Telecommunications companies that invest in laying submarine links to Europe will receive state aid in the form of tax credits, Communications Minister Austin Gatt said yesterday.
The initiative comes after the European Commission gave the go-ahead for government incentives to be given to telecoms providers that invest in international connectivity.
Malta has become highly dependent on submarine links with Europe. Last August, a fault in a cable to Sicily operated by Go left thousands of users and businesses cut off from the internet for the better part of a day.
Under the new scheme, small companies that invest money in a submarine link will qualify for tax credits of up to 50 per cent of their costs, medium-sized companies qualify for 40 per cent and large companies for 30 per cent. The tax credits will be awarded for expenses incurred up to December 2011 but also apply to companies that have already made such an investment.
This means that Vodafone, Melita and Go qualify for 30 per cent tax credits on the cost of their cables. Melita only recently fired up a €10 million submarine fibre optic cable creating a 100 kilometre connection between Malta and Sicily. Go has two cable links to Sicily and Vodafone operates another.
A legal notice had still to be issued but the measure would serve as an incentive for other companies to invest in similar links, said Minister Gatt.
He was speaking at the launch of the Malta Communications Authority's 2008 annual report.
The figures in the report were very positive and showed that the increased competition in the sector was working, he said.
The report shows that mobile phones have become more widespread but that the fixed-line telephone is still a more popular means of getting in touch. In fact, people spent more time making fixed-line calls in 2008 than they did the previous year, an extra 44.4 million minutes.
Fixed-line to mobile phone traffic increased by 9.5 million minutes although the number of minutes spent on international fixed-line calls fell by three million minutes.
Two new mobile phone operators came on the market last year and the number of mobile subscribers reached 385,636; 94 per cent of the population owns a mobile hand set.
The number of users on pre-paid services fell by 998 but, at 86 per cent of the market, this option was still much more popular than going on contract.
One tenth of mobile phone users - an increase of 13,300 over the 2007 figure - ported in 2008, that is, they switched mobile networks but retained their number.
Subscribers sent fewer text and picture messages and made more voice calls in 2008 when compared to 2007 as a result of more promotional offers being made, the MCA said.
Last year, 503.8 million text messages were sent, 7.4 million fewer than in 2007. The number of MMS messages dropped from the 562,000 sent in 2007 to 360,195 last year.
Malta had the most expensive mobile voice rates in the EU last year, with an average rate of 27c per minute compared to the EU average of 14c, according to European Commission figures quoted in the MCA report.
The MCA clarified later that the figures might not fully reflect the actual cost of mobile services in Malta because they only related to the average per-minute cost.
Quoting Commission statistics, the MCA pointed out that subscribers in Malta paid an average of €22.73 a month for a typical basket of mobile services compared to the EU average of €19.49. The island ranked 20th among the 27 EU countries on the typical consumer price for average mobile usage.
Despite being ubiquitous, mobile phones in Malta have still not penetrated to the same degree as in the EU, with a penetration rate of 94 per cent compared to the EU average of 119 per cent.
The number of internet subscriptions amounted to 102,908 last year, 98 per cent of which were broadband. The broadband penetration rate of 24.6 per cent is higher than the EU average of 22.9 per cent.
Dial-up internet is on the decline, with just 1,993 subscriptions at the end of 2008 compared to 5,426 in 2007.