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Study into the cost of capital (WACC) of KPN

07-07-2015

Commissioned by the Netherlands Authority for Consumers and Markets (ACM), research firm Brattle carried out a study into the level of the cost of capital of Dutch telecom company KPN, and, more specifically, into the risk premium for investments in Fiber-to-the-Home (FttH). The cost of capital is the reasonable return on invested capital, and is also called the Weighted Average Cost of Capital (WACC). The cost of capital determines the capital costs that KPN pays for raising capital.

Background

This study is used for the new market analyses for the telecommunications markets. ACM uses the cost of capital when implementing the obligations from the market analysis decisions. The WACC affects the tariffs that KPN is allowed to charge other market participants. When ACM issues decisions about the implementation of obligations, the WACC will be presented to market participants. They will be given the opportunity to give a reaction to the way the WACC has been determined.