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Economic crisis hits hard on Telecom sector

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Avatar for SaifAnsari
Written by   26
1 year ago

One of the most repeated complaints in the telecom sector has to do with taxation. The main operators in this country have systematically requested fiscal "clemency" from the different governments. With these prayers as a backdrop, the Executive of Pedro Sánchez has cut by more than a quarter the income forecast for the General Telecommunications Tax, which taxes all the procedures with the administration, and has kept unchanged the one that charges them for the reservation of the frequencies of the radioelectric spectrum.

The year 2021 is going to be tough for operators. Not only because of the economic crisis and its effects, which are already being perceived in the income accounts of most of them, or because of the commercial fight with the arrival of more competition from small operators. It will also be so because the first 'blow' of the investment will have to be faced in order to gain the rights to exploit the radioelectric spectrum in the 700 MhZ band, which will serve to expand the ultra-fast 5G networks. For this auction, the Government already foresees at least income of 2,100 million euros, above the first forecasts of the companies led by Telefónica.

The Vice President for Economic Affairs, Nadia Calviño, in her appearance before Congress to report on the SURE European Fund for Employment Policies To Vice President for Economic Affairs, Nadia Calviño, in her appearance before Congress to report on the SURE European Fund for Policies employment 3/9/2020. The telecos put the rate to the tech in solfa and believe that it is a "toast to the sun"In this context, the Government has just put on the table its income forecasts through public rates. At least, those that must be reflected in the General State Budgets (PGE). The main one is the so-called 'general telecommunications rate' and is intended to cover the management of the central administration in certain concessions and authorizations, registration or mandatory inspections. In 2018, the last PGE approved, the Executive at that time foresaw that operators had to pay at least 22 million euros for this concept. The project for 2021 includes 16.3 million, 28% lower and one of the lowest figures in recent years.

The other rate that is quantified through state budgets is known as the 'spectrum rate'. In other words, it is the one that taxes the reserve for use by operators of any frequency in the public radioelectric domain. This is based on the market value of the use of the frequency and the profitability that the teleco can obtain. As in the two previous years, it has remained unchanged at 10 million euros among all companies in the sector.

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The rate of operators, controversial. The so-called 'General Operators Rate' is the only one that is not governed by budgets. And it is the one that casts the most doubts for the year 2021. The Government does not reflect the income forecast, because it depends on the expenses declared by the National Commission of Markets and Competition (CNMC) and the Secretary of State for Telecommunications related to its surveillance and management work in the sector. In 2019 this amount amounted to just over 24 million euros. Next year, the reform of the Telecommunications Law should be in force, the approval of which is scheduled for the first months, and therefore companies such as Facebook (WhatsApp, Messenger) or Microsoft (Skype) would have to contribute to this payment. They have been declared service providers and must contribute 1% of their sales.

The problem is that most of these platforms are free or belong to groups that bill from outside of Spain. This is what the operators have criticized, calling it a "toast to the sun." The president of Telefónica himself, José María Álvarez-Pallete, demanded last summer a fair taxation and regulation. Both the telecom and operator rates are being fought by the different operators in the courts. Many of the settlements demanded by the Tax Agency have been appealed in the courts, as well as those that have been carried out by town halls and other local administrations, with different results. Some of the battles, such as the one initiated by Vodafone against the Tax on Economic Activities (IAE) charged by its telephone towers, have already reached the Supreme Court pending a final ruling. And others, such as the 'RTVE rate', has reached the Constitutional Court.

All the major players have been very critical of rates and the tax level in recent years. The president of the employer association DigitalES, Eduardo Serra, claimed it in the reconstruction commission organized by the CEOE in summer. The still CEO of Vodafone, Antonio Coimbra, has repeatedly demanded greater predictability in the chapter on taxes and that the pressure be reduced. And their counterparts at Telefónica and Orange have done the same. At least on the side of the telecom rate it has a breather. Even if it is very small.

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Comments

Amazing post

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1 year ago

Due to the covid all the sector has been going low

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1 year ago

Amazing article by you my friend

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1 year ago

Great article.

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1 year ago

Nice

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1 year ago

Great article

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1 year ago

Nice Post

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1 year ago

Great article

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1 year ago

Unfortunately, a severe economic crisis is coming to the whole world, it will take a long time for the world to recover.

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1 year ago

Yeah now it needs lot of time and hard work to recover to previous state

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1 year ago

Great article.

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1 year ago

Thanx buddy

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1 year ago

I like your article.

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1 year ago

Thanx buddy

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1 year ago

Welcome.

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1 year ago

nice article

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1 year ago

Thanx buddy

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1 year ago