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Safaricom urges govt to reconsider mobile tax

Safaricom urges govt to reconsider mobile tax

Safaricom has urged the government to reconsider the Finance Act 2018 that has resulted in increased mobile excise duty tax and raised the cost of telecom services.

The legislation imposed a 15% increase in excise duty on internet providers and 10% excise duty on mobile phone services.

All telecom companies have adjusted their prices accordingly.

During the presentation of Safaricom's half-year results 2018/2019 (for six months ending 30 September 2018), CEO Bob Collymore said the company will engage government to identify alternative sources of revenue.

"We are facing some serious challenges; we have to grapple with inflation and higher taxes on M-Pesa, voice, SMS, mobile data and fixed data. We are concerned with the impact of greater taxation on an already strained consumer."

Collymore said the company is already "a great contributor to the exchequer" with Kshs 48 billion paid in taxes during the half-year 2018/2019.

But he warned that the company's ability to pay these taxes depends on consumers who use its services because of affordability.

Chairman of the Safaricom board, Nicholas Ng'ang'a added, "While it is still too early to know the impact of these taxes, we continue to engage the government in the hope that together we can find middle ground that will offer relief to Kenyans."

M-Pesa leading in revenues

Safaricom's service revenue grew by 7.7% year-on-year growth to post Kshs 118.2 billion compared to 109.7 billion recorded half-year 2017.

Its mobile money product accounted for 30% of service revenue contributing Kshs 35.5 billion. MPesa's revenues grew by 18.2% compared to half year 2017.

Mobile data contributed 16.5% of the service revenue, growing by 10.8% compared to the previous half year results. It pulled in Kshs 19.5 billion. The company has 17.6 million mobile data users.

Voice service (incoming and outgoing) revenue is still leading in terms of revenues and grew by 1.4% to Kshs 48.0 billion.

"We accomplished all this while sustaining investment in our network, which saw us invest KES 17 billion in the first half of the year driven by increased network roll out and acceleration of broadband and fibre deployment," Collymore said.

Safaricom fibre has now passed 200,000 homes and has extended its fibre network to 5,800km.

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