Liberalisation of telecommunications sector in near future – Hughes

…GTT tax dispute takes centre stage

Despite promising a fully-liberalised telecommunications sector by the first quarter of 2018, Public Telecommunications Minister Cathy Hughes declined to give a timeline for its realisation in light of fruitful talks with GTT and its parent company, Atlantic Tele-Network International (ATNI).
On Monday, Minister Hughes reported that negotiations with GTT and its parent company for the lifting of the monopoly on the telecommunications sector have been fruitful, adding that one needed to take into context the fact that the companies have had the upper hand for over 20 years.
She added that both companies and the Government want to leave the negotiating table with the best deal.

The negotiations to date have been conducted in an extremely cordial manner, she said, adding “if you recognise that GTT and ATNI have had a monopoly situation that have lasted for over 20 years, then you can understand that from the perspective of both parties they want to ensure that they are coming to table to get the best…at the end of the day, on the Government side, we want to ensure that we get the deal that is going to be good for the people of Guyana.”
According to the Public Telecommunications Minister, the Guyana Revenue Authority (GRA) wanted to make sure that “they are covering all their bases from the financial end from taxes that would have been paid, from things that could be offered to the sector as a whole, so, therefore, the focus is not on getting this done in the shortest space of time, but making sure that we come up with an end gain that suits everyone.”
The liberalisation of the sector is heavily dependent on the settlement of a US$44 million tax claim against GTT. However, the company continues to enjoy the monopoly in international voice and data services until 2030.

Tax breaks
When asked about the granting of special tax breaks in exchange for the liberalisation of the sector in the shortest time possible, the Minister noted that queries on the financial and tax aspects of the negotiations should be directed to the Finance Minister and Head of the GRA.
“Those are some of the issues they are looking at; however, I will remind you that the environment provides for a liberalised environment, which means that everybody comes to the table to get and apply for the same terms and conditions; there are no special outcomes given to any particular company,” she noted.
“The Government is very committed to ensure that liberalisation comes in the fastest possible time; however, the tax issues do not come under my purview. Only the Minister of Finance or the Commissioner General of the GRA can deal with those aspects and, therefore, we are working very swiftly to ensure that we cover all of those areas,” she added.

End to monopoly
GTT and the Government began negotiations on December 9, 2016 hoping to put an end to the 26-year-old monopoly on the fixed line market. GTT has held sway in fixed line, international voice and data markets since 1990 and the initial 20-year contract was renewed in 2010 for another 10 (until 2030).
The talks came following the passage of the Telecommunications Act of 2016.
As it relates to the tax issues, ATNI said that GTT has been involved in several legal claims regarding its tax filing with the GRA dating back to 1991 regarding the deductibility of intercompany advisory fees as well as other tax assessments.
However, the company notes that should it be held liable for any of the disputed tax assessments, totalling US$41.1 million, it is of the view that the Government would then be obligated to reimburse it for any amounts necessary to ensure a not-less-than 15 per cent return on investment.
GTT’s long-distance voice and data monopoly came under intense scrutiny following the damage of the Americas II fibre-optic cable in May of 2008. To cushion the effect, GTT’s only competitor, Digicel was granted an interim long-distance licence to route communications from the country via satellite.
Since the commencement of the talks, GTT has accused Digicel of being involved in illegal activities and called for an independent third-party audit. According to GTT, Digicel, a company that has a licence for mobile services, has been facilitating an illegal, unlicensed trans-border link between Guyana and Suriname.
Minister Hughes noted that they would have been meeting with Digicel to finalise the terms of its licences to be issued under the new Telecommunications Act.