ictQATAR Issues definition of the regulatory Weighted Average Cost of Capital (WACC)

The Supreme Council of Information and Communication Technology (ictQATAR) has issued the Order and Decision (ICTRA 2013/08/05-A) defining the regulatory Cost of Capital of Ooredoo for the purposes of Regulatory Accounting and other cost studies.

The Cost of Capital is the allowed rate of return, usually determined as the Weighted Average Cost of Capital (WACC).

The WACC sets the “interest rate” for the capital used by Ooredoo and influences wholesale and retail pricing significantly.

The WACC also defines the regulatory fair profit margin that an operator should obtain from its investments in the business.

A fair profit margin provides the operator with sufficient funds to cover its costs, while encouraging additional investments. Pricing services that include fair and efficient costs, and an accurate WACC, encourage competition and growth in the market.

The calculation of the WACC is taken from a regulatory point of view. Amongst others, the main regulatory objectives are to:

• provide sufficient return to encourage investments,
• refer to capital market performance where it is possible,
• consider adequately the risk of the regulated industry, and
• ensure that retail and wholesale products are priced efficiently.

The Order can be downloaded from this link.

The two rounds of consultations held by ictQATAR and the responses of the Service Providers can be downloaded from this link