BEREC Opinion on Phase II investigation Case SK/2018/2051

On 22 January 2018, the European Commission registered a notification from the Slovakian Regulatory Authority (RÚ) concerning termination rates in the market for wholesale call termination on individual public telephone networks provided at a fixed location in Slovakia (in light of the fourth market review).  In the notified measure, RÚ proposes to set a maximum symmetric fixed termination rate (FTR) of 0.0976 EUR/cent per minute on the 17 SMP operators, which had previously been designated with SMP. 
On 20 February 2018, the Commission sent a serious doubts letter opening a phase II investigation pursuant to Article 7a of Directive 2002/21/EC as amended by Directive 2009/140/EC. The Commission expressed serious doubt over the size premium RÚ added into its calculation of the weighted average cost of capital (WACC) to compensate Slovakian operators for their relatively smaller size and higher risk compared to European operators. In line with the fourth market review, the termination of calls originated outside the EU/EEA is excluded from the price control obligation.  
According to RÚ, the size premium would reflect the risk of the variability in the return of the operators' shares in the long run depending on the size of undertakings, and is derived from the market capitalisation of the companies listed on the US stock exchange.  
On the basis of the analysis set out in the opinion, BEREC considers that the Commission’s serious doubts are justified.