Give us time to sort out GST on prepaid top-ups, say telcos

Presently, a reload top-up of RM10 has a goods and services tax (GST) value of 60 sen. – Flickr pic, May 11, 2015.

Telecommunication companies 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 said that implementation of any solution would take time, as it involved numerous issues along the prepaid ecosystem such as updating back-end processes, training front liners and 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 chief executive officer (CEO) Wong Heang Tuck said.

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

Ninety percent of U Mobile subscribers are prepaid users and 10% are 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 concerns, saying the firm needed 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," CEO Morten Lundal said.

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

"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," Lundal said.

DiGi Telecommunications Sdn Bhd meanwhile said 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% in prepaid customers, said in comments that it was premature for the company to estimate the time needed to change the system as it was 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