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The Effects of Telecommunication Service Quality Dimensions

on Customer Satisfaction in Kathmandu Valley

Article in Journal of Nepalese Business Studies · December 2021

DOI: 10.3126/jnbs.v14i1.41498

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 ISSN 2350-8795 (Print)
The Journal of Nepalese Business Studies Vol. XIV No. 1 December 2021 ISSN 2676-1238 (Online)
(A Peer-Reviewed, Open Access Journal)

The Effects of Telecommunication Service Quality Dimensions on

Customer Satisfaction in Kathmandu Valley

Gunja Kumari Sah

Shiva Prasad Pokharel

DOI: https://doi.org/10.3126/jnbs.v14i1.41498

Received on 12 June 2021 Accepted on 10 November 2021

ABSTRACT
Telecommunications have become a vital tool for the success of any business. The 21st-
century telecommunication business has been described by hi-tech competition, which has
brought attention to customer satisfaction. The study aimed to identify major influential
dimensions that affect customer satisfaction. It was accompanied by a descriptive and causal
research design and used a structured questionnaire as a survey instrument of the service
quality (SERVQUAL) model. The population of this research covered all customers of the
Telecommunication industry located at Kathmandu valley, and the sample considered 400
customers through convenience sampling techniques. The survey questionnaire was set in
three sections with 38 questions of various types to collect data. The result showed a
noteworthy strong positive relationship between service quality dimensions and customer
satisfaction. It also revealed security was the major influential dimension of customer
satisfaction, followed by tangibles, assurance, and empathy. The finding of the study helps all
telecommunication industries to enhance service quality and develop a strategy to increase
customer satisfaction and value. Hence, it infers that security, tangibles, assurance, and
empathy increase the customer's satisfaction in telecommunications services. Overall service
quality dimensions are commonly considered as crucial features of customer satisfaction.
Keywords: Customer satisfaction, service quality, SERVQUAL model, telecommunication

1. INTRODUCTION
Information technology (IT) acts as a significant tool in the advancement of our life.
The telecommunication industry is rapidly growing through globalization and technological
innovation. In modern trade and business, the mobile telecommunications industry has been
described by high technological advancement, which has attracted the attention to customer


Ms. Sah is an Assistant Professor at Patan Multiple Campus, Tribhuvan University.
Email: [email protected]

Mr. Pokharel is an Associate Professor at Patan Multiple Campus, Tribhuvan University.
Corresponding Author: Gunja Kumari Sah
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 The Effect of Telecommunication Service Quality Dimensions on Customer Satisfaction in Kathmandu Valley

satisfaction and has become tremendously essential for the success of the business. Customer
Satisfaction is an emotion of happiness or unhappiness resulting from deviating a product's or
service's perceived performance with expectations (Kotler, 2011). It generally refers to a
decision of customers towards products or services performances (Kotler & Keller, 2006). So,
it is a function of the performance of products and services and customers' expectations
(Dahal, 2019). In this globalization age, achieving a higher level of customer satisfaction is a
tough task in the service segment. Therefore, many service sectors have initiated to advance
their service quality and provide improved services to their customers. Hence, telecom sectors
need to keep up their service quality dimensions to maintain sustainability for a longer period.
The telecommunication sector needs to concentrate on those service quality dimensions,
which resulting customer satisfaction (Dahal, 2019; Shrestha & Ale, 2020).
Telecommunication services in Nepal began in B.S. 1948 with the foundation of
Mohan Akashwani. With the formulation of a five-year plan (1955-1960),
Telecommunication Department was founded in B.S.1959. During the third five-year plan
(1966–1970), the Telecommunications Department was transformed into the
Telecommunications Development Board in 1969 to upgrade and expand telecommunications
services. It was formally known as a government corporation recognized by Nepal
Telecommunications Corporation (NTC) in 1975, after enacting the Communications
Corporation Act 1971. On April 13, 2004, NTC was renamed Nepal Doorsanchar Company
Limited after 29 years. The Nepal Doorsanchar Company Limited is a company with a
limited liability established under the Companies Act of 1996 (NTA, 2020).
Nepal Doorsanchar Company Ltd., also known as Nepal Telecom, is Nepal's
nationalized telecommunications service provider with 91.49 % of the government share
(Dahal, 2019; Shrestha & Ale, 2020). The corporation was a monopoly until 2004, when the
Nepal Telecommunications Policy was passed, paving the path to the liberalization of Nepal's
telecommunications sector (Gautam, 2016). Nepal's telecom sector has proven to be fiercely
competitive. Till now, there have been four telecom operators in Nepal. They are Nepal
Telecom, Ncell, STPL, and NSTPL, with a broad range of technologies (NTA, 2020).
Nepal telecom captured a 52.32% market share, whereas Ncell captured 42.16% and
the remaining 5.51% STPL and 0.01% NSTPL of Nepalese GSM (Global System for Mobile
communication) market (NTA, 2020). As competition has escalated among the operators,
they must learn about customer satisfaction regarding service quality dimensions such as
responsiveness, reliability, assurance, tangibles, empathy, and security. In today's hyper-
competitive age, achieving and maintaining achievement by satisfying consumers is a vital
challenge for every firm and head of the company, particularly in service industries like
telecommunication services. The highly competitive market requires extreme satisfaction
from the customer. This study plays a significant role for the telecommunication industry to
improve service quality and customer satisfaction. Thus, the telecommunication industry
needs to identify the major influential dimensions of service quality to increase customer
satisfaction and value.
Hence, this research aimed to find the relationship between service quality
dimensions and customer satisfaction. It also examined which aspect of service quality
impacts customer satisfaction in the telecommunications sector. Depending on the research
questions, the objectives of this study were to examine the relationship between service
quality dimensions and customer satisfaction and to identify the major influencing
dimensions of service quality that affect customer satisfaction.

