June 2005
BIZ NEWS

Mero Mobile to be Launched in June

The long wait of the Nepali consumers for an alternate provider of mobile telephone services is going to be over in June. If nothing goes wrong at the last moment, Spice Nepal (P) Ltd. is set to start distributing connections within June for Mero Mobile, the brand name of its GSM based cellular mobile telephone service.

According to the company officials, the machines and equipment acquired from the German company Siemens have arrived and a team of Nepali engineers led by a technical team of three engineers from Belarus experienced in GSM technology have already installed and test run the system. “Now we are waiting for approval from the Nepal Telecommunications Authority (NTA) for our tariff,” says Ruslan Zhukeyev, the Deputy Chief Marketing Officer of the company. Though not willing to reveal the proposed rates till the NTA approval is received, he, however, says that the rates are not going to be higher than that of Nepal Telecom, the state-owned operator, “as the Nepali consumers are very price sensitive”.

However, Spice Nepal will compete by providing a high quality and a wider range of services. “We have a different team of professionals deployed to address the problems raised by the customers,” he says. Looking at the frequent complaints of Nepal Telecom’s cell phone subscribers about poor connectivity and frequent call drops, Spice Nepal’s assurances may be a good attraction for the Nepal Telecom customers to switch over to Mero Mobile. Moreover, Spice Nepal is also promising to provide more value added services available under the GSM technology such as MMS (multimedia messaging services), which are still not made available by Nepal Telecom.

Initially licensed three years ago to operate GSM mobile telephone services, Spice Nepal was acquired by the Raj Group of Companies last year from the Khetan Group and the Spice Cell of India. Now the company has investment from VISOR, an investment company of Kazhakstan owned by non-resident Nepalis. However, the Spice Nepal officials were not willing to divulge the details about the ownership structure of the company at present.

Entrepreneurs from Underprivileged Groups

Nepal Youth Business Initiative (NYBI) has successfully helped a group of four youths from the underprivileged community to become entrepreneurs and three more youths are receiving similar help now, says a NYBI press release.

Established by Nepalese Young Entrepreneurs Forum (NYEF) in 2004 as the Nepal Chapter of Youth Business International (YBI) which in turn was inspired by the Prince’s Trust set up by British Crown Prince Charles, NYBI works for the promotion of entrepreneurship among the underprivileged and disadvantaged youth by developing their business ideas into viable enterprises under the guidance of a mentor who tracks and monitors the progress of the enterprise to enhance its capability.

For this purpose, youth between the ages of 18 to 35 are selected and provided with a small seed capital on the basis of the viability of their business idea. The selection process is according to the framework designed by YBI. Currently, it is in the pilot programme stage and being supported by local business and corporate houses, says the press release.

Meanwhile, a corporate Go-Kart competition was organised by NYBI to raise funds to support such businesses in a sustainable manner.

Airline Fare War Stopped & Soon Restarted

Realizing the unsustainability of the protracted fare war, three major private sector airlines (Buddha, Cosmic and Yeti) jointly revised their fares upward effective from May 29, on the routes where they were under-cutting each other. Nubiz had indicated the unfeasibility of the reduced fares in May 2005 issue.

But soon, Yeti came up with what it calls as special monsoon fares, effective from June 10, going back to the rates that prevailed before May 29, citing reduced seat occupancy in higher fare. As Yeti is believed to be earning good profits from other sectors, its latest fare reduction is expected to be sustainable for at least some time, thus giving a tough competition to the other airlines.

The development confirms the finding reported in Nubiz’s May 2005 issue that a significant number of air travelers were highly price conscious and would not continue air travel once the fares went up.

Meanwhile, all the three airlines have been coming up with loyalty programs offering free tickets to their customers after they fly certain miles paying the applicable fares. Since both Buddha and Cosmic sources are being quoted as denying any intention to go back to the old fare war, they are expected to announce further facilities under the loyalty program and to increase the number of seats for pre-paid tickets that can be purchased at lower fares.

While the fares jointly revised upward in late May had triggered a complaint of carteling, the airlines had no reason to worry as the laws of Nepal are very lenient or even silent on such issues. Now, with Yeti going back to the old low fare structure, this complaint of carteling has been sidelined.

Nepal Investment Bank Ltd. (NIBL) and Kumari Bank Ltd. (KBL) have signed an agreement to share ATM/POS network for their respective card businesses, making it the first instance of the country’s commercial banks coming together to share their ATM/POS network. With this agreement all Visa card transactions can be conducted through the ATMs of both banks.

KBL has acquired associate membership of Visa International through NIBL and can also issue and acquire both domestic as well as international Visa cards.

Currently NIBL has eight ATMs and KBL has four ATMs situated at strategic locations at Kathmandu and Pokhara. Similarly there are more than 500 Point of Sale (POS) terminals owned by NIBL and now available for use by customers of both banks.

Both the banks say they are planning to enhance their network in the near future.

Corporate Kaleidoscope

• Everest De Cargo (P) Ltd., licensee of FedEx Express, has opened a new service centre in Patan, opposite Lalitpur Sub-municipality office building eying the handcraft and carpet export business of the city known for its craftsmanship. The company assures of delivery at major destinations in the US, Europe and Asia within two to four working days of receiving the documents and packages at its collection centre.

• Gorkha Brewery (P) Ltd. observed its 15th anniversary late May.

• Nabil Bank Ltd. has entered into an agreement with SpeedRemit (P) Ltd. to speed up the delivery of remittance to the beneficiaries in Nepal.

• Standard Chartered Bank Nepal Ltd. has opened a branch at Dharan increasing the number of the bank's branches to eight. The new branch replaces the Duhabi branch, one of the two closed down last year.

• Cosmic Air has added one more Fokker-100 to its existing fleet of three Fokkers, two Dorniers and one SAAB.

• A new private sector bank, Infrastructure Development Bank, was set up recently under the Bank and Financial Institution Ordinance 2061. Its central office is in Banepa. Within a month of its establishment the bank held its 1st AGM electing the Board of Directors with Khemnath Dallakoti as the Chairman and Indra Raj Humagain as the Managing Director. The committee has Achyut Bahadur Wagley, Achyut Prasad Bajgain, Deb Lal Kizi and Narendra Bimali as directors.