Posts Tagged ‘telecommunications’

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Taliban sends tax bills to big telecom

January 28, 2016

The Taliban has demanded that four telecommunications companies operating in Afghanistan pay them a 10 percent.  This news from Agence France Presse suggests the Taliban is expanding the scope of their revenue dragnet.  The companies have not commented on whether or not they will give in to the Taliban’s demands, although AFP quotes one corporate source who sounded like they haven’t decided what to do yet.  The situation is resembles Somalia, where telecommunications companies have reportedly made payments to the terrorist group Al-Shabaab.

Afghan Taliban flex muscles with new telecom ‘tax’

By AFP

Published: January 18, 2016

KANDAHAR, AFGHANISTAN: The Taliban have demanded a hefty new “protection tax” from Afghan mobile phone companies, industry and militant sources told AFP, as the resurgent group tightens its stranglehold on a rare successful business in a slumping war economy.

At a secret meeting last month near Quetta, the Taliban’s central leadership formally demanded the tax from representatives of four cellular companies in exchange for not damaging their sites or harming their employees.

The edict was motivated by an Afghan government announcement in October that it had amassed a windfall of 78 million Afghani within days of imposing an additional 10 per cent tax on operators, according to two telecom company officials who attended the meeting and a third industry executive privy to the information.

“They want us to pay the same amount paid to the government,” one of the officials who was at the gathering told AFP.

“We told them that this will kill our business, but they said: ‘This is the only way to guarantee your people are not harmed and your sites are not burned’,” he added.

A source in the Quetta Shura — the Taliban’s Pakistan-based leadership council — confirmed the meeting, telling AFP the group was waiting for a formal response from the companies.

“We told them: ‘It is our right to tax you if you want us to protect your (transmission) towers around Afghanistan’,” he said. “‘You will have to pay’.”

The militants have long targeted Afghanistan’s private telecom firms, kidnapping engineers, destroying transmission masts and forcing regular coverage blackouts in volatile areas to avoid detection of their fighters.

Local-level Taliban commanders have been known to extort from businesses operating in their areas, notably the telecom firms and logistics companies supplying Nato bases and Western-funded construction projects.

But this appears to be the first time the central leadership has formally demanded a levy from business enterprises, underscoring how they increasingly operate like a shadow government.

It also highlights the dangers of doing business in conflict-torn Afghanistan — particularly for the telecom industry, fast becoming a battleground in the Taliban’s war against the US-backed Afghan government.

The companies said to be at the meeting — Abu-Dhabi based Etisalat, South Africa’s MTN and homegrown firms Roshan and Afghan Wireless Communication Company — officially declined to comment when contacted by AFP.

But one of them confirmed the meeting and tax demand, voicing a mix of helplessness and frustration.

“Ten per cent tax to the Taliban? That means we will have to share our revenue information with a militant organisation,” a Kabul-based company representative told AFP.

“That’s just not feasible. We told them ‘no’.”

But one of the telecom officials who attended the Pakistan meeting said there was no escaping the Taliban edict, adding that the companies at best could wrangle a concession from the insurgents in future negotiations…

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Al-Shabaab profits from Somali telecom sector

August 18, 2014

Without a stable central government, Somalia’s telecommunications network has been unregulated for decades.  This has allowed for tremendous growth and fairly low prices for phone and Internet access in Somalia compared to neighboring countries.

However, this has also created a Wild West atmosphere of clan elders and businessmen in Mogadishu cutting deals with international—often Saudi-backed—telecommunications providers like Arabsat.  Arabsat is based in Saudi Arabia and is owned by the Arab League.  In addition to providing phone coverage, Arabsat’s satellites host television broadcasts by well-known hate channels Al Manar and Al-Aqsa.

The government of Somalia has made attempts recently to begin taxing and regulating the telecommunications industry, but the bigger factors at play are the taxes you don’t see.  Some evidence suggests that informal licenses are granted by warlords or businessmen in exchange for bribes paid behind the scenes.

Reporting from the Gulf News earlier this year went even farther, suggesting that the warlords allow the telecoms to over-charge customers so they can pocket the difference or pay off al-Shabaab too:

…By persuading other telcos worldwide to clip the ticket for them, these [Somali telecommunications providers] groups has [sic] become wealthy enough to avoid attempts by government and the regulatory International Telecommunication Union (ITU) to rein them in.

Not only do these groups exploit vulnerable customers charging them often beyond their means and disproportionate to costs, there are also suspicions that some sponsor the terrorist scourge, Al Shabaab.

By negotiating with foreign companies to charge above the usual rates and to put money collected into overseas funds, these “companies” avoid tax — and have sufficient clout to offer deals to favoured factions, or fund groups they believe will deliver a government suited to their economic or ideological aims…

There are also rumors of relationships between, or at least pressure exerted by, al-Shabaab on several specific Somali telecommunications companies including Hormuud Telecom.  RBC Radio reported this year that, “Al Shabab has closed down Hormuud Telecom Company’s branch in Jilib town, Middle Jubba region after the company failed to pay $50,000 which Al Shabab demanded from local companies,” and added that, “Extorting money from private business companies and aid agencies operating in Somalia is seen as the biggest source of investment for Al Shabab’s war with the government.”  Some sources have gone further, describing Hormuud as “al-Shabaab’s messenger” or “the phone of death” taking its cues from al-Shabaab.

In October 2011, Hormuud was allowed to remain in operation while two rival companies were closed by al-Shabaab.  One of those rivals, Nationlink Telecom, eventually reopened after allegedly paying $30,000 to al-Shabaab to resume operations.  An al-Shabaab member told the Somalia Report that non-cooperative companies would be forced to close “until their managers agree to pay taxation for the war against the infidels as well as the crusaders.”

While it is possible that some of the claims about the telecommunications business in Somalia have been exaggerated due to clan or business rivalries, former al-Shabaab commander Mohamed Farah Al-Ansari confirmed the role of extortion against Somali telecommunications companies in funding al-Shabaab in an interview with Voice of America last year.

There are enough grounds for concern that international investors and corporations would do well to examine any business deals with Somali telecommunications companies with the utmost caution.  Similar to the risks of doing business with the money transfer company Dahabshiil, the taint of al-Shabaab is simply too strong to ignore.