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Nepal’s only billionaire enlists Huawei to build country’s telecoms

Nepal’s only billionaire enlists Huawei to build country’s telecoms

Binod Chaudhary, Nepal’s only billionaire, made his fortune selling instant noodles with flavours such as Masala Delight and Chicken Pizza. Now he has enlisted China’s Huawei to help build a telecoms network in his home country, wading into a global power contest.

Mr Chaudhary, whose privately held Chaudhary Group conglomerate deals in everything from banking to tobacco, plans to build the network to introduce 4G mobile services, before rolling out 5G. He is joining forces with Turkcell, the Turkish mobile company, as well as buying Huawei’s equipment, and hopes to expand the business internationally.

But in doing so Mr Chaudhary, who is worth $1.7bn according to Forbes, risks becoming mired in a budding technological cold war: ahead of the mass adoption of 5G networks, the US is pursuing an aggressive campaign to try to make businesses shun Huawei, whose equipment it says is vulnerable to espionage.

Huawei’s spread through south Asia, a region with a combined population of 1.8bn, is being closely watched. Nepal, a country between India and China with a population of about 30m, has become a strategic battleground in the struggle for regional dominance.

But Mr Chaudhary is sanguine. “Political issues are a passing phase. Business is more permanent,” he told the Financial Times. “One fine day you’ll find President [Donald] Trump saying everything is hunky dory with [Chinese president] Xi Jinping, and life will change.”

The Chinese telecom giants are very interested in the Nepalese market, and some government officials are very close to Chinese companies

5G is expected to become widely used in everything from transport to homes, generating vast amounts of data that could be vulnerable to being hacked. For the US, maintaining an edge over China in developing the technology is seen as essential to protecting its national security.

Washington has long expressed concern about Huawei, and in May barred US and some overseas companies from supplying the company — a decision that came amid an escalating trade war with Beijing. The issue has blended into a broader political dispute, with the US seeking to extradite Meng Wanzhou, Huawei’s chief financial officer and the founder’s daughter, from Canada on fraud charges.

“Huawei’s solid record in security is the strongest evidence of its claim that Huawei equipment poses no security threat,” the company said. The US’s ban was “politically motivated and has nothing to do with national security”.

The Chaudhary Group’s decision to select Huawei’s infrastructure for its network points to what analysts say is a fundamental weakness in the US efforts: for companies in many developing countries, the Chinese supplier’s cheaper prices and superior quality make it an obvious business choice.

Mr Chaudhary said he had considered competitors, including Ericsson and Nokia, but decided Huawei’s equipment was the most cost-effective and impressive.

The billionaire, whose CG company logo is ubiquitous in Nepal, started his business career running a nightclub in 1970s Kathmandu in his late teens. He went on to build his grandfather’s textile business into a multinational conglomerate, launching Wai Wai noodles and diversifying into businesses from selling washing machines to brewing beer. He has noodle factories around the world including in Europe, and owns hotels across Asia.

Mr Chaudhary, whose CG company logo is ubiquitous in Nepal, started his business career running a nightclub in 1970s Kathmandu in his late teens © Bloomberg

The group’s telecoms venture is awaiting approval from Nepal’s industry regulator but it plans to invest an initial $250m and use cut-price contracts to take market share from the two dominant operators, following a model employed by Mukesh Ambani, Asia’s richest man, when he launched his Jio service in India in 2016. 

The market in Nepal is ripe for disruption, Mr Chaudhary said. Average revenue per customer for mobile services in Nepal is at present $36 a year, compared with $22 in India, according to the Inclusive Internet Index. At the same time, Nepal’s gross domestic product per head is less than half that of its larger neighbour.

Nepal’s tricky mountainous terrain makes it less appealing to western telecoms equipment providers, say analysts, but Chinese companies such as Huawei and ZTE have happily filled the gap, becoming important suppliers to Nepal’s established mobile operators. 

“The Chinese telecom giants are very interested in the Nepalese market, and some government officials are very close to Chinese companies,” said Babu Ram Aryal, a Kathmandu-based lawyer who works in the industry. “It’s not just from a political perspective . . . Chinese companies’ products are also very popular because they’re cost-effective.” 

Their appeal also points to a broader shift in Nepal, where Chinese companies and investors are playing a larger role in an economy once tied overwhelmingly to India. The government of Prime Minister KP Sharma Oli, who took office in 2018, has sought to participate in China’s Belt and Road infrastructure scheme and is planning a railway network to link the two countries.

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Meanwhile, imports from China have grown and Chinese contractors such as the Gezhouba Group have taken on large-scale hydropower projects. The number of Chinese visitors has also risen sharply, to 150,000 last year from 30,000 a decade earlier. 

Chandan Sapkota, a senior fellow at the Nepal Economic Forum, a think-tank, said this had been a source of concern for US and Indian officials. “With Chinese investments, starting from procurement to mobilisation to implementation, there will be much more engagement than before,” he said. “We are already seeing it.”

But Mr Chaudhary, who has extensive business interests in India, said he is all for expanding ties with China. The group already has hotels there, buys its noodle-making machines from China and is planning a cement venture with Chinese partners.

As for the future of his telecoms business, he is wagering that cooler heads will prevail.

“The quantity, the magnitude of the issues in the China-US conflict is huge. We are only a small contract,” Mr Chaudhary said.

“We’ll see what happens. [Huawei] gives us a competitive edge,” he added. “We believe that the problem of America and China cannot be a permanent one.”

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