FREN.JK
Smartfren Telecom Tbk PT
Price:  
23.00 
IDR
Volume:  
48,700,700.00
Indonesia | Wireless Telecommunication Services
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FREN.JK WACC - Weighted Average Cost of Capital

The WACC of Smartfren Telecom Tbk PT (FREN.JK) is 13.0%.

The Cost of Equity of Smartfren Telecom Tbk PT (FREN.JK) is 11.95%.
The Cost of Debt of Smartfren Telecom Tbk PT (FREN.JK) is 15.30%.

Range Selected
Cost of equity 10.60% - 13.30% 11.95%
Tax rate 3.20% - 12.00% 7.60%
Cost of debt 4.00% - 26.60% 15.30%
WACC 6.4% - 19.6% 13.0%
WACC

FREN.JK WACC calculation

Category Low High
Long-term bond rate 6.6% 7.1%
Equity market risk premium 7.9% 8.9%
Adjusted beta 0.5 0.65
Additional risk adjustments 0.0% 0.5%
Cost of equity 10.60% 13.30%
Tax rate 3.20% 12.00%
Debt/Equity ratio 1.65 1.65
Cost of debt 4.00% 26.60%
After-tax WACC 6.4% 19.6%
Selected WACC 13.0%

FREN.JK'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 FREN.JK:

cost_of_equity (11.95%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.5) + 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.