As a part of the government’s flood-induced tax-system amendments, the Finance Ministry is reportedly considering including telecommunication services in the state’s 22% VAT bracket on goods and services (up from the 5% VAT bracket). This would come probably in 2003, providing the tax bill is passed by Parliament, therefore sooner than expected, and could have an impact upon fixed and mobile voice traffic, and further for mobile operators, could increase the share of SMS (text messaging) revenues (with low tariffs) at the expense of voice revenues. Nevertheless, the domestic telco stocks should not react, we believe.
(Jiri Soustruznik)