10 March 2014

Tanzania: Duty Hike Hurt Telecoms

POSITIVE prospects on the telecommunication sector to contribute significantly to economic growth and improving people's living standards are unlikely to be realised following the hiking of excise duty to 17 per cent from 5 per cent.

This would imply, according to the Simbanet Chairman of the Board Mr Ali Mufuruki, the increment on the cost of telecom services like data and internet connectivity which are to be passed to ultimate consumers.

Mr Mufuruki made the remarks at the weekend during the Simbanet employees get together to mark the New Year where various awards were given to best workers.

"The fast growing telecom sector has already shown positive impact, particularly on the mobile phones that have eased communication for both rural and urban people in accessing various services," he said.

The government on the 2013/14 budget estimates proposed an increment of 14.5 per cent excise duty to be imposed on all mobile services except money transfer services instead of airtime only. Out of this, 2.5 per cent will be used to finance education.

Earlier in an interview, Simbanet Chief Financial Officer Mr Said Aman said the company has registered outstanding performance of 25 per cent growth in 2011/12 and 2012/13 and in the current year, it is expected to reach 35 per cent.

Also, he said last year the company managed to extend its footprint to almost all parts of the country, thus providing customers with an easy access of the data and internet connectivity services.

For example, the Simbanet was currently covering with fibre-optic cable the whole of Dar es Salaam, Arusha and Mwanza Regions as well as all the regional centres countrywide.

Mr Aman added that customers' expectations for the internet services to decline to below 50 per cent could never be realised following the imposition of 17 per cent excise duty on telecom services.

On cybercrime, he said Simbanet has been keen and applying innovative measures in dealing with the problem to ensure customers safety while using internet services for carrying various transactional operations.

"We are determined to offer world-class corporate connectivity and technology solutions that enable customers to depend and have confidence on our services, while delivering them at competitive price," he added.

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