FAQ -
What is 'Notional Interest' ?
On 30 June 2005, the law of 22 June 2005 was published in the Belgian Official Gazette. It allows Belgian companies (and Belgian branches of foreign companies) to deduct from their tax base a fictitious or notional amount of interest based on their adjusted equity capital. This measure has been applicable since 1 January 2006.
Risk capital
Risk capital refers to a company's net equity, including capital, reserves and retained earnings, existing at the end of the previous tax period and expressed (in accordance with Belgium's generally accepted accounting principles) in the company's unconsolidated financial statements for that period. However, certain items are excluded from the definition of risk capital to prevent redundancy and abuse. The amount of risk capital is also increased or decreased by the fluctuations of certain components during the tax period.
Interest rate
The deduction is calculated by multiplying the company's adjusted equity capital by the interest rate applicable to ten-year government bonds.
Carry forward of the deduction
If a company has insufficient taxable profits, it may be carried forward for seven years for deduction purposes.
Regulation impact 2011
| Regulation impacts (EUR million) | FY 2011 Estimated impact | |
|---|---|---|
MTR & flow-through Fix-to-Mobile | Revenue EBITDA | ~ €80m < €15m |
Roaming | Revenue EBITDA | ~ €10m ~ €10m |
Collecting model for Premium Rate Services | Revenue EBITDA | ~ €20m Neutral |
Other (a.o. new LLU & bistream prices) | Revenue EBITDA | ~ €5m ~ €5m |
Total | Revenue EBITDA | ~ €115m < €30m |
MTR
On 29 June 2010, the Belgian regulator (BIPT) adopted its final decision on the 2010-2013 MTR glide path. Gradual MTR decreases are foreseen until 2013 for all operators. The first decrease occurred on 1 August 2010 and the second one on 1 January 2011 for all three mobile operators in Belgium. At the same time, the BIPT reduced the existing MTR asymmetry, which is why the decrease for the other two mobile players was greater than for Proximus. This brings the Belgian regulation more in line with the European context. Fully symmetric tariffs will be achieved in 2013. Any decrease in MTRs is reflected in Belgacom’s fixed-to-mobile retail tariffs. Accordingly, Belgacom lowered its fixed-to-mobile tariffs on 1 August 2010 and on 1 January 2011.
| MTR glide path | Before* | 01-Aug-10* | 01-Jan-11* | 01-Jan-12 | 01-Jan-13 |
|---|---|---|---|---|---|
In euro cent (excl. VAT) Proximus Mobistar Base |
7.20 9.02 11.43 |
4.62 5.05 5.81 |
3.94 4.29 4.90 |
2.46 2.62 2.92 |
1.08 1.08 1.08 |
% Change Proximus Mobistar Base |
|
-36% -44% -49% |
-15% -15% -15% |
-38% -39% -40% |
-56% -59% -63% |
Asymmetry Mobistar-Proximus Base-Proximus
|
25% 59% |
9% 26% |
9% 24% |
7% 19% |
0% 0% |
* Including inflation
Voice Roaming
In application of the updated regulation on voice roaming which entered into force in July 2009, voice roaming rates decreased on 1 July 2010. Data roaming services are regulated at wholesale level based on a price cap, calculated on a per kilobyte basis. On 1 July 2010, data roaming prices went down from EUR 1 per Mb to 80 euro cents per Mb.
| EU roaming regulation | Before | 01-Jul-10 | 01-Jul-11 |
|---|---|---|---|
Voice roaming rates (eurocent / minute) Retail Outgoing Retail Incoming Wholesale |
43 19 26 |
39 15 22 |
35 11 18 |
Data roaming rates (eurocent / Mb) Wholesale
|
100 |
80 |
50 |
In addition, measures aimed at preventing "bill shocks" for Mobile data roaming were implemented and are affecting Mobile data revenue. Since 1 July 2010, all customers are by default on a maximum financial limit of EUR 49.85 (excl. VAT) per month for data roaming, unless they have opted out.
Financial collecting model for Premium Rate Services
On 1 April 2010, Belgacom adopted, where appropriate, a financial collecting model for part of its Premium Rate Services in which Belgacom collects from customers on behalf of a third-party content provider. This was as a consequence of the final circulars issued end-2009 by the Ministry of Finance concerning the application of VAT on Premium Rate Services and Tax on Chance Games. As a result, the relevant revenues can no longer be considered as full Belgacom revenues.
Shareholder Return policy
Belgacom’s shareholder policy as approved by the Belgacom Board of Directors on 25 February 2010:
The return of free cash flow either through dividends or share buybacks, will be reviewed on an annual basis, in order to keep strategic financial flexibility for future growth, organically or via selective M&A, with a clear focus on value creation. This also includes confirming appropriate levels of distributable reserves.
The shareholder remuneration policy is based on a number of assumptions regarding future business and market evolutions, and may be subject to change in case of unforeseen risks or events outside the company's control.
Further to the company's commitment to an attractive shareholder return, Belgacom's Board of Directors approved on 24 February 2011 the following shareholder return:
- a share buyback for a maximum amount of EUR 200 million, to be carried out during 2011-2012;
- and to return from the result 2011 a total dividend of EUR 2.18 gross per share.
Taxes on dividends
Under Belgian law, the withholding tax on dividends amounts to 25%. This amount is withheld by Belgacom. Shareholders are paid the net dividend. A different regulation may apply for foreign shareholders, depending on tax agreements. Belgium has agreements with more than 60 countries.
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