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Press release

Interim report for period ending 30 September 2001: Swisscom still on course for success

21 November 2001

Swisscom continued to perform well in the third quarter of the current financial year. Net debts have been turned into a net cash position during the course of 2001. At September 30, 2001, Swisscom reported net funds of CHF 2.82 billion.

Gratifying segment results in spite of selective price reductions

Despite tariff reductions introduced on March 1, 2000, Fixnet Retail and Network reported stable net revenue from external customers of CHF 2,311 million. Revenue from telephony traffic fell by 7.6% to CHF 823 million principally due to lower tariffs. Compared with the previous year, national telephony traffic volumes fell by 7.1% while international telephony traffic rose by 4.3%. Revenue from value added services increased by 35.3% to CHF 230 million thanks to an increase in Internet traffic. Revenue from access business grew by 3.1% to CHF 844 million as a result of an increase in the number of ISDN access channels. EBITDA for the segment as a whole fell compared with the previous year by 8.4% to CHF 1,292 million.

Revenue from the Fixnet Wholesale and Carrier Services segment of CHF 974 million remained practically unchanged compared with the previous year. Tariff reductions in international incoming traffic could be largely offset by volume-related growth in revenue from national interconnection services and from international subsidiaries. Internet and transit traffic to the mobile network increased significantly compared to the previous year. Thanks to the increase in revenues with other segments, EBITDA compared to the previous year rose by 62.3% to CHF 125 million.

Compared to the previous year Enterprise Solutions reported a 2% drop in revenue to CHF 1,354 million. Tariff reductions introduced on March 1, 2000 resulted in a 3.2% decline in voice revenue to CHF 757 million. Value-added services, on the other hand, showed positive revenue growth. Revenue in data communication fell by 3.3% to CHF 580 million. Sustained competitive pressure pushed down prices in leased-line business, leading to a fall in revenue. However, strong growth in IP-based services for corporate customers (Corporate Communication Services) helped to largely offset this effect. The segment´s EBITDA margin remained virtually unchanged compared with the previous year.

Revenue from Mobile rose year-on-year by 15.2% to CHF 2,327 million. The Swiss mobile market continued to grow, albeit at a considerably slower pace than in the record year of 2000. Mobile maintained its market share of around 68% and increased its customer base in 2001 by 343,000 to 3.51 million. This generated a 19.2% increase in voice revenues to CHF 1,557 million. While in 2001 ARPU (average revenue per user) has remained stable at CHF 83, this is down on last year´s figure of CHF 89. In data business, revenue from SMS remains high. Total revenue in mobile data communication rose compared to the previous year by 51.4% to CHF 162 million. Mobile increased EBITDA by 23.5% to CHF 1,405 million and EBITDA margin from 43.5% to 47.3%.

debitel posted local-currency revenue growth in comparison to the previous year of 2.8% to EUR 1,876 million. In Swiss franc terms revenue is down slightly on the previous year as a result of currency movements. At the end of September debitel´s subscriber base in Europe stood at 9.7 million. Growth in the German mobile market slowed compared with the previous year. In 2001 debitel increased its mobile subscriber base in Germany by 18.3% to 7.09 million. Tariff reductions and lower returns on premiums and hardware sales led to a slight fall in mobile revenues in Germany. However, revenue from international business advanced by 14.3% largely as a result of positive performance in the Netherlands and Denmark. debitel is looking to achieve solid growth in income: EBITDA of the debitel Group increased by 23.5% to CHF 142 million. This improvement is attributable to sound performance in international business, which posted positive operating income as at September 30, 2001.

Revenue from the segment Other fell by 6.7% to CHF 789 million. This was largely attributable to performance in the Swisscom Systems business (sale, rental and maintenance of PBX systems), where revenue dropped by 20.4% to CHF 348 million. Net revenue (including intersegment revenue) posted by Internet Service Provider bluewin AG grew year-on-year by 23% to CHF 107 million. The growth was due chiefly to an increase in traffic volume. With a market share of around 45% and around 680,000 active access customers (an increase of 13% in 2001) bluewