Axiata Group reached a deal to sell its mobile unit in Nepal after a review of the local business environment determined continuing operations with the current unfair taxation and regulatory uncertainties was not sustainable.
The group’s subsidiary Axiata Investments (UK) entered into an unconditional agreement with Spectrlite UK for the sale of Reynolds Holdings, which owns an 80 per cent stake in Ncell Axiata. The total consideration for the proposed transaction is split between a fixed sum of $50 million and conditional amounts contingent upon future business performance and distributions declared by Ncell.
In a stock market filing, Axiata Group explained it accelerated its exit given its exposure to double taxation, the risk associated with the expiry of the company’s mobile licence in 2029 and the potential of expropriation of its stake by the government.
Ncell paid a capital gains tax of NPR47 billion ($352.3 million) as “full and final liability” and received confirmation from tax authorities in April 2020 no further taxes remain in relation to an acquisition of Reynolds in 2016.
Despite the payment, the operator was hit with an additional tax bill of NPR57.9 million for the same transaction in 2021.
In June, an international tribunal issued an order barring authorities from demanding Ncell pay any additional amounts related to the dispute, but the tax authority has not withdrawn the assessment, which is estimated at $433.6 million including interest.
Due to asset impairment charges related to Ncell, Axiata Group’s net loss in Q3 grew to MYR797 million ($171 million) from MYR52.4 million a year earlier.