Proceedings

elationships with other operators, respectively, retail, whose objective is social
marketing and customer relationship management. Support unit provides support
services for both business units.
It can be noticed that, in fact, strategic business units were created, namely, division
of the company with their own mission and objectives, designed to maximize profit
and provide "relevant" services. Certainly, these units are small enough to be flexible
and, at the same time, large enough to control several factors that can affect long term
performance.
Romtelecom, like other traditional telecommunications operators, had to adapt to the
highly competitive market conditions. To ensure greater business flexibility and
reduce time to market for new services, in 2007 Romtelecom has refocused its
business strategy and launched the "Customer 1 st " project, which aimed to bring
additional benefits to customers, either at the same or at a lower price.
The company aims to focus on new services whose markets are not subject to the
regulations, unlike the classical voice market, which is strongly regulated. In the latter
case, Romtelecom does not have the desired freedom; instead broadband Internet
services and digital television allow the company to display their creativity.
Regulation covers a set of rules on the quality of services provided to the public, but
also on cost accounting system, in order to set the prices based on costs. Romtelecom
was designated as having significant power on the relevant retail markets. This
position entails a number of additional rules the operator must comply with. From this
perspective, the entity subjected to our analysis has to face some pressure from the
regulatory authority and at the same time, from shareholders which pursue the
achievement of performance objectives, while creating value.
The interventions of regulatory authority are strongly felt in several areas: (a)
managerial accounting system; (b) divisional performance measurement system and
(c) pricing services.
(a) managerial accounting system
The ANCOM Decision no. 1380 / 2003 requires Romtelecom to elaborate a
"methodology for separate accounting implementation", which aims to prepare a set
of separate financial statements (for each business unit), using some information
provided by the managerial accounting system.
In addition, operators with significant market power are required to develop a topdown
model for computing the long-run incremental costs (LRIC) for activities
related to interconnection and access to an operator network or to its associated
infrastructure, in order use these costs for setting cost-oriented prices. ANCOM
approved a regulation regarding the implementation of this model for Romtelecom
(Decision no. 1381 / 2003), as well as for the two mobile operators with significant
market power. LRIC practice is recognized as the best practice in the field, being used
by most European Union member states.
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