2.3 Modalities of service with negative margin

Without prejudice to compliance with the annual maximum variation of prices of the correspondence, editorial mail and parcel basket of services, in the case of service modalities that present a negative margin, prices notified by CTT must result in an increase of the margin or, ultimately, the maintenance of the margin of the service modality (paragraph 5 of article 8).

ANACOM takes the view that this rule is not complied with where the margin is negative in 2015 ¹ (last year for which annual data of CTT's cost accounting system is available²) and it is estimated that the latter will further deteriorate up to 2017 ³. That is:

• Margin 2015 < 0, and
• Margin 2015 > Margin 2016 > Margin 2017.

The national editorial mail service presents a negative margin in 2015, and it is estimated, based on the traffic and cost estimates and forecasts presented by CTT, that the latter will further deteriorate in 2016 and 2017, although only by a minor extent.

However, there is always a degree of uncertainty regarding traffic evolution and CTT has underestimated, over the last few years, the negative evolution of traffic relative to the national editorial mail service, as can be seen in Table 2.

(a) Traffic value forecast, considered by CTT within the scope of the price proposals for the year in question.
(b) Source: years 2013 to 2015 - Results of CTT's Cost Accounting System; year 2016 – deviation between the estimated traffic for 2016 presented by CTT within the scope of the price proposal for 2017 and the traffic forecast for 2016 presented by CTT within the scope of the price proposal for 2016.
(c) Relative deviation between the real traffic value observed and the forecast considered by CTT.

If, instead of a reduction of (SCI) (ECI)%, as forecast by CTT, there was in 2017 a reduction that was 3.1 percentage points lower than that forecast by CTT, but still conservative relative to the evolution in 2014 and 2015 and estimated by CTT for 2016, it is estimated that the margin would not deteriorate, thus complying with the provisions in this rule.

Note too that this service has registered price increases over the last few years (namely 5.5% in 2014, 10% in 2015 and 4.8% in 2016), with CTT proposing an average annual increase for 2017 of 3.3%⁴.

In addition, to at least maintain the service margin, taking into account the traffic estimates of CTT, a higher increase of its price would be necessary (an annual average variation of around (SCI) (ECI)% is estimated), which, if it were to occur all at once, and given the price increases of previous years, could jeopardise the affordability of the service, placing at risk the commercial viability of the service's users.

According to the methodology of analysis mentioned and the information available, all the other situations are in compliance with the rule defined in paragraph 5 of article 8.