In line with the EU Regulatory Framework for telecommunications, NRAs considering price regulation to address market power in the telecoms sector should allow Significant Market Power (SMP) operators to earn a reasonable rate of return (or WACC) on their investments. However, regulators often use different methodologies to determine such a reasonable return, which results in WACCs differing considerably across the Union.
The study, prepared for the European Commission by the Brattle Group, looks into different methodologies and makes recommendations for the most appropriate approach to deriving the WACC. The report will contribute to the debate on the reasonable rate of return for investments in the telecoms network in regulatory proceedings and inform the European Commission's future policy in this area.
Refer to the study
Executive summary in English
Executive summary in French