112/2009 Resolution
- 1. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version Resolution No. 112/2009: Regulation on Accounting Separation, Regulatory Accounting & Reporting Requirements Pursuant to the Telecommunications Regulatory Act issued by the Royal Decree No. 30/2002 and; The Royal Decree No. 20/2004 Issuing two Class I Licenses: the First for Oman Telecommunications Company for the provision of the Basic Fixed Public Telecommunications Services & the Second for Oman Mobile for the Provision of mobile telecommunications services, The Royal Decree No. 17/2005 issuing Class I License to the Omani Qatari Telecommunications Company for the provisions of Basic Mobile Public Telecommunications Services and, The Royal Decree No. 34/2009 issuing Class I License to the Omani Qatari Telecommunications Company for establishing & operating a Fixed Public Telecommunications Services System and, The Executive Regulation issued by Resolution No. 144/2008; and The approval of the Telecommunications Regulatory Authority obtained on 3rd November 2009 on its meeting No. 7/2009 and; Based on the exigencies of the public interest; It is decided: Article 1 In the application of Accounting Separation, Regulatory Accounting & Reporting Requirements Regulation, the following regulations shall be applied Article 3 This Resolution shall be published in the Gazette and shall become operative from the date following its publication. Mohammed Bin Nasser Al-Khusaibi Chairman of Telecommunications Regulatory Authority Issued on: 8th Thu AL-Haja 1430 A.H. Corresponding to: 25th November 2009 A.D.
- 2. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version Regulation on Accounting Separation, Regulatory Accounting & Reporting Requirements Article 1 Definitions: A In the application of the provisions of this regulation, the terms and expressions used herein shall express the exact meaning exhibited in both Telecommunications Regulatory Authority & its Executive Regulation mentioned above or in the fixed and mobile licenses issued by the Royal Decree No. 20/2004 ,the mobile license issued by the Royal Decree No. 17/2005 and the fixed license issued by the Royal Decree No, 34/2009, unless the text otherwise requires. B The following terms and expressions shall have the meaning assigned to each of them unless the text otherwise requires: 1) “Accounting Separation” means the preparation of Separated Regulatory Accounts by the Notified Operator for the different Markets specified by the TRA, so that costs and revenues associated with each Market can be separately identified and properly allocated; 2) “Separated Regulatory Accounts” means such restatement and disaggregation of the Notified Operator’s Statutory Accounts as may be required by the TRA for regulatory purposes and as stipulated in this Regulation; 3) “Current Cost Accounting (CCA)” means an accounting convention, where assets are valued and depreciated according to their current replacement cost; 4) “Framework Document” means the document issued by the Authority regarding accounting separation, regulatory accounting and reporting requirements; 5) “Fully Distributed (Allocated) Costing (FDC or FAC)” means a costing methodology whereby joint and common costs are divided among services where thedirect costs are directly assigned to the cost- causing service.
- 3. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version 6) “Historic Cost Accounting (HCA)” means an accounting convention whereby costs, revenues, assets and liabilities are generally recorded at the value when the transaction was incurred and where assets are valued and depreciated according to their cost at the time of purchase; 7) “Long Run Incremental Costing (LRIC)” – The incremental economic costs that arise in the long run due to a specific increment in volume of production. 8) “Notified Operator” means the Operator so declared by the Authority pursuant to this Regulation; 9) “Reference Interconnection Offer” means the interconnection offer provided by a Notified Operator which includes schedules, prices, terms & conditions, etc;; 10) “Markets” means the different groups of services/ products (both Retail & Wholesale) determined by the TRA and for which the Notified Operator has to separate its business in order to comply with the Accounting Separation obligation/ Regulation; 11) “Retail Market” means a market for services to beneficiaries which are not for themselves providers of telecommunications services; 12) “Wholesale Market” means a market for services to other licensees’ service providers who then provide service to beneficiaries ; 13) “Transfer Charge” means the charge or price that is applied, or deemed to be applied by the Licensee to itself for the provision of service/s by one of its Business Units to another one of its Business Units; Article 2: Without prejudice to the provisions of the Telecommunications Act and its Executive Regulation mentioned above and resolutions implementing thereof, the Framework Document is considered a complementary & explanatory for the terms of this Regulation. Article 3: Obligations, Notified Operator and Relevant Markets a Notified Operator shall be declared, by a decision of the Authority, to be any Licensee operating in any market or markets where there is no effective competition.
