Private telecom operator Ncell has been awarded an “A” rating by ICRA Nepal for a loan of Rs 22.60 billion, reflecting the company’s strong financial position despite recent revenue declines. The rating applies to both a long-term loan of Rs 10.60 billion and a short-term loan of Rs 12 billion. The rating agencies awarded ICRANP LA for the long-term loan and ICRA NP A1 for the short-term loan. These ratings were reaffirmed on December 31.
Last year, Ncell’s rating was assessed for a loan of Rs 27.22 billion, with the ratings now confirmed for 2024. The Rs 12 billion short-term loan includes Rs 4 billion for working capital loans and Rs 8 billion for non-fund-based limits, such as letters of credit.
ICRA Nepal credited Ncell’s “A” rating to its strong financial profile, steady profitability, and experienced management team. The agency highlighted Ncell’s low gearing ratio of 0.7 times and its favorable total debt (TD) to operating profit before depreciation, interest, and taxes (OPBDITA) ratio of 0.7 times as of mid-July 2024. Despite revenue losses, Ncell’s profitability indicators remain robust, with operating profit margins (OPM) around 54% for FY 2024.
The rating agency also noted that Ncell’s ability to implement effective cost control strategies has helped maintain strong margins, even in the face of losses from voice and international long-distance (ILD) services. Additionally, the company holds a dominant market share of 53% in data for FY 2023 and boasts one of the highest average revenue per user (ARPU) rates in the industry.
Even with the exit of Axiata Group, which had previously been involved with Ncell, the company’s experienced management team is expected to maintain positive business performance, according to ICRA Nepal. The agency further emphasized that Axiata’s departure is unlikely to negatively affect the company’s ratings, with Ncell continuing to show strong financial consistency.
The “A” rating underlines Ncell’s positive market outlook and resilience, despite the challenges faced by the broader telecom industry. ICRA Nepal’s assessment highlights the company’s ability to maintain its financial profile and competitive position in the market.
