TPG.AX WACC - Weighted Average Cost of Capital

The WACC of TPG Telecom Ltd (TPG.AX) is 9.4%.

The Cost of Equity of TPG Telecom Ltd (TPG.AX) is 9.75%.

The Cost of Debt of TPG Telecom Ltd (TPG.AX) is 12.50%.

	Range	Selected
Cost of equity	8.00% - 11.50%	9.75%
Tax rate	26.20% - 30.10%	28.15%
Cost of debt	4.00% - 21.00%	12.50%
WACC	6.3% - 12.6%	9.4%

WACC

TPG.AX WACC calculation

Category	Low	High

Long-term bond rate	4.0%	4.5%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.78	1.07

Additional risk adjustments	0.0%	0.5%
Cost of equity	8.00%	11.50%

Tax rate	26.20%	30.10%
Debt/Equity ratio	0.51	0.51
Cost of debt	4.00%	21.00%

After-tax WACC	6.3%	12.6%


Selected WACC	9.4%

TPG.AX'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 TPG.AX:

cost_of_equity (9.75%) = risk_free_rate (4.25%) + equity_risk_premium (5.60%) * adjusted_beta (0.78) + 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.