Embattled Indian telecom firm loses $70 million in Nepal

March 7th, 2008 - 3:54 pm ICT by admin  

By Sudeshna Sarkar
Kathmandu, March 7 (IANS) Indian joint venture United Telecom Ltd (UTL), the first foreign player to have entered Nepal’s telecom sector, has run up a loss of 4.54 billion Nepali rupees ($70 million or Rs.2.85 billion) due to government policies and an ongoing labour standoff. UTL headquarters in Kathmandu and its service centres in the valley have remained closed since Feb 6 due to an indefinite strike called by a labour union affiliated to Nepal prime minister Girija Prasad Koirala’s Nepali Congress party.

Despite intervention by Nepal’s Labour Commission and the labour and home ministries, the police have not been able to remove the picketers who are demanding full-time employment in the JV.

UTL officials say the strike was called by part-time and contract workers employed by the third-party contracting company J&T Associates, who won the tender to outsource unskilled staff for UTL.

The telecom firm’s plight is being watched warily by all major companies in Nepal, including other Indian joint ventures.

Many companies in Nepal, following the worldwide practice to outsource unskilled labour, have arrangements similar to UTL.

Almost all organisations in Nepal including the foreign embassies and UN agencies outsource security guards, for instance.

If the strikers are allowed to continue to hold the telecom JV at gunpoint, it would send a negative message, especially to foreign investors.

The UTL dispute affects the Indian government directly since 80 percent of the stakes are held by three Indian public sector units - VSNL, MTNL and Telecommunications Consultants India Ltd.

The 37-day strike, the longest in Nepal’s telecom history, has seen the JV incur a direct loss of NRS 100 million.

UTL, which won a licence in 2002 to start landline services in Nepal with an investment of NRS 3.25 billion, is already smarting under an additional whopping loss of NRS 4.44 billion.

Much of it was incurred when King Gyanendra seized absolute power in 2005 with the backing of the army and shut down UTL phone lines for 65 days, apparently to allow his son-in-law Raj Bahadur Singh to corner the market with his newly launched mobile telephone company.

Though the ban was lifted, the Indian company was not allowed to provide new phone connexions for another 165 days.

Even after the fall of the royal regime, its woes have continued.

The information and communications ministry, now headed by a Maoist minister, refused to grant it full mobility though the terms in its licence are the same as state-run Nepal Telecom’s, which was allowed full mobility.

If yet another round of meetings at the Labour Commissioner’s office Friday does not yield any result, the Indian JV is likely to move court.

The JV’s plight comes at a time Nepal’s finance minister Ram Sharan Mahat attended a meeting of SAARC ministers in New Delhi and pledged to secure Indian investment in Nepal.

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