SPK.NZ WACC - Weighted Average Cost of Capital
The WACC of Spark New Zealand Ltd (SPK.NZ) is 7.6%.
| Range | Selected | |
| Cost of equity | 8.5% - 10.7% | 9.6% |
| Tax rate | 28.1% - 29.9% | 29% |
| Cost of debt | 4.0% - 7.0% | 5.5% |
| WACC | 6.5% - 8.7% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 4.3% | 4.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.81 | 0.87 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.5% | 10.7% |
| Tax rate | 28.1% | 29.9% |
| Debt/Equity ratio | 0.53 | 0.53 |
| Cost of debt | 4.0% | 7.0% |
| After-tax WACC | 6.5% | 8.7% |
| Selected WACC | 7.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SPK.NZ | Spark New Zealand Ltd | 0.53 | 1.4 | 1.01 |
| 1310.HK | HKBN Ltd | 1.56 | 0.09 | 0.04 |
| 3774.T | Internet Initiative Japan Inc | 0.14 | 0.43 | 0.39 |
| CNU.NZ | Chorus Ltd | 0.92 | 0.77 | 0.46 |
| DU.DB | Emirates Integrated Telecommunications Company PJSC | 0.05 | 0.59 | 0.57 |
| TATACOMM.NS | Tata Communications Ltd | 0.24 | 1.02 | 0.88 |
| TM.KL | Telekom Malaysia Bhd | 0.21 | 0.64 | 0.56 |
| TPG.AX | TPG Telecom Ltd | 0.63 | 0.46 | 0.32 |
| TRUE.BK | True Corporation PCL | 1.16 | 1.12 | 0.61 |
| VOC.AX | Vocus Group Ltd | 0.35 | 1.22 | 0.98 |
| Low | High | |
| Unlevered beta | 0.52 | 0.59 |
| Relevered beta | 0.72 | 0.81 |
| Adjusted relevered beta | 0.81 | 0.87 |
SPK.NZ'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 SPK.NZ:
cost_of_equity (9.60%) = risk_free_rate (4.55%) + equity_risk_premium (5.60%) * adjusted_beta (0.81) + 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.