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Tax revenue from telecoms sector drops
Tax contributions to the national coffers by the telecommunications sector were only about 1.6 trillion kip (US$199.2 million) last year, a large decrease from the previous year.
“The contributions were over 1,930 billion kip (Almost US$240.3 million) in 2009,” said National Authority of Post and Telecommunications Vice President Mr. Padapphet Sayakhot recently.
The drop in tax revenue is attributed to growing competition in the telecom sector last year, in which large telecom providers are jostling for a greater market share.
“The main areas of competition were in offering reduced service fees and product costs as well as free call time,” Mr. Padapphet said at the annual meeting of major national telecom provider Enterprise of Telecommunications Lao (ETL).
Laos currently has four telecommunication companies - Lao Telecommunications Company (LTC), ETL, Star Telecom and the Millicom Lao Company.
Competition for market share is heating up with all offering cheap services in a bid to attract more customers.
The reduction in service fees has made an impact in the companies' revenue earnings. “When the company incomes fall, so does the national tax revenue from the sector,” Mr Padapphet said.
“They get more customers, but will bring in less revenue.”
ETL Director General Mr. Khammouane Xomsihapanya reported last week that company income was about 422 billion kip (Almost US$53 million) in 2010, a decrease of about 8 percent compared to the previous year.
ETL contributed about 72 billion kip to government coffers in 2010, a fall of about 3.2 percent from 2009.
LTC Director General Mr. Thongsay Sanexaya reported last month that revenue for 2010 fell short of the company's target by more than 19 percent.
It made about 733.3 billion kip (Almost US$91 million) in revenue before tax last year. That was about a 17 percent decrease in revenues during 2009.
About 248.16 billion kip, or almost 39 percent of the company's 2010 revenue, went to tax contributions, a drop of about 8.6 percent on 2009 tax contributions.
Currently ETL has over 985,000 mobile phone customers, more than 18,000 fixed line phone customers and about 3,500 internet customers. LTC has more than 1.5 million mobile phone customers.
Until the mid-1990s, Laos had only two telephone companies. Then, in 1995, LTC signed an agreement with the government to become the only supplier of telephone services for the next five years.
When the contract expired in 2000, ETL was established. Millicom Lao, which provides only mobile phone services, came into operation in 2003 and Star Telecom was launched in 2008.
Star Telecom is a joint venture between Lao Asia Telecom State Enterprise, which opened in 2002, and Viettel Global of Vietnam.
VIENTIANE TIMES
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