Trio call for govt to undo tax hike and scrap fourth licence

6 Nov 2013

The CEOs of Jordan’s three cellcos and the chairman of the ICT Association of Jordan (int@j) at a press conference earlier this week called for the government to scrap a tender to introduce a fourth player into the wireless market and to rescind a tax increase on mobile subscriptions, the Jordan Times writes. The government of Jordan has received two offers for the new concession and is expected to announce a winner before the end of the year. The move has long been criticised by the chiefs of the incumbent operators as a short-sighted attempt to swell state coffers. ICT Minister Azzam Sleit explained that the state was interested in improving competition and developing the market and that the introduction of a fourth operator was simply a means to an end: ‘We are not really after having a fourth or a fifth operator; we just want better services in Jordan and that users have access to more advanced services. Telecom operators have their own viewpoint when it comes to licensing a fourth operator, we respect this viewpoint and it is the market that decides whether there is a need for a new operator or not.’ Sleit added that the government was open to dialogue with the existing operators and was keen to promote the introduction of new technologies and services to the market, such as 4G. The introduction of 4G is not an inviting prospect for the three operating cellcos, which view the move as ‘premature’ and are having to cut back on investments as a result of recent tax increases in the segment.

The trio added that the sector was already under pressure following the doubling of a special tax on mobile subscriptions from 12% to 24% in July this year. Jawad Abbassi, the chairman of int@j pointed out that whilst the government saw a drastic increase in revenues from the tax hike – claiming JOD28.7 million from the levy in Q3 2013 compared to JOD16.3 million in Q2 – operators’ turnover had slumped to JOD124.8 million from JOD136.2 million over the same period. Abbassi continued, suggesting that the tax was unsustainable and would ultimately hurt the development of the sector: ‘It is true that the government generated more revenues when it increased the special tax on mobile subscriptions, but its revenues from taxes imposed on income will decline, because companies are making less profits.’