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Is MTN Phasing Out Airtime Scratch Cards?

Mobile phone subscribers especially on the MTN and Airtel network in some parts of Uganda have complained of being charged unusual extra money off airtime scratch cards.

For example, a Shs500 card is now sold at Shs600 while a Shs1, 000 card is sold at Shs1200.

Airtime agents say telecom firms reduced on their commission, thus necessitating the hike. For example, airtime of Shs100, 000, they are given a commission of Shs3, 000 or less from the previous average of Shs4, 000.

“We feel cheated. We invest in a lot of money and almost get nothing. Now they are cutting back on the commission arguing that there are new taxes on airtime,” an airtime agent told Business Focus.

In a statement MTN distanced itself from increasing airtime prices, blaming it on agents.

Uganda Revenue Authority (URA) said there is no new tax on airtime as some people have been claiming.

In a recent statement, Ian Rumanyika, URA Communications Officer said the Telecoms were not accounting for VAT [Value Added Tax] on the full value of airtime sold to the subscribers claiming to give a discount to distributors.

For example airtime of 10,000 sold at 9,300 and the Telecom companies would declare and charge VAT at 9300 instead of declaring full face value of the airtime.

“It’s is important to note that distributors do not offer services to the Telecom subscribers but to the Telecom firms by distributing their products. Hence it was agreed that Telecoms must account for full value of airtime. The distributors will charge the Telecoms for their distribution services.

The airtime agents or distributors registered for VAT will invoice with VAT while those not registered for VAT will invoice their fee less VAT.

All telecom companies agreed to this move and we had given them the 1st quarter to sensitize their distributors which I believe they did,” he said.

He added: “The last financial year 2016/17 we have collected both LED [Local Excise Duty] and VAT totaling to [Shs] 288,677,182,696.30. We forecast an addition of over [Shs] 5bn on this measure.”

End of Scratch Cards?

MTN is now encouraging its subscribers to recharge their airtime electronically—either through the ‘EasyLoad’ option or off their mobile money accounts.

The telecom giant is giving a 30% bonus on the value of airtime a client buys through ‘EasyLoad’.

A Mobile Money Agent operating in Kakumiro Town Council, Kakumiro district told Business Focus that airtime scratch cards are increasingly becoming scarce in the area since some agents have given up on reselling airtime after the commission was cut.

The Agent said an MTN official in charge of the area told them (Mobile Money Agents) that MTN Uganda was systematically phasing out airtime scratch cards for cashless payments.

“He (the official-names withheld) said that taxes on airtime had been increased yet the cost of printing them is also high,” the agent said.

The official encouraged Mobile Money agents in the area to register for ‘EasyLoad’ where they are able to buy airtime at higher commissions and resell it to the subscribers at no extra charge.

Asked whether MTN was phasing out airtime scratch cards,  Justina Ntabgoba, the  Corporate Affairs Senior Manager at MTN Uganda said the telecom company wanst aware of such developments.

“I am not aware about those speculations [of MTN phasing out airtime scratch cards]. I have consulted and I can tell you we are not aware about it,” Ntabgoba told Business Focus.

Taddewo William Senyonyi
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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