Algeria has increased the Value Added Tax (VAT) rate on voice and data telecommunications services, and mobile firms believe this will raise fiscal pressures on operations that have seen user revenues decline.

VimpelCom's Algerian mobile unit, Djezzy, which has just appointed Matthieu Galvani as new Chief Executive Officer, said by the end of December 2016, its subscriber base decreased by 4% to 16.3 million.

"From a taxation perspective, starting from January 2017, the new finance law increased pressure through an increase of VAT from 7% to 19% on data services and from 17% to 19% on voice services," read a confirmation from VimpelCom of the new Algerian VAT rates on Monday.

The tax rate on recharges has also been increased from 5% to 7%, also with effect from the beginning of this year. The fourth quarter period to end December 2016 saw Average Revenue Per User (ARPU) income decline by 10%.

This has been attributed to "the combined impact of historic 3G coverage shortfalls, sub-optimal changes in early 2016 to both billing increments and the commission structure for indirect distribution" channels.

Service revenue for the period also tumbled by 14%. However, data revenue continued to demonstrate strong organic growth of 70% in line with trends in other markets in Africa where the voice category is under pressure.

LTE services are pivotal for the company's quest to grow data revenue and it had earmarked expansion of high-speed 4G internet connectivity to 20 areas by the end of 2016. This expansion is, however, subject to regulatory approvals which the company anticipates will be granted.

It reported on Monday that during the quarter period under review, Djezzy "completed the 3G network roll-out across all 48 of Algeria's wilayas". However, there was a 16% decrease in capital expenditure for the period.

"Revenue decreased at double-digit rates and Djezzy continued to face customer churn and ARPU erosion. The company expects this pressure to continue, as it will take time to stabilise its commercial proposition and its customer base," VimpelCom said in its quarterly report.