Employees Unions of Nepal Telecom (NTC) have objected to the company’s plan to raise capital. Releasing the notices, both the National Telecom Employees Association of Nepal (NTEAN) and Nepal Telecom Workers’ Union (NTCWU) voiced their disapproval of the telcos’ plan and demanded the scrapping of the plan.

The government-owned operator has announced it will issue 20 percent bonus shares and 20% cash dividends at the general meeting scheduled for Chaitra 24th. This is the first time the telco is issuing bonus shares and will help increase its paid-up capital to 18 billion rupees. Never forget, the telco has announced it will allocate 22% shares to the public.

But the company’s decision to issue bonus shares and add capital has received disapproval from its employee unions. Both leading trade unions NTEAN, and NTCWU have urged the company to rescind on its plan to accumulate more capital.

Also read: NTC Increases Profit by 18 Percent in Q2, FY 078/79

Why is NTEAN objecting Ntc’s plan for more capital accumulation?

NTEAN has issued a notice voicing their protest. Deeming it’ suicidal’, the association demanded the company to scrap the plan to raise the paid-up capital.

NTEAN argued that it was unfortunate that the company itself brought the idea whereas it has a 91 percent share of the government. The notice referred to the association drawing attention to the company’s stakeholders before. But it laments that the the company is itself “firm on committing a suicidal step.”

The association argues the company is financially sound and not in need of additional capital for new investments.

The notice reads that all the previous 13 general meetings have issued dividends. But this time it is planning on issuing bonus shares for the first time. NTEAN alleges that the plan has come without any depth study into the company’s financial structure and its proper usage.

The association also fears the decision will directly put a strain on the country’s treasury. Likewise, the ‘decision’ will at last lead to the bankruptcy of the country’s large institution.

NTEAN is also skeptical about the entry of business houses on the secondary market for Ntc’s shares and believes it is no coincidence. They have referred to a possible ‘insider trading’ for some share trading.

If Ntc proceeds with its plan to raise paid-up capital it will eventually prove catastrophic to the organization, NTEAN fears. Thus, it has sought the government’s intervention to address the situation.

Check out: Nepal Telecom Could Reduce Data Costs by 15 – 20%

NTCWU says no assurance of more investment and profit

Nepal Telecom Workers’ Union (NTWU) has also expressed its disapproval of Ntc’s plan to raise capital adding that it is observing the matter with curiousity.

In its press release, NTCWU points to Nepal Telecom’s least profitable year and adds the decision to add more capital comes without a plan in depth. It says the added capital’s lack of investment assurance, and commitment makes the management committee’s decision “one-sided.”

Pointing to Ntc’s worst year in terms of profit, the union believes the increased capital has no assurance of new gains for the company. And like NTEAN, NTCWU argues the company has enough cash reserves to look for any further.

“The company has not established grounds for new areas of investment, and the company has always had only issued cash dividends. But now, it is also issuing bonus shares will impact not only the company’s autonomy but also the couintrys’s treasury,” its press release reads.

The NTCWU also warned such decisions will weaken the company and nullify the company’s share less workers’ years of contribution. Likewise, the union has strongly demanded on the authority to address its concerns soon as possible.

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NTC wants to raise the capital but the leading employee unions have been quick to object to the plan and could protests may intensify if their concerns remain unaddressed. Do you think the company is on the right or they should also find consent with the employees association? Do leave your opinions in the comments below.