Categories: Stories

Phone companies plead with government to reverse tariff cut

Zimbabwe’s telecoms operators are pushing for the reversal of a government sanctioned tariff cut which they say has seen the sector’s revenue fall by as much as 14 percent and the fiscus lose $120 million in taxes.

The industry regulator Postal and Telecommunications Regulatory Authority (POTRAZ) in December last year ordered the operators to cut their voice tariffs to 15 cents per minute from 23 cents after adopting a new pricing model.

It abandoned the COSITU pricing framework – an International Telecommunications Union’s model for the determination of costs and tariffs (including interconnection and accounting rates) for telephone services – in favour of a long run incremental cost (LRIC) model, which saw a 35 percent reduction in voice tariffs.

The tariff is expected to come down further to nine cents per minute in 2016.

In an industry position paper by the four players — Econet Wireless, Telecel Zimbabwe, Telone and NetOne — to government, the operators said traffic across industry had declined despite the reduction in tariffs resulting in revenue falling drastically.

“The prevailing economic decline and tight regulatory environment have resulted in subdued performance of the telecoms industry. The introduction of the LRIC in December 2014 has exacerbated this decline with revenues falling 14.2 percent from Q4 2014 to Q1 2015,” the telcos said.

They proposed a cut of between 10 and 15 percent from the November 2014 tariff, adding that the 35 percent reduction had seen government miss out on $120 million in VAT.

“The impact on VAT revenues is that $19 million less per quarter is being remitted to the fiscus and an estimated $40 million less per year in corporate income tax. This results in $120 million lower annual contribution.”

Among other recommendations, the operators requested government to completely scrap off the five percent duty on airtime and 25 percent duty on handsets introduced by government last year.-The Source

(64 VIEWS)

This post was last modified on %s = human-readable time difference 6:52 pm

Charles Rukuni

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

Recent Posts

Can the ZiG sustain its rally against the US dollar?

Zimbabwe’s battered currency, the Zimbabwe Gold, which was under attack until the central bank devalued…

November 10, 2024

Will Mnangagwa go against the trend in the region?

Plans by the ruling Zimbabwe African National Union-Patriotic Front to push President Emmerson Mnangagwa to…

October 22, 2024

The Zimbabwe government and not saboteurs sabotaging ZiG

The Zimbabwe government’s insatiable demand for money to satisfy its own needs, which has exceeded…

October 20, 2024

The Zimbabwe Gold will regain its value if the government does this…

Economist Eddie Cross says the Zimbabwe Gold (ZiG) will regain its value if the government…

October 16, 2024

Is Harare the least democratic province in Zimbabwe?

Zimbabwe’s capital, Harare, which is a metropolitan province, is the least democratic province in the…

October 11, 2024

Zimbabweans against extension of presidential term in office

Nearly 80% of Zimbabweans are against the extension of the president’s term in office, according…

October 11, 2024