Pushback in Surcharge Fiasco

2
1442
From left: Mr. Mamadou Coulibaly, CEO, Orange Liberia; Edwina C. Zackpah, Acting Chairperson, LTA

Orange Liberia Defends imposition of new tariff, while LTA says it is illegal

The mobile network operator, Orange Liberia, has defended the imposition of surcharges on voice calls and mobile data, despite the Liberia Telecommunications Authority’s claim that it is illegal.

Previously, US$2 purchased 1.2GB of data, but with the new pricing, US$2 now gets only half that amount, 600MB of data, while on-net voice calls, which generated 45 minutes of airtime for US$1.00, now renders only 15 minutes for the same price.

Such a move by Orange Liberia and its competitor, Lonestar Cell MTN, has erased the modest mobile call and data rates consumers have been accustomed to over time.

In a press release issued yesterday, Orange Liberia said it is taken aback by a press release by the LTA on October 8, 2020, in which it stated, among other things, that the surcharges (“additional costs”) currently being implemented by mobile network operators (“MNOs”) are “illegal and arbitrary.”  

However, Orange Liberia claims that the LTA’s statement is not the truth as their new surcharges or price on voice calls and mobile data came as a result of an order from the regulator after a court battle.

“Orange Liberia wishes to recall that it is the LTA which promulgated LTA ORDER: 0016-02-25-19 on February 25, 2019. The surcharges were challenged by Orange Liberia thorough the Civil Law Court by filing a Petition for Judicial Review; and by operation of Section 81, Subsection 3 of the 2007 Telecommunications Act and an Order of the Civil Law Court, the effectiveness of the LTA ORDER was suspending pending a final determination of the case by the Liberian court,” said Orange-Liberia in the release.

“That final determination was made by the Supreme Court on September 3, 2020. It should be noted that it is Sections 4.1., 4.2, and 4.3 of the LTA ORDER, not the MNOs, which imposed the surcharges. These sections of the LTA ORDER specifically mandate MNO’s to impose surcharges on all on-net calls in the amount of $0.008 and to impose surcharges on each MB of data at a rate of $0.00065,” Orange said.

Orange Liberia further added that, on the basis of the order, it assumed that the surcharges were a tax which should be imposed by the Legislature only; rather, the Supreme Court ruled that the surcharges are not a tax but additional costs that the LTA, pursuant to the 2007 Telecommunications Act, has the authority to impose.

The company added that after the final judgment of the Supreme Court, it engaged the LTA to implement the order by placing the surcharges on its customers, “collect it and remit it to the LTA.”

 “Instead of the LTA agreeing to meet on how to roll out this scheme of the LTA ORDER, the LTA sent Orange Liberia invoices in the amount of approximately US$16.5 million for the period, March 2020 through August 2020 to be paid by October 21, 2020, or Orange Liberia’s license be suspended and taken to court.       

“As a law-abiding entity, Orange Liberia moved to comply with the LTA ORDER by calculating the surcharges and placing them on top of its own costs to be paid by its customers, collected by Orange Liberia and remitted to LTA’s account. Shortly after Orange Liberia announced the rollout of its plan to implement the LTA ORDER, the LTA accused Orange Liberia of price-fixing, profiteering, collusion, antitrust conspiracy, and political motive for implementing the LTA ORDER, and directed that all MNOs should cease from implementing the LTA ORDER in the manner and way that the MNOs were implementing it,” the company said.

LTA further added that it has mandated the two companies to make full restitution to consumers affected by their “Arbitrary increase in data and voice prices.”

“The LTA Board of Commissioners met with representatives from Orange Liberia and Lonestar Cell MTN earlier today (October 9, 2020) in separate meetings at the regulatory headquarters in Paynesville. The Board expressed its displeasure over the increase which was not approved and issued a stern warning. Both Service Providers confirmed in the meetings that they are in the process of reverting to prices prior to their arbitrary increase.”

In February of 2019, the LTA released the order 0016-02-25-19, introducing floor prices on voice and data calls. This order was implemented in September 2019 and led to the cancellation of the widely popular “3-day free calls”. The order mandated that within six months of passage, there would be another automatic imposition of surcharges of $0.008 per minute on voice-on-net calls and $0.00065 per MB (or $0.6656 per GB) on data.

The surcharge is a revenue generation source for the telecommunications sector which was recently implemented to replace the 5 percent tax.

Meanwhile, Orange Liberia has said it has complied with this second-order to cease and desist from implementing its order and that it has paid “all 5% regulatory fees, annual license fees, numbering and spectrum fees, $0.14/min and $0.05/min on international incoming and outgoing calls, Goods and Services Tax and continues to comply with its obligations under the Liberian law.”

“Orange Liberia has complied with this second order. Notwithstanding, the LTA wants Orange Liberia to pay surcharges, which Orange Liberia never collected from its customers and which Orange Liberia could not collect during the pendency of the Petition for Judicial Review lawsuit, because the law is that the effectiveness of LTA ORDER was suspended while that matter was in court,” the company said. “By LTA demanding now that Orange Liberia should pay the surcharges in the amount of US$19.3 million, which was never collected by Orange Liberia from its customers, the LTA is effectively ordering Orange Liberia into bankruptcy; which is unacceptable to Orange Liberia.”

Orange Liberia further explained that it is ready and prepared to meet with the LTA to amicably resolve the matter in a mutually beneficial way; but “The LTA’s demand that the surcharges should be paid by Orange Liberia from its revenues/assets, not by Orange Liberia’s customers, is tantamount to running Orange Liberia into bankruptcy, as its revenue cannot under any circumstance afford such huge amount.”

“Orange Liberia is ready to open its records in substantiation of the fact that a payment of US$19.3 million will bankrupt the company; if surcharges were to be paid from Orange Liberia’s own revenue, Orange Liberia will not be a profitable enterprise in Liberia because it does not generate that amount of revenue from its own costs. It is just not a sustainable proposition,” Orange Liberia said.

Author

2 COMMENTS

  1. I really wonder what the LTA wants from these providers – especially Orange. What is the customer base in Liberia? From my calculations, it is around two point something million subscribers. How much money can two mobile network operators make when the customer base is that low and you are charging them this surcharge on top of the huge taxes they are paying year in and year out?! I’m willing to bet that these two companies are in the top four as far as taxes paid per year.
    The way I see it is that if the LTA puts pressure on them, then the costs will definitely have to come back to the customers, otherwise there will be no need for them to be in Liberia. You invest to make profits – bottom line!

  2. This is what Monopoly does to the people of Liberia where almost every major business activity is restricted in the hands of few people-Mainly foreigners. If you want fair charges, open the market to other competitors and stop using private businesses as source of income for the corrupt government.

Leave a Reply