Liberia: Will Orange Liberia Pull Out As Supreme Court Upholds LTA’s Regulation on Surcharge on Voice Calls and Internet Data?

In March this year, when the LTA advanced its invoice to Orange Liberia and LoneStar Cell MTN for monies collected on the surcharge, both companies indicated that they are unable to pay the surcharge now or in the foreseeable future based on their current and projected revenue and economic realities.

MONROVIA – Orange Liberia had insisted that should the Liberia Telecommunications Authority (LTA) surcharge on the existing floor prices for GSM Companies voice calls and internet data be implemented, it would make its business in the country less viable and very difficult to continue operations.

To this end, Orange Liberia has been challenging the LTA Order in court with a core argument that “LTA cannot determine and impose surcharges as same is not within its regulatory authority, as that authority was removed by an Act passed by Legislature and published on August 29, 2017.”

Orange Liberia contended that the LTA has no legal rights to impose floor price and levy surcharges on telecommunications goods and services and that the repealed provision was related to excise tax, which Orange claimed was within the authority of the Liberia Revenue Authority (LRA).

The surcharge is a government revenue generator from the telecommunications sector which was recently implemented to replace the 5 percent tax.

It represents US$22 million on a turnover of US$93.3 million turnovers, with a big sum of that going to Orange France as management and royalties’ fees to avoid further paying local taxes.

The surcharge of US$0.008 for each minute of voice call and US$0,0065 for each megabyte of data was expected to be introduced in March this year – six months after the cancellation of the famous three days ‘free call’ and the introduction of a new floor pricing system.

GSM Companies: ‘We Can’t Pay’

In March this year, when the LTA advanced its invoice to Orange Liberia and LoneStar Cell MTN for monies collected on the surcharge, both companies indicated that they are unable to pay the surcharge now or in the foreseeable future based on their current and projected revenue and economic realities.

“To do so would mean at best a drastic reduction in our investments and downsizing of our operations and at worst, a conclusion by our parent companies that our business is not sustainable in Liberia. It is our utmost wish for this not to be the case, but circumstances may make this unavoidable,” both Orange Liberia and Lonestar Cell MTN stated in a joint communication to the LTA on April 30.

The two companies stated that their total revenue for the month of March 2020 along with their expenditures make it impossible to take on the additional expenses. They warned that this could hamper the sustainability of the sector.

The GSM Companies argued at the time, “In this period of coronavirus, it is unconscionable, and contradictory to ask consumers to pay more, while also asking us to provide consumers with affordable packages as was done through Orange Care and Y’ello Hope. The surcharges would place Liberia as one of the most expensive countries for communications across Africa.”

First Ruling against Orange Liberia

Despite all their arguments, the Civil Law Court ‘B’ at the Temple of Justice denied contentions raised by Orange –Liberia, challenging the Liberia Telecommunication Authority (LTA) order 0016-02-25-19 that was intended to establish price floors for on-net voice and data services, a regulatory fee on telecommunications goods and services, and a regulatory surcharge for on-net voice and mobile data services in May this year.

Judge Scheaplor R. Dunbar declared at the time that: “The petition for judicial review is denied and dismissed, and the resistance is sustained. The stay order of April 15, 2019 is lifted. LTA may proceed to enforce and implement the order,” adding costs ruled against Orange-Liberia.”

Judge Dunbar rejected Orange’s argument, ruling that the LTA’s order was promulgated in conformity with the Telecommunication Act of 2007, stressing “And that the said order does not violate any provision of the Revenue Code.”

The judge said LTA does not have to obtain the full agreement of all service providers and stakeholders before it can promulgate an order, rule or regulation.

Judge Dunbar’s ruling into the Writ of Prohibition filed by Orange Liberia at the lower court basically permitted the regulatory body to go on with the collection of the surcharges from the GSM Companies.

But Orange Liberia took an appeal to the Supreme Court, requesting the Court to reverse the ruling.

However, after the Supreme in Thursday’s ruling adjudged that word “surcharge” as used in the LTA’s Order published on February 25, 2019 is construed within the context of an imposition of additional fees or charges on data services and on-net voice calls under the authority of the LTA Act of 2007. The Court added that the imposition of the surcharges does not invade Legislature’s authority to levy tax.

“It was not the intent of the Legislature to preclude the appellee from imposing surcharges on data services and on-net voice when it repealed and amended Section 1165 (Mobile Telephone Usage) and 1022(B)(2) of the amended Revenue Code as amended in 2016,” the Supreme Court added.

According to the Bench, the trial judge was not in error when he held that Orange Liberia did not allege sufficient legal grounds for the granting of its petition for judicial review, and that the LTA acted under the its Act of 2007.

The Supreme Court also noted that the argument on economic factor is not the prerogative of the Court, rather the technical and political actors.

“We must add that question arising from public policies on the imposition of price and their accompanying economic impacts are addressed to the judgment of the technical and political actors hence not cognizable for judicial determination unless there is a clear showing of arbitrariness or that the administrative agency exceeded its jurisdiction touching on the imposition of price as required by law,” the Bench noted.

The Supreme Court’s ruling was signed by all members of the Bench.