NT exploring modalities for investment diversification
KATHMANDU, AUG 09 -
In a bid to diversify its investment portfolio, Nepal Telecom (NT) is exploring three possibilities — establishing a subsidiary company, a joint-venture model and equity partnership.
The NT board had formed a committee under the coordination of Baikuntha Aryal, joint secretary at the Ministry of Finance, to suggest potential areas of investment. The company recently asked the committee to look for investment modalities.
“We have asked the committee to study what types of investment modalities could be best for NT — a subsidiary company or going for a joint-venture model or equity partnership — with other investors,” said Budhi Acharya, deputy managing director of NT.
The Aryal-led committee is expected to submit its report within a month to the NT board. “We are planning to complete the study and submit it within a month,” said Aryal, adding the study would underline potential areas where NT could invest and how it could invest by making necessary changes in the existing provision.
According to Acharya, the NT board will decide on investment diversification plan based on the study report.
The cash-rich state-owned company has long been working on utilising its resources in other possible profit-making sectors. As a part of investment portfolio diversification plan, NT has already started investment in the hydropower sector. It has so far invested in two hydropower projects — Upper Tamakoshi and Trisuli 3B.
NT, which is one of the largest institutional depositors, has over Rs 35 billion in cash reserve which could be invested in other sectors besides the telecom business, NT officials said.
NT has invested Rs 6 billion in the Upper Tamakoshi as loans. It had also signed an agreement with the Nepal Electricity Authority to operate Trisuli 3B under the equal share ownership model. It has also been expressing interest to diversify investment by establishing a service-oriented company for the purpose of electricity generation and transmission. Two years ago, NT had made amendments to its memorandum of articles for the purpose.
Growing competition in the telecom market, gradual decline in the profit growth rate with market saturation, and huge cash reserve has made the company think on using its resources in other sectors.
An NT board member said it is hit time NT invested in other profit-making sectors for staying financially healthy in a competitive environment. “There are possibilities of setting up a subsidiary company for telecom infrastructure sharing and value added services for mobile users,” he said.
The company has also been planning to bring in a strategic partner. “The Finance Ministry is making technical and legal preparations for bringing in a strategic partner and we hope it will be completed within a year,” the NT official said.
Source: The Kathmandu Post
