FG to Cut Taxes for Telcos

Federal Government is planning to reduce taxes on telecommunications infrastructure to encourage firms to spend more on their networks, Dr Omobola Johnson, minister of Communications Technology  has said.

“For every naira that is spent on infrastructure, about 70 per cent of it is spent on taxes. We’re going to bring that down to a much more reasonable level at 30 to 40 per cent,” she told Bloomberg.

Mobile phone firms, including MTN Group Ltd and Bharti Airtel Ltd of India, have examined ways to offload networks to reduce exposure to costly African infrastructure.

Apart from taxes, the operators also face the challenges of unreliable power supply and the threat of bomb attacks from Islamist militants.

MTN and Airtel were both fined early this year for poor service standards. While the laws allow only the Federal Government to tax mobile phone firms, states and local authorities have found other ways to raise cash by levying operators’ infrastructure, including towers and base stations, Johnson said.

Regional governments shouldn’t charge a retail store N10 million ($60,808) and phone firms N100 million for the same-sized space, she said. MTN is planning to sell a stake in its mobile tower network, worth over $1 billion.

Sunil Mittal, the billionaire Chairman of India’s largest mobile phone operator Airtel, said in a May interview that operators were unfairly taxed in the country because the industry supports other areas of the economy.

Nigeria is a target for international phone firms eager to tap into demand from the country’s 170 million people.

The total number of connected mobile phones increased to 177 million in April, compared with 170 million at the start of the year, according to the Nigerian Communication Commission (NCC).