HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

EXPERT LEVEL TRAINING ON TELECOM NETWORK COST

MODELLING FOR THE HIPSSA REGIONS

Arusha

15-19 July, 2013

David Rogerson, ITU Expert

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HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

Sessions 9/10 – Manipulating data and assumptions in a bottom-up cost model (a

practical exercise)

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HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

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Agenda

Describe the

scenario

Explain the

exercise

Work in groups

Present and

discuss findings

Aims and objectives for these sessions

Session 9 Session 10

HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

Background to the exercise

TRAN has decided to follow a bottom-up modelling approach and has asked its Cost-Engineering-Accounting Team (CEAT) to prepare and submit such a model to help its regulatory decisions.

The deadlines are tight, so it is necessary to manipulate a pre-existing model.

A team member has identified the ITU Mobile Telco Bottom-up LRIC Training Model as fit for purpose but in need of data manipulation.

A soft-copy of this model is available for each team.

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HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

A reminder - latest offers on the table

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Mobilco offersTo pay: 6cpm (fixed)

15 cpm (mobile)

To receive:

20cpm (year 1)

18cpm (year 2)

15cpm (year 3)

Telecom offers

A single reciprocal charge for all termination (fixed and mobile) on both Telecom and Mobilco:

10cpm

HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

The ITU Mobile Telco LRIC training model

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Key CellsSummary Sheets Direct input into the modelInput Sheets Inputs copied from other worksheetsCalculation sheets Calculation cells

Output cells copied to other worksheets

9. LRIC2. Traffic

1.Coverage

8. Routing factors

11. LRIC+

10. Mark-ups

7. Network costing

6. Network design

3. Network design parameters

4. CAPEX and Direct OPEX

A. Model Design

B. Control Panel

C. Reference Lists

5. Indirect OPEX

D. Reconciliation

E. Graphs

HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

Input data identified by the CEAT experts

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Topic area Expert team

Source of data Location of data

Coverage Engineers Telecom (with Mobilco estimates)

Annex A

Subscribers Sales and Marketing

Telecom (with Mobilco estimates)

Annex B

Traffic Billing Telecom (with Mobilco estimates)

Annex C

Busy hour Engineering Telecom Annex D

Network design Network operations

Telecom Annex E

WACC Accounting CEAT Annex F

HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

Your task

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GROUP WORK EXERCISE 3

Each WG is a team reporting to the Board of TRAN.

1. Enter the changed data into the model and be prepared to provide management with the following calculations from your amended model:

a. Cost per minute for on-net retail calls (2013)

b. MTR of calls from other networks (2013-2015)

2. Is the answer to (a) and (b) above different for Mobilco and Telecom? How did you test that?

3. What do your results say about the latest offers on the table when negotiations between Telecom and Mobilco on call termination charges?

HIPSSA Cost model training workshop:

Sessions 9-10: Manipulating data and assumptions in a bottom-up model

Reporting format

Telecom Mobilco

2013 2014 2015 2013 2014 2015

On-net retail

Mobile termination

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All costs to be shown in local currency cents per minute