A new tax on telecoms operators introduced by the Sudanese government to make up for the loss of oil revenue from the newly independent South is expected to impact on Zain Sudan’s earnings this year, despite an anticipated rise in the firm’s mobile subscriber base by two to three million, the unit’s CEO Ibrahim Ahmed El-Hassan told news agency Reuters. The government has raised sales and services taxes for telecoms firms from 20% to 30%, while a tax on profits was hiked from 15% to 30%. A shortage of currency and soaring inflation, worsened by the loss of about three-quarters of the country’s oil output when South Sudan seceded in July 2011, has made it difficult for operators to pass on higher costs to customers, Elhassan said. ‘We can’t raise the prices for the consumer because … we have to give competitive prices, and then because the pricing sensitivity is not that flexible. People are very sensitive to any increase of prices.’ In addition, a holiday on the 30% corporate profit tax also expired for Zain Sudan last year, and the firm is looking at ways to ‘optimise costs’ like more specifically targeting its advertising. The unit has also faced problems in repatriating its profits to Kuwaiti parent Zain. ‘We are working on these difficulties, but still, for example, we did not transfer our profit to Kuwait going back four years,’ Elhassan said. ‘That’s why we reinvest the profit here in Sudan.’ Zain Sudan, the country’s largest mobile operator by customers, expects to boost its current subscriber base of around 13 million to between 15 and 16 million by the end of the year.
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