ARKEP issues updates on SMP

10 Jan 2019

Sector watchdog the Regulatory Authority for Post and Electronic Communications (Autoriteti Rregullator i Komunikimeve Elektronike dhe Postare, ARKEP) has identified fixed line incumbent Kosovo Telecom as having significant market power (SMP) in the local loop unbundling (LLU) segment on the basis that the company has 100% participation in the space and has infrastructure that is not easily duplicated. As such, the regulator imposed new measures on the telco, including obligations for access, non-discrimination and transparency, whilst the company is also subject to pricing controls. Under the latter requirements, ARKEP stated that Telecom would use a ‘retail minus’ to ensure that its prices were fair, although the watchdog may intervene and set new prices via benchmarking or bottom-up models. ARKEP’s decision also removed previous requirements for the telco to separate its accounts. Similarly, cableco IPKO was designated an SMP player in the wholesale broadband access market and ARKEP imposed the same obligations on the operator.

In a related development, ARKEP opened to public consultation a draft document on the calculation of the weighted average cost of capital (WACC) for the provision of mobile telephony services in Kosovo. ARKEP intends to use the WACC rate as part of future price control measures on SMP operators in the wireless segment. The regulator noted that it did not have access to all of the data needed for the calculation, and utilised a benchmark method instead, recommending WACC values of 10.17% after tax and 11.3% before tax. The consultation is due to close on 19 January 2019.