- 4. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version b Where there is only one licensee operating in a market, the Authority may deem the market to be operating in conditions where there is no effective competition and may rely upon it so as to declare the Licensee operating therein as a Notified Operator without the need of any further evidence or additional analysis. In all other cases, the Authority may declare a licensee as a Notified Operator based on an analysis of the relevant market and following a decision by the Authority that there is no effective competition in the relevant market. c The Authority from time to time, shall review its decisions declaring Licensees as Notified Operators in the light of changing market conditions. The Authority may decide , at its own discretion, to review any decisions or obligations arising hereunder at any time as it may consider appropriate or where a licensee provides the Authority with such evidence that leads the Authority to consider that a review is appropriate before that time. d Markets for which the Authority may impose obligations to Notified Operators shall be determined by a decision of the Authority. e Class one Licensees who are not declared, by a decision of the Authority, as Notified Operators shall be committed to the following: 1. Regulatory obligations and remedies determined for Retail and Wholesale levels and specified in the “framework Document”, in addition to obligations specified in the granted licenses. 2. Provide the Long Run Incremental Costing (LRIC)” along with its results as per the Licenses granted to them and the requirements of the Authority. f Obligations of the licensees arising from this Regulation should be read in conjunction with the “Framework Document”. In the event of conflict or ambiguity the obligations of the Licensee shall be determined by applying the order of precedence specified below: i. the Telecommunications Law; ii. The Executive Regulation iii. this Regulation; iv. any Decision of the Authority issued pursuant to this Regulation; v. the Framework Document;
- 5. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version Article 4 General Financial Reporting Principles All operators, when reporting financial information to the Authority, shall apply the TRA General Financial Reporting: a) Relevance, b) Reliability, c) Comparability, d) Understandability, e) Materiality. Article 5: Regulatory Accounting Principles Pursuant to this Regulation and the “Framework Document” Operators when preparing Regulatory Accounts shall apply Regulatory Accounting Principles in a proportional manner in the following order of precedence:: i. Priority and Proportionality, ii. Cost Causality, iii. Transparency, iv. Objectivity, v. Consistency, vi. Materiality. B In the event of a conflict between the Principles set out above and the principle of proportionality, which may not be resolved by applying them in the order of precedence set out above, a Licensee may seek, in writing, the Authority’s guidance on how to deal with the issue. C The Authority may respond, on a case by case basis, to the specific written queries mentioned aboveas it considers appropriate to the specific case at hand. If the Authority is of the opinion that the advice provided may be of interest to other licensees, it may publish its advice in such form and manner as it may consider appropriate, having regard to the need to protect commercially confidential information. Article 6 Quality of Regulatory Accounting Data
- 6. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version a. The Regulatory Accounting Data should have the following characteristics: i. Transparent, ii. Relevant, iii. Comparable over periods, iv. Reliable. b. Without prejudice to any other obligations, licensees shall retain the Separate Regulatory Accounting Data for a period of no less than five (5) years. Article 7 Cost Allocation Process a. Cost based on the Activity Based Costing should be used to allocate costs, capital employed and revenue. b. Costs and revenues should be allocated to services or products on the basis of those activities that cause those costs or revenues to arise. c. When applying the principle of cost causation, an operator shall use appropriate and detailed cost allocation methodologies in its cost accounting system. This requires to: 1. Review each item of cost, capital employed and revenue, 2. Establish the driver that caused each item to arise, 3. Use the driver to allocate each item, 4. Pool costs that cannot be related on a causation basis to activities and allocating on a predetermined basis. d. Cost items shall fall into one of the following categories: i. Direct and directly attributable costs ii. Indirectly attributable costs iii. Un-attributable costs H. Allocation of Capital Employed shall be consistent between the measure of capital employed on which the return is based and the measure of capital employed reported in the separate accounts. Revenue shall be allocated according to its type.
