AMMAN -- The government's plan to increase electricity prices is likely to force mobile operators to either raise prices of their services or look into alterative "cheaper" energy sources, according to sector stakeholders.
They said the telecommunications sector, which contributes about JD300 million annually to the treasury in taxes and fees, faces several challenges at this stage and cannot absorb more taxes, referring to recent statements by the government that it was looking into means on how to increase revenues to the treasury.
"The government should start a dialogue with the sector's representatives if it has plans to increase revenues it generates from the industry," Zain Jordan CEO Ahmad Hanandeh, said in a meeting with the press on Tuesday.
"Increasing electricity prices will pose another challenge to the sector," he added.
According to the Electricity Regulatory Commission (ERC), the government is in the final stages of its review of a proposed electricity tariff, submitted by the Ministry of Energy, which calls for cross-sector raises ranging between 8 to 40 per cent.
Umniah CEO Ihab Hinnawi noted that a rise in power tariffs would cost mobile operators millions of dinars per year.
"Operators have either to look for alternative energy resources that are cheaper or increase prices of their services and this is difficult in light of the tough competition in the market," Hinnawi told reporters.
The sector representatives said mobile operators would be forced to start sharing infrastructure in order to cut costs.
Sami Smeirat, chief officer of the enterprise unit at Orange Jordan, said any increase in taxes or rising costs resulting from a hike in electricity prices would negatively affect the sector.
Several taxes are currently imposed on the sector, the mobile operators said, citing the 16 per cent sales tax, 12 per cent special tax, 24 per cent income tax and 10 per cent as sharing in revenues.
© Jordan Times 2012
