Spice Nepal says mobile demand outstrips capacity

Gopal Sharma

KATHMANDU: Spice Nepal Ltd., Nepal's first private mobile operator launching next month, said on Monday its capacity could be exhausted in less than a year as it signs up all the customers waitlisted by its stretched state-run rival.

Nepal, sandwiched between India and China -- the world's fastest-growing and largest mobile markets, respectively, has hundreds of thousands of potential mobile customers who have been on the waiting list of Nepal Telecom Ltd. for four to six years.

"The market is very hungry and the waiting list for fixed-line and mobile connections is growing longer," Ajeya Raj Sumargi, director at Spice Nepal, told Reuters in an interview.

"In one year, we are planning to have more than 1 million customers. We can attract this waiting list to buy our connections."

Nepal Telecom has 700,000 customers, including close to 250,000 mobile subscribers. The carrier has been unable to meet demand for connections for years as the impoverished economy grapples with a Maoist revolt in the world's lone Hindu kingdom.

Nearly half Nepal's 4,000 villages do not have a single phone connection. In contrast, more than 540,000 Indian villages out of the total 600,000 have been linked to telecoms networks.

FULL LAUNCH NEXT MONTH

Spice Nepal, with permission to interconnect its GSM-technology network with existing state-run infrastructure, "soft-launched" its services this month for the government.
"Commercial launch is on Sept. 17 and we have the approval to set up 52 tower stations," Sumargi said.

Spice has yet to decide on the pricing, but Sumargi said his mobile rates would be competitive with those of Nepal Telecom, which charges three Nepali rupees (4.3 U.S. cents) per minute.

Spice services will start in the capital and expand to the tourist town of Pokhara 200 km west of Kathmandu. Later, the network will reach three major business cities -- Biratnagar, Birgunj and Bhairahawa -- on its borders with India, Nepal's largest trading partner.

"In five years time we will provide services in all of Nepal," Sumargi said.

The country's laws allow Spice Nepal and Nepal Telecom to have a five-year duopoly in the mobile market, Sumargi said.

Nepal, with 26 million people, has a telephone penetration of just over 3 percent, compared with more than 10 percent in India.

Spice Nepal has invested about 2 billion Nepalese rupees in its network, and recently placed a GSM equipment order worth about $29 million with a unit of India's Siemens Ltd.

Sumargi said he was confident the investment climate in one of the poorest nation's in the world, now clouded due to an increasingly bloody revolt, would improve in the coming years.

"We cannot tie our hands down during bad times. This problem will be solved and the country will be back on track. Nepal is good for investment and we are an example."