All posts by Steve Esselaar

Ghana is looking to join the growing club of countries in Africa that have imposed taxes on OTTs. But there is a strange cognitive dissonance that government’s have on this issue and Ghana is a perfect illustration. The Minister for Communications and Digitalisation, Ursula Owusu-Ekuful has said:  “We are determined to accelerate the use of digital technology, applications and service at all levels, build and protect our digital infrastructure, and enhance capacity and digital skills acquisition of our youth. As you may be aware, it is only through tax revenue mobilization that such investments and more can be funded”.  It’s […]

Data usage is growing fast. But some telco revenues are not keeping pace with data usage. Why? In Africa, data usage is generally linked to increasing revenues. Why don’t we see the same trend in Europe? Figure 1 shows data usage compared to ICT sector revenues in Germany. We can see the same trends in the UK and other European countries.  One major factor that differentiates Europe – and other mature markets like South Korea – from Africa is that the growth of the ICT sector is bound to slow down with increasing market penetration. Once most households have fixed […]

The past few months have seen several telco CEO’s make the claim that OTTs are making their investments unviable. But is this the case? Are OTTs the cause of telco’s returns below their cost of capital? In the table below is a short summary of some of the CEO statements that have been in the media over the past year. If we look at the data, telco’s have healthy EBITDA margins, ranging from 29.3% to 30.6%, way above the average across 94 sectors of 12%. Return on Equity (ROE) is reasonable. The cost of capital is the lowest compared to […]

Accessible, reliable and affordable broadband Internet is the foundation of the digital economy and digital inclusion. Improved broadband penetration is associated with substantial socioeconomic benefits, contributing to enhanced productivity, facilitating information exchange, and improving service delivery across the economy. The ICT sector in Uganda is taxed heavily. MTN and Airtel alone made up 40% of excise duty revenues and 12.7% of VAT revenues in the financial year 2019/2020. Yet the sector’s GDP contribution is only 1.8%. While there is an increased and justified momentum around the world for the collection of a Digital Service Tax (DST), the introduction of yet […]

Accessible, reliable and affordable broadband Internet is the foundation of the digital economy and digital inclusion. Improved broadband penetration is associated with substantial socioeconomic benefits, contributing to enhanced productivity, facilitating information exchange, and improving service delivery across the economy. Tanzania’s National Five Year Development Plan III (FYDP III) recognizes the significance of improved broadband penetration to both the job creation as well as the positive impact on the service sector, which contributes significantly to the country’s GDP (MoF 2021). The ICT sector in Tanzania is heavily taxed. Consumer taxes represent 32% of the total cost of mobile services (GSMA 2021). […]

Accessible, reliable and affordable broadband Internet is the foundation of the digital economy and digital inclusion. Improved broadband penetration is associated with substantial socioeconomic benefits, contributing to enhanced productivity, facilitating information exchange, and improving service delivery across the economy. The ICT sector in Kenya is taxed heavily. Consumer taxes represent 21% of the total cost of mobile services, compared to 14% for the rest of Africa (GSMA 2020). Mobile service excise duties alone contributed 2.2% of total tax revenue for the 2020 Financial year, compared to the sector’s GDP contribution of 3.1%. Other taxes such as WHT, VAT and corporate […]