Mobile industry zooming in on tax and infrastructure barriers in Chad

In Chad, 3G market penetration (3G connections as a share of the population) has stagnated at below 3% of the population, and taxes on mobile services are nearing 45% of mobile operators’ gross income. In this context, the GSMA, Airtel and Millicom conjointly held an ICT taxes & policy workshop in the Chadian capital N’Djamena on the 6th and 7th of September. The workshop aimed to identify key strategic priorities for the future growth of the country’s mobile sector as well as to initiate a discussion between all parties to elaborate a common vision on ICT as an enabler for long term economic growth in Chad. The event was attended by 60 representatives of the ICT ecosystem including representatives from ARCEP (regulator), ADETIC (ICT agency), ICT Ministry, Consumer Association and the Treasury.

Addressing connectivity issues of supply, demand and policy in Chad
The workshop gave rise to discussions around the challenges and opportunities for connectivity in Chad. On the demand side, the Consumer Association advised how high taxes are making mobile services and products unaffordable for the lowest quintile of the population, with taxes amounting to 80% of the lowest quintile’s monthly expenses. In addition, the Consumer Association highlighted the low quality of service and poor coverage in some of the poorest areas.

From a policy perspective, the regulator ultimately insisted on the operators’ coverage obligation as well as the need for the industry to lower mobile broadband tariffs.
 

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On the supply side, mobile operators pressed the government and treasury to relax taxes pressure to avoid a stall in investments in the short term and potential divestments in the mid to long term. The MNOs and the GSMA highlighted the benefits of freeing cash flow for the country’s development, emphasising that a 10% substitution from 2G to 3G penetration on average increases GDP per capita growth by 0.15 points.
 

Way forward
Despite different views on taxes and policies, all parties agreed there is a need to revitalise the ICT sector as a critical step towards sustainable economic growth in Chad. With the support of the GSMA, Airtel and Millicom have agreed to submit a set of taxes and policy adjustment propositions to the government and relevant parties before the end of the year. The GSMA will tangibly support this initiative by providing analytical and advisory services on both taxes and infrastructure economics.