ADP shares tumbled 2.78% on Friday following France’s transport regulator rejection of its 2026 tariff proposal, extending the current tariff freeze into 2026. The Autorité de Régulation des Transports (ART) criticized the plan for projecting a 3.5% return on capital employed (ROCE) against a 4.8% weighted average cost of capital (WACC), calling the assumptions overly optimistic. The regulator also faulted the cost-allocation method and conservative financial forecasts, which it claimed understated returns by up to 1%.ART’s rejection leaves ADP without a multi-year tariff framework for 2027-34, risking unilateral rate decisions that could lower profitability.

With no agreement, ART may set 2027 tariffs independently, eliminating multi-year visibility for the operator. The regulator urged ADP to expedite negotiations on cost allocation, with a refined proposal expected by summer. The next key deadline is April 11, when ART will publish its opinion on the 2027-34 Economic Regulation Agreement draft.Investors face heightened uncertainty as the stalemate threatens ADP’s ability to secure favorable terms.

Morgan Stanley analysts warned that prolonged disputes could result in lower tariffs and reduced WACC, squeezing long-term returns. The stock’s slump reflects fears of reduced revenue stability and delayed infrastructure investments, underscoring the high stakes for ADP and France’s aviation sector.