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Weighted Average Cost of Capital (WACC)

Norwegian Communications Authority (Nkom) applies Weighted Average Cost of Capital (WACC) in the imposition of cost accounting, accounting separation and in the LRIC models and margin squeeze models.

The WACC is the opportunity cost of all capital invested in an enterprise. WACC is used in cost accounting and the accounting separation as an “accepted return on capital”. WACC is also used in Nkom’s LRIC models and margin squeeze models. In November 2017 Nkom made decisions on updated cost of capital in the mobile markets and the fixed network markets respectively. The cost of capital is determined on the basis of calculations made by Professor Thore Johnsen. The current decisions are only available in Norwegian.