Cellcos warn SMS costs will rise if state takes half their revenues

9 Oct 2008

Lawyers representing a number of leading Filipino cellcos say they will have no choice but to increase end-user SMS charges if the government insists on taking half the revenues generated from them to fund new health and education initiatives in the country. GMANews quotes lawyers Froilan Castelo, head of regulatory affairs of Globe Telecoms, and Roy Ibay, senior manager for regulatory and telecom relations of Smart Communications, as saying that Senator Richard Gordon’s bill would effectively increase production costs which would ultimately have to be passed on to consumers. ‘This will add up to our cost. Part of our cost of production is the tax being paid, the income tax etc so this will be another imposition,’ Castelo is reported as saying after the hearing on the proposed Health and Education Acceleration Programme (HEAP), which the government hopes to fund by revenues generated by telecommunication companies. While cellcos do not object to the spirit of the proposal, they baulk at the idea of the state raking in 13.5 centavos of the 27 centavos currently charged, arguing that once other taxes and costs are taken into account, it squeezes their margins too much. ‘We are looking at it as part of our social responsibility programmes of helping education and health … What we are proposing is a technical working group so that we will not resort to imposition of levy, taxes but on how the telcos can further help,’ Castelo told the paper. Meanwhile Smart’s legal representative suggested that the government should instead automatically divert the tax being paid by telecoms to help fund health and education initiatives.

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