Time needed to sort out GST on prepaid top-ups, say telcos

KUALA LUMPUR: Telecommunication companies (telcos) are in support of Communications and Multimedia Minister Datuk Seri Ahmad Shabery Cheek's efforts in determining the best solution to the issue of the Goods and Services Tax (GST) on prepaid mobile services.

However, they opined that implementation of any solution would take time, as it involves numerous parties along the prepaid ecosystem such as updating back-end processes, training the front liners as well as preparing communication materials for consumers.

"The prepaid market is a complex ecosystem. Hence, it will be a challenge for any mobile service provider to implement the required changes at short notice," U Mobile's Chief Executive Officer (CEO), Wong Heang Tuck said.

The value-chain is further complicated with various top-up options for the consumers like physical card, virtual reload, Internet and mobile banking as well as ATM machines, he told Bernama.

Ninety per cent of U Mobile subscribers are prepaid users and 10 per cent, post-paid.

U Mobile currently has more than 11,000 traditional dealers and 31,000 alternate distribution channels nationwide comprising convenience stores, electrical chain stores, hypermarkets and supermarkets.

"Despite the challenges, U Mobile is fully committed to supporting the minister and will focus on getting the distribution and back-end ready to serve our customers," Wong said.

Maxis Bhd echoed U-Mobile's concern, saying the firm needs enough time to reconfigure its system and work with third party retailers, resellers and sales agents.

"Implementing any new changes to the application of the GST on prepaid top-ups will involve similar complexities in reconfiguring the system and other activities.

"It also includes the massive effort of exchanging top-up tickets from all the physical touch points, which has to be done manually, dealer by dealer," its CEO, Morten Lundal said.

As of March 31, Maxis had 8.992 million prepaid customers, while the post-paid segment comprised 2.823 million.

According to Lundal, Maxis is willing to work with the authorities, including the Malaysian Communications and Multimedia Commission (MCMC), to ensure smooth implementation and treatment of the GST on prepaid top-ups.

"We will continue to extend our fullest support to the Minister, as part of the efforts to ensure an amicable solution is reached for the benefit of customers and the industry," it added.

Digi Telecommunications Sdn Bhd explained further that the difficulty also involved ensuring a seamless experience for customers and business continuity across 15,000 of Digi's touch points.

"With the majority of 45 million mobile consumers in Malaysia using prepaid to-date and inclusive those with multiple sim cards, we owe it to them to have a swift and definitive decision for peace of mind," CEO, Albern Murty said.

Digi spent more than eight months making adjustments for full compliance to the implementation of GST on April 1.

Another telco, Celcom Axiata Bhd, which has close to 10.2 million or 78 per cent in prepaid customers, said in comments, it was slightly premature for the company to estimate the time needed to change the system as it is a process under review.

As of December 2014, Celcom subscribers stood at 13 million with about 16,000 traditional distribution channels and 17,000 non-traditional.

At present, a reload top-up of RM10 has a GST value of 60 sen. Until all these changes are made, users will continue to pay GST above the reload value.-Bernama