The new tariffs are immediately applicable for all new subscriptions, while for the existing ones the prices will increase starting 01 March 2019. The impact of this on Digi’s customer base, top line and bottom line is yet to be seen.
Romanian RCD and RDS increased monthly tariffs for certain Digi services. As they state, this was done in order to meet the constant need to develop and increase the quality of the services they provide and to react to continuing increase in costs they occur. The new tariffs are immediately applicable for all new subscriptions, while for the existing ones the prices will increase starting 01 Mar 2019.
This increase in tariffs could also be attributed to series of fiscal measures adopted in December 2018 in order to fill the Governments budget gap. This affects Digi as GEO 114/2018 grants the right for the National Authority for Management and Regulation in Communications (ANCOM) to charge an increased monitoring tax of 3% of the revenues of the electronic communications operators.
Also, extending the duration of the existing mobile communications licenses will be subject to the payment of a 4% tax on turnover generated by mobile telephony in the year preceding that in which the extension is granted multiplied by the number of years for which the extension is extended of the license.
Recently, Digi published a report stating that the Romanian Government’s representatives stated that the additional taxation would be caused by the “incorrect behaviour” of the telecommunications operators. Digi states that they are of the opinion that these allegations have no legal, tax or economical basis, and that the decision to introduce these new taxes is ungrounded and discriminatory. They also add that GEO 114/2018 is prejudicial to the development of the telecommunications and energy industries in Romania as it materially increases, without proper consultation and without any serious justification, the fiscal burden on businesses in these sectors, thus potentially restricting the ability to make further investments and affecting clients.
The impact of this on Digi’s customer base, top line and bottom line is yet to be seen.