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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]


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


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.

Suggested Citation

  • Bragança, Gabriel & Rocha, Katia & Camacho, Fernando, 2006. "A taxa de remuneração do capital e a nova regulação das telecomunicações
    [Cost of capital and the new regulation of telecommunications services]
    ," MPRA Paper 5400, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:5400

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    References listed on IDEAS

    1. Ross, Stephen A., 1976. "The arbitrage theory of capital asset pricing," Journal of Economic Theory, Elsevier, vol. 13(3), pages 341-360, December.
    2. Pindyck Robert S., 2007. "Mandatory Unbundling and Irreversible Investment in Telecom Networks," Review of Network Economics, De Gruyter, vol. 6(3), pages 1-25, September.
    3. Robert C. Merton, 2005. "Theory of rational option pricing," World Scientific Book Chapters,in: Theory Of Valuation, chapter 8, pages 229-288 World Scientific Publishing Co. Pte. Ltd..
    4. Hausman, Jerry & Myers, Stewart, 2002. "Regulating the United States Railroads: The Effects of Sunk Costs and Asymmetric Risk," Journal of Regulatory Economics, Springer, vol. 22(3), pages 287-310, November.
    5. Pereiro, Luis E., 2001. "The valuation of closely-held companies in Latin America," Emerging Markets Review, Elsevier, vol. 2(4), pages 330-370, December.
    6. 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.
    7. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    8. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    9. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    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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    Cited by:

    1. de Braganca, Gabriel Fiuza & Rocha, Katia & Moreira, Rafael Henrique Rodrigues, 2008. "Real Options and the Regulation of Brazilian Fixed-Line Telephone Operators: The Mark-up on the Cost of Capital," Working Paper Series 3997, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.

    More about this item


    Custo de Capital; Telecomunicações; Revisão Tarifária;

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill


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