1. 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 1

2. 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) 2

3. HIPSSA Cost model training workshop: Sessions 9-10: Manipulating data and assumptions in a bottom-up model 3 Agenda Describe the scenario Explain the exercise Work in groups Present and discuss findings Aims and objectives for these sessions Session 9Session 10

4. 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. 4

5. HIPSSA Cost model training workshop: Sessions 9-10: Manipulating data and assumptions in a bottom-up model A reminder - latest offers on the table 5 Mobilco offers To 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

6. HIPSSA Cost model training workshop: Sessions 9-10: Manipulating data and assumptions in a bottom-up model The ITU Mobile Telco LRIC training model 6

7. HIPSSA Cost model training workshop: Sessions 9-10: Manipulating data and assumptions in a bottom-up model Input data identified by the CEAT experts 7 Topic areaExpert team Source of dataLocation of data CoverageEngineersTelecom (with Mobilco estimates) Annex A SubscribersSales and Marketing Telecom (with Mobilco estimates) Annex B TrafficBillingTelecom (with Mobilco estimates) Annex C Busy hourEngineeringTelecomAnnex D Network designNetwork operations TelecomAnnex E WACCAccountingCEATAnnex F

8. HIPSSA Cost model training workshop: Sessions 9-10: Manipulating data and assumptions in a bottom-up model Your task 8 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?

9. HIPSSA Cost model training workshop: Sessions 9-10: Manipulating data and assumptions in a bottom-up model Reporting format TelecomMobilco 201320142015201320142015 On-net retail Mobile termination 9 All costs to be shown in local currency cents per minute