- 7. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version Article 8 Transfer charges a) The transfer charging system shall follow the Regulatory Accounting Concepts and conform to the following principles: i. Transfer charges (revenues and costs) shall be attributed to cost components, services and main business areas or disaggregated businesses in accordance with the activities, which cause the revenues to be earned, or costs to be incurred; ii. The attribution shall be objective and not intended to benefit any business or disaggregated business; iii. There shall be consistency of treatment of transfer charges from year to year; iv. The transfer charging methods used should be transparent. There should be a clear rationale for the transfer charges used and each charge should be supportable; v. The transfer charges for internal usage should be determined as the product of usage and unit charges; vi. The charge for internal usage should be equivalent to the charge that would be levied if the product or service were sold externally rather than internally; vii. It should be assumed that the retail sale was carried out with the same interconnection charge for the same service as set out in the Notified Operator’s RIO; viii. In cases where wholesale services are not currently on offer (i.e. no wholesale tariffs exist) the transfer charges for the network part of retail services should be calculated on the same basis and methodology, and using the same network element costs, as the wholesale services; ix. The separated accounts shall disclose the transfer charges between businesses or markets.. b) Notified Operators shall document very clearly how each of the transfer charges were generated between the various Markets within the Accounting Documents and a Transfer Charge matrix shall be provided in accordance with the format provided in the Framework Document.
- 8. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version Article 9 Regulatory Separated Accounts – Format and Associated Timeframes a) Prior to submission of the Separated Regulatory Accounts for the first period, a one-off document, detailing the Accounting Separation Methodology to be adopted, shall be prepared by Notified Operators and supplied to the TRA for approval prior to the preparation and submission of the licensee’s Separated Accounts to the TRA. a. . b) The document specified above shall be updated on an annual basis in accordance with any amendments approved or required by the TRA. b. Article 10 Documentation a) The Notified Operator, following an audit by independent external auditor, shall submit to the Authority the following documents for all of the Markets obliged to prepare and submit Separated Regulatory Accounts: i. Audited Separate Regulatory Accounts ii. Accounting Documents iii. Detailed Attribution Methodology (DAM) These documents may be provided in accordance with the content requirements and formats set out for each of the above documents in the Framework Documents. Article 11 Independent Verification/ Appointment of Auditors a) Notified Operators shall support the submission of Separated Regulatory Accounts with an audit opinion that the accounts are fairly presented in accordance with the accounting documents. b) All audit work carried out pursuant to this Regulation, shall be at the expense of the Notified Operator. c) The TRA accepts, for the first year only, the submission of the
- 9. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version Separated Regulatory Accounts “properly prepared in accordance with the accounting documents” audit opinion. Article 12 Time Frames a) Notified Operators shall declare their audited Separated Regulatory Accounts through posting them on their website or within the time and the from the TRA sees appropriate. For the first year submission (i.e. year 2009) the Separated Regulatory Accounts and relevant information may not be made publicly available and will be reviewed by the TRA in consultation with the Operators once the first version of the Separated Regulatory Accounts is produced. The TRA may review its position in this regard in light of prevailing circumstances at the time. b) The Notified Operators shall be obliged of the following: 1. Provide a Methodological Document on account separation after three months from the date of issuing this Regulation. 2. Provide Fully Distributed Costing Accounts using top-down model of historic cost methodology for the year 2009, after one year from the date of issuing this Regulation. The Notified Operator shall submit within the same period a sample for the Fully Distributed (Allocated) Costing/ top- down model of historic cost methodology. 3. Provide Fully Distributed Costing Accounts using top-down model of historic cost methodology and current cost methodology, Long Run Incremental Costing results and its models after 6 months from the end of each year starting from 2010. Article 13 Provision of Information by Class II & III Licensees All Class II & III licensees shall comply with the following: a. Make public their tariffs, charges, rates and any proposed changes to these in advance of the change taking place, as well as information regarding retails tariffs, network and technical specifications and accounting information within the time and the from the TRA sees appropriate & applicable. Provide the TRA, upon request, the costs & revenues for their services, including internal prices. Provide the TRA, upon request, the Separate accounts to enable monitoring the tariffs charged by the said licensees.
- 10. This is an unofficial translation and is provided here for information purposes only. Reliance may only be placed upon the official Arabic version Article 14 Statistical Data a) All Class I, II & III licensees shall supply the TRA with the statistical data required by the Authority in the form and times specified by it. b) The TRA may request from the licensee to provide statistical and other data on a monthly, quarterly and annual basis. c) The TRA may publish such market statistics as it considers appropriate on a quarterly basis or at a frequency which the TRA deems appropriate. d) The TRA will treat statistical data supplied to it in accordance with the requirements specified in this section as non-confidential and may publish these in a form that it considers appropriate except where the Licensee submits a substantiated request that the information should be treated as confidential. The Authority may decline its request.