In a dramatic culmination of regulatory and legal disputes, CG Communications Limited (CG Telecom), a subsidiary of Nepal’s Chaudhary Group, has failed to secure its place in Nepal’s telecom sector. With the Patan High Court recently dismissing CG’s petition to reinstate its rural telecom license, the company’s inability to comply with government rules and regulations has come under sharp scrutiny.

This legal setback highlights the systemic issues within CG Telecom, including its failure to meet fundamental regulatory obligations and allegations of leveraging political influence to bypass compliance. While CG’s grand ambitions of transforming Nepal’s telecom sector have been widely publicized, its consistent non-adherence to government standards has led to a deadlock, leaving its operational aspirations in disarray.

Regulatory Breaches and License Revocation

CG Telecom first obtained its rural telecom license from the Nepal Telecommunications Authority (NTA) in 2003 (2060 BS). As per the Telecommunications Act, this license required periodic renewals: every 10 years initially and subsequently every five years.

The latest renewal deadline fell on November 30, 2023 (Mangsir 16, 2080). However, CG failed to submit its renewal application and pay the associated fees within the prescribed timeframe. According to Clause 25(5) of the Act, licenses that are not renewed by the deadline are automatically void.

Following this automatic cancellation, NTA formalized the decision and informed CG of the revocation. Instead of adhering to the legal process for appealing this decision within 35 days, CG chose to approach the court six months later, raising questions about its intentions and strategy.

The Patan High Court dismissed CG’s petition, reinforcing that the company had no legal grounds to contest the revocation. The court’s decision underscores CG Telecom’s consistent non-compliance with established regulatory frameworks.

Exploiting Political Influence?

Beyond regulatory violations, CG Telecom’s approach to resolving its operational hurdles has been marred by allegations of political lobbying. Representatives of CG have often claimed that they are being deliberately blocked by the government and regulatory bodies. However, critics argue that these claims are a smokescreen for the company’s failure to adhere to legal obligations.

Insiders suggest that CG has attempted to influence political leaders to pressure regulatory bodies into granting it licenses under relaxed conditions. Despite these efforts, NTA has maintained its stance, insisting that CG cannot bypass the regulatory requirements that all telecom operators must follow.

The company’s decision to delay its license renewal and seek recourse only after prolonged inaction has fueled suspicions of its reliance on political connections rather than compliance with the law.

NTA’s Firm Stand on Compliance

The Nepal Telecommunications Authority has taken a firm position against CG Telecom, emphasizing the need for strict adherence to the Telecommunications Act and related regulations. NTA sources revealed that CG’s rural telecom license had already been under scrutiny for unmet obligations, including inadequate service coverage in rural areas—a critical condition for license renewal.

The Telecommunications Act mandates that license holders must apply for renewal three months before the expiration date and fulfill all associated requirements. CG’s failure to meet these basic standards reflects a lack of seriousness in its operations.

Moreover, the NTA has pointed out that rural telecom licenses are a prerequisite for obtaining a unified license, which would allow CG to operate broader telecom services. By failing to renew its rural license, CG effectively disqualified itself from entering the mainstream telecom market.

What Went Wrong with CG Telecom?

Missed Deadlines and Non-Payment of Fees:

CG’s inability to submit its renewal application on time and pay the required fees was the primary reason for its license revocation.

Failure to Meet Rural Telecom Obligations:

The company did not fulfill the terms of its rural license, including adequate service coverage and technical improvements, which are critical for license renewal.

Deliberate Delay in Legal Appeals:

CG bypassed the government’s appeal mechanism, opting to approach the court only after a six-month delay. This decision reflects either negligence or a calculated attempt to pressure regulators through political influence.

Dependence on Political Maneuvering:

Allegations of lobbying and political interference have overshadowed CG’s operational ambitions, further damaging its credibility.

The Broader Impact on Nepal’s Telecom Sector

The CG Telecom saga sheds light on deeper issues within Nepal’s telecom sector, particularly the tension between regulatory enforcement and the entry of new players. While Nepal’s telecom market is dominated by established operators like Nepal Telecom and Ncell, the entry of new competitors could drive innovation and reduce costs for consumers.

However, the inability of companies like CG to comply with regulatory norms undermines efforts to create a competitive environment. The NTA’s strict enforcement of rules in CG’s case sends a clear message that no operator is above the law, regardless of its political or financial clout.

CG’s Unrealized Ambitions

Despite its legal and regulatory challenges, CG Telecom had announced ambitious plans to revolutionize Nepal’s telecom sector. The company had partnered with Huawei to develop 5G infrastructure, securing a $100 million agreement for equipment procurement, RF planning, and data center development.

Additionally, CG had promised to offer free voice and SMS services, along with data packages at half the market price. These plans, however, now appear to be mere marketing tactics, as the company failed to meet the foundational requirements for operating in Nepal.

NTA sources revealed that while CG actively pursued advanced projects like 5G, it neglected its basic responsibilities under the rural telecom license. This misalignment between aspirations and obligations reflects poor corporate governance and strategic planning.

Lessons for Nepal’s Business Environment

The CG Telecom case offers valuable lessons for Nepal’s business environment. It highlights the importance of adhering to regulatory frameworks and the consequences of attempting to bypass them. While political connections may provide temporary advantages, they cannot replace the need for compliance and accountability.

For Nepal, the case underscores the need to create a level playing field in the telecom sector. Regulatory bodies must maintain their independence and enforce rules uniformly to encourage fair competition and innovation.

At the same time, companies must recognize that long-term success in Nepal’s market requires more than financial resources and political influence. Commitment to legal compliance and ethical practices is essential for building trust and credibility.

CG Telecom’s inability to operate in Nepal is a cautionary tale of missed opportunities and flawed strategies. While the company positioned itself as a disruptor in the telecom sector, its failure to comply with basic regulatory requirements exposed significant shortcomings in its approach.

By relying on political lobbying instead of addressing its operational lapses, CG undermined its own credibility and alienated regulators. The Patan High Court’s dismissal of its petition serves as a final verdict on the company’s inability to align its ambitions with Nepal’s legal framework.

As Nepal’s telecom sector continues to evolve, CG’s failed endeavor is a stark reminder that adherence to rules, rather than influence, is the key to sustainable growth. Whether CG can recover from this setback and re-establish itself as a credible player remains to be seen. For now, its dreams of transforming Nepal’s telecom industry remain unfulfilled, mired in controversy and regulatory failure.