BT.A.L WACC - Weighted Average Cost of Capital
The WACC of BT Group PLC (BT.A.L) is 5.6%.
| Range | Selected | |
| Cost of equity | 7.2% - 9.8% | 8.5% |
| Tax rate | 23.1% - 26.9% | 25% |
| Cost of debt | 4.0% - 5.7% | 4.85% |
| WACC | 4.8% - 6.5% | 5.6% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.54 | 0.69 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.2% | 9.8% |
| Tax rate | 23.1% | 26.9% |
| Debt/Equity ratio | 1.42 | 1.42 |
| Cost of debt | 4.0% | 5.7% |
| After-tax WACC | 4.8% | 6.5% |
| Selected WACC | 5.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BT.A.L | BT Group PLC | 1.42 | 0.79 | 0.39 |
| KPN.AS | Koninklijke KPN NV | 0.44 | 0.07 | 0.05 |
| O2D.DE | Telefonica Deutschland Holding AG | 0.64 | 1.1 | 0.75 |
| ORA.PA | Orange SA | 1.21 | 0.24 | 0.13 |
| ORNT.L | Orient Telecoms PLC | 0.18 | -0.1 | -0.09 |
| SCMN.SW | Swisscom AG | 0.59 | 0.24 | 0.16 |
| TEF.MC | Telefonica SA | 1.72 | 0.65 | 0.29 |
| TEL.OL | Telenor ASA | 0.48 | 0.33 | 0.25 |
| TELIA.ST | Telia Company AB | 0.64 | 0.07 | 0.05 |
| TIT.MI | Telecom Italia SpA | 1.84 | 0.83 | 0.35 |
| Low | High | |
| Unlevered beta | 0.15 | 0.26 |
| Relevered beta | 0.31 | 0.54 |
| Adjusted relevered beta | 0.54 | 0.69 |
BT.A.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 BT.A.L:
cost_of_equity (8.50%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.54) + 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.