Mergers, Acquisitions and Financial Results

Confusion has continued to trail the adjustments made by mobile and fixed telecommunication operators to their tariffs as a result of the 100 per cent increase in the value added tax (VAT). The Federal Government, for the first time since the introduction of VAT in 1993, recently adjusted upwardly the consumption tax rate from 5 per cent to 10 per cent. This has directly resulted in higher prices of consumer goods and services across the country, while the increment also took its toll on telephone subscribers.

Apart from vague text messages sent by GSM operators to their subscribers informing them of the adjustment to VAT charges, no explanation has been given yet as to what extent the adjustments would affect telephone call durations.

In a short messaging service (SMS) to its subscribers, leading GSM operator, MTN Nigeria said: "Please note that MTN has implemented a rate increase in line with the Federal Government 10 per cent VAT directive."

Despite this notice, an official of the telecom firm denied that it would result in tarrif increase. "What has happened", said the official, "is that MTN just adjusted its VAT rate from 5 to 10 per cent to reflect the new directive from the Federal Government."

Similarly, Celtel, also effected a readjustment to reflect the new VAT rate in an SMS sent to subscribers on its network saying, "Due to the recent changes in VAT, all our call tariffs except SMS and Data have been adjusted accordingly. We regret inconveniences caused."

Although Globacom is yet to alert its subscribers to the adjustment, subscribers are already complaining that it has been reflected in their tariffs.

Other fixed line and fixed wireless operators including Starcomms, Multi-Links, 21st Century, MTS First Wireless, are already adjusting their billing switches to reflect the new VAT rate which they may not communicate to their subscribers.

Subscribers are now worried about the extent to which they are being charged by telephone service providers in their bid to reflect the VAT increase.

Although many of the operators told THISDAY that "there was no tariff increment", investigations however revealed that, for example, there is now a reduction in the call duration (in minutes or seconds) a N500 recharge voucher would give a subscriber after the VAT rate increase.

In other words, the VAT increase led to a little tariff increase, even though operators would rather call it "re-adjustment" mainly because VAT is remitted to government. This is coming at a time when subscribers are generally experiencing difficulties in accessing good and reliable services characterised by poor network quality across providers' platforms.

In the face of high rate of dropped calls, call interference and loss of audio, recurrent down times, long delay and non delivery or multiple delivery of SMS being experienced by Nigerians, many subscribers are not too happy with the "adjustments".

This Day