The WACC of Telekom Austria AG (TKA.VI) is 6.1%.
Range | Selected | |
Cost of equity | 5.8% - 8.8% | 7.3% |
Tax rate | 21.9% - 22.9% | 22.4% |
Cost of debt | 4.0% - 4.5% | 4.25% |
WACC | 5.0% - 7.2% | 6.1% |
Category | Low | High |
Long-term bond rate | 2.8% | 3.3% |
Equity market risk premium | 5.7% | 6.7% |
Adjusted beta | 0.54 | 0.75 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 5.8% | 8.8% |
Tax rate | 21.9% | 22.9% |
Debt/Equity ratio | 0.42 | 0.42 |
Cost of debt | 4.0% | 4.5% |
After-tax WACC | 5.0% | 7.2% |
Selected WACC | 6.1% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
TKA.VI | Telekom Austria AG | 0.42 | 0.25 | 0.19 |
ELISA.HE | Elisa Oyj | 0.2 | 0.22 | 0.19 |
HTO.AT | Hellenic Telecommunications Organization SA | 0.16 | 0.48 | 0.42 |
KPN.AS | Koninklijke KPN NV | 0.44 | 0.03 | 0.02 |
MTELEKOM.BD | Magyar Telekom Tavkozlesi Nyrt | 0.18 | 0.88 | 0.77 |
O2D.DE | Telefonica Deutschland Holding AG | 0.64 | 1.1 | 0.74 |
OPL.WA | Orange Polska SA | 0.59 | 0.38 | 0.26 |
PROX.BR | Proximus NV | 1.72 | 0.35 | 0.15 |
TTKOM.IS | Turk Telekomunikasyon AS | 0.91 | 1.07 | 0.63 |
UTDI.DE | United Internet AG | 0.83 | 0.92 | 0.56 |
Low | High | |
Unlevered beta | 0.23 | 0.48 |
Relevered beta | 0.31 | 0.63 |
Adjusted relevered beta | 0.54 | 0.75 |
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 TKA.VI:
cost_of_equity (7.30%) = risk_free_rate (3.05%) + equity_risk_premium (6.20%) * adjusted_beta (0.54) + 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.