BEREC Report on WACC parameter calculations according to the European Commission’s WACC Notice of 6th November 2019 (WACC parameters Report 2023)

Document number: BoR (23) 90

Document date: 08-06-2023

Date of registration: 13-06-2023

Document type:
Author: BEREC

In this fourth BEREC Weighted Average Cost of Capital (WACC) parameters Report BEREC calculates the WACC parameters following the non-binding Commission’s WACC Notice on the calculation of the cost of capital for legacy infrastructure in the context of the Commission’s review of national notifications in the EU electronic communications sector of 6th Nov. 20192. The cost of capital is the core element of any regulatory pricing decision NRAs take. The Notice aims to ensure a consistent calculation of the WACC by national regulatory authorities (NRAs) thereby contributing to the development of the internal electronic communications market.
As the Commission’s Notice has not changed, BEREC is following the same methodology (incl. ‘technical choices’) as in last year’s Report providing utmost continuity.

BEREC applied three general principles:

  • Follow the Notice as closely as possible, which mainly refers to the methodologies to be used for the estimations;
  • Be transparent, using publicly available data where possible or using data which is widely used and accepted in the financial markets, which refers to the data sources to be used for the estimations;
  • Explain every step of the calculation and proceed in a straightforward manner, which refers to the calculations as such.

For each of the parameters of the WACC formula (using the Capital Asset Pricing Model (CAPM) approach) the Report sets out:

  • the application of the methodologies according to the WACC Notice,
  • the assumptions and choices made,
  • the data and data sources used,
  • the steps of the calculations,
  • the results.

By explaining precisely and transparently how the results were derived NRAs will be able to follow the BEREC calculation steps from start to end and to fully understand the logic of the calculation process so that they can replicate the results shown in the WACC parameters Report. This ensures that NRAs are confident that the results are robust and were derived using state of the art professional standards as well as following the Notice as closely as possible taking into account also best regulatory practices where the Notice provides for NRAs’ flexibility