Andy Chong Yee Bin, Chief Executive Officer/Managing Director of Ncell, talks about the telco's presence in Nepal, performance during the pandemic, and how it copes with the new normal after the COVID-19 pandemic. Andy has held CEO and top management positions in Malaysia, Singapore and Indonesia, where he led teams to build and grow businesses and in providing strategic direction in the areas of sales & marketing, technical & operations and finance.
As the leading mobile operator in Nepal, could you please give us an overview of Ncell's achievements in Nepal during the past few years?
Ncell has been operating in Nepal since 2004 as the first private mobile operator in the country. We provide high quality international standard services with a local touch. Over 98% of our employees are Nepali and our services are designed to meet the needs of the people of Nepal.
At Ncell, we are constantly working towards our goal of connecting everyone in Nepal through our nationwide network, providing high quality, modern and cost-effective services for the consumers, and creating value for our partners.
Ncell became a part of Axiata Group Berhad post completion of acquisition on 11 April 2016. Together with Axiata, Ncell is committed to contribute to the development of the country's economy and infrastructure, building best-in-class networks and bringing people in the remotest areas of Nepal within the reach of communications.
As one of the biggest foreign investors in Nepal, we take pride for being one of the highest tax payers of the country—from the time of its inception till date, Ncell has paid over Rs 242 billion in income taxes and fees to the government, with Rs 32.22 billion just in the last fiscal year 2019/20, accounting for 3.8% of the total tax revenue of the government.
Our direct and indirect contribution to the country's GDP stood at 2 percent in 2018/19. As a committed investor in Nepal, we have made a substantial investment in infrastructure for service expansion and enhancing quality. We invest between Rs 32–35 billion annually in Capex and Opex which directly or indirectly supports and drives growth in the economy. Infrastructure investments especially telecommunications have strong links to growth, poverty alleviation and environmental sustainability.
Through our investments, we have introduced new technological solutions that has resulted in positive externalities to include direct economic benefits via employment, affordable means of communications resulting in social and economic benefits for our customers, better provision of social services like education and health, decentralisation and integration processes, human welfare and overall economic development.
We have directly and indirectly, created employment opportunities for approximately 57,000 people. Increased investment from company like Ncell will contribute to expand the overall infrastructural base of the country and further support the Nation's 'Digital Nepal' initiatives.
During the pandemic, economic activity has come to a standstill globally, while the telecommunication business appears to be least affected. How is the situation of Ncell? Has there been a slowdown in Ncell's growth in terms of customers as well as profit?
It is true telecommunications businesses have been more resilient than many other industries which have been impaired by as much as 95% for example, the tourism and hospitality industries. For Ncell, while we are in a relatively better position compared to other big businesses, the telecoms was not spared. During the pandemic situation, access to communications, content, services, entertainment were almost uniquely channeled via data connectivity and data consumption has been heightened. In Nepal, telecommunications network utilisation has increased by more than 40%. However, the impact of increased use of telecom services with people living at home and working from home have not translated to higher revenues for mobile operators as people, being at home, were using fixed broadband alternative.
In the past year, there were two waves of stringent lockdowns in Nepal—which impaired movement of people for almost half of 2020. During this time, mobile telecom companies were compelled to provide its essential services at highly discounted and subsidised rate to ensure our customers had connectivity during lockdowns. For example, we provided 120% bonus on top up, increased Saapati (micro-credit) amount, made balance transfer services available for free, free mobile services to over 160,000 front liners and provided 25% discount in PAYG data, among others.
During the lockdown, despite data traffic increasing by as much as 40%, overall revenues declined by as much as 35% during its peak. With easing of lockdown towards end 2020, our business has since recovered to 28% of pre-lockdown levels. Yet, this will take some time to reach to pre-Covid levels—we often refer to as ‘normalcy', or some semblance of it.
It is evident that consumer consumption behaviour has changed during this period as well—we see a shift from voice usage to data (mostly fixed broadband data) during the lockdown. Notwithstanding this shift, we continued to invest in our data carrying capacity throughout 2020.
