Globe Telecom bucks proposed 10% add'l tax on cellphone firms

The Ayala-controlled Globe Telecom warned yesterday that plans by Congress to impose an additional 10-percent tax on the country's five cellular phone companies will be "disastrous" to the industry.

Gerardo Ablaza Jr., Globe president and chief executive officer (CEO), said House Bill 8278 initiated by LAMP Rep. Danilo Suarez of Quezon, will undermine the capability of mobile phone providers to expand their operations to the provinces and further bring down the cost of the service.

Ablaza pointed out that cellular phones should not be viewed as a luxury item being used only by yuppies and other rich kids.

The carriers, he noted, are primarily responsible for bringing basic telephone service to far-flung areas of the country which do not have phone lines.

"This is something I feel very strongly about because people could not see that because of cellular, we are able to bring telephony into the provinces which would otherwise, have access only if they have wirelines. We invested massive amounts of money on this," he explained.

According to Ablaza, Globe spent almost P8 billion in 1999 to improve and upgrade its wireless network and that the company has earmarked about P14 billion this year for the same purpose.

There are already about 2.5 million cellular phone subscribers and the number is expected to reach some five million by yearend, even surpassing the number of fixed lines in existence.

"How can we continue doing this if on the other hand, we are taxed significantly for services which we are already heavily taxed. We pay taxes on practically everything aside from the 10-percent VAT on the revenue level. I think what they are doing is disastrous to the industry. Because if becomes counter productive to the thrusts of Globe and other industry members," he said.

At the same time, Rodolfo Salalima, Globe senior vice president for legal and president of the Philippine Economic and Telecommunications Federation (Petef), has called the bill unconstitutional since it singles out mobile phone providers.

The estimated P9 billion to be generated from the proposed tax will be used as a special computer literacy education fund for public elementary and high schools.

The bill has already been passed in the Lower House.