Dean Boyce addresses concerns of Telecom Industry
We turn to telecommunications in Belize. Over the years the industry has evolved and, recent developments have cast the spotlight on Telemedia, the leading local telecoms company. The Chairman of Telemedia’s Executive Committee, Dean Boyce, appeared on Monday morning’s broadcast of Open Your Eyes. He answered questions ranging from taxation, to free internet in schools and on “Who owns Telemedia?”
Who owns Telemedia?
Dean Boyce, Chairman, Executive Committee, Telemedia
“He would arrange for certain charitable trusts and employees to purchase their shares and he lends the financing for those various organizations set up to borrow the money and the shares were acquired. So at the beginning those shares are fully funded. You have a position now where it was twenty percent and not it’s up twenty-three percent of the company is owned by a thrust with the beneficiaries are B.T.L. employees. There’s another seventy or something percent that’s owned by another charitable trust, the Hayward Charitable Trust, and again that’s a Belize based charity for Belize causes and those two together own about ninety-four percent of the company and the others are held by other minority shareholders.”
Investment and Telecommunications
“If you have good communications then it will stimulate the economy generally and good communications involves everyone having access but at the right affordable prices. Belize is an environment where the GDP per capita income is just over our thousand US dollars and if you compare that to similar countries in the region and that’s quite low in a very large country. So you put in this very large amount of expensive equipment into the network and you attract business into the Toledo District and other rural areas of the country. If you want big businesses to come in, if you want hotels to come in and set up in those areas to generate employment, they’re gonna have to have good communications. So what we were saying and talking to the government about is that needs to be the focus because if you get good communications in the country at affordable prices then it will stimulate the economy generally.”
Taxes on Revenue vs. Profit
“If you are taxing on revenue, you are distorting the amount of profits you are paying on your income. Countries around the world, they are taxed on profit not on revenue. In our country by chance it’s a different methodology, it’s taxed on revenue but whereas we would normally be taxed four to six percent, we’re being taxed at twenty-five percent; it’s actually gone up. There was a time when other countries would face economically difficult times, they would be reducing taxes as well as stimulating growth and in our case, reducing prices. This has gone in the opposite direction. I’m sure the government has a plan but remaining at nineteen to twenty-five, even in those areas, that is too high. They said by first of April 2008 they would have implemented a change in tax methodology to tax at twenty-five percent of profits as opposed to nineteen percent of revenue at the time. So that was what we obtained from the government and that’s reasonable. And what we said is that we’d be reducing prices and we have been doing that and it’s to facilitate a reduction in prices. If you tax on revenue, you tax on twenty-five percent of your revenue–I’ve spoken to other telcos around the region and taxation experts within the region as well, and they find it absolutely amazing that we’re being taxed on revenue at all, let alone at twenty-five percent of the revenue. It means that we have to make—of every dollar that we’re billing the customer, the first twenty-five percent of every dollar goes to the government. So it’s very difficult for us to reduce prices, to reduce our profit margins, when we’ve got that sort of structure. In fact, it’s a disincentive to reduce prices.”
Viability of additional Telecom Licenses in Belize
“Just allowing licenses for the sake of it, isn’t terribly constructive. In fact, it is unimaginative. What you should be doing is working with us to try to say if there are areas where you say look you’re really not performing in these areas. But we’ve got competition, Speednet and Telemedia staff don’t always see eye to eye and there’s not a lot of love between the two of them and if you look at the prices it’s because of the competition. I’m sure if you brought in another carrier, a third carrier, the prices would come down even further but what we don’t want is for it to be unproductive. So you have a third carrier and we have a situation where we’ve lost fifty percent of our prepaid cellular business, for example, and we lose thirty or forty million and we stop all of the development in rural areas and that’s not constructive.”
Wider coverage in villages and free Internet for schools
“In the south, for example, there are communities that need much better communications like the valleys so you shoot a powerful signal over the top of the hills and it misses them because their in the valleys. So you have to go with stations and other equipment to shoot the signal down do that’s a big project that’s undergoing over the next couple of years. A part of that will be the free internet for schools. The idea is that every single community school has internet. We’ve already got fifty thousand per our adverts, fifty thousand children countrywide that are using the internet and the idea is we need to get every single child connected.”
Fixed Lines to cell phones
“If you look though at the number of cellular customers in the country, including our competitor, there’s probably a little over two hundred thousand. Population of three hundred thousand and we’ve got two hundred thousand cellular phones; the reason our competitors are offering a fixed line service. But the reason they don’t really push it is because there’s really no money in it in a lot of places. It’s because of the rates. So because of those rates, because we offer a bundle where you can talk as long as you like, it affects the investment. You’re not using up additional airway capacity because it’s on a copper and it’s fixed on a dam, we don’t mind if you spend the weekend talking and just pay us a flat fee because it’s already a sunk investment. So I think there will still be a low for fixed lines but we still have thirty-five thousand fixed lines. We had thirty-five fixed lines five years ago. It will be a part of your overall telecommunication service. So you’ll be between fixed line and your mobile; it won’t make any difference. You’ll be using your internet, you’ll be swapping you voice calls through the internet; it will be seen as just another technology. Certainly it’s a sunken investment anyway so we need to make sure we continue to utilize it.”
Boyce’s interview covered other relevant areas in telecoms including the recent massive layoffs happening globally in the industry.
