IDEAS home Printed from
   My bibliography  Save this paper

The beta in the WACC for regulated fixed and mobile telecommunica-tions services: Its role and robust estimation


  • Schmitt, Stephan
  • Neu, Werner


It is a highly controversial topic, both in the regulatory as well as the scientific research environment, whether the beta factor – as a measure for systematic risk – for fixed line and that for mobile operations has actually the same value. Since most telecommunica-tions operators are today integrated, offering both types of services, It is difficult to ad-dress this empirical question directly. This paper contributes to the discussion by provid-ing new empirical evidence with an approach that is a bit more sophisticated than is typically the case. Using an especially derived panel data set for 16 European tele-communications operators, covering the period 2010 through 2016, we tested the main hypothesis regarding the impact of mobile operations on risk, as well as carried out a preliminary test regarding the validity of the Modigliani/Miller formula needed for the main hypothesis. We do not find any empirical evidence that the risk parameters of fixed line and mobile network operators are different. Instead, they seem to be rather similar or within in the same range. Second, as a byproduct, we are not able to empiri-cally confirm the Modigliani/Miller formula according to which the transformation of the equity betas into asset betas depends essentially on the debt/equity ratio assuming in the process a debt beta equal to zero. Our results rather confirm the findings of other studies suggesting that the debt beta is strictly positive.

Suggested Citation

  • Schmitt, Stephan & Neu, Werner, 2017. "The beta in the WACC for regulated fixed and mobile telecommunica-tions services: Its role and robust estimation," 28th European Regional ITS Conference, Passau 2017 169496, International Telecommunications Society (ITS).
  • Handle: RePEc:zbw:itse17:169496

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Barth, Anne-Kathrin & Heimeshoff, Ulrich, 2012. "How large is the magnitude of fixed-mobile call substitution? Empirical evidence from 16 European countries," DICE Discussion Papers 49, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Skardziukas, Domantas, 2010. "Practical approach to estimating cost of capital," MPRA Paper 31011, University Library of Munich, Germany.
    3. Chalmeau, Olivier, 2013. "Determinants of European telecommunication operators systematic risk," 24th European Regional ITS Conference, Florence 2013 88495, International Telecommunications Society (ITS).
    4. Ingo Vogelsang, 2003. "Price Regulation of Access to Telecommunications Networks," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 830-862, September.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:itse17:169496. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - Leibniz Information Centre for Economics). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.