As many as 1 million Ncell customers stopped using their services during the lockdown which, we assume, is due to businesses getting impacted resulting in loss of employment for many people. It was estimated no more than 3% of our Points of Sales (PoS) were opened during the lockdown which affected our business and when the government eased lockdown, we saw around 25% of PoS were re-opened. This has a direct impact to the recharge activities of consumers.
I am hopeful businesses including ours, will begin its recovery journey towards pre-Covid normalcy in 2021, and perhaps even longer for some industries like tourism and hospitality. The impact has dug deep into the structure of Nepal's economy and will need a longer runway to recover, which at least for our industry, will follow a moderate L-shape. It will be an excellent outcome if businesses recover to within 90% of pre-Covid levels by end 2021.
Nowadays, operators are seeking digital transformation. How does Ncell implement digital transformation? How do you see the help it brings for Ncell during and after pandemic?
Digital transformation has been on our agenda right at the on-set but it wasn't until the pandemic hit us which necessitate, we accelerate our digital transformation. We learnt (the hard way) during the pandemic that engaging with our customers digitally would have resulted in a more resilient 2020 for Ncell. We initiated and fast tracked several major digital initiatives around digitalising our customer and channel engagement value chain amongst others—where customers will engage with us digitally, and not physically which has been a challenge during pandemic times. These were rolled out beginning December 2020 and we continue to drive adoption and over-time, utilisation and monetisation as the new engagement model with our consumers. This will no doubt require consumers to embrace and become comfortable with this new mode of engagement, but we are confident this will become second nature. It is evident from many other markets/operators, where a digitalised engagement value chain had resulted in a more robust and resilient 2020 for mobile consumers and the operators.
Regarding the network development, what is your investment plan for the existing 4G network and any plan for 5G network in Nepal?
Our plans to roll out our 4G nationwide is ready and is a function of availability of the right spectrum. We will require multiple frequencies—both for capacity enhancement and for expansion of coverage. We launched 4G in June 2017 and expanded it to all provinces of Nepal.
Spectrum at 900 MHz is required to deliver population coverage. We have 58% 4G population coverage and as soon as we are awarded technology neutral spectrum in this band, we will be able to expand 4G coverage to over 90% of population coverage, so we will continue to invest in expanding our network. We are hopeful this will be resolved soon so we can better serve consumers with 4G services.
With spectrum in 1800 MHz band that we secured in December 2019, we will give depth of 4G coverage to deliver higher data speeds and capacity within the coverage area. But to serve wider geography, we need technology neutral spectrum in 900 MHz.
And, for 5G, we would welcome Nepal Telecommunications Authority's leadership in setting up industry consultations to ensure timely availability. From our point of view this will likely be post implementation of our nationwide 4G plans.
What do you think of ZTE's contribution to your network development? And what do you expect from the future cooperation with ZTE?
As a trusted partner of Ncell, ZTE has cooperated with Ncell for over 10 years to provide wireless, core network and transport network services in Nepal, meeting more than 60% of Ncell's wireless network business needs. We are grateful to ZTE for their presence and support. Moving forward, ZTE and Ncell will continue to strengthen the collaboration to enable Ncell to attain network and digital transformation through ZTE's industry-leading solutions and technologies, contributing to the further development of Nepal's telecommunications industry.
What are your prospects for Ncell in the next few years and what are your priorities?
We are giving priority to digitalisation of our key business activities where meaningful and impactful so that post pandemic, we can be ahead of the curve and better able to serve our customers.
Our business strategy and investments will remain focused on data oriented services, which is where the growth will be. Nepal has the opportunity to pull forward with their Digital Nepal 2020 programme—both from a supply and demand perspective. Had Nepal been up the curve in terms of its digital economy, the impact, for businesses such as ours, would have been lessened with easier and simpler access to services for customers.
Data is the future and there is significant opportunity for growth as Nepal embraces a digital future. Share of data revenues of mobile telecom companies have been increasing year on year whilst demand for voice services remains relatively constant. We aspire to be a digital telco and our strategy is data-centric. And for enterprises, we hope to be first choice of Nepali businesses to help them achieve their aspirations in the near future.