Publication of the Regulatory Accounting of the Telecom Italia fixed network – Financial Year 2009
On August 5, 2011, the Italian Communications Authority (AGCom) (AGCom) published on its website the description and the Reports issued by the Auditors regarding Regulatory Accounting for the fixed network of Telecom Italia S.p.A.(TI) for 2009.
This section contains some information in this respect recalling that the Reports are the result of the auditing for which the AGCom, pursuant to regulations in force, has appointed an independent auditing firm.
Telecom Italia and the obligations of fixed network Regulatory Accounting
Telecom Italia, under the Community directives and national legislation [1], is required to produce statutory financial statements as well as specific Regulatory Accounting of the fixed network services (including Cost Accounting and Accounting Separation). In accordance with current regulations, in 2009, this Regulatory Accounting was drawn up for the Markets/Services for which Telecom Italia was identified as having “SMP”, i.e. significant market power. The Regulatory Accounting is reconciled with the Company Financial Statements for the year.
The aim of Regulatory Accounting is to provide the National Regulatory Authority (AGCom), about each market for which SMP was declared, with the economic, financial and quantitative information to enable the NRA to conduct its market regulatory and control activities. In particular the information is to demonstrate:
- Telecom Italia’s compliance with the principle of internal-external non-discrimination in the supply of services, i.e. between the resources used for TI commercial services and the equivalent resources used for the services offered to other Operators
- the degree of cost orientation to the prices of the regulated services (when this requirement applies)
- the profitability resulting from the accounts of revenues earned and costs incurred, considering a gross capital earnings rate defined by AGCom.
The general “rules” of Regulatory Accounting are contained in the specific EU Recommendation dated 19 September 2005 on “Accounting separation and the cost accounting in the regulatory framework of electronic communications” (2005/698/CE)”[2]; for fixed network services, these rules have then been further defined by the implementation criteria issued by AGCom in the Market Analysis procedures added to the ones contained in Decision 152/02/CONS on “equality of treatment”. The references for current cost accounting are stated in AGCom Decision 399/02/CONS.
Regarding methods, criteria and the cost basis used for the economic/financial reports of the Markets and Services subject to regulation, these are based on current cost accounting (CCA), fully distributed costs (FDC). The sole exception is the copper distribution network for which the Authority has requested to maintain the historical cost (HCA) basis.
The regulations state that the results and methods used for the Regulatory Accounting of fixed network services must be verified by an independent party (Auditor) appointed by the Authority, and that the reports of the Auditor must be published by the Authority in order to ensure an adequate transparency of information to the market. Telecom Italia, pursuant to Art. 1 par. 6 of Dec. 152/02/CONS, shall make available to the public the Regulatory Accounting information within 45 days after the publication of the Reports by the Authority.
Results of the accounts auditing conducted by the Auditor appointed by the Authority
The Auditing firm appointed by AGCom for auditing the Accounting Separation for the year 2009 is Mazars [3].
Auditing of the Regulatory Accounting for the year 2009 was started by the Authority in January 31 2011 following the completion of the public tender for the selection of the Auditors and the completion of the audit 2008.
Telecom Italia is pleased to announce that the auditing for the year 2009 has been completed with a judgement of compliance of TI Regulatory Accounting with the criteria set forth in European and national legislation in the sector.
This positive assessment is a significant acknowledgment, also achieved for the year 2009, of the company’s constant commitment to compliance with the specific obligations on the equality of treatment and Regulatory Accounting, and attests the adequacy and reliability of the Accounting Separation information produced by Telecom Italia since 1998.