23 August 2001
Swisscom is among the few telecommunications companies in the world with great financial strength. Management consistently reduced net borrowings through increased operating efficiency and the closing of successful transactions. As of 30 June 2001 Swisscom had net funds of CHF 1.02 billion. Free cash flow in the first six months amounted to CHF 3.22 billion.
Markus Rauh, Chairman of the Board of Directors, comments: "Swisscom has a very solid balance sheet. This is the result of our strong investment principles and a careful selection of opportunities. Swisscom is as solid as a rock."
Switzerland is Swisscom´s key market, where it generates most of its cash flows. In other countries Swisscom makes targeted investments in specific markets. In April this year Swisscom announced that it is selectively examining a number of international growth opportunities involving acquisitions in the fields of data communication and Mobile Service Providing. Should we not conduct a sizeable transaction, Swisscom will contemplate a share buy-back programme. As yet no decisions have been taken.
In spite of the significant price reductions in March 2000, net sales to external customers in the Fixnet - Retail and Network segment declined by only 1.8% year-on-year to CHF 1,533 million. Revenue from telephone traffic fell by 9.9% to CHF 552 million, but in contrast developments in Value Added Services were positive: a vigorous expansion in internet traffic increased revenue by 34.8% to CHF 151 million. ISDN growth generated a 3.5% increase in access revenue to CHF 559 million. The volume of national telephone traffic fell by 7.8% year-on-year, whereas that of international telephone traffic rose by 2.4%. Positive developments in Value Added Services and savings on staff cost helped to stabilise the segment´s EBITDA in spite of significant price reductions in telephone traffic.
The Fixnet - Wholesale and Carrier Services segment increased net sales to external customers by 2.1% year-on-year to CHF 646 million. National interconnection services for other operators and higher revenue from international subsidiaries contributed to this increase. However, revenue from incoming international traffic declined due to reduced termination prices.
Net sales to external customers in the Enterprise Solutions segment were down 3.1% year-on-year to CHF 895 million. Price reductions as of 1 March 2000 and lower market shares reduced telephony-traffic revenue by 9.6%. Positive contributions came from Corporate Communication Solutions and Value Added Services, which posted rises of 29.3% to CHF 106 million and 57.9% to CHF 60 million respectively. Revenue from data communication declined by 6.6% to CHF 382 million, with a sharper fall of 14.7% to CHF 203 million in leased-line business due to sustained price pressure. Positive developments at Corporate Communication Solutions and Value Added Services combined with reduced costs helped to maintain the Enterprise Solutions EBITDA margin at its previous year´s level.
With revenue up 18.5% year-on-year to CHF 1,528 million, Mobile remains Swisscom´s growth business. Some 259,000 new customers were acquired in the first half of 2001, bringing the total as of 30 June 2001 to 3.43 million. The proportion of prepaid customers rose by 2.3 percentage points in the first half of 2001 to 40%. As new customers, on average, use their phones less, the monthly average revenue per customer (ARPU) diluted to CHF 83, as against CHF 89 at the end of 2000. About 1.2 billion text messages were sent in the first half of 2001, a rise of 390% year-on-year despite flatter growth in the second quarter. Roaming revenue was below the previous year´s figure, primarily as a result of competitors expanding their networks and loss of market share. The Mobile EBITDA margin went up from 44.2% to 48.0% despite a 10.7% increase in operating expenses year-on-year. Growth in customer and traffic volume resulted in a direct increase in goods and services purchased and in an indirect increase in personnel expenses due to the growth-related expansion of the company . In contrast, costs for acquiring and retaining customers were down 18.9% year-on-year.
debitel revenue rose by 1.9% year-on-year to CHF 1,896 million.Local currency growth (Euro) amounted to 4.6%. The revenue increase was attributable to the expansion of the customer base by 10.5% in the first half of 2001 to 9.5 million. Price reductions and the lower ARPU´s of the rapidly growing number of prepaid customers, resulted in lower revenue growth year-on-year. At CHF 93 million, EBITDA was up 27.4% year-on-year. A number of measures were initiated to achieve a lasting improvement in debitel´s business outside Germany. Changes were made to the business model in France, while the 48% stake in debitel Belgium was divested. The holding in debitel Nederland was increased to 100% in July 2001. International business made a positive contribution to the Group result in the first half of 2001.
In the segment Other, revenue declined by 6.9% year-on-year to CHF 525 million. This was chiefly the result of a decline in PBX services (the sale, rental and servicing of private branch exchange equipment), where revenue fell 22.8% to CHF 230 million. Increased access volumes enabled Internet Service Provider bluewin AG to increase net revenue (including intersegment sales) by 17.2% to CHF 68 million. bluewin has a market share of 45%. The number of active subscribers rose by 16.9% in the first half of 2001 to 642,715, though growth slackened in the second quarter. The consolidation of Swisscom Directories for the first time contributed to the increase in EBITDA.
Swisscom expects a slight increase in revenue for the current financial year, compared with 2000. Given the already high penetration rate in mobile telephony, growth at Mobile and debitel will flatten. The company has succeeded in reducing its loss of market share in fixed telephony, but some segments in fixed-line telephony, data and mobile telephony business will have to contend with sustained pressure on prices. If market conditions do not change significantly in the second half of the year, Swisscom expects EBITDA to be in line with the previous year. The extraordinary gains recorded on the sale of the 25% shareholding in Swisscom Mobile AG and the divestment of property are expected to lead to a marked increase in net income.
The Swisscom General Meeting of 29 May 2001 passed a resolution to reduce the nominal value of the company´s shares by CHF 8. The resulting payment to shareholders of CHF 588.4 million will be carried out on 11 September 2001.
The detailed Interim Report can be downloaded from the following website:
PDF: Detailed Interim Report
and the Letter to Shareholders from:
PDF: Letter to Shareholders
Berne, 23 August 2001