Cesky Mobil, the No.3 domestic mobile operator, said that it expects to fully reflect in its tariffs the planned reclassification of the domestic VAT rate for telecommunication services from 5% to 22% from 2004. Of the other operators, T-Mobile CR said it will largely do the same, while Eurotel has yet to revel its intentions. We assume that all the operators, including the fixed-line operator Cesky Telecom, will reflect most of the new VAT assessment in their tariffs. While the short-term effect on their traffic volumes will be negative, we believe the medium-term demand price elasticity for these services is very low.
Jan Hájek