AXON’s Audit Report
It is referred in the audit report that MEO claims that it is not feasible to individually identify unprofitable customers due to internal limitations of its information systems. It is expressly mentioned that the access cost depends on operational information, namely the loop length, which is not available for all accesses, thereby making the correspondence between physical access lines and customer identifiers impossible.
As a result, MEO followed an alternative approach to identify unprofitable customers in profitable areas, which AXON explains in detail in the audit report and which involves the elaboration of de-averaging curves of net revenues and of access costs. On the basis of these de-averaging exercises, MEO is able to calculate the proportion of customers that are not profitable in each area and net costs generated by such customers.
As regards the de-averaging of access costs, auditors mention that the model uses data for 2014 and that the de-averaging of line length took only retail lines into consideration, in compliance with ANACOM’s determination on this matter.
As such, AXON concludes that the approach followed by MEO is consistent with the methodology established by ANACOM, a conclusion which is restated for results resubmitted by MEO in May 2016.
Notwithstanding, auditors identified in the first values submitted by MEO on 30.10.2015 a situation at the level of calculation, the correction of which was recommended. In one of the sheets of the customer model some items were calculated taking the annual period (12 months) into consideration, when only the period of service provision (5 months) should have been considered. These calculations are deemed not to have any impact in the model of unprofitable customers or in the final value of 2014 CLSU, given that sheets used as basis for the calculation of 2014 CLSU correctly consider the 5-month period; nevertheless, the correction was recommended. The audit report also mentions that when 2014 CLSU estimates were resubmitted, MEO had corrected this situation.
MEO comments
In its comments to the audit report of 2014 CLSU, MEO mentions that it agrees with the recommendation made by auditors as regards to need to consider the 5-month period instead of the 12-month period in the calculation model, referring that it conducted this correction in calculations resubmitted on 06.05.2016. It stresses, just like auditors, that the implementation of this correction had no impact on CLSU results.
Line taken by ANACOM
As was the case with the determination of CLSU in previous years, MEO declares that it is not provided with disaggregated information on access costs and follows the alternative approach implemented in previous years.
Bearing in mind that ANACOM agreed with the approach followed by MEO in the scope of the determination of CLSU in previous years and taking into account that auditors conclude, in the scope of this audit, that the approach followed by MEO is consistent with the methodology established, ANACOM concludes that the process followed is in compliance with the methodology.
Taking also into consideration that when resubmitting CLSU values for 2014, MEO implemented the auditor recommendation referred above, according to the mention made in the audit report, ANACOM considers that there is nothing to point out.
