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Strong take-up of TV offer but Swisscom's net income drops 6.6% year-on-year.

Swisscom Reports Full-Year Results

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2/6/2014
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BERNE, Switzerland -- In 2013, Swisscom’s net revenue rose by CHF 50 million or 0.4% to CHF 11,434 million, while EBITDA declined by CHF 175 million or 3.9% to CHF 4,302 million. At constant exchange rates and excluding company acquisitions as well as Fastweb’s wholesale revenue from interconnection services (hubbing), revenue fell by 0.8%. This slight decrease was mainly due to price erosion in Swiss core business of around CHF 350 million and reductions in roaming charges of around CHF 210 million. The total fall of around CHF 560 million was largely offset by customer and volume growth of around CHF 480 million.

EBITDA fell by 2.0% on a like-for-like basis, due primarily to the fall in revenue in Swiss core business. Expenses were also higher in Switzerland for network maintenance and IT, while customer growth in Italy led to higher acquisition costs. In the second half of 2013, adjusted EBITDA rose by CHF 44 million year-on-year.

Net income declined by 6.6% or CHF 120 million to CHF 1,695 million, which was mainly attributable to lower EBITDA and a CHF 94 million increase in depreciation and amortisation due to increased capital expenditure on infrastructure. Overall headcount rose by 594 FTEs to 20,108 FTEs. While headcount was higher in Switzerland as a result of corporate acquisitions, the insourcing of external staff and the expansion of customer service in Swiss business, the number of Fastweb employees was lower due to outsourcing.

Excluding costs of CHF 360 million for mobile frequencies acquired in 2012, total capital expenditure rose by 10.5% to CHF 2,396 million and in Switzerland by CHF 52 million or 3.2% to CHF 1,686 million, with the bulk of the spending going on Switzerland’s broadband infrastructure. In terms of mobile communication, over 85% of the population already have access to fourth-generation LTE technology, which means that the original expansion target has been greatly exceeded. Around 1 million Swisscom customers now own a 4G/LTE-enabled device and are able to benefit from the fastest mobile technology available at the moment. By the end of December, 750,000 households and businesses were already connected to the fibre-optic network.

The trend towards bundled offerings and new pricing models such as flat-rate tariffs continues unabated. By the end of 2013, one million customers were benefiting from one of the popular packages, which corresponds to an increase of 27.0% or 213,000 versus the prior year. Revenue from bundled contracts recorded a 32.5% increase to CHF 1,553 million, with the main driver being television and mobile communications. In the third and fourth quarters, the increase in revenue from bundled contracts exceeded the fall in revenue from individual contracts. The number of bundled contracts taken out together with a mobile communications offering rose from 40.1% to 41.9% in comparison with the previous year. The number of revenue-generating units (RGUs) grew by 349,000 or 3.0% to 12.1 million.

The number of Swisscom TV connections increased year-on-year by 209,000 or 26.4% to 1 million, of which 939,000 subscribed to the basic packages. Virtually every third Swiss household uses Swisscom TV. 410,000 Swisscom TV customers make use of the Replay function, which allows users to watch programmes from around 70 channels up to 30 hours after they have been broadcast. In 2013, total viewings of live sporting events and films (VoD) increased by 10.7% to 8.8 million, while the number of fixed-network broadband access lines grew year-on-year by 84,000 or 4.9% to 1.81 million.

Swisscom AG (NYSE: SCM)

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