AT&T WACC - Weighted Average Cost of Capital
The WACC of AT&T Inc (T) is 5.4%.
| Range | Selected | |
| Cost of equity | 5.4% - 7.4% | 6.4% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.9% - 5.6% | 5.25% |
| WACC | 4.7% - 6.1% | 5.4% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.34 | 0.45 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 5.4% | 7.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.62 | 0.62 |
| Cost of debt | 4.9% | 5.6% |
| After-tax WACC | 4.7% | 6.1% |
| Selected WACC | 5.4% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| T | AT&T Inc | 0.62 | 0.18 | 0.12 |
| ALSK | Alaska Communications Systems Group Inc | 0.91 | 1.48 | 0.89 |
| ATNI | ATN International Inc | 2.48 | 0.57 | 0.2 |
| BCE.TO | BCE Inc | 1.39 | -0.03 | -0.01 |
| CBB | Cincinnati Bell Inc | 2.5 | 0.36 | 0.13 |
| CNSL | Consolidated Communications Holdings Inc | 3.85 | -0.01 | 0 |
| FTRCQ | Frontier Communications Corp | 226.23 | -0.08 | 0 |
| IGLDF | Internet Gold Golden Lines Ltd | 46.76 | 0.51 | 0.01 |
| T.TO | Telus Corp | 0.88 | -0.06 | -0.04 |
| VZ | Verizon Communications Inc | 0.78 | 0.27 | 0.17 |
| Low | High | |
| Unlevered beta | 0.01 | 0.13 |
| Relevered beta | 0.01 | 0.18 |
| Adjusted relevered beta | 0.34 | 0.45 |
AT&T'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 AT&T:
cost_of_equity (6.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.34) + 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.