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T-Mobile US WACC %

:4.5% (As of Today)
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As of today (2022-08-13), T-Mobile US's weighted average cost of capital is 4.5%. T-Mobile US's ROIC % is 2.89% (calculated using TTM income statement data). T-Mobile US earns returns that do not match up to its cost of capital. It will destroy value as it grows.


T-Mobile US WACC % Historical Data

The historical data trend for T-Mobile US's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

T-Mobile US Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
WACC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.44 6.64 4.81 4.26 4.10

T-Mobile US Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
WACC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.45 4.40 4.10 4.25 4.65

Competitive Comparison

For the Telecom Services subindustry, T-Mobile US's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

T-Mobile US WACC % Distribution

For the Telecommunication Services industry and Communication Services sector, T-Mobile US's WACC % distribution charts can be found below:

* The bar in red indicates where T-Mobile US's WACC % falls into.



T-Mobile US WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, T-Mobile US's market capitalization (E) is $183666.879 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Jun. 2022, T-Mobile US's latest two-year average Short-Term Debt & Capital Lease Obligation was $9839 Mil and its latest two-year average Long-Term Debt & Capital Lease Obligation was $95276 Mil. The total Book Value of Debt (D) is $105115 Mil.
a) weight of equity = E / (E + D) = 183666.879 / (183666.879 + 105115) = 0.636
b) weight of debt = D / (E + D) = 105115 / (183666.879 + 105115) = 0.364

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 2.84200000%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. T-Mobile US's beta is 0.45.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 2.84200000% + 0.45 * 6% = 5.542%

3. Cost of Debt:
GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.
As of Dec. 2021, T-Mobile US's interest expense (positive number) was $3362 Mil. Its total Book Value of Debt (D) is $105115 Mil.
Cost of Debt = 3362 / 105115 = 3.1984%.

4. Multiply by one minus Average Tax Rate:
GuruFocus uses the latest two-year average tax rate to do the calculation. The calculated average tax rate is limited to between 0% and 100%. If the calculated average tax rate is higher than 100%, it is set to 100%. If the calculated average tax rate is less than 0%, it is set to 0%.
The latest Two-year Average Tax Rate is 16.015%.

T-Mobile US's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.636*5.542%+0.364*3.1984%*(1 - 16.015%)
=4.5%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


T-Mobile US  (NAS:TMUS) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, T-Mobile US's weighted average cost of capital is 4.5%. T-Mobile US's ROIC % is 2.89% (calculated using TTM income statement data). T-Mobile US earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest two-year average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses last fiscal year end Interest Expense divided by the latest two-year average debt to get the simplified cost of debt.


Related Terms

T-Mobile US Business Description

T-Mobile US logo
Address
12920 SE 38th Street, Bellevue, WA, USA, 98006-1350
Deutsche Telekom merged its T-Mobile USA unit with prepaid specialist MetroPCS in 2013, creating T-Mobile US. Following the merger, the firm provided nationwide service in major markets but spottier coverage elsewhere. T-Mobile spent aggressively on low-frequency spectrum, well suited to broad coverage, and has substantially expanded its geographic footprint. This expansion, coupled with aggressive marketing and innovative offerings, produced rapid customer growth. With the Sprint acquisition, the firm's scale now roughly matches its larger rivals: T-Mobile now serves 70 million postpaid and 21 million prepaid phone customers, equal to nearly 30% of the U.S. retail wireless market. In addition, the firm provides wholesale service to resellers.
Executives
Field Callie R officer: President, Business Group C/O T-MOBILE US, INC. 12920 SE 38TH STREET BELLEVUE WA 98006
Nelson Mark Wolfe officer: EVP and General Counsel C/O T-MOBILE US, INC. 12920 SE 38TH STREET BELLEVUE WA 98006-1350
Softbank Group Corp director 1-7-1 KAIGAN MINATO-KU TOKYO M0 105-7537
Delaware Project 6 L.l.c. director ONE CIRCLE STAR WAY SAN CARLOS CA 94070
Long Letitia A director C/O CORPORATE OFFICE PROPERTIES TRUST 6711 COLUMBIA GATEWAY DRIVE, #300 COLUMBIA MD 21046
Holloway Bavan director 8501 NORTH SCOTTSDALE ROAD SUITE 100 SCOTTSDALE AZ 85253
Draper Dow officer: EVP, Emerging Products 1475 120TH AVE NE BELLEVUE WA 98005
Freier Jon officer: EVP, Consumer Markets C/O T-MOBILE US, INC. 12920 SE 38TH STREET BELLEVUE WA 98006-1350
Katz Michael J. officer: EVP, T-Mobile for Business C/O T-MOBILE US, INC. 12920 SE 38TH STREET BELLEVUE WA 98006-1350
Leroy Dominique director C/O T-MOBILE US, INC. 12920 SE 38TH STREET BELLEVUE WA 98006
Wilkens Michael director C/O T-MOBILE US, INC. 12920 SE 38TH STREET BELLEVUE WA 98006
Tazi Omar director C/O T-MOBILE US, INC. 12920 SE 38TH STREET BELLEVUE WA 98006
Claure Raul Marcelo director 2010 NW 84 AVENUE MIAMI FL 33122
Bazzano Dara officer: SVP & Chief Accounting Officer 100 NORTH SEPULVEDA BLVD. SUITE 1100 EL SEGUNDO CA 90245
Fisher Ronald D director, other: Resigned on 6/22/20 C/O SOFTBANK HOLDINGS INC 10 LANGLEY ROAD SUITE 403 NEWTON CENTER MA 02159

T-Mobile US Headlines

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