Malaysian telco Axiata Group Berhad has confirmed it's exiting the Nepalese market.

The telco announced last week that it has entered into an unconditional sale and purchase agreement with Spectrlite UK Limited for the sale of Reynolds Holding Limited, which owns approximately 80 percent equity stake in Ncell Axiata Limited.

Axiata said it will sell Ncell for a fixed consideration of $50 million.

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Axiata said its decision to exit from Nepal is due to "unfair taxation and regulatory uncertainties," noting that it's no longer sustainable for Axiata to operate in the market.

"Axiata has been in Nepal for seven years, working alongside hard-working colleagues in Ncell," said Vivek Sood, group chief executive officer and managing director of Axiata.

"However, the increasing challenges in the operating environment represent a fundamental shift. It has led the Axiata board to conclude, after a thorough process, that our foray in Nepal cannot continue due to the unfavorable conditions for Axiata, the uncertain regulatory and tax environment, and the looming risks associated with the expiry of the mobile license in 2029."

Axiata acquired the controlling stake in Ncell in 2016 following the purchase of Telia-owned Reynolds Holding for $1.37 billion.

In a statement, Axiata stated it paid $421.9 million as a "full and final liability under Nepalese law," and received confirmation from tax authorities in April 2020 that no further taxes remain, as part of its acquisition of Reynolds in 2016.

However, a further $433.6 million was demanded from Nepalese authorities in January 2021 after further assessment by the tax authorities. The payment has been suspended following an international tribunal, which barred authorities from demanding further payment from Ncell.

Founded in 2004, Ncell serves more than 16 million customers in Nepal. The company was founded as Spice Nepal, the country's first private operator, launching its mobile service as Mero Mobile. TeliaSonera (now Telia) acquired a controlling stake in 2008, rebranding Mero to Ncell in 2010.