In an effort to counter the pressure from mobile and alternative operators, Cesky Telecom expanded its current range of pricing programs for both households and enterprises yesterday. The main features of the new programs (active from the beginning of 2004) are transferability of free minutes and a price reduction on international calls.
According to CT, the new prices (without VAT) are roughly 4% lower than the current prices, but when the increased VAT is included (telco services are reclassified from 5% to 22% next year) end-user prices will be 12.3% higher (CTK).
While the scope and complexity of CT's tariff programs will increase, we believe that only a relatively limited number of households will optimize their tariff choice in the near future based on the new programs.
The VAT reclassification and the extent to which all the operators will reflect the VAT increase in their tariffs (either on the basis of their choice, or on the basis of a regulatory decision in the case of some of CT's services) will indeed impact market shares and nominal revenues of the operators in both voice and data-service segments. Recall that while all the operators seemed ready to fully reflect the VAT increase in their end-tariffs (i.e. 16.2% increase), the regulator recently indicated that it will allow CT to pass only a part of the increase onto the regulated tariffs of its services; its final decision is expected in coming weeks.
Jitka Oppitzová