Oireachtas Joint and Select Committees
Wednesday, 5 June 2019
Joint Oireachtas Committee on Communications, Climate Action and Environment
National Broadband Plan: Discussion
I thank Ms Connolly for her attendance. I am sure she understands why we are asking these questions. It is in the public interest. I studied and then worked in the business school in University College Dublin, UCD. I was in the marketing rather than the accounting wing. I am going to ask some questions to get my head around some of the accounting aspects. We know the bidder is investing €175 million in capital into the project. We also know from the newspapers that the bidder will get a return on that investment. We do not know what that is.
Representatives from the Commission for Communications Regulation, ComReg, were here earlier. In respect of utility regulated assets, the weighted average cost of capital is about 6%. My understanding from similar types of infrastructure projects, that is, major long-term investment projects, is that someone investing private capital might expect a return on investment in the low single digits. I am working with a hypothesis. Let us assume it was 12%, twice the cost of capital. That would not be an outlandish assumption as to what the return might be. I am not stating it is the rate of return or anywhere near it. Let us, however, just take that as an assumption for the purposes of what I am about to ask Ms Connolly. That would not be a crazy assumption.