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The Journal of Nepalese Business Studies

2. LITERATURE REVIEW
The exploratory research conducted by Zeithaml et al. (1985) offered several
insights and propositions of service quality. The research considered ten factors: reliability,
responsiveness, competence, access, courtesy, communication, credibility, security,
understanding, and tangibles. The study established four key gaps in the service provider's
side that affect service quality as perceived by consumers.
Wang and Lo (2002) studied service quality dimensions, customer satisfaction and value, and
behavioral intentions in China's phone market. The study was based on the SERVQUAL
model. The result showed that network quality was one of the major dimensions of service
quality of customer satisfaction, and customer value in China's mobile phone market.
Turel and Serenko (2006) researched the antecedents of customer satisfaction and loyalty
with mobile service in Canada. They obtained data from 210 young adult cellular subscribers.
They used descriptive and structural equation modeling to analyze data and fit the model.
They found high internal consistency and reasonably high convergent validity correlations.
In 2009 Negi (2009) used the modified SERVQUAL model to examine the causal
relationship between tangibles, reliability, responsiveness, empathy, assurance, network
aspect, and ease to measure customers' perceptions and expectations of mobile
telecommunications in Ethiopia. The result indicated that a significant relationship between
reliability and overall service quality.
In Greece Santouridis and Trivellas (2010) investigated essential factors that affect
customer faithfulness in the mobile telephony segment. The result showed the customer
service, pricing policy, and system that have a noteworthy positive influence on customer
satisfaction leading to a significant positive influence on customer loyalty.
Arokiasamy and Abdullah (2013) studied the service quality dimensions and customer
satisfaction in Malaysia's cell phone service supplier. They also employed the SERVQUAL
model to examine the relationship between the service quality dimensions and customer
satisfaction, determining that service quality dimensions affected customer satisfaction
positively in terms of loyalty and attitudes.
In Nepal, Gautam (2016) researched strategies of NTC and Ncell telecommunication
networks. The results showed that NTC and Ncell are the two most potent telecom companies
in Nepal. NTC continues to lead in terms of total users; nevertheless, Ncell recently overtook
NTC as the biggest provider of GSM mobile lines. In the Nepalese banking sector, Bhatta &
Durgapal (2016) researched bank customers' perception of service quality and satisfaction by
the service performance SERPERF model. They obtained data from 300 customers of six
banks situated in Kathmandu. According to them, customer satisfaction was statistically
predicted by reliability, tangibility, empathy, and responsiveness. Neupane and Devkota
(2017) identified the effects of service quality on patient satisfaction in the health sector.
According to the findings, private hospitals in Nepal provide a high degree of service quality
in the eyes of patients. They also discovered a high level of patient satisfaction in Nepal's
private hospitals.
In the telecommunication sector, Dahal (2019) studied Nepal Telecoms' global
system for mobile network customer satisfaction. Data were obtained from 562 customers
who were randomly chosen using judgmental sampling techniques. Five dimensions such as
innovation, corporate social responsibility, network, brand image, price, services and one
moderator (occupation), were found to be antecedents of GSM network customer satisfaction.
Similarly, Shrestha and Ale (2020) investigated the impact of service quality factors on the
perceived performance of Nepal Telecom phone users in Nepal's Kathmandu valley. The
SERVQUAL model's five service quality dimensions were the focus of the research. A

