Bouygues to absorb VAT increase; only ADSL customers affected

13 Jan 2011

Dow Jones reports that French fixed, broadband and mobile operator Bouygues Telecom claims it is absorbing the cost of a government-imposed tax hike which took effect on 1 January and will not pass on the rise to its customers. However, its DSL broadband users are set to see a small rise in their monthly connection fee. As reported by CommsUpdate, France has increased value added tax (VAT) to 19.6% from 5.5% on combined internet, TV and telephony packages, scrapping a reduced rate applied to the TV portion of triple-play bundles.

Bouygues’ rivals SFR and Numericable earlier reported tariff increases to partially compensate for a VAT rise on triple-play services. SFR will raise retail broadband prices – by EUR2 for most monthly packages and by EUR1 for its entry-level option – and many of its mobile tariffs on 1 February 2011, whilst cableco Numericable’s prices will rise by 3% on average as of August 2011. France Telecom meanwhile, said it will increase monthly tariffs by between EUR1 and EUR3 as of February 2011, although a company spokesperson said the tax increase will still cost it around EUR70 million a year (compared to around EUR316 million without any price raising). Earlier this month Bouygues indicated it would pass on at least some of the tax hike to customers, but in its latest release says mobile phone customers and people with a fibre-optic connection will see their monthly fees unchanged, while customers with an ADSL connection will see a EUR1.88 monthly increase on their bill.

France, Bouygues Telecom