These prices must not be levied in cases where the infrastructure seeker pays
for the generator upgrade.
IV.
Background and Main Input Data
The maximum monthly prices in sections (I.), (II.) and (III.) of this Annex F have
been calculated by applying the methodology presented in section 5 of this
regulation. The overall approach for calculating the monthly prices for tower
and electricity access sharing is based on a fully-allocated cost model, using
annuities for annualizing the depreciation charges and the return on
investment. Through different rounds of industry consultations, RURA collected
data from all main operators in Rwanda on the actual cost of passive
infrastructure elements.
The service cost is calculated by applying the following formula:
Service Cost = Operating Cost + Annualization Factor * Capital Expenditure
Annuities are a commonly used approach for service price setting, as they keep
the combination of depreciation and return on capital constant over the lifetime of an asset.
The formula for calculating the annualization factors of annuities is:
Cost of capital/{1-[1/(1+cost of capital)]^asset life}
For the purpose of service price setting of passive infrastructure sharing of
mobile towers, RURA applies a cost of capital of 15%, which is based on a
review of various operator submissions and a comparison with international
benchmarks.
An important element for annualization of service costs is the asset life time.
Operator replies on RURA’s data request show asset life ranges from 10 to 20
years for tower infrastructure and from 3 to 10 years for power equipment.
For the purpose of cost modeling, RURA decided to apply the following asset
life times:
- 15 years for CAPEX on towers (including material costs, installation
charges and foundation costs – as well as access roads)
- 8 years for CAPEX on power access in the case of connectivity to the
electricity grid
- 4 years for CAPEX in generators for sites with no connectivity to the
electricity grid (in this case, generators have a much shorter expected
useable life)
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