TRC launches 4G auction, cellcos to boycott tender over tax hike

28 Jun 2013

Jordanian watchdog the Telecommunications Regulatory Commission (TRC) has launched a tender for spectrum in the 800MHz, 2100MHz, 2300MHz and 2600MHz bands, opening the door to a potential new market entrant and facilitating the launch of 4G services in the Kingdom. The response to the sale has been overwhelmingly negative, however. The CEOs of the nation’s trio of cellcos recently lashed out at policy makers for treating the telecom sector as a ‘cash cow’ and threatening to boycott the sale, Zawya reports. The revelation that the government intends to raise income tax on the sector from 25% to 40%, alongside an imminent increase in electricity prices sparked the outcry, with Umniah’s Ihab Hinnawi saying that: ‘Whenever the government wants to offset the budget deficit it looks at increasing taxes on the sector.’ The tax increase will force companies to cut costs, leading to a decrease in investments and recruitment, Hinnawi noted, adding: ‘Imposing new taxes and increasing power prices will cause a drop in revenues and profits and eventually the government’s revenues will decline.’

Zain Jordan CEO Ahmad Hanandeh went further, threatening legal action or international arbitration against the government if the planned tax hike goes ahead: ‘Decision makers think we sell air and make money… telecom operators have invested millions in networks and worked extensively to make some profits.’ With bidding for the spectrum due to close on 1 September 2013, the cellcos may succeed in pressuring a change of stance from Amman in time to submit offers for airwaves.