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VAT rate rise in Estonia will be noticeable in telco bills from February

Smartphone. Photo is illustrative.
Smartphone. Photo is illustrative. Source: ERR

The sales tax hike put in place by the coalition government will be followed by a noticeable rise in internet, telecomms and TV bills, from next month in particular, ETV news show "Aktuaalne kaamera" (AK) reported Tuesday.

While all of Estonia's service providers will be affected, Telia, which has the largest turnover of them all, is to raise significantly its prices from March.

Holger Haljand, CEO of Telia Eesti, told AK that this was in fact the result of the disappearance of "lower speed" packages from the company's service selection, in the interests of maintaining quality while consumption volumes rise.

In any case, this will mean price rises.

The lowest-cost home internet package with Telia will cost the consumer €19 per month from March, up from the €16.26 charged at present.

While in this case the higher price is at least accompanied by faster internet speeds, in the case of the TV package, the higher price does not bring any additional benefits.

Haljand said: "In the case of the TV service, in fact, only in the case of the mini-package and of one additional service will prices rise. In the case of the mini-package, the increase will only be 89 cents. Such surges are a requirement to be able to ensure that TV content continues to be maintained at the highest quality, that the TV service itself is maintained at the highest quality."

The most affordable TV and internet combined package will cost consumers an additional €43 per year, AK reported.

Telia's 2022 reported profit was €54 million, and the company increased the prices of services in line with the new VAT rate, from January 1.

However, due to rising consumption – which the company says has tripled in recent years – Telia will be raising its fess further from March.

While the VAT increase came into effect at the start of the year as noted, Tele2, another major service provider, has pledged not to hike prices next month, February.

In fact the company already upped its tariffs last year, saying it was offering a more secure service in return.

Tele2's 2022 sales revenue came to €85.1 million.

Sten Argos, Business Manager at Tele2 Estonia, told AK that "Also last year, we added some extra services to help with the security on several packages."

"This will, it is true, carry with it a certain price correction. But it also comes with a rise in the so-called needs growth, and security needs growth, in respect of our customers. On the basis of what our customers want, we proceed, we offer a price guarantee, reasonable prices and adjust the packages accordingly. We have not made any major fee rises for quite a long time, in relation to services," Argos went on.

Elisa, the third of the big three service providers in Estonia, also hiked its fees last year, as a result of the rising energy prices.

Evelin Tulp, Elisa Eesti telecommunications services department head, told AK That: "If by chance now there should be any changes in the economy beyond our control – in the external environment, in input prices – then in the long run, of course, we will have to react, but in the near future there is no such plan."

To meet the growing state budget deficit at a time of economic downturn, the Reform-Eesti 200-SDE coalition, on entering office in April last year, announced a two percentage point hike in the basic VAT rate, more accurately a sales tax, to 22 percent, from the start of this year.

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Editor: Andrew Whyte, Merili Nael

Source: 'Aktuaalne kaamera,' reporter Veronika Uibo.

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