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probabilistic sampling strategy was used to acquire data from 200 respondents. All five
measures of service quality had a favorable and significant effect on customer satisfaction.
Customers must consider the telecommunications service quality as a reference when
selecting telecommunication service providers of good quality and service (Yulisetiarini &
Prahasta, 2019).
A significant number of studies have been carried out to find out the service quality
of various sectors. Although various studies on service quality have been reported (Dahal,
2019; Rahhal, 2015; Shrestha 2018; Yousapronpaiboon, 2014), there has been limited study
on service quality and customer satisfaction throughout the entire telecommunications sector.
In today's highly competitive industry, it's critical to keep consumer satisfaction at a high
level. Although customer satisfaction is not a complete solution for business problems, it is a
helpful tool for determining how well a firm performs and maintains service quality. In
contrast, this study focused on the service quality model to understand the level of service
quality dimensions and its impact on customer satisfaction of the telecommunication industry
in Nepal.

Theoretical Framework
The framework suggests service quality dimensions are associated with customer
satisfaction. Based on the literature, customer satisfaction depends on service quality
dimensions of the SERVQUAL model. This framework consists of responsiveness,
reliability, assurance, tangibles, empathy, and security as independent variables, customer
satisfaction as a dependent, and gender, age, occupation, and education as moderating
variables.

Figure 1
Theoretical Framework (Parasuraman et al., 1985 & Zeithaml et al. (1985)
H1
Responsiveness
H2
Reliability
Customer
H3
Satisfaction
Assurance
H4
Tangibles  Gender
H5  Age
Empathy  Occupation
 Education
H6
Security

Research Hypothesis
The above framework would lead to the following hypotheses:
H1: There is a significant relationship between responsiveness and customer satisfaction
H2: There is a significant relationship between reliability and customer satisfaction
H3: There is a significant relationship between assurance and customer satisfaction
H4: There is a significant relationship between tangibles and customer satisfaction.
H5: There is a significant relationship between empathy and customer satisfaction.
H6: There is a significant relationship between security and customer satisfaction.

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The moderating effect of customer's gender, age, occupation, and education was
hypothesized as follows:
Ha: Customer satisfaction differs as per customer’s gender
Hb: Customer satisfaction differs as per the customer's age
Hc: Customer satisfaction differs as per occupation
Hd: Customer satisfaction differs as per education

3. METHODOLOGY
The study used a descriptive and causal research design, and it was conducted among
600 respondents in the Kathmandu valley by a primary survey through a structured
questionnaire. The targeted population of the study consisted of all the consumers within the
Kathmandu valley who used telecommunication services. The study employed a convenience
sampling technique. Targeted respondents of the study were: students, servicepersons,
businesspeople, and unemployed, etc. According to Cooper and Schndler (2014), the sample
size in the research should not be less than 385 respondents. The sample size was also by the
guidelines of selecting sample size (Krejcie & Morgan, 1970). The structured questionnaire
for the survey involved 38 questions and was prepared into three sections. The first section
comprised demographic information, the second section demanded telecommunication
service-related, and the final section asked for the various service quality dimensions and
overall customer satisfaction-related information. All 28 survey items of the study variables
were measured with a 5-point Likert-type scale with 1 = strongly disagree to 5 = strongly
agree.
The questionnaires were distributed in two ways: online survey and field survey.
During the 60 days of January-February 2019, 300 people were contacted via an online
survey, and 198 people responded. On the other side, a field survey for 300 questionnaires
was also done, with 250 being gathered at the same period. From gathered questionnaires, 48
questionnaires were discarded, and 400 questionnaires were valid and entered into Statistical
Package for Social Science (SPSS) version 20. Descriptive and inferential techniques
analyzed data. The frequency analysis was used to describe the demographic information of
telecommunication users. Reliability (Cronbach's Alpha) analysis was employed to examine
the internal consistency of the structured questionnaires used in the study. Descriptive
statistics was done to summarize the constructs. Correlation analysis was used to check the
association between constructs. Multiple regression analysis was used to access the effect of
independent variables on the dependent variable as well as test the hypotheses assumed.
Independent sample t-test and analysis of variance test used to analyze the moderating effect
on the dependent variable.

