AXON’s Audit Report
The audit report identifies some problems in reconciling values from the CAS and those considered in the calculation of CLSU. Auditors note that the same reconciliation problems were identified in the calculation of CLSU in previous years.
As such, just as in the scope of previous audits to CLSU results, AXON identified difficulties in reconciling the number of access lines (PSTN/ISDN) considered for the purpose of the calculation of CLSU of unprofitable areas and of unprofitable public payphones with volumes entered in the CAS for 2014. Auditors also indicate that the number of lines included in the calculation of CLSU is lower than the one in the CAS, which in its opinion undervalues CLSU values.
The audit report also mentions deviations at the level of traffic volumes and of revenues, affecting the calculation of unprofitable areas and specifically of unprofitable public payphones in profitable areas. Although it is acknowledged that this situation limits the accurateness and resilience of amounts presented and calculations made by MEO, auditors conclude, taking into account that volumes considered for the purpose of CLSU calculation are generally lower than those reflected in the CAS and that revenues considered in the model and generally higher than those reported in the CAS, that MEO is underestimating CLSU.
As regards deviations identified in the reconciliation of traffic volumes, the audit report takes due note of the clarification provided by MEO, stressing the fact that traffic values used in the calculation of CLSU are lower than those in the CAS. This operator refers that the volumes considered in the calculation of CLSU should not be compared directly to volumes reported in the CAS, as the traffic volume reported in the CAS includes traffic of customers at the level of analogue accesses and RDIS accesses, as well as traffic of IPTV and VoIP customers, which are not included in the calculation of CLSU. The difference between volumes of traffic between the public payphone model and the volume reported in the CAS, according to the clarification provided by MEO to auditors, is related to the fact that volumes of virtual cards included in the CAS correspond to paid minutes, whereas minutes included in the model correspond to minutes effectively routed in the network.
As regards differences found in the reconciliation of access and traffic revenues in the model of unprofitable areas, the audit report presents clarifications provided by MEO on this situation. According to this operator, the main reason for this deviation results from the fact that the CLSU model does not take into account the discount granted to customer accounts as it was not possible to allocate the discount to each service. As regards differences in the reconciliation of revenues allocated to public payphones, the clarification provided by MEO, referred in the audit report, explains that this situation occurs because revenues of virtual cards in the CAS were adjusted for financial accounts that present a lower value than that presented in operational systems.
MEO comments
In its comments to the audit report, MEO restates the observations made in the scope of previous audits to CLSU. As such, at the level of the number of lines used to calculate CLSU, it stresses, as declared by AXON, (...) that, taking into account the fact that the number of lines considered for the purpose of the calculation of CLSU, is in general much lower than the value reflected in the CAS, the establishment of CLSU performed by MEO is underestimated”.
As regards factors which prevented the full reconciliation of traffic volumes and volumes of access and traffic revenues, it declares that a full reconciliation of values should not be expected, stressing that factors that made the full reconciliation impossible in previous years (2007-2013) remained in 2014. Lastly, the company declares that volumes of minutes used to establish 2014 CLSU are lower than those in the CAS, which undervalues CLSU, and that revenues considered in the CLSU model are higher than those in the CAS, which on its turn also leads to the underestimation of established CLSU.
Line taken by ANACOM
As regards deviations identified in the reconciliation between values considered in the CLSU calculation model and those in the CAS, it must be referred, in the first place, that in all situations identified this fact contributed to the underestimation of CLSU. In the second place, these situations were duly justified, having auditors undertook an analysis and concluded that data used in the CLSU calculation model result in a more conservative CLSU estimate, and thus affects negatively only MEO itself. In the third place, in the scope of audits to CLSU estimates from 2007 to 2013, this type of deviations had already been identified, having ANACOM accepted values used for the calculation of CLSU on the basis of arguments set out above.
Not having been identified new elements that call into question this Authority’s views, ANACOM reiterates its position. As such, bearing in mind that the situations verified in the reconciliation between some inputs of the model and CAS values result from an impossibility acknowledged by MEO, which affects negatively this company only, it is deemed that 2014 CLSU estimates should be accepted.
