On 18 July 2016, the European Commission (EC) published a study on the methodology to be used for calculating the weighted average cost of capital (WACC). The study analyses the different methodologies used by European regulatory authorities in imposing obligations on operators identified as having significant market power - such as cost orientation of prices and the adoption of cost accounting systems - and makes recommendations on the approaches deemed most appropriate.
WACC assesses the investments made by the operator, enabling a reasonable rate of return on invested capital in light of associated risks.
Further information:
- Commission publishes study on a common approach for the calculation of the Weighted Average Cost of Capital in telecoms regulation https://ec.europa.eu/digital-single-market/en/news/commission-publishes-study-common-approach-calculation-weighted-average-cost-capital-telecoms
