1. Determining How To Transform Regulatory Cost Models Into Commercial Cost Models For Effective Business Planning IIR’s Telecoms Cost Accounting 26 th October, 2009 Mian Mutti Ur Rehman Costing & Regulatory Economist - Mobilink Pakistan [email_address]
2. Contents Transforming Model Growing demand of commercial cost modelling Comparison of both model approaches Disseminating information to departments Advantages of transforming
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5. Contents Regulatory costing objectives Growing demand of commercial cost modelling Comparison of both model approaches Quires form internal stakeholders Commercial Costing Objective Methodologies Scope of cost selection Cost calculation
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9. Difference between regulatory and commercial costing Long run incremental cost (Bottom up) Long run incremental cost (Top down) Fully allocated cost – Current Cost basis (Top down) Regulatory Costing Methodology The entire network is costed on the basis of following methodologies Commercial Costing Methodology All accounting cost data to be allocated on network elements and on all services Long run incremental cost (Top down) Fully allocated cost – Current Cost basis (Top down) Costing Methodologies Fully allocated cost – Historical Cost basis (Top down) Fully allocated cost – Historical Cost basis (Top down)
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14. Difference between regulatory and commercial costing Cost calculation Interconnect Costing Source of data (ABC/financial) Activity centres (building block) Costs by service Reflected costs Direct Directly attributable: e.g. switching Indirectly attributable: e.g. corporate Access Traffic Lease lines Interconnection Broadband Others Allocation to activity Allocation to services Accounts Asset registers Lifetimes Financials Organised by nature Depreciation and valuation rules Personnel Expenses Extraordinary Provisions Taxes Depreciation Cost of capital Reconciliation adjustments Specific operating analyses Gritería Reconciliation
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16. Contents Transforming Model Growing demand of commercial cost modelling Comparison of both model approaches Quires form internal stakeholders Level of details
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18. Transforming Model Level of details Outgoing Call Fixed to Mobile - Incoming Mobile to Mobile On-net 25,000,000 1 1 1 0 1 1 1 1 1 1 2 2 15,000,000 0 0 1 1 0 0 1 1 1 2 1 1 85,000,000 0 0 0 1 0 0 1 1 0 2 1 1 Minutes Cost of sales Customer services Marketing Interconnect billing SMSc Voice mail Interconnect links HLR/IN Links MSC - MSC Links BTS to MSC BTS MSC Call types
19. Contents Transforming Model Growing demand of commercial cost modelling Comparison of both model approaches Quires form internal stakeholders Disseminating information to departments
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21. Contents Transforming Model Growing demand of commercial cost modelling Comparison of both model approaches Quires form internal stakeholders Disseminating information to departments Advantages of transforming