Nepal court allows Axiata's Ncell to repatriate dividend earnings

PETALING JAYA: The Supreme Court of Nepal has ruled in favour of Axiata Group Bhd’s 80%-owned subsidiary Ncell Pvt Ltd, allowing the Malaysian telco giant to repatriate dividends earned by its unit out of Nepal to the tune of 72 billion rupees (RM2.84 billion) following a legal tussle on capital gains tax settlements.
The Himalayan Times reported that justices Om Prakash Mishra and Kedar Prasad Chalise pronounced in their verdict that disallowing Ncell to repatriate its dividend will adversely affect the company and its stakeholders.
The apex court also stated that any company operating in Nepal, as per the Foreign Investment and Technology Transfer Act, 1992, can repatriate its profit out of foreign investment in Nepal in foreign currencies.
The court reportedly heard that the move of blocking Ncell from repatriating its dividend earnings is illogical as the telco has cleared all of its capital gains tax (CGT) in the buyout deal, while TeliaSonera, the previous owner of NCell is liable to settle its CGT owed to the government.
Axiata said in July that it had been fully cleared of the CGT payment with a further advance deposit 13.6 billion rupees by Nepal’s Large Taxpayers Office as per the directive of the agency. Ncell had made a payment of 9.9 billion rupees in May 2016.
In December 2015, Axiata acquired a 80% stake in Ncell from Swedish telco TeliaSonera for US$1.365 billion (RM5.87 billion) through a deal which was subjected to CGT.
TeliaSonera, which exited the country, owed about 10% of the CGT to the Nepali government. This had prompted the Nepali government to bar the repatriation of dividends by Ncell until the CGT issue was settled.
On Bursa Malaysia today, Axiata ended unchanged at RM5.38 with some 3.21 million shares changing hands.