4. RESULTS AND DISCUSSION

The results of various tests are discussed with each of the relevant research
objectives. According to demographic status, most of the respondents were males with 55.3
percent and females with 44.7 percent. Regarding age group, the respondents were 42.5
percent of 15-24, 40.2 percent of 25-34, 12 percent of 35-45, and 5.3 percent above 45.
According to education, respondents were not formally educated 5 percent; secondary
educated 11.8 percent, bachelor's degree holders 52 percent, and master degree holder 31.2
percent. In terms of occupation, 50.8 percent were service holders, 15 percent were
businessperson, 27.5 percent were students, and 6.7 percent were of the unemployed group.
Regarding using the network, 67.7 percent of respondents chose the NTC network as their

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 The Effect of Telecommunication Service Quality Dimensions on Customer Satisfaction in Kathmandu Valley

first choice, 28.5 percent used Ncell, 3.3 percent used STPL, and only 0.5 percent used others.
They used telecommunication services for personal use 42.3 percent, for business use 10.5
percent, and 47.2 percent took services for both personal and professional purposes.
According to the duration of using telecommunication service, 7.3 percent used it less than
two years, 30.3 percent used it two to five years, 40.7 percent used it from the last 10 years
and 21.7 percent used it more than 10 years. In terms of the tariff of telecommunication
service, 72.3 percent used prepaid tariffs, and 27.8 percent used postpaid tariffs.
One of the most important criteria for evaluating research instruments is reliability,
which refers to the internal consistency of the variables (Chu & Murrmann, 2006). As a
result, Cronbach’s alpha (a) analysis was utilized to assess the internal consistency of the
structured questionnaires. Nunnally (1978) suggested that a reliability level of 0.70 is
accepted. According to Hair, et al. (1998), Cronbach's Alpha should be more than 0.7, and it
is considered as a suitable value for measuring internal consistency.
Table 1
Cronbach’s Alpha of Various Constructs for Internal Consistency
Variables Cronbach's Alpha
Responsiveness 0.822
Reliability 0.823
Assurance 0.834
Tangibility 0.830
Empathy 0.820
Security 0.826
Customer Satisfaction 0.814
Source: Survey, 2019
Table 1 shows alpha values ranging from 0.814 to 0.834, indicating an acceptable
level of reliability. It was used to determine the items' internal consistency (Dahal, 2019;
Shrestha, 2018). Bhatta and Durgapal (2016) also found Cronbach’s alpha values were above
0.70. Since, Cronbach's alpha value is more than 0.7, which states that all the constructs are
acceptable.
Descriptive statistics were employed to summarize the data. The mean and standard
deviation were used to describe the data (Marshall & Jonker, 2010; Thompson, 2009). The
mean value indicates the average value, and the standard deviation measures the distribution
of the scores around the mean. The mean value greater than three and standard deviation
value less than 1 was presumed that respondents gave positive responses to Likert statements.
The descriptive data are shown in Table 2.
Table 2
The Descriptive Statistics of Different Construct to Analyze Customer Satisfaction
Variables Mean Std. Deviation
Responsiveness 3.381 0.827
Reliability 3.376 0.827
Assurance 3.506 0.757
Tangibles 3.442 0.775
Empathy 3.380 0.798
Security 3.503 0.802
Customer Satisfaction 3.530 0.781
Source: Survey, 2019

