Chad cuts telecoms excise duty to bolster internet

Chad cuts telecoms excise duty to bolster internet

Move could give market a significant, much-needed boost says GSMA.

The decision of the government of Chad to remove the 18% excise duty incurred by telecommunication service providers in the country has resulted in a reduction in the cost of internet.

Chad's Finance Act 2020 was adopted on 30 Dec 2019 and came into effect on 1 January 2020.

This prompted authorities, via the Agency for the Regulation of Electronic Communications and Posts (ARCEP), to lobby telcos to reduce their rates for internet services.

The telcos have responded favourably.

Airtel reduced the cost of 200Mb from FCFA500 (the price since Jan 2018) to FCFA400.

It also lowered the costs of its 4Gb and 7Gb data plans to FCFA4000 and FCFA10,000 respectively, from FCFA5,000 and FCFA12,000.

Tigo also lowered the prices of its data plans. Its 50Mb data plan now costs FCFA150 instead of FCFA200, it lowered the cost of its 200Mb plan by FCFA100 and its 500Mb plan fell from FCFA1000 to FCFA845.

The GSM Association (GSMA), which continues to advocate telecoms tax reform in several African countries, noted that the removal of excise duty and the drop in internet prices could boost the Chadian market, which continues to be impacted by several challenges.

In its report on digital inclusion and mobile sector taxation in Chad, the GSMA said more than two thirds of Chadians remain unconnected to mobile services and mobile penetration lags behind many other African countries. It added that mobile broadband networks are still in their infancy, with 3G penetration only around 2%, and internet usage is the lowest among countries with comparable GDP per capita.

"Affordability of mobile services is a key barrier to increasing penetration and usage. High costs may be a particular issue for the poorest in Chad's society, for whom costs correspond to 87% of monthly income, not including the cost of handset purchase," the GSMA stated.

While internet subscribers in Chad have welcomed the reductions, the cost of internet in the country remains comparatively high against counterparts on the continent.

According to A4AI Mobile Broadband Pricing - USD Q2 2019, Chad has the most expensive internet rates in the Central Africa sub-region, while Cameroon's prices are considered the most affordable.