Swisscom is on track with its business

Swisscom has just published its latest half-year figures. CEO Urs Schaeppi commented on the half-year results as follows: "Swisscom delivered a very solid performance in the market in the second quarter. We have successfully launched inOne, are growing in bundled offers and in the TV business. Fastweb is also doing well and increased its contribution to Swisscom's EBITDA. The decline in fixed-network telephony continued, which, together with intense, strongly promotion-driven competition, resulted in slightly lower revenue from telecommunications services."

Intense competition, declining fixed-network telephony

Overall, the net revenue of Switzerland's largest telecom service provider in the first half of 2017 was virtually unchanged year-on-year at CHF 5,690 million (CHF -79 million or -1.4%). At the same time, revenue from telecommunications services in Switzerland declined slightly. According to Swisscom, it fell by CHF 76 million (-2.3%) due to intense competition and increasing market saturation, with around half of this decline attributable to the declining subscriber base in fixed-line telephony. EBITDA, on the other hand, increased by 1.5% or CHF 33 million to CHF 2,260 million. The growth in EBITDA was also driven in particular by Fastweb (+20.3%). Fastweb's EBITDA includes compensation from legal proceedings amounting to CHF 102 million.Swisscom's net profit increased by CHF 51 million or 6.5% year-on-year to CHF 839 million.Swisscom continues to expect net revenue of around CHF 11.6 billion and capital expenditure of around CHF 2.4 billion in 2017.In terms of EBITDA, the forecast is increased from around CHF 4.2 billion to around CHF 4.3 billion due to the compensation from legal proceedings at Fastweb recorded in the second quarter. If the targets are achieved, Swisscom plans to propose an unchanged dividend of CHF 22 per share for the 2017 financial year at the 2018 Annual General Meeting.

Decline in sales in Swiss core business compensated for

Thanks to prudent planning, it has been possible to compensate for most of the decline in revenue in the Swiss core business, the company adds. As announced, Swisscom will reduce its cost base in Switzerland by over CHF 300 million from 2015 to 2020.

On balance, the Group's headcount decreased by 1.7% to 20,775 jobs in the first half of the year. As of the end of June, Swisscom had a headcount of 17,974 in Switzerland. This is 398 jobs or 2.2% fewer than at the end of 2016. More than half of the reduction was absorbed through natural attrition and internal job placements. Over the course of summer 2017, 222 apprentices completed their training at Swisscom. 278 young people started their apprenticeships at Swisscom in August, mainly in retail, mediamatics, IT and commercial apprenticeships. In total, there are over 900 apprentices in training at Swisscom.

Network of the future: roll-out of ultra-broadband network continues, switch to All-IP on schedule

The telecom service provider is currently working full steam ahead on generation projects and is continuing to modernize its infrastructure in Switzerland. Although Group-wide capital expenditure decreased as a result of delays in network rollout (-11.4%), it remains at a high level of CHF 1,057 million. In Switzerland, these amounted to CHF 728 million or 16.9% below the previous year. As of the end of June, more than 2.7 million lines were equipped with the latest fiber-optic technologies. In total, Swisscom has connected around 3.7 million homes and businesses with ultra-broadband (more than 50 Mbit/s). By the end of 2021, Swisscom will have connected all Swiss communities with fiber-optic technologies, giving even remote villages access to ultra-broadband.

The forward-looking digitization of the fixed network (all-IP technology) is also proceeding according to plan. More than 1.7 million customers, or three-quarters of all lines, are already benefiting from HD voice quality, personal barring lists, name display, and automatic spam filters to block unwanted advertising calls. Up to 40,000 additional lines are added each month. From the beginning of 2018, customer lines in larger regions of Switzerland will be completely converted to IP, so that the dismantling of the old infrastructure can be driven forward there.

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