Why and Why Not Telco pass through the 6% service tax?

Since the very first second the announcement was made, every quarters are fuming on the extra burden they should bare if it goes through. Here, it involves everyone in Malaysia, even foreign workers who are mostly prepaid subscribers. On this topic, Finance Malaysia has some words to say.

Picture taken from bigmacky.wordpress.com

In this modern world, mobile phones has become a necessity to us. Some may say: "I can sleep without pillow, or lost my wallet, but I cannot separate from my mobile phone". As such, does it mean that telcos can held you "ransom" on using their services? Since this is called "service tax", did telcos do their part in providing the good services (if not the best)?

3 Reasons why Telcos should not pass through the 6% service tax?

1. Coverage is suck in certain areas, still. There are rounds of complaints on line-dropping issues. Yup. They fixed it after that. But, the same old problems come back to haunt consumers after awhile.
2. Customer service is suck. At least, I am using the largest telco's service in Malaysia. But, I did not proud to say that either. Because, the respond to solve my issue is suck.
3. Crazily high charges. Comparing with neighbor countries, you will found out why Malaysian are labeled as "rich". Even with the "Value Plans" offered, consumers here are still paying high charges, whereby the really rich telcos boost their profit margin by squeezing consumers.

But...

Does telcos need to get the approval from MCMC first? No.

Does telcos obliged to absorb the 6% service tax at the first place? No.

Then, why not telcos pass the extra burden to end users like us? Emm...

Service tax is imposed by government on all services being offered in Malaysia. No sector constrain. No industry constrain. If we're paying 6% service tax on food outlets or shopping malls, why not prepaid or post-paid mobile services? Who is the main beneficiaries from the 6% service tax? Government or Telcos?

Hey Malaysians, YOU got the answer?

English Premier League from Maxis?

Recently, TM and Maxis concluded a 10-year agreement for TM to provide High Speed Broadband (HSBB) Access Services to Maxis. According to RHB research, Maxis with the agreement, can instantly roll out fixed home services to a potential pool of higher ARPU customers with last mile access via TM’s HSBB network to 700k premises, and up to 1.3m premises by end-2012.

Currently, Maxis’ fixed home services is limited to Bandar Utama, Sierramas, Bangsar and Sri Hartamas via its own fibre-to-the-home (FTTH) network. And, as Finance Malaysia know, Maxis is targeting to launch its service in the newly popular township of Puchong.

Maxis's secret weapon - Content
All in one, Maxis plans to roll out are IPTV, VoIP, video-on-demand (VoD) and high speed Internet. In fact, TM itself already offers some form of IPTV and VoD bundled in together with its core service of high speed Internet in its UniFi packages. Hence, content is indeed a very important element for Maxis to stand out. It is very likely that Maxis will leverage off its sister company, Astro especially for the Astro's exclusive rights of English Premier League.

A Win-Win situation 

For Maxis, it can save on its capex by riding on TM's HSBB network, without the need to build its own fibre network which could cost billions of ringgit. For TM, it could benefits from more wholesale revenue arising from a higher utilisation rate of its HSBB network.

2010 Top 10 Malaysian Companies

Wall Street Journal (WSJ) recently announced the result of Asia 200 survey, which ranked the top 10 companies of selected countries according to financial reputation, corporate reputation, quality, vision, and innovation. Want to know the winners of Malaysia?

Wall Street Journal: "For the second year in a row, Public Bank Bhd ranked 1st overall among Malaysian companies. The bank's profit rose 20% to RM 2.2 billion on a 12% rise in revenue during the first nine months of the year.

Customer deposits grew at an annualized rate of 12.2%. Public Bank, Malaysia's 3rd largest lender by assets behind Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd (CIMB), also ramped up its Tier 1 capital ratio while touting a dramatically lower impaired-loans ratio at 1.2%, versus 3.4% for the industry overall."

Source: Wall Street Journal

Meanwhile, CIMB Group this year makes a new showing on the Asia 200 list, with a #7 spot. The group helm under Dato' Sri Nazir Razak, spearhead CIMB as a regional universal bank, setting its foot in Malaysia, Singapore, Indonesia, Thailand, Hong Kong, China, UK, USA, Brunei, Myanmar, Vietnam, Bahrain and Cambodia.

Surprisingly, Malaysia Airlines (MAS) was being ranked as #9 on the list, while AirAsia - the stiff rival - are not included. Anyway, MAS did turnaround recently after suffering from huge losses few years back. A police report against Tan Sri Tajuddin Ramli (former executive chairman) was lodged by MAS in 2002 for allegedly causing the national carrier to suffer losses in excess of RM 8 billion.

Ananda Krishnan's Maxis and Astro earned their place at 4th and 10th respectively. After re-listing of Maxis 2009, the billionaire took Astro, Measat and Tanjong private this year.

Source: Wall Street Journal