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Table 2 explains that the mean scores of the composite variables in this study were
between 3.376 and 3.530, which means almost all respondents agree with the service quality
dimensions and customer satisfaction. It indicates a standard deviation value between 0.757
of 0.827. The mean value must be greater than three, and the standard deviation value must
be less than one. In table 2, all the mean value of the constructs was greater than three with a
standard deviation less than one (Thompson 2009). So, the analysis can be generalized.
Shrestha and Ale (2020) also reported that the mean score of tangibles was equal to 3.169 and
assurance was equal to 3.207, which indicates that customers were satisfied and agreed on the
tangibles and assurance with the service provided by Nepal Telecom.
Correlation analysis is used to test the relationship between variables. It depicts the
power and direction of the relationship. The Pearson's correlation coefficients were used to
identify the strength of linear relationships among independent and dependent constructs. The
relationship may be weak, moderate, strong, or very strong, and it may be positive or
negative. Correlation analysis is shown in Table 3. The correlation coefficient value ranges
between +1 and -1 in terms of the strength of the relationship. The correlation coefficients
range from -1 to +1, with -1 denoting perfect negative and +1positive correlation coefficients,
respectively; 0 denotes no correlation (zero relationships). Furthermore, correlation
coefficients less than 0.40 (whether negative or positive) are considered low, moderate
between 0.40 and 0.60, and strong above 0.60 (Isaac, 2018).
Table 3
Correlation Matrix
Service Quality Dimensions Customer Satisfaction
Responsiveness Pearson Correlation .789**
Sig. 0.000
Reliability Pearson Correlation .775**
Sig. 0.000
Assurance Pearson Correlation .798**
Sig. 0.000
Tangibles Pearson Correlation .817**
Sig. 0.000
Empathy Pearson Correlation .810**
Sig. 0.000
Security Pearson Correlation .827**
Sig. 0.000
Source: Survey, 2019
Above table 3 shows all the service quality dimensions have a significant positive
relationship with customer satisfaction. There is a positive and strong relationship between
security and customer satisfaction, whose values are r = 0.827, p<0.01, followed by tangibles
and customer satisfaction values of r = 817, p<0.01. Neupane and Devkota revealed that each
factor of service quality was positively correlated and significant at the 0.01 level (Neupane
& Devkota, 2017). Bhatta & Durgapal also found service quality dimensions were strongly
correlated with bank customer satisfaction (Bhatta & Durgapal, 2016).
The regression assumptions were tested based on the findings of normality, linearity,
multicollinearity, and error independence before running the regression analysis. There is no
collinearity concern if the VIFs value is between 1 and 5 (Rawlings et al., 1998; Ron, 2002).
The VIF value ranged from 0.188 to 4.747, indicating that there was no multicollinearity. The
effect of the cause variable on the outcome variable was examined using regression analysis.
It is shown in Table 4.

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 The Effect of Telecommunication Service Quality Dimensions on Customer Satisfaction in Kathmandu Valley

Table 4
Regression Analysis
Unstandardized Collinearity
Coefficients p- Statistics Remarks on
Model B Std. Error t value Tolerance VIF Hypothesis
(Constant) 0.162 0.089 1.831 0.068
Responsiveness 0.073 0.049 1.486 0.138 0.188 3.318 H1:Rejected
Reliability 0.022 0.044 0.502 0.616 0.231 4.336 H2:Rejected
Assurance 0.181 0.051 3.568 0.000 0.211 4.747 H3:Accepted
Tangibles 0.222 0.046 4.880 0.000 0.249 4.015 H4:Accepted
Empathy 0.117 0.050 2.349 0.019 0.198 3.053 H5:Accepted
Security 0.357 0.038 9.319 0.000 0.329 3.036 H6:Accepted
A Dependent Variable: Customer Satisfaction
R = 0.894; R2= 0.800; Adj. R2 = 0.797; S. E. = 0.352; F-value = 261.461,
p-value of F-test = 0.000.
Sig. at 5% level
Source: Survey, 2019
Table 4 shows the F-value and p-value of the regression model were 261.461 and
0.000, respectively which was significant at a 5% level of significance. So, the model became
linear. R square of the model was 0.800, which means the model was estimated 80 percent
customer satisfaction variation of service quality dimensions and the remaining 20% by other
constructs. It also demonstrates that all the independent variables except responsiveness and
reliability were a significant relationship with customer satisfaction. The main contributor
independent variables were security (β = 0.357, t = 9.319.402, p-value = .000), tangibles (β =
0.222, t = 4.880, p-value = .000), assurance (β = 0.181, t = 3.568, p-value = .000), and
empathy (β = 0.117, t = 2.349, p-value = .019) respectively. Shrestha and Ale (2020) also
found empathy was a significant predictor of customer satisfaction among the service quality
dimensions. The SERVQUAL model was proven to be a reliable factor and appropriate
instrument for improving the quality of services (Vencataya et al. 2019; Bhatta & Durgapal,
2016). According to Al-Hashedi (2017), mobile telecom businesses should invest extensively
in network improvement and growth to increase network coverage and voice quality, reduce
call loss and network congestion during social events, and increase data speeds. Customer
satisfaction is an important factor in improving the company's reputation and in a company's
long-term existence (Yulisetiarini & Prahasta, 2019). Delivering high-quality service in a
competitive market is the key to gaining a long-term competitive edge in today's world
(Agarwal & Boora, 2018). Independent sample t-test and analysis of variance test were used
to examine the moderating effect on customer satisfaction—summary of the test result
presented in Table 5.

