Key Benefits:
The Autorité de régulation des communications électronique et des postes,
Based on the Posts and Electronic Communications Code (hereinafter "CPCE"), including its Articles R. 20-33, R. 20-35, R. 20-36 and R. 20-37 ;
Having regard to the Minister's orders in charge of electronic communications of 3 March 2005 appointing the operator responsible for providing the components of the universal service provided for in 1°, 2°, and 3° of Article L. 35-1 of the CPCE;
Vu la Decision No. 2006-1103 of the Autorité de régulation des communications électronique et des postes of 14 November 2006 setting out the provisional contributions of operators to the cost of universal service for the year 2007;
Vu la Decision No. 2007-0057 of the Autorité de régulation des communications électronique et des postes of 23 January 2007 Decision No. 2006-1103 of 14 November 2006 setting out the provisional contributions of operators to the cost of universal service for the year 2007;
Vu la Decision No. 2007-0834 of the Autorité de régulation des communications électronique et des postes of 4 October 2007 on the determination of the final value of the capital rate of pay for the calculation of the final net cost of the universal service for the year 2006 provided for in Article R. 20-37 of the Post and Electronic Communications Code;
Vu la Decision No. 2008-0181 of the Electronic Communications and Post Regulatory Authority of 19 February 2008 publishing the rules for the application of the methods referred to in articles R. 20-33 to R. 20-39 of the Post and Electronic Communications Code for the calculation of the final cost of the universal service for the year 2006;
After deliberating on 20 November 2008,
I. ∙ CONTEXT
Article R. 20-37 of the CPCE states:
"In order to assess the costs referred to in articles R. 20-33, R. 20-35 and R. 20-36, the rate of pay of the capital used is fixed by the Telecommunications Regulatory Authority, taking into account the weighted average cost of permanent capital for the operator responsible for the universal service and for the operator that an investor would bear in electronic communications activities in France. »
The capital pay rate is a necessary element for calculating the net costs of the following universal service obligations:
- tariff equalization obligations for geographical equalization obligations;
- obligations relating to the service of the territory in telephone booths installed in the public domain;
― obligations relating to the provision of an information service and a directory of subscribers in print and electronic form.
The objective of this decision is to set the rate to be used for the final cost assessment of these universal service obligations for 2007.
II. – PREVIOUS DECISION
For the year 2006, the Authority had set, by its decision No. 2007-0834the rate of pay of capital employed at 10% for the calculation of the final net cost of the universal service.
III. METHODS
The Authority has not made any changes in the method or in the rules for evaluating the rate of pay of capital in relation to those defined in the decision No. 2007-0834 relative to the determination of the final value of the capital pay rate for the calculation of the final net cost of the universal service for the year 2006.
These rules are specified by the decision No. 2008-0181 of the Authority.
IV. ― ASSESSMENT OF TALK FOR YEAR 2007
The application of the rules for setting the rate of pay of capital leads, for the year 2007, to the evolution of two parameters:
- the risk-free rate, reassessed to 4.3%, compared to 3.8% in 2006, in accordance with the evolution of the TEC 10 index annual average (at ten-year constant maturity, a daily index of long-term returns of state loans) in 2007;
– the debt premium, estimated at 1.25 per cent, consistent with the tightening of funding conditions in comparison with those taken into account in setting the capital pay rate for the year 2006.
The values of the other parameters relevant to establish the final rate for the year 2007 are unchanged from those used to fix the final rate for the year 2006:
- the market premium is 5%;
– the target "beta" selected for France Telecom shares is 1;
– the financial lever, defined as the debt-to- equity ratio, is 66.67 per cent.
The cost of equity is 14.2 per cent and the cost of debt is 5.6 per cent. The weighted average cost of the valued capital using a target debt structure was then 10.7%.
Decides:
The rate of pay of capital provided for in section R. 20-37 of the Electronic Post and Communications Code and used to assess the final value for 2007 of the net costs associated with sections R. 20-33, R. 20-35 and R. 20-36 of the same code is set at 10.7%,
The Director General of the Autorité is responsible for the execution of this decision, which will be published in the Official Journal of the French Republic.
Done in Paris, 20 November 2008.
For the president:
The member of the college presiding at the meeting,
E. Bridoux
