BERN, Switzerland -- Net revenue for the Swisscom Group fell by 1.7% year-on-year to CHF 2.45 billion. The cost savings implemented did not completely offset this decline, and operating income before interest, tax, depreciation and amortisation (EBITDA) dropped by 2.7% to CHF 1.09 billion. However, due to lower depreciation and amortisation and a higher net financial result, net income before deduction of minority interests rose by 6.6% to CHF 613 million. The share buyback program in 2004 led to higher growth in net earnings per share, which increased by 14.8% to CHF 8.46. As already announced, Swisscom is launching another share buyback program in 2005 to the value of CHF 2 billion. For fiscal 2005, Swisscom expects revenue and EBITDA to fall to around CHF 9.6 billion and around CHF 4.1 billion respectively, primarily as a result of the intense competition and pricing pressure faced by Mobile and Fixnet.
The Swisscom Group’s revenue from external customers decreased by CHF 43 million (1.7%) year-on-year to CHF 2.45 billion. The Fixnet segment posted a drop in revenue of CHF 34 million (2.9%). The increase in revenue from access charges due to the growth of ADSL was outweighed by the decline in traffic revenue. At Mobile, the higher number of customers in particular pushed revenue up by CHF 13 million (1.5%). The Solutions segment recorded a drop in revenue of CHF 35 million (11.1%) as a result of ongoing tough competition and pricing pressure. The “Other” segment increased revenue by CHF 15 million (13.3%) on the back of additional revenue generated by Swisscom IT Services through business with third parties.
The reduction in operating expenses as a result of the cost-cutting measures implemented was not sufficient to fully offset the decline in revenue. EBITDA therefore decreased by CHF 30 million to CHF 1.09 billion. The net financial result increased by CHF 23 million, primarily because the Group achieved higher net interest income and higher gains from sales of shareholdings than in the previous year. At CHF 147 million (previous year: CHF 145 million), income tax expense was close to the previous year’s level.
Net income before deduction of minority interests increased by CHF 38 million (6.6%) year-on-year to CHF 613 million. The decline in EBITDA was outweighed by lower depreciation and amortisation, a higher net financial result and the fact that losses are no longer being posted for the discontinued operation (debitel). Due to a new statutory accounting requirement, net income is now shown before deduction of the interests of minority shareholders in fully consolidated group companies. After deduction of these minority interests, net income amounted to CHF 520 million (previous year: CHF 488 million). Due to the smaller average number of shares resulting from the 2004 share buyback program, net earnings per share increased by 14.8% to CHF 8.46.
As already announced, Swisscom is launching another share buyback program this year to the value of CHF 2 billion. Shares will be bought back via the second trading line – this is expected to start by 23 May 2005.
Management change at Swisscom IT Services AG
Michael Shipton (born 1956), Chief Strategy Officer of Swisscom AG, is to become the new CEO of Swisscom IT Services AG. In his new role, he will remain a Member of the Swisscom Group Executive Board. Michael Shipton is succeeding Urs Stahlberger (1946), who is to retire by the end of 2005 at the latest. The changeover will take place over the course of this year, with arrangements for Michael Shipton’s successor being made during the same period.
Subdued outlook for 2005
Amid intense competition and price reductions at Mobile and Fixnet, Swisscom expects revenue to decrease to around CHF 9.6 billion for fiscal 2005, with operating income before interest, tax, depreciation and amortisation (EBITDA) falling to approximately CHF 4.1 billion. The decline in revenue and EBITDA amounts to around CHF 0.4 billion and CHF 0.3 billion respectively year-on-year and can chiefly be attributed to lower traffic volumes for Fixnet and Mobile, the announced price cuts at Mobile (particularly in respect of termination) and the planned transfer of International Carrier Services activities to the joint venture with Belgacom as from the middle of the year. The Swisscom Group’s capital spending will once again be in the region of CHF 1.2 billion.
Swisscom AG