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A taxa de remuneração do capital e a nova regulação das telecomunicações
[Cost of capital and the new regulation of telecommunications services]

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Author Info

  • Bragança, Gabriel
  • Rocha, Katia
  • Camacho, Fernando

Abstract

An adequate rate of return on capital yielded by the regulated firms is a central issue related to the new cost-based approach adopted by the Brazilian Telecommunication Regulatory Agency (Anatel). In this context, careful attention must be given to the Weighted Average Cost of Capital (WACC) estimation. Downside bias can harm innovation and infrastructure future investment decisions and upside bias contradicts the government main directive to reduce tariffs and foster competition, in fact, both mistakes reduces social welfare. In this respect, the article intends to offer methodological insights, based on well-accepted theoretical achievements and best practices abroad, for the task of estimate a telecom WACC taking account of specific regulatory and sectorial Brazilian characteristics.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5400.

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Date of creation: Mar 2006
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Handle: RePEc:pra:mprapa:5400

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Keywords: Custo de Capital; Telecomunicações; Revisão Tarifária;

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References

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  1. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(3), pages 637-54, May-June.
  2. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, American Finance Association, vol. 19(3), pages 425-442, 09.
  3. Robert S. Pindyck, 2004. "Mandatory Unbundling and Irreversible Investment in Telecom Networks," NBER Working Papers 10287, National Bureau of Economic Research, Inc.
  4. Robert C. Merton, 1973. "Theory of Rational Option Pricing," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 4(1), pages 141-183, Spring.
  5. Ross, Stephen A., 1976. "The arbitrage theory of capital asset pricing," Journal of Economic Theory, Elsevier, Elsevier, vol. 13(3), pages 341-360, December.
  6. Pereiro, Luis E., 2001. "The valuation of closely-held companies in Latin America," Emerging Markets Review, Elsevier, Elsevier, vol. 2(4), pages 330-370, December.
  7. Hausman, Jerry & Myers, Stewart, 2002. "Regulating the United States Railroads: The Effects of Sunk Costs and Asymmetric Risk," Journal of Regulatory Economics, Springer, Springer, vol. 22(3), pages 287-310, November.
  8. Camacho, Fernando & Bragança, Gabriel & Rocha, Katia, 2005. "A remuneração de capital nas telecomunicações e o novo contexto regulatório brasileiro
    [The remuneration of capital in the telecommunications and the new Brazilian regulatory context]
    ," MPRA Paper 5399, University Library of Munich, Germany.
  9. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, American Finance Association, vol. 7(1), pages 77-91, 03.
  10. Camacho, Fernando, 2004. "Custo de capital de indústrias reguladas no Brasil
    [Cost of capital of regulated industries in Brazil]
    ," MPRA Paper 5396, University Library of Munich, Germany.
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