The strategic impact of tax regulation on the performance of a telecommunication company

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

Abrupt regulatory and statutory requirements add to the complexity of sustainable businesses and may impact their strategies and their performance. This research aims to investigate such regulatory impacts, for example, the full end-to-end telecommunications (telco) industry is complex and requires focused strategies right from the product catalogue down to rate cards, price configuration, system capacity, network depletion rules, billing engines, and customer invoices. Failure to apply the correct value-added tax (VAT) change in these elements can result in over or underbilling of customers. An undercharge influences the operator’s revenue, causing a loss, not just because of the 1 percent VAT increase. Consequential damage points to that an overcharge may increase customer complaints and result in reputational risk that is not limited to customer churn. A mixed-method design was applied where interviews provided qualitative results and financial statements of mobile telephone networks (MTN) were used for quantitative analysis. Results showed that the VAT change increased the liability transactions from the balance sheet of the year 2018 compared to 2017 (Nene, 2019). This research recommends efficiency in project management that involves the review of old legacy systems, conducting impact analysis and contentiously updating the enterprise architecture framework.

Keywords: Performance, Revenue, Strategy, Telecommunication, VAT Increase

Authors’ individual contribution: Conceptualization — P.R.N.; Methodology — P.R.N.; Validation — N.V.M.; Formal Analysis — P.R.N.; Investigation — P.R.N.; Data Curation — P.R.N.; Writing — Original Draft — P.R.N.; Writing — Review & Editing — P.R.N. and N.V.M.; Visualization — P.R.N.; Supervision — N.V.M.; Project Administration — P.R.N.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G38, H22, H29, M21, P47

Received: 04.05.2023
Accepted: 12.12.2023
Published online: 14.12.2023

How to cite this paper: Nene, P. R., & Moraka, N. V. (2023). The strategic impact of tax regulation on the performance of a telecommunication company [Special issue]. Corporate & Business Strategy Review, 4(4), 369–380. https://doi.org/10.22495/cbsrv4i4siart17