VOD.L WACC - Weighted Average Cost of Capital
The WACC of Vodafone Group PLC (VOD.L) is 7.0%.
| Range | Selected | |
| Cost of equity | 9.3% - 13.5% | 11.4% |
| Tax rate | 19.0% - 19.0% | 19% |
| Cost of debt | 4.0% - 9.2% | 6.6% |
| WACC | 4.8% - 9.1% | 7.0% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.88 | 1.21 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.3% | 13.5% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 2.75 | 2.75 |
| Cost of debt | 4.0% | 9.2% |
| After-tax WACC | 4.8% | 9.1% |
| Selected WACC | 7.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| VOD.L | Vodafone Group PLC | 2.75 | 1.24 | 0.38 |
| AAF.L | Airtel Africa PLC | 0.52 | 1.55 | 1.09 |
| DRI.DE | 1&1 Drillisch AG | 0.21 | 0.8 | 0.68 |
| FNTN.DE | freenet AG | 0.17 | 0.51 | 0.44 |
| ICEGR.OL | Ice Group ASA | 64.46 | 0.2 | 0 |
| OBEL.BR | Orange Belgium SA | 2 | -0.07 | -0.03 |
| SNC.LS | Sonaecom SGPS SA | 0.01 | 0.29 | 0.29 |
| TCELL.IS | Turkcell Iletisim Hizmetleri AS | 0.51 | 0.81 | 0.57 |
| TEL2 B.ST | Tele2 AB | 0.32 | 0.26 | 0.21 |
| VEON.AS | VEON Ltd | 2.28 | 0.23 | 0.08 |
| Low | High | |
| Unlevered beta | 0.26 | 0.41 |
| Relevered beta | 0.82 | 1.31 |
| Adjusted relevered beta | 0.88 | 1.21 |
VOD.L'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 VOD.L:
cost_of_equity (11.40%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.88) + 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.