Tonga Anticipates $2.3 Million From Communications Annually

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Communications entities ‘baffled’ at expected revenue

By Pesi Fonua

NUKUALOFA, Tonga (Matangi Tonga, Aug. 8, 2012) – Communications costs in Tonga are under pressure as the Tonga Government aims to collect more than $10 million pa'anga [US$5.7 million] revenue from the communications and public enterprises sector in the current financial year.

At least, that is according to the national budget statement for 2012-13, but this figure has been challenged by those who know the industry.

The issue was raised by People's Representative 'Aisake Eke, during the budget debate in June. The former Secretary of Finance questioned why the new budget expected to collect TOP$4 million [US$2.3 million] from the Tonga Communications Corporation (TCC) and Digicel. He pointed out that during the first half of the 2011-12 financial year, the revenue collected from TCC and Digicel amounted to only TOP$370,000 [US$211,962]. The TOP$10 million was expected to come from the communications sector and public enterprises

However, in the previous financial year, up to December 2011, government had collected only TOP$700,000 [US$401,008], and he said he did not think that the figures would add up at the end of the financial year.

The Minister of Finance, Hon. Lisiate 'Akolo, during the Budget debate, responded that with regards to the $4 million from TCC and Digicel, the collection was usually slow but they always managed to collect the estimated amount by the end of the financial year. In addition, they had advised both TCC and Digicel to charge yachts that use other frequencies for their telecommunications.

Parliament passed the Budget in June with no changes to that figure.

Fair trade policy

Meanwhile, both TCC and Digicel are baffled with the thought that between them, the two companies have to pay government TOP$4 million annually.

When Matangi Tonga asked them why the Minister of Finance was telling parliament that they were slow in their payment of money due to government, spokesmen for both companies were baffled by the claims, and why the government thought that they would continue to pay government TOP$4 million annually.

A spokesperson for TCC explained that in 2008 the government had introduced what was called a "Minimum Termination Rate" of 30 seniti for every international call that was coming into the country. "A caller would pay for their call overseas, then we charged 30 seniti to connect and complete the call in Tonga. The government then got 8 seniti and we got the rest, and so government was collecting an extra TOP$4 million a year."

International dispute

But the fact that this extra charge made calls to Tonga more expensive was challenged. TCC said there was a marked drop in the number of calls to Tonga and a final blow to the scheme came after the Tonga government was challenged by the USA for infringing the fair trading policy of the WTO by putting extra charges on international calls to Tonga.

The spokesman for the TCC said that following the WTO dispute, the Minimum Termination Rate scheme was gradually faded out, "and instead of government getting eight seniti a call they were getting four seniti, and eventually the MTR ended in 2011."

A Digicel spokesperson said as far as they were concerned they did not owe government any money and he did not want to comment.

Ministry of Finance

So has government readjusted the amount of revenue it expected to collect from the TCC and Digicel, since the MTR ended in 2011?

'Aholotu Palu, from the Ministry of Finance said that the estimated revenue for 2011-12 went down from TOP$4 million to TOP$3.6 million [US$2 million], and for 2012-13 it went down again to TOP$3.5 million.

Meanwhile, the Ministry of Finance has advised TCC and Digicel to charge yachts for using certain frequencies for their communications, and there was still a high hope for government to meet its estimated revenue collection of more than TOP$10 million from the communications sector.

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