FREN.JK WACC - Weighted Average Cost of Capital

The WACC of Smartfren Telecom Tbk PT (FREN.JK) is 13.1%.

The Cost of Equity of Smartfren Telecom Tbk PT (FREN.JK) is 12.10%.

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

	Range	Selected
Cost of equity	10.70% - 13.50%	12.10%
Tax rate	3.20% - 12.00%	7.60%
Cost of debt	4.00% - 26.60%	15.30%
WACC	6.4% - 19.7%	13.1%

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	0.51	0.66

Additional risk adjustments	0.0%	0.5%
Cost of equity	10.70%	13.50%

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%	19.7%


Selected WACC	13.1%

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 (12.10%) = risk_free_rate (6.85%) + equity_risk_premium (8.40%) * adjusted_beta (0.51) + 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.