As fourth-generation (4G) mobile internet coverage reaches nearly 90 percent of mobile users in Nepal, the country’s telecommunications sector is approaching a critical inflection point: whether the existing network maturity, institutional capacity, and policy environment are sufficient to move toward fifth-generation (5G) services.

According to data published by the Nepal Telecommunications Authority (NTA) covering up to mid-December 2025 (end of Mangsir 2082 BS), 4G penetration has reached 89.64 percent of total mobile subscribers. This rapid expansion has strengthened nationwide mobile broadband access but has also exposed structural and regulatory weaknesses that may complicate Nepal’s transition to next-generation connectivity.

Between mid-April and mid-December 2025 alone, the number of 4G users increased by 766,757, rising from 25.38 million to 26.14 million. Nepal Telecom accounts for 14.41 million 4G users, while Ncell serves 11.73 million, underscoring a duopolistic market structure that will heavily influence any future 5G rollout.

Nepal launched 4G services on January 17, 2017. Official data tracking began a year later, in February 2018, when total 4G subscribers stood at just 1.32 million. By December 2018, that figure had climbed to 2.31 million. Over the past six years, adoption has accelerated sharply, driven by smartphone affordability, falling data prices, and aggressive network expansion by operators.

However, the expansion of 4G has not been matched by institutional readiness for the next technological leap. While older 3G technology is rapidly being phased out - 3G subscribers have fallen from over 8.59 million in February 2018 to just 801,685 by December 2025 - the transition highlights the scale of operational and policy challenges involved in shutting down legacy networks and reallocating spectrum efficiently.

Ncell has already announced a complete shutdown of its 3G services, while Nepal Telecom is gradually refarming 3G spectrum for newer technologies. Analysts say this transition is a necessary precondition for 5G, but not sufficient on its own.

Despite global momentum toward 5G commercialization, Nepal remains at the preparatory stage. In August 2021, the NTA decided to provide Nepal Telecom with 60 MHz of spectrum in the 2600 MHz band free of charge for 5G testing purposes. However, more than three years later, commercial deployment has not materialized, raising concerns about execution capacity and regulatory inertia.

Institutional delays in existing network projects further complicate the outlook. The Office of the Auditor General, in its 62nd annual report, flagged serious delays in Nepal Telecom’s 4G expansion project. The project, based on a procurement agreement worth NPR 19.68 billion, was originally scheduled for completion by February 2020 but remained unfinished even after deadline extensions up to April 2022. The report also questioned why additional expenditures were made despite expired deadlines and why delay penalties were not enforced.

Telecom policy experts argue that these unresolved governance and project management issues cast doubt on Nepal’s ability to handle the far more complex and capital-intensive rollout of 5G. Unlike 4G, 5G requires dense fiber backhaul, extensive small-cell deployment, reliable power supply, and significant private investment - areas where Nepal continues to face structural bottlenecks.

At the same time, rising 4G saturation indicates that demand-side conditions for 5G are gradually forming. High data consumption, growth in digital services, and increasing enterprise demand for low-latency connectivity in sectors such as banking, logistics, and smart infrastructure suggest a potential use case for 5G in urban and industrial clusters.

Regulators now face a strategic choice: whether to prioritize consolidation and quality improvement of existing 4G networks or to actively create conditions for a phased 5G launch. This includes spectrum pricing clarity, infrastructure-sharing rules, right-of-way reforms, and credible timelines for spectrum auctions.

With 4G nearing universal reach and 3G exiting the market, Nepal’s telecom sector is technically approaching the threshold for 5G. Whether that threshold can be crossed will depend less on technology availability and more on governance discipline, investment confidence, and regulatory resolve.