Swisscom relies on Italy, corporate business to maintain earnings growth in H1 2016

Swisscom felt the effects of stiffer competition in its core telecoms business during the first half of 2016, resulting in the company generating marginal gains in revenue and net income compared to the same period of 2015.

 

The operator increased net income by 0.5% year-on-year to CHF788 million (€726 million/$822 million) and generated a 0.2% rise in revenue to CHF5.7 billion. Earnings before interest, depreciation and amortisation (EBITDA) of CHF2.2 billion in the recent period were 4.4% higher than in the first half of 2015.

 

Swisscom CEO Urs Schaeppi said the operator encountered “strong price pressure in mobile telecommunications” and “increasingly cut-throat competition in the core business” during the opening half of 2016. Such factors mean the company must take a “prudent” approach to handling its costs and “further increase efficiency within the company,” he said.

 

The chief executive added that Swisscom saw increased demand for its bundled and TV access services during the opening half of 2016. Corporate customers proved to be a boon for the company’s solutions business, and its Italian ISP Fastweb “made a significant contribution to our EBITDA growth over the past six months,” Schaeppi said.

 

Swisscom’s full earnings statement reveals that Schaeppi was not just paying lip service to the Italian division’s contribution to group EBITDA in the first half. While Fastweb’s EBITDA increased by 28.8% year-on-year, core Swiss EBITDA fell 0.6% compared to the same period of 2015.

 

Figures for the second quarter were more encouraging for Swisscom. Total revenue increased 0.7% year-on-year to CHF2.8 billion, while EBITDA of CHF1.1 billion was up 5.9% on the same period of 2015.

 

The operator said it is standing by its full-year 2016 revenue forecast of CHF11.6 billion, but increased its predictions for full-year EBITDA. Swisscom now expects to generate EBITDA of around CHF4.25 billion – a marginal increase on its previous forecast of CHF4.2 billion.

 

Full-year capex is now expected to be around CHF2.4 billion, compared to Swisscom’s previous forecast of CHF2.3 billion.