TIT.MI WACC - Weighted Average Cost of Capital
The WACC of Telecom Italia SpA (TIT.MI) is 8.8%.
| Range | Selected | |
| Cost of equity | 8.9% - 12.0% | 10.45% |
| Tax rate | 24.0% - 24.0% | 24% |
| Cost of debt | 5.4% - 15.4% | 10.4% |
| WACC | 5.8% - 11.8% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.63 | 0.79 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.9% | 12.0% |
| Tax rate | 24.0% | 24.0% |
| Debt/Equity ratio | 1.84 | 1.84 |
| Cost of debt | 5.4% | 15.4% |
| After-tax WACC | 5.8% | 11.8% |
| Selected WACC | 8.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TIT.MI | Telecom Italia SpA | 1.84 | 0.83 | 0.34 |
| HTO.AT | Hellenic Telecommunications Organization SA | 0.16 | 0.47 | 0.42 |
| KPN.AS | Koninklijke KPN NV | 0.44 | 0.07 | 0.05 |
| O2D.DE | Telefonica Deutschland Holding AG | 0.64 | 1.1 | 0.74 |
| PROX.BR | Proximus NV | 1.9 | 0.45 | 0.18 |
| SCMN.SW | Swisscom AG | 0.59 | 0.24 | 0.16 |
| TEL.OL | Telenor ASA | 0.48 | 0.33 | 0.24 |
| TELIA.ST | Telia Company AB | 0.64 | 0.07 | 0.05 |
| TKA.VI | Telekom Austria AG | 0.4 | 0.25 | 0.19 |
| UTDI.DE | United Internet AG | 0.89 | 1.07 | 0.64 |
| Low | High | |
| Unlevered beta | 0.19 | 0.28 |
| Relevered beta | 0.45 | 0.69 |
| Adjusted relevered beta | 0.63 | 0.79 |
TIT.MI'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 TIT.MI:
cost_of_equity (10.45%) = risk_free_rate (3.95%) + equity_risk_premium (8.80%) * adjusted_beta (0.63) + 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.