Swisscom Reports H1 689025

Revenue declines 3.8% year-on-year at Swiss incumbent in face of domestic price erosion

August 11, 2011

4 Min Read

BERNE -- In the first half of 2011, Swisscom’s net revenue declined by 3.8% to CHF 5,722 million and operating income (EBITDA) was down 0.8% to CHF 2,270 million. At constant exchange rates and adjusted for the provision for VAT proceedings against Fastweb in the previous year, revenue and EBITDA were lower, down 1.4% and 3.6% respectively. Despite customer growth, the net revenue of Italian subsidiary Fastweb decreased in local currency by 6.4% to EUR 875 million due to aggressive price competition. Excluding Fastweb, Swisscom’s revenue remained virtually stable, dropping by CHF 3 million to CHF 4,620 million. Price erosion in the Swiss business of CHF 298 million was nearly offset by customer and volume growth of CHF 263 million. The 10.1% rise in net income to CHF 962 million is largely attributable to the provision recognised in the first half of 2010 for VAT proceedings against Fastweb. Higher investment spending in Switzerland on next-generation networks and rising customer numbers led to an increase in headcount, with around 200 new FTEs being created within the space of the year. Based on an average CHF/EUR exchange rate of 1.20, Swisscom expects to close the 2011 financial year with net revenue of CHF 11.5 billion, EBITDA of CHF 4.6 billion and capital expenditure of CHF 2.0 billion. The main reason for the reduced revenue forecast is the weak euro. Swisscom still expects to pay a dividend of at least CHF 21 per share for 2011.

Table 1: Swisscom H1

1.1.-30.6.2010

1.1.-30.6.2011

Change

Net revenue (in CHF millions)

5,946

5,722

-3.80%

EBITDA (in CHF millions)

2,288

2,270

-0.80%

EBIT (in CHF millions)

1,298

1,326

2.20%

Net income (in CHF millions)

874

962

10.10%

Retail broadband connections Switzerland (as at 30 June in thousands)

1,530

1,618

5.80%

Swisscom TV connections in Switzerland (as at 30 June in thousands)

317

512

61.50%

Mobile connections in Switzerland (as at 30 June in thousands)

5,691

5,913

3.90%

Mobile data services Switzerland (in CHF millions)

199

236

18.60%

Broadband access lines in Italy (as at 30 June in thousands)

1,694

1,741

2.80%

Capital expenditure (in CHF millions)

814

909

11.70%

Group employees (FTEs as at 30 June)

19,480

19,829

1.80%





In the first half of 2011, the Swisscom Group’s net revenue declined by CHF 224 million or 3.8% to CHF 5,722 million and operating income before depreciation and amortisation (EBITDA) was down by CHF 18 million or 0.8% at CHF 2,270 million. At constant exchange rates and adjusted for the provision for VAT proceedings against Fastweb in the first half of 2010, revenue and EBITDA were lower than in the previous year, down 1.4% and 3.6% respectively. The net revenue of Italian subsidiary Fastweb decreased in local currency by 6.4% to EUR 875 million. Excluding Fastweb, Swisscom’s revenue remained virtually stable, dropping by CHF 3 million to CHF 4,620 million.

The CHF 88 million or 10.1% increase in net income to CHF 962 million is largely attributable to the aforementioned provision recognised in the previous year at Fastweb. In addition, the lower EBITDA was nearly offset by an improved financial result and lower income tax expense. Capital expenditure increased by CHF 95 million or 11.7% to CHF 909 million, mainly due to higher levels of investment in the Swiss telecommunications infrastructure. The number of employees rose year on year by 1.8% or 349 FTEs to 19,829. Some 200 new FTEs were created in Switzerland, mainly in the customer service and network expansion areas. The higher headcount is also partly attributable to acquisitions in Switzerland.

Swisscom AG (NYSE: SCM)

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