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November 29, 1995

TELECOM ITALIA RAIDED TO BALANCE BUDGET

By CBR Staff Writer

Telecom Italia SpA will not get the discount of some $62m in 1996 on its yearly payment to the state for its exclusive franchise, but will get the rebalanced call rates that it had requested, says Il Sole-24 Ore. In making the announcement, minister of posts and telecommunications Agostino Gambino also confirmed that the outline for a law creating a new, independent regulatory authority should be presented within the next week. Gambino said the government could not afford to give Telecom the discount it promised because the Senate budget commission, in trying to balance the government books, cut back the allocation to $100m from some $162m. The sum corresponds exactly to that promised Telecom Italia. It is not the first time the government has reneged on its promise progressively to reduce Telecom Italia’s franchise tax of 3.5% of turnover to 0.5% by 1998. Telecom commented that the decision could call into question the entire future of the expected discount. Tariffs will be rebalanced to increase local call rates and reduce long distance calls, which should cost the average family only about $1.87 more per month. And if the family uses a lot of long distance, he said, the increase should be cancelled out. Businesses will also get a reduction on leased data lines.

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