Telcos cry out: N16bn monthly tax to states unbearable

Telcos cry out: N16bn monthly tax to states unbearable

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…say situation responsible for poor services, little expansion

Operators in the telecommunication sector have blamed the dwindling fortune of infrastructure in the sector on the negative attitude of some state governments towards the expansion of Information and Communication
Technology.
According to findings, telecom providers like MTN, GLO, Airtel, 9-Mobile, and nTel, among others, are groaning under the weight of what sources in the organisations described as heavy taxation from
the states.
Investigations revealed that state governments earned over N10 billion from telecom operators every month, a development the operators say hinders them from either expanding existing infrastructure or replacing old
ones.
Similarly, an impeccable source in the Association of Telecommunications Companies of Nigeria told our correspondent that each of the five major telcos paid an average of N4 billion every month to over 30 states across the country.
In total, a sum of N16bn tax charges are being paid to the states by the various telcos,
every month.
Most of the telecom operators, who spoke with The Point in separate interviews, described the states’ policies as unfriendly and counter-productive, as they either frustrate operators out of business or force subscribers to pay more for same or poorer
services.
Some of the policies are multiple taxation, exorbitant Right of Way levies, non-adherence to agreement, multiple regulations, and vandalism, among others.

 

‘STATES SEE US AS CASH COWS’
According to them, if the development persists beyond 2017, meeting the 2018 broadband target of 30 per cent may be a mirage, even as penetration is currently at 21 per cent level.
While the operators lauded the efforts of the Federal Government to accelerate the nation’s industrialisation efforts by installing 18,000km of fibre optic cable across the country to improve broadband penetration, they argued that such efforts would not yield the desired results till the states’ policies were redesigned to boost foreign direct investment.
“We are not expanding because state governments’ agencies see telecom operators as cash cows. Government must see the National Broadband Plan and other initiatives to grow the sector as moves that should be supported. They are not for the benefits of the operators but for the nation’s and subscribers’,” the Vice President, Regulatory and Corporate Affairs, 9mobile, Mr. Ibrahim Dikko, said.
Dikko’s concern is equally shared by other stakeholders in the sector. In most cases, they alleged that most states went contrary to the agreement they made with the operators as they increased some charges by over 1,000 per cent.
“There had been an agreement between the operators and state governments on the amount to be charged per meter for RoW, which was N145/m. But now, only five states adhere to that agreement as other states now charge as much as N5000 per meter. How will an operator cope, especially one that has the intention of expanding services across a particular state?” Dikko lamented.
He further alleged that some states want telecoms operators to pay up land-use charge, as they see operators as a means to make money.
The Director, External Affairs, nTel, Mr. Osondu Nwokoro, urged the Federal Government to intervene and help operators survive the increasing demands of several state governments.
He stressed that the FG needed to intervene in the challenges facing the sector, arguing that the proposed 18,000km fibre cable could not give Nigeria 30 per cent broadband target and efforts of the operators must be considered and complemented by the states.
“The state authorities don’t know what ICT can bequeath on them. The economic situation in the country has made it difficult to face finance for infrastructure development in the telecom sector. With adequate finance, the country can reach 50 per cent broadband penetration by next year. Penetration is one, demand is another and infrastructure is another critical issue,” the Chief Executive Officer, Medallion Communications, Mr. Ikechukwu Nnamani, said.
He also noted that the states had not considered the need to have a vibrant ICT infrastructure.
The President, ATCON, Mr. Olusola Teniola, argued that the FG must render adequate support to operators if it was determined to diversify the economy.
According to him, if states’ administrators persistently burden telcos operators, it would affect their contributions to the Gross Domestic Product and would slow down the movement of the sector going
forward.
“States can support the sector in the area of spectrum management and their agencies should not see us as people they can just latch on and make quick money from whenever they are broke or given targets,” he said.

 

I believe that those who proposed the bill must have thought that government centrally relies on tax because without tax, government cannot operate

FG TO SLAM FRESH TAX ON TELCOS
However, there are indications that the telcos may pay more tax as a source in the Ministry of Communications told our correspondent that it might soon revisit the suspended proposed communication
tax.
The communication service tax bill, which was suspended by the Senate, seeks to impose, charge and collect nine per cent on service fees payable by users of electronic communication services.
If the Bill is enacted into law, it will mandate service providers to file monthly tax returns worth N20 billion with the Federal Inland Revenue, with strict penalties for non-compliance. The categories of communication services liable to the tax include voice calls, Short Message Service, Multi-Media Service, Data and
Pay TV.
Meanwhile, the Minister of Communications, Mr. Adebayo Shittu, insisted that the tax would help enhance telecommunication services in the country.
“The proposed tax would also help to improve telecommunication infrastructure. We have a lot of deficiency in the provision of infrastructure in the telecommunication sector. And I believe that those who proposed the bill must have thought that government centrally relies on tax because without tax, government cannot operate,” he
said.
The minister said the ministry was proposing a workshop to sensitise the public on the new bill.

We are not expanding because state governments’ agencies see telecom operators as cash cows. Government must see the National Broadband Plan and other initiatives to grow the sector as moves that should be supported

“We are proposing a workshop on the bill for all stakeholders in telecommunication services; operators, and even, the ordinary man. I hope that at the appropriate time, when the figures are out, everybody will appreciate the need for such a tax, in which at the end of the day will
improve services and make everybody happy.
“Everybody is complaining every day over lack of quality and good services, drop calls and all of that. All these are caused by deficiency in infrastructure and we cannot shy away from what will provide government with resources to improve facilities,” he argued.

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