonera to leave without paying taxes, and this will dim Nepal’s investment climate. Ncell owners had used the company to launder money as foreign direct investment. The Supreme Court set precedents in such cases, but lawyers demands for the clear provisions on such deals on Income Tax Act.