The cost of capital is determined from the product of the WACC rate and the basis of return, whereby the latter is particularly important because it should reflect the operator's investment in its operational activity. PTC has considered the value of invested capital, calculated using the sum of borrowed capital and equity, as the basis of return for the purposes of calculating the cost of capital and hence the asset allocation, whereas the remainder (the difference between the value of non-current assets and the value of invested capital, given as working capital) is allocated as common costs.
Paragraph 2 of article 74 of Law No 5/2004 states that "in imposing the obligations, the NRA shall: a) Take into account the investment made by the operator, and allow said operator a reasonable rate of return on the capital invested, taking the risks involved into account (...)".
The position is taken that the capital invested is the investment made by the company, evident in an immediate way in the non-current assets of the company. In this context, the capital invested for return shall be reflected in the company's non-current assets, whereby the cost of capital should be directly applied.
In its report, PwC recommended that the basis of return of the cost of capital should correspond to the assets directly associated with the regulated activity of the company.
Considering that the cost model presented by PTC is based on the methodology of fully distributed costs, it is reasonable to consider as the basis of return the total value of non-current assets (associated with regulated and unregulated products and services), with allocation performed using the Activity Based Costing methodology.
In light of the above, the direct application to non-current assets of PTC constitutes a more a appropriate methodology, taking into account that they provide a direct return on the investment made by the company in its operational activity.
In this context, ICP-ANACOM determines that PTC should consider non-current assets in its basis of return of the cost of capital, including tangible assets, intangible assets and financial investments. Any other assets which PTC classifies as an investment and which in its view should have a return will have to be submitted to ICP-ANACOM and duly justified for the validation of their proper inclusion in the basis of return.
