Eircom not getting as big a WACC

bealtine

http://www.rte.ie/business/2008/0522/comreg.html

Communications regulator ComReg has set a new rate which determines how much Eircom can earn from investing in its fixed-line telephone business. The figure is a factor in how much Eircom is allowed to charge consumers.

The new rate for Weighted Average Cost of Capital (WACC) is 10.21%, down from the previous 11.5%. ComReg said it was happy this would give Eircom an adequate rate of return.

ComReg said it was important that the rate was not set too high - which could result in higher prices for consumers - nor too low, as this could affect Eircom's willingness to invest in its network.

The regulator said it looked at other options such as splitting the WACC rate between different parts of the business, but decided not to do this in the absence of specific plans from Eircom about investment in 'next generation', or higher speed, networks.

ComReg said it could re-assess the decision in the light of 'any substantial new information'

crawler

hmmm....that is going to hurt B&B - expect "toys out of the pram" in the near future me thinks...

paulm17781

What sort of impact will this have on customers, lower line rental?

crawler

paulm17781 wrote: »

What sort of impact will this have on customers, lower line rental?

Wont have any immediate impact on consumers sadly...it's a longer term thing.

bealtine

paulm17781 wrote: »

What sort of impact will this have on customers, lower line rental?

You are joking right?

Comreg and consumers are diametrically opposed.

Comreg rarely do anything useful for consumers.

watty

The regulator is mandated to provide a level playing field for Operators, and one economic theory claims this will benefit consumers.

Analysis of UK post shows that only the large companies benefit, private people and small buisiness are suffering from postal deregulation and the "level playing field" philosophy.