When resubmitting new estimates of 2010-2011 CLSU, MEO conducted a review of the adjustment to avoid double counting traffic between unprofitable customers in profitable areas, so as not to compromise the correspondence of the model to the reality portrayed. In that occasion, the company referred that the need for the review resulted from the change of MEO’s net margins resulting from the review of CAS values.
MEO thus calculated the proportion of revenues of unprofitable customers in the total of revenues of on-net calls made in profitable areas on the basis of gross revenues instead of net revenues.
In its decision on the establishment of 2010-2011 CLSU, of 20.11.2014, ANACOM considered that this change increases the strength of the calculation and that it is in accordance with the established methodology, noting also that auditors considered it to be reasonable and appropriate.
AXON’s Audit Report
The audit report mentions that the calculation of the net revenue adjustment, intended to eliminate the double counting of on-net received and made calls in the scope of the 2014 CLSU “(...) is based on the percentage that unprofitable customers represent in the total of gross revenues of on-net calls made in those unprofitable areas.”
AXON reaches the conclusion that the approach followed by MEO is consistent with the methodology established by ANACOM.
Line taken by ANACOM
In this respect, it must be stressed that, having ANACOM approved on 20.11.2014, in the scope of the decision on 2010-2011 CLSU, the adjustment proposed by MEO, and bearing also in mind that auditors considered it to be reasonable and appropriate, and that in the decision on 2012 CLSU ANACOM maintained this approach and clarified that the adjustment should be maintained in future years, a view which was maintained for 2013 CLSU, it is deemed that the adjustment conducted by MEO in 2014 CLSU is in compliance with ANACOM’s determinations.
