AAF.L WACC - Weighted Average Cost of Capital

The WACC of Airtel Africa PLC (AAF.L) is 7.4%.

The Cost of Equity of Airtel Africa PLC (AAF.L) is 8.35%.

The Cost of Debt of Airtel Africa PLC (AAF.L) is 10.05%.

	Range	Selected
Cost of equity	6.60% - 10.10%	8.35%
Tax rate	39.60% - 40.80%	40.20%
Cost of debt	9.20% - 10.90%	10.05%
WACC	6.2% - 8.6%	7.4%

WACC

AAF.L WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	6.0%	7.0%
Adjusted beta	0.44	0.73

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.60%	10.10%

Tax rate	39.60%	40.80%
Debt/Equity ratio	0.67	0.67
Cost of debt	9.20%	10.90%

After-tax WACC	6.2%	8.6%


Selected WACC	7.4%

AAF.L's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for AAF.L:

cost_of_equity (8.35%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.44) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.