Telecom sector remains among top tax payers

Telecom sector remains among top tax payers

The telecommunications sector remains one of the top four tax payers in Laos despite strong competition in the field, according to a report from the Ministry of Post and Telecommunications.

ETL staff promote the company's mobile phone service.

The ministry unveiled the report at the telecom sector's annual conference this week. It gives a clear indication that despite robust business competition, telecom firms were still making large profits and paying significant amounts of tax.

Officials at the ministry's Planning and Cooperation Department said yesterday the four telecom operators and various internet service providers paid about 400 billion kip in taxes and fees.

In an accurate reflection of the Lao economy, the other three top tax paying sectors are gold and copper miners, electricity generating and distribution companies, and breweries.

Telecom sector officials said telcos generated total revenue of 2,300 billion kip in 2011, which was about a 13 percent increase on the previous year, despite strong business competition in the sector over the past five years or so.

An official in charge of planning and statistics for telecom firms in Laos said one of the main contributors to revenue was Star Telecom. He explained that cell phone service provider Unitel was able to attract new customers after expanding network coverage.

According to the National Socio-Economic Development Plan for 2011/2012, the telecom sector is expected to generate revenue of about 2,500 billion kip and pay about 600 billion kip in taxes and fees to the government this fiscal year.

An official said the ministry was unable to forecast telecom sector revenue in 2012 and admitted that strong business competition would pose big challenges for the industry in terms of maintaining its status as one of the top tax payers.

According to the ministry's report, at the end of 2011 some 4.9 million people subscribed to fixed line and cell phone services, with the vast majority being cell phone subscribers, at around 4.6 million. The fixed line and cell phone subscription rate nationwide is 76 percent, out of the total Lao population of almost 6.5 million.

The ministry forecasts that the number of fixed and cell phone users will reach 5.2 million this year, or around 80 percent of the population. It expects the telecom network to be extended to cover 7,300 villages out of a total 9,119 villages nationwide, which is 80 percent of all villages.

The four telecom operators Lao Telecom, ETL, Star Telecom and VimpelCom Lao have agreed to fix the minimum call rate at 800 kip per minute, except on special occasions such as the New Year holidays, when they will conduct marketing campaigns and lower prices to win new customers.

Telecom operators are confident they will be able to generate more revenue after fixing the minimum call rate.

vientiane times