New telecoms tax could cost Magyar Telekom USD42m in FY12

25 May 2012

Hungarian fixed and mobile operator Magyar Telekom (MTel) estimates that it will have to pay HUF10 billion (USD41.8 million) in telecoms taxes in fiscal 2012, following the adoption of new tax measures from 1 July. As reported by CommsUpdate, on 18 May the Hungarian parliament approved a new controversial tax on mobile communications in the country, to the concern of local operators which feel the industry is already labouring under the burden of the government’s so-called ‘crisis taxes’. The move, which had been expected, means that from 1 July 2012 a HUF2 (USD0.08) tax is now being applied to every call minute and every SMS, with a monthly cap set at HUF700 for individuals and HUF2,500 for business users. Emergency call numbers and those for charities are exempt from the new tax, though.

The government hopes to raise up to HUF44 billion per annum through the initiative as it looks to plug a hole in its budget deficit, but the move has been widely condemned by Hungary’s leading operators. The three big cellcos – Magyar Telekom (T-Mobile), Telenor and Vodafone – say that that the new tax will not serve Hungary’s interests while it puts an ‘unfair burden’ on the telecommunications industry. They had proposed an amendment to the government’s planned new tax, suggesting that the government bill should include a cap on the planned monthly tax, limiting it to HUF400 for individuals and HUF1,400 for businesses.

MTel says it is still reviewing the potential impact of telecoms taxes on its Group operations, and for the time being is maintaining its guidance for a 4%-6% drop in underlying EBITDA for the current financial year. As such, it is not including the adverse effect of the new telecommunication tax or any other ‘special’ provisions until the review is complete. Further, MTel notes that along with the possible HUF10 billion tax bill arising from the new law, it will also be liable to taxes associated with the so-called ‘special telecommunication tax’, which was introduced in 2010 and which is also payable until the end of fiscal 2012. Here, the telco estimates that the impact of that tax will be negative HUF24 billion this year.

Hungary,Magyar Telekom,

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