Working for a bidder on a telecoms company in a unique regulatory position, we proposed a due diligence programme that incorporated a long-term view of national regulatory trends alongside a focus on the stability of the asset’s regulatory status.
In light of the government’s then strategy of achieving full-fibre rollout by 2033, we advised the client that the government’s approach to encouraging private investment in full-fibre networks would determine the medium to long-term regulatory framework.
Within this framework, we identified that the key issues for the client and the asset would be the application of Ofcom’s policies relating to competition and it’s ‘fair bet approach’ that determines acceptable levels of profit following investment in full-fibre infrastructure.
Understanding the long-term regulatory and policy horizon, we interviewed key industry stakeholders and regulatory decisionmakers to form a view on how achievable the government’s targets were and how this would impact Ofcom’s approach to regulation.
The asset’s unique regulatory position was established because of the local history of the area it operated. This meant we had to engage with local stakeholders to gain an insight into the asset’s standing and how it could be leveraged against further regulatory interventions.
By analysing previous regulatory statements issued by Ofcom relating to the asset, supported by insights garnered through interviews, we were able to advise the client on the likely scope of Ofcom’s regulatory interventions in a number of different scenarios.
We provided the client with a comprehensive analysis of how Ofcom’s regulatory interventions were likely to proceed over the next ten years and beyond, in light of the government’s priorities for the broadband sector.
We explained to the client what Ofcom’s regulatory approach would be over the short to medium-term and how this would likely affect the asset’s business model.
We devised a risk mitigation strategy for the asset to assist the client in the event its bid was successful. The strategy was designed to allow the business to be proactive in ensuring a stable operating environment over the long-term.