6. Conclusion and Determination

Whereas:

a) In its preliminary audit report, AXON concludes that, except for limitations related to reconciliation and discrepancies identified in calculations and sources of information, results and calculations presented by MEO in 30.10.2015 (first CLSU estimates for 2014) and later corrected in 27.01.2016, further to some recommendations conveyed in the meantime by AXON to MEO, are in compliance with principles, criteria and conditions laid down in ANACOM determinations, and data, assumptions and calculations used are adequate enough.

b) Before AXON presented its preliminary audit report, MEO conveyed on 06.05.2016 new CLSU estimates for 2014, taking into account recommendations made by AXON in the course of the audit as well as recast CAS values for 2014, which in the meantime had been approved by ANACOM on 21.05.2016.

c) The referred estimates were subject to a new audit in the scope of the ongoing procedure, which had not been yet concluded. This audit was intended to check compliance of resubmitted values with amendments introduced in MEO’s CAS for 2014, and the correct implementation of recommendations set out in the preliminary audit report.

d) ANACOM notified MEO on 08.06.2016 of final audit results to CLSU estimates for 2014, this company having sent its comments to the final audit report (draft version) on 07.07.2016.

e) Alternative approaches used by MEO to establish avoidable access costs continue to be acceptable to ANACOM, as they have been used before in the scope of the establishment of CLSU for previous years, having been considered acceptable and consistent with the methodology for calculating CLSU, both by auditors and by ANACOM itself.

f) In compliance with ANACOM’s determination of 22.07.2015, MEO used, to calculate CLSU for 2014, operational data as well as traffic and revenue data for the first five months of the year, having demonstrated that the use of average costs for the 2014 financial year does not differ significantly from the use of unit average costs for the January-May 2014 period, and as such that unit average costs for 2014 appropriately reflect the company’s activity for the period concerned.

g) ANACOM confirms that the methodology used to determine unprofitable areas, including the application of plausibility criteria, as well as to determine unprofitable customers in profitable areas, retired persons and pensioners, unprofitable public payphones in profitable areas, and indirect benefits, is appropriate and complies with ANACOM’s determinations.

h) Limitations identified at the level of the reconciliation of values used to determine CLSU compared to information entered in the CAS for 2014, referred in a), correspond to situations which have been duly justified, and which result in the underestimation of CLSU, in compliance with declarations made by auditors, thus they do not affect other companies, such as those required to contribute to the financing of US, in addition to MEO itself.

i) Auditors concluded that, except for situations referred as far as reconciliation is concerned, which are able to underestimate the amount of CLSU, all other discrepancies identified in the course of the audit and referred in a) have been corrected, and final values resubmitted by MEO on 06.05.2016 are in compliance with principles, criteria and conditions determined by ANACOM, and reflect also values of the CAS which was reviewed and approved by ANACOM.

j) In its final audit report, AXON refers specifically that «(...) the methodology followed by MEO for 2014 complies with the methodology established by ANACOM according to the Applicable Regulatory Framework (...), including with determinations of 20.06.2013, 20.11.2014, on the results of the audits to CLSU for the 2007 to 2009 and 2010 to 2011 financial periods, respectively. This provides soundness, certainty and consistency to total calculations over the years.

Moreover, the methodology followed by MEO for 2014 complies with the methodology established by ANACOM specifically for 2014 according to its decision of 22.07.2015 on the “Methodology of calculation of universal service net costs for 2014”. »

k) The declaration of conformity on the audit to estimates of the universal service net costs for 2014 issued by Grant Thornton refers as follows:

“As such, we believe that, except for situations described in paragraph 10 above, which could underestimate CLSU, recast estimates of net costs of the provision of the Universal Service presented by MEO for the 2014 period preceding the current universal service provision, are in compliance with ANACOM’s methodology, assumptions and determinations set out in the Technical Specifications and amount to 7,721,670.71 Euros (seven million, seven hundred twenty one thousand, six hundred and seventy Euro and seventy one cents.)” ¹

l) The general consultation and prior hearing procedures were held for a twenty-day period, under article 8 of ECL and articles 121 and 122 of the Administrative Procedure Code (Decree-Law No. 4/2015 of 7 January), in the course of which three contributions were received, which were summarized and analysed in the public consultation and prior hearing report, deemed to be integral part of this decision.

m) Contributions received in the scope of the general consultation and prior hearing procedures restate in essence aspects which had already been referred in the scope of consultations on decisions concerning the establishment of CLSU for previous years, and no new arguments having been put forward, ANACOM maintains unchanged the views expressed in its DD on this matter.

ANACOM’s Management Board, in the scope of assignments conferred under paragraph 1 i) of article 8 of its Statutes, approved by Decree-Law No. 39/2015, of 16 March, in the exercise of powers provided for in articles 95 and 96 of the Electronic Communications Law, hereby determines:

To approve, taking into account the audit result and the declaration of conformity issued by auditors, estimates presented by MEO - Serviços de Comunicações e Multimédia, S.A., on 06.05.2016, and to determine that final CLSU values for the 2014 period preceding the current universal service provision are those set out in the table below.