Government and its agents are milking telecommunication operators through fees and levies, and one of the leading mobile telecoms operators TNM has come in the open to reveal that its cost of levies, fees and taxes was K15 billion for 2014.
In a statement accompanying TNM’s 2014 financial results, Managing Director Willem Swart revealed that the cost of the company’s contribution to government directly and indirectly through MACRA was K15 billion.
“This cost of doing business, is one of the highest in the industry in Africa and substantially contributes to the high cost of our operations,” said Swart, who is also Chairman of the Association of Telecom Operators (ATOL).
He said out of an audited turnover of K40 billion, TNM’s returned net profit after tax is K5.2 billion which is disproportionate to the K15 billion fees to MACRA and government.
Swart said while TNM is committed to the economic development of Malawi, the tel-co is worried about its future profitability and sustainability because of the high cost of doing business prevailing.
“The profits of our company directly come from our subscribers and we therefore have the responsibility to use these funds in the most effective way possible, which will support the future growth of the company and the economy,” he said.
He said TNM as one of the major corporate citizens in the country has the duty to support activities which will develop the ICT industry for the long term benefit of the people of Malawi, but also “to oppose any actions which would destruct value and the ability of the company to invest on a sustainable basis in infrastructure for the future.”
Recently, due to the high cost of regulatory obligations, TNM hiked its call tariffs by 14 percent—well below inflation—but to the company’s chagrin, MACRA decreed against the hike citing the outdated Communications Act of 1998.
The situation raised concern in the broader telecoms industry. It also came after a study commissioned by MACRA reported that Malawi had one of the highest call tariffs in the world—suggestions which TNM trashes as inaccurate.
Swart said Malawi’s monthly Average Revenue Per User (ARPU) for 2014 was K 1,451 (U$ 3.2) and not K5,441 (U$ 12) as was reported in the media. He said at US$3.2, Malawi’s ARPU and represents one of the lowest ARPU’s in Africa.
To justify that TNM offers low tariffs, Swart said the company sold over 642 million minutes on its network in 2014 at a price below K20 per minute.
He said the market for telecommunications in Malawi is small and does not support extravagant investment in infrastructure if any operator has to pay returns to shareholders and repay loans at high interest rates.
“[In comparison], Nigeria has achieved 183 million subscribers this month and in Malawi we now have approximately 5 to 6 million active subscribers. A small market can only support smaller operators and networks, and the need for development and affordability must always be balanced. It is therefore important for us to use the revenue we receive from our customers, in the most effective way possible,” he said.
Swart said in view of high inflation and interest rates, TNM would in the near future increase and implement tariff increases to secure sustainability of the business.
“Malawian businesses are operating in a high inflation environment and must adjust prices on a regular basis to maintain the profitability of the operations. This increase will be much lower than the level of inflation as experienced during the past 12 months. The lower than inflation increase, is made possible through our dedication to efficiency and cost control as a company,” he said.
The telecoms chief said TNM supports all the projects by government to improve the lives of the people of Malawi and is proud of its contributions.
“TNM however prays that all these funds will be governed effectively and the funds will be spent on projects that make the lives of ordinary Malawians better,” he said.
