Table 3 - Citéfibre outcomes data
Volatility
|
0.623 |
0.700 |
0.777 | ||||||||
|
Up-front cost |
Payout |
NPV | ||||||||
|
5622 |
7027 |
8432 |
5622 |
7027 |
8432 |
5622 |
7027 |
8432 | ||
|
352 |
0.007 0.012 |
2.04 0.00 |
0.00 0.00 |
0.00 0.00 |
2.27 0.00 |
1.88 0.00 |
0.00 0.00 |
3.36 ^T.99 - |
2.33 0.00 |
1.96 0.00 |
|
o.o17 |
0.00 |
0.ÏÏ0 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 | |
|
400 |
0.007 |
2.16 |
1.76 |
0.00 |
3.24 |
2.15 |
1.51 |
3.68 |
2.39 |
2.25 |
|
0.012 |
0.00 |
0.00 |
0.00 |
'^^^L52^^^ |
0.00 |
0.00 |
^^2.2^7 ^' |
0.00 |
0.00 | |
|
0.017 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 | |
|
448 |
0.007 |
3.09 |
2.05 |
0.00 |
3.55 |
2.27 |
2.05 |
3.78 |
3.37 |
2.36 |
|
0.012 |
0.00 |
0.00 |
0.00 |
2.15 |
0.00 |
0.00 |
^^2.3^8^ ^' |
’ ' ^2.^16^" |
0.00 | |
|
0.017 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
^^2.00 ^' |
0.00 |
0.00 | |
We can now turn to the case of the established operator. While in the case of the new
entrant we assumed absence of any regulation, with the established operator we are
interested at looking at the impact of different regulations on the timing of investment. We
consider four different regulatory scenarios: 1) Forbearance (absence of regulation); 2)
Permanent regulation; 3) Sunset clause; 4) Regulatory holiday. The intervention by the
regulator consists of a decrease in the annual net cash flow of the established operator by
27.5%. This reduction corresponds to a halving of the cost savings and the extra profits of
NGNs.
Initially we assume that the established operator is the only one which is evaluating
whether to invest in NGNs: the competitive situation is such that no alternative operator is
looking at building a next generation infrastructure. Therefore the incumbent has not to
rush (or delay) the investment in order to compete with infrastructure-based new entrants
(or to exploit somebody else’s network). In practice, with limited exceptions such as
Fastweb in Italy and Free in France, so far only incumbents have announced wide-ranging
investment plans in NGNs: the assumption can thus be considered quite realistic. On the
31