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UPDATE 2-Cost-cutting helps Swisscom beats Q1 forecasts
May 3, 2017 / 6:32 AM / 7 months ago

UPDATE 2-Cost-cutting helps Swisscom beats Q1 forecasts

* Swisscom cuts costs as roaming fees decline

* Italian Fastweb growth continues

* Telecom Italia JV advances despite probe - CEO (Adds shares, detail about Italian probe)

ZURICH, May 3 (Reuters) - Swisscom AG posted a 2.5 percent rise in first-quarter net profit on Wednesday that beat analysts’ expectations, as the state-controlled telecommunications company cut costs at home to help offset falling revenue.

Swisscom, which left its full-year forecast unchanged, is working to reduce costs by 300 million Swiss francs ($303 million) a year by 2020 as it grapples with challenges in its core Swiss business that include falling fixed line subscribers, roaming reductions and a drop in corporate business.

However, the firm is expanding in Italy as its Fastweb telecoms network operator adds customers.

Net profit rose to 373 million francs, Swisscom said in a statement, more than the average estimate of 355 million francs given in a Reuters poll of analysts. Sales slipped 1.9 percent to 2.83 billion francs.

“We earned a solid result in the first quarter, and we did this under continuing heavy pressure and in a difficult environment,” Chief Executive Urs Schaeppi said.

He said the firm aims to offset price pressures in the remaining months of 2017 with promotions including “inOne” bundled products that he expects to boost sales.

The shares rose 1.6 percent at 0930 GMT, trimming Swisscom’s fall this year to 2.6 percent.

Fastweb’s revenue rose 3 percent to 453 million euros ($494.95 million), as subscribers to its Italian broadband business rose 7 percent to 2.4 million.

Swisscom said its outlook for the full year was unchanged and that is still expected net revenue of 11.6 billion francs, an operating profit of around 4.2 billion francs and capital expenditure of 2.4 billion that includes expanding its broadband network.

The company plans to pay an unchanged dividend of 22 francs per share for 2017.

Swisscom has cut its Swiss workforce by 680 jobs to 18,280 compared with a year ago and another 400 jobs are due to go by year’s end, some through accelerated retirements.


Meanwhile the Italian antitrust authority is investigating a joint venture set up last year by Fastweb and rival Telecom Italia to speed up the roll-out of an ultrafast broadband network in 29 cities.

Swisscom said on Wednesday it was confident that the partnership was legitimate and its work was continuing despite the investigation.

“We believe we have a solid case,” Schaeppi told reporters. “This is a standard procedure,” he said of the scrutiny by competition regulators. ($1 = 0.9152 euros) ($1 = 0.9916 Swiss francs) (Reporting by John Miller; Editing by Edmund Blair, Greg Mahlich)

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