A Telecom Advisory Services (TAS) report, delivered in conjunction with
the GSMA today, reveals how mobile sector-specific taxation is impacting on
the development and deployment of Mobile Broadband in developing countries.
The study indicates how a reduction in special taxes applied to the
telecommunications sectors in countries with different taxation approaches
like Brazil, Mexico, Bangladesh and South Africa will translate into higher
Mobile Broadband service adoption and more wealth creation reflected in
additional GDP growth.

    Inconsistencies currently exist in many developing countries between the
levels of taxation levied against the Mobile industry and the reliance each
of these countries place on Mobile Broadband to achieve broadband penetration
goals. With a widespread absence of fixed infrastructure in these markets,
Mobile Broadband will become a key social and economic development lever,
driving internet connectivity and bridging the existing digital divide. As
today's report reveals, every dollar reduced in taxes across Brazil, Mexico,
Bangladesh and South Africa will generate additional GDP ranging between
US$1.4 to US$12.6 through enhanced broadband uptake. Despite this however,
all four countries have implemented a taxation approach that actively reduces
Mobile Broadband penetration by putting an economic burden on the purchase of
handsets and services.

    "The findings from today's report clearly show how distortive taxation
approaches in some countries can increase the Total Cost of Mobile Ownership
(TCMO), negatively impacting development of Mobile Broadband," said Tom
Phillips, Chief Government and Regulatory Affairs Officer at the GSMA. "This
report highlights the inconsistencies between regulations aimed at developing
ICT sectors and policies that single out the services they deliver as "cash
cows" upon which taxes are levied."

    The study authored by renowned experts Dr. Katz, Dr. Flores-Roux and Dr.
Mariscal states that at least twenty-seven countries around the globe have
special taxes focused on telecommunications services. While it is imperative
that governments apply taxes to finance spending and generate externalities
in sectors where private investment is lacking, these taxation models are
often extremely inefficient. Fiscal policies that apply a special tax to the
telecommunications sector cause distortions that "crowd out" private spending
and ultimately diminish welfare.

    "It is crucial that policy makers in these countries understand the
impact Mobile Broadband will have on wealth creation, and align their ICT
development strategies to sustain its ongoing growth", said Mr. Phillips.

    The full report can be found via the following link: TAS Report
(http://www.gsmamobilebroadband.com/upload/resources/files/15072010174953.pdf
)

    TAS Report highlights - Malaysia:

    - For every dollar that taxes are reduced over the 5 year period ending
in 2014, 1.7 to 25.6 dollars will be created in additional GDP.

    - The effect of lowering taxes on Total Cost of Mobile Ownership from the
current 6.1% to 5.1% will have the following cumulative effects:

    - Additional penetration: 0.9 %-1.8 %, representing 2.9 %-5.8 %
additional subscribers (or 260,000-530,000 subscribers)

    - Wealth creation (additional GDP): $105 million-$1.44 billion
(0.01-0.24% additional GDP by 2014)

    - Accumulated loss/gain in tax collection: on the most conservative case,
loss of $ 48 million; on the most positive case, $ 156 million

    - Malaysia levies 5% VAT on telecom services, and 10% VAT on handsets

    - Malaysia's Taxation Approach is characterized as "Universalization and
Protectionism", a strategy aimed at minimizing taxes in order to maximize
wireless service deployment.

    About the GSMA

    The GSMA represents the interests of the worldwide mobile communications
industry. Spanning 219 countries, the GSMA unites nearly 800 of the world's
mobile operators, as well as more than 200 companies in the broader mobile
ecosystem, including handset makers, software companies, equipment providers,
Internet companies, and media and entertainment organisations. The GSMA is
focused on innovating, incubating and creating new opportunities for its
membership, all with the end goal of driving the growth of the mobile
communications industry.

    For more information, please visit Mobile World Live, the new online
portal for the mobile communications industry, at
http://www.mobileworldlive.com or the GSMA corporate website at
http://www.gsmworld.com.

    Source: GSMA