Economics & Regulation
Economics & Regulation
Our dedicated team has been engaged in numerous local and international cost accounting, regulation and strategy engagements on behalf of, Incumbents/ Operators and National Regulatory Authorities (NRA’s) in the utilities industry.
Our services include:
Regulatory Strategy & Policy
|The liberalization of the Information & Communication markets has stimulated cumulative interacting innovations in products, services, and technologies, and a general convergence or blurring of distinctions between platforms, products, and services in an IP world. These developments necessitate some form of regulatory response either to support or impede them. KPMG helps its clients to operate in the current regulatory environment and understand the various concepts and the potential impact on their businesses. Our experts have an in-depth knowledge on the different regulatory regimes and processes and we help and advice our clients on how to devise their regulatory strategy.|
|Regulatory Accounting & Audit||This includes the overall design of the Regulatory Accounting & Accounting Separation Frameworks, based on each country's specifics. We have designed and implemented both, complex and simpler costing systems using suitable software packages, tailored to the needs and requirements of our clients. We have also, performed the reviews of different costing systems in order to, assure their regulatory compliance. Furthermore, we have audited the Separated Regulatory Accounts and provided our independent opinion and advice.|
|Regulatory Compliance & Assurance|
|Design & Implementation of Costing Systems||Cost modelling and implementation is one of the most important and key areas of our expertise. Throughout the years we have developed a wide range of sophisticated and more simple costing systems both for regulatory, as well as, management purposes. Our clients are using their costing systems as guidance and as valuable tools in order to, derive their product profitability, accounting separation, pricing policy and their overall competition and business strategy. We have developed both, Top-Down and Bottom-Up systems using the FDC, CCA & LRIC methodologies.
|Review of costing systems|
|Derivation/ evaluation of Cost of Capital (WACC) calculations||Cost of capital is simply one of the many costs that are incurred by any business yet, it is less immediately visible and tangible than costs such as, wages and operating expenses but, nevertheless exists. Financial analysts and most industry professionals consider the Weighted Average Cost of Capital (WACC) as the most appropriate measure of the returns that investors require in order to invest in a business. The cost of capital that a firm faces represents the equilibrium return that investors expect from investing in a firm with a specific set of risks.The risks that an investor faces in addition to market risks, are also influenced by the ratio of debt versus equity that reflects the capital structure of the business.|
|Generation/ review of Separated Regulatory Accounts|
|Competition & Anti-competitive practices analysis||
The main objective of NRAs is to ensure that competition is effective and where it is not, to take adequate steps to ensure that competition is promoted. Consequently, part of the remit of the NRA is to monitor the level of competition in a range of markets. In some cases this requires the NRA to assess the need for and requirements of ex-ante regulation. In other cases, the NRA will need to determine whether anti-competitive conduct is occurring or has already occurred and decide on the required ex-post remedy.
We can provide advice on the following areas: excessive pricing, predatory pricing, margin squeezing, bundling or tying, price or non-price discrimination, on-net/off-net price discrimination, refusal to supply, unduly long-term contracts.
|Advice on regulatory strategy and reporting|
|Market Review & Analysis|
|License Auctioning and Strategy||KPMG experts have vast experience in license auctioning. We have participated in the strategy design, implementation and analysis of many auctions.KPMG has assisted licensing authorities in best designing their auctions, as well as operators in developing winning/ successful bids in licensing auctions.|
|Information Security Management System/ Assessment|