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Table 5
Summary of the Results of Hypotheses Testing
Levene's Test
of Equality of ANOVA Test
Statement Variances Remarks
F- p- F- p-
value value value value
Ha: Customer satisfaction differs as per
3.054 0.081 Rejected
customer's gender
Hb: Customer satisfaction differs as per the
0.407 0.748 Rejected
customer's age
Hc: Customer satisfaction differs as per the
0.037 0.990 Rejected
customer's occupation
Hd: Customer satisfaction differs as per
1.382 0.248 Rejected
customer's education
Source: Survey, 2019
Table 5 shows the results of moderating effect of gender, age, occupation, and
education on customer satisfaction. An independent-samples t-test was used to test the
significant difference in gender regarding customer satisfaction. The male customers
satisfaction (mean = 3.533, standard deviation = 0.833) was not significantly different from
that of female customers satisfaction (mean = 3.526, standard deviation = 0.714). Similarly,
Levene’s test of equality of variance for male and female customers was also not significantly
different (F-value = 3.054, p-value = 0.081). With regard to age group, analysis of variance
revealed insignificant results (F-value = 0.407, p-value = 0.748). Analysis of variance of
customer's occupation showed insignificant results (F-value = 0.037, p-value = 0.990). With
regard to level of education analysis of variance exhibited insignificant results (F-value =
1.382, p-value = 0.248). Dahal (2019) also reported the insignificant result of gender and age
group with customer satisfaction.

3. CONCLUSION
Nepal Telecommunication has strategies to satisfy its customers. Nepalese telecom
consumers are happy with its service. According to the findings, the factors of responsiveness
and reliability had little bearing on telecoms' customer satisfaction. Customer dissatisfaction
could be the result of delayed and difficult-to-perform precise services. The findings,
however, revealed a strong link between assurance, tangibles, empathy, and security. As a
result, customer happiness is determined by trust, appearance, close relationships, and
information. It also identified security as the major dimension of customer satisfaction, and
there is no significant relationship between moderating variables such as gender, age,
education, occupation, and customer satisfaction.
Therefore, the SERVQUAL model is critical for predicting total service quality. So it
is concluded, even within the telecommunications industry, the dimensionality of
SERVQUAL and the relevance of the factors vary depending on the cultural and national
environment. As a result, the findings of the study can assist academicians, researchers,
practitioners, the telecommunications industry, and governments in improving service quality
and boosting customer satisfaction. Since this study was limited to the Kathmandu Valley,
more research should be done across the entire country to discover if the outcomes differ.

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 The Effect of Telecommunication Service Quality Dimensions on Customer Satisfaction in Kathmandu Valley

Future researchers can broaden the study's scope to obtain more precise results. It aids in the
maintenance of a firm's distinct reputation by offering high-quality services and
understanding security, tangibles, assurance, and empathy factors that influences customer
satisfaction.
6. ACKNOWLEDGMENTS
The authors would like to acknowledge “University Grants Commission Sanothimi,
Bhaktapur Kathmandu, Nepal for providing Small Research Development and Innovation
Grant (SRDIG) to carry out this research work. We also would like to thank Patan Multiple
Campus, Patan Dhoka, Lalitpur, Tribhuvan University for continuous encouragement, support,
and necessary assistance.

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