Estimating the cost of capital for the license fee

Economic Insight undertook an analysis of the appropriate parameters to use in estimating a weighted average cost of capital (WACC) for Ofcom’s proposed license fee for 900 and 1800MHz spectrum.

The precise discount rate Ofcom will use to convert its estimated lump sum spectrum valuation into the annual fee is a critical issue to mobile network operators, and our report was included in Three’s submission to Ofcom on this subject.