News & insights

CEPA has supported ComReg in its review of the methodology used to estimate the weighted average cost of capital (WACC) for regulated telecoms services in Ireland. ComReg has now published its consultation and draft decision for the upcoming regulatory period, as well as CEPA’s independent report (link here).

The review considers whether the methodology set out in ComReg’s 2020 decision remains appropriate. Since then, market conditions and the regulatory landscape have changed, including reduced reliance on cost-orientated price controls in some areas.

ComReg proposes to calculate WACC estimates for 3 sectors: fixed line telecommunications, Physical Infrastructure Access and broadcasting transmission services. ComReg also proposes that a separate WACC for mobile telecommunications is no longer required.

ComReg’s draft decision also proposes a change in the methodological approach. Rather than continuing with the approach adopted in the 2020 decision, ComReg considers it more appropriate to follow the approach set out in the European Commission Notice, as implemented and published annually by BEREC. CEPA’s report informed ComReg’s assessment of this change, including the extent to which the BEREC approach should be adopted and potential alternative estimation approaches.

This publication adds to CEPA’s recent work on cost of capital issues in telecoms and digital infrastructure across Ireland, the UK, Australia and New Zealand.