Telcos say prices will have to rise if government hikes taxes

17 Sep 2010

Reuters reports that a number of leading French telcos, including France Telecom (FT) and Iliad (Free), are warning that the costs of some services will have to rise if the government pushes ahead with plans to increase VAT on triple-play services of TV, broadband internet access and telephony. Earlier this month TeleGeography’s CommsUpdate reported that France’s Economy Ministry is preparing to submit proposals to the country’s president, Nicolas Sarkozy, concerning a plan to raise the VAT on telecom bundles to 19.6% which, if implemented would impact on operators that sell triple-play services. The move could generate ‘several hundred million euros’ for the state as part of the 2011 budget and Paris is under intense pressure from EU regulators to amend the way it taxes triple-play services. Not surprisingly, at the time several operators baulked at the suggestion, and warned of an inevitable hike and the threat of a slowdown in investment in new technologies, if it went ahead. However the government is looking for extra revenue to cope with the recession and a rising deficit, and is expected to decide on the telecom tax by late September. The new tax could end a near ten-year run in which French consumers have benefitted from some of the cheapest and most innovative triple-play bundles anywhere in Europe.