Home / Business / Network operators, others invest $37b in five years

Network operators, others invest $37b in five years

According to the Global System for Mobile telecommunications Association (GSMA), the growth and performance however expected from these investments, are stalled by the increase in multiple taxation, especially from governments.

GSMA alerts governments to dangers of multiple taxes

Mobile Network Operators (MNOs) in Nigeria, South Africa, Kenya, Tanzania, Rwanda, and other sub-Saharan (SSA), have invested about $37 billion in various upgrades of their networks in the last five years.

According to the Global System for Mobile telecommunications Association (GSMA), the growth and performance however expected from these investments, are stalled by the increase in multiple taxation, especially from governments.

GSMA, the body, which represents the interest of over 800 mobile operators globally, noted that a combination of frequent tax changes, and the high number of taxes levied on MNOs increase the complexity and operational burden.

It noted that countries that have a higher level of taxes and fees as a proportion of sector revenues tend to have relatively low levels of readiness for mobile Internet connectivity.

Already, the Association of Licensed Telecommunications Operators (ALTON), claimed that Nigerian operators pay about 26 different forms of taxes and levies in the country.

ALTON Chairman, Gbenga Adebayo, said mobile operators and consumers in Nigeria, pay taxes and levies including national and local taxes on revenues, businesses and business sites as well as regulatory fees such as spectrum and permits fees.

Indeed, GSMA in its ‘Taxing Mobile Connectivity in Sub-Saharan Africa: A review of mobile sector taxation and its impact on digital inclusion’ survey, presented at the ongoing GSMA Mobile 360 Africa Conference, holding in Dar Es Salaam, Tanzania, noted that rebalancing sector-specific taxes and regulatory fees can promote connectivity, economic growth, investment and fiscal stability.

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The Director General, GSMA, Mats Granryd, said: “Mobile connectivity is a critical enabler of economic and social development but in many countries, particularly developing countries with large informal sectors, the mobile sector is over-taxed, relative to its economic footprint.

“The excessive taxation applied to the mobile sector ignores its positive economic contributions and leads to negative affordability and investment impact. In the current economic climate, it is paramount for governments to foster, not hinder, growth.”

The global telecoms body said a number of principles for reforming sector-specific taxation and fees should be considered by governments in SSA, to align mobile taxation with other sectors, and best international practices recommended by the World Bank, and the IMF.

The institutions called for reduction in sector-specific taxes and regulatory fees; reduce complexity and uncertainty of taxes and fees on the mobile sector; remove consumer taxes that target access to mobile services; and support effective pricing of spectrum to facilitate better quality and more affordable services. Also, to reduce or remove import duties; implement supportive taxation for emerging services such as mobile money; remove taxes on international incoming calls and avoid excessive regulatory fees and taxes on revenues.

Other findings presented are that in SSA, more than 420 million people (43 per cent of the population) subscribed to a mobile service at the end of 2016. But the region faces a significant digital divide with only 26 per cent of the population subscribed to a mobile internet service at the end of 2016. In 2015, the mobile sector paid, on average, 35 per cent of its revenues in the form of taxes, regulatory fees and other charges in the 12 SSA countries for which this data is available.

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It was also discovered that about 26 per cent of the taxes and fees paid by the mobile industry are related to sector-specific taxation rather than broad-based taxation.

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