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Swisscom Q1 revenue dips

May 2, 2024

Swisscom hs reported Q1 group revenue fell by 1.6 per cent year-on-year to CHF 2.70 billion (€2.76bn), with a marginal decline of 0.5 per cent at constant exchange rates. In the Swiss core business, revenue fell by CHF 52 million or 2.5 per cent to CHF 1,993 million. Revenue from telecommunications services decreased by 2.2 per cent to CHF 1,324 million. In contrast, revenue from IT services with business customers rose by 4.9 per cent to CHF 297 million. The business in Italy continues to show positive development. The year-on-year revenue growth at Fastweb comes in at €35 million (+5.6 per cent).

Consolidated operating income before depreciation and amortisation (EBITDA) fell slightly by 0.8 per cent to CHF 1,155 million. Excluding non-recurring items and at constant exchange rates, this resulted in a decrease of 1.5 per cent. The EBITDA margin increased from 42.4 per cent to 42.7 per cent. EBITDA in the Swiss core business fell by 2 per cent, while in Fastweb it increased by 2.1 per cent (in Euros).

Net income rose by 2.9 per cent year-on-year to CHF 455 million.

Network infrastructure: FTTH expansion continues

Swisscom continuously invests in the quality, coverage and performance of its network infrastructure, consolidating its position at the cutting edge of technology. Group-wide investments rose by 9 per cent year-on-year to CHF 594 million.

Mobile network: Over 82% 5G+ coverage

CHIP has rated the Swisscom mobile network as the best in Switzerland for the ninth consecutive time. Swisscom is rapidly expanding the 5G network in order to ensure high network quality and to continue to offer customers an excellent mobile network. At the end of March 2024, Swisscom provided more than 82 per cent of the Swiss population with 5G+.

Broadband expansion: fibre-optic network growing – Swisscom appeals COMCO decision

By the end of 2025, fibre-optic coverage is expected to increase from the current 47 per cent to 57 per cent and to 75–80 per cent by the end of 2030. By then, the latest network technologies such as optical fibre and 5G mobile communications should be available in almost all municipalities. At the same time, Swisscom will gradually decommission the copper network, which is around 150 years old, wherever optical fibre is available in the coming years.

Swisscom intends to complete the optical fibre network in all municipalities after 2030. This will enable the complete decommissioning of the copper grid and related electricity savings on the order of the annual consumption of a city with around 20,000 inhabitants (100 GWh).

Swisscom will appeal against the decree published by the Competition Commission (COMCO) on Apri 25th. Swisscom does not consider the decision and reasoning by COMCO to be transparent in certain key points. Swisscom believes that it has behaved correctly in accordance with competition law. The appeal to this decree will not affect the further expansion of optical fibre access.

Residential customers: successful blue subscriptions

At the end of March 2024, 2.07 million customers in the residential customer segment were using blue subscriptions. In this segment, blue accounts for 50 per cent of all mobile subscriptions and 81 per cent of fixed-line broadband connections with the Swisscom brand. The number of fixed-line broadband connections fell by 1.3 per cent year-on-year to 1.99 million connections, with the number of TV connections dropping by 2.1 per cent to 1.53 million. In mobile telephony, the number of connections increased by 0.5 per cent to 6.27 million, while the customer structure changed due to an increase in postpaid lines (+126,000) and a similarly strong decrease in prepaid connections (–92,000).

Revenue from telecommunications services in the residential customer segment fell by 1.8 per cent year-on-year to CHF 946 million. Among other things, the decline was due to the increase in VAT not being passed on to customers.

Business customers: increased demand for IT services

The market for business customers remains dominated by price pressure and technological changes. Revenue from telecommunications services fell by 3.3 per cent year-on-year to CHF 378 million, primarily due to price erosion. Swisscom has a strong position as a full-service provider and customer satisfaction is high. Demand for cloud, security, IoT and SAP solutions and business applications continued to grow. Revenue from IT services rose by 4.9 per cent in the first quarter of 2024 to CHF 297 million.

Fastweb increases customers, revenue

Fastweb increased its revenue by 5.6 per cent in local currency terms. In the mobile communications sector, the number of connections was up by 11.8 per cent on the previous year to 3.61 million. The customer base in the fixed-network business (retail and wholesale) grew overall by 4.5 per cent to 3.30 million. Although this fell by 3 per cent to 2.58 million in the retail business as a result of the challenging market environment, the number of ultra-fast broadband connections that Fastweb provided to other operators rose to 720,000 (+45 per cent). Bundled offerings continued to play an important role, with 43 per cent of customers using a bundle of fixed network and mobile. Revenue from residential customers remained virtually stable at €288 million (–0.3 per cent). Revenue in the business customer segment grew by 8.8 per cent to €284 million. Wholesale also reporting higher revenue, with an increase of 17.8 per cent to €86 million.

Fastweb’s overall revenue rose year-on-year to €658 million (+5.6 per cent). Operating income before depreciation and amortisation (EBIDTA) rose by 2.1 per cent to €192 million. Fastweb also announced its entry into the electricity market at the beginning of April through the reselling of electricity tariffs.

Financial outlook confirmed – Vodafone Italia transaction on track

Swisscom expects net revenue of around CHF 11 billion, EBITDA of CHF 4.5–4.6 billion and capital expenditure of around CHF 2.3 billion for 2024. Subject to achieving its targets, Swisscom plans to propose payment of an unchanged attractive dividend of CHF 22 per share for the 2024 financial year at the 2025 Annual General Meeting.

On March 15th, Swisscom announced its takeover of Vodafone Italia and the merger of this acquisition with Fastweb. The process of securing official approvals from the Italian competition authority and other bodies is under way. Subject to regulatory and other standard approvals, the transaction is expected to be completed in the first quarter of 2025.

“Customers are inspired by our products and services and are happy to recommend Swisscom to others. In the comparison tests conducted on our mobile network and our service, we were able to improve further on our already very high level. Business performance is satisfactory and in line with expectations,” said CEO Christoph Aeschlimann, commenting on the first quarter of 2024. “We are focusing on quality and taking a more conservative approach than our competitors when it comes to promotions. We have also avoided passing on rising costs, such as the increase in VAT, to our customers. Our subsidiary Fastweb is growing continuously in Italy. The planned takeover of Vodafone Italia will strengthen Swisscom as a whole. Our focus in Switzerland remains unchanged. A top network and top service continue to be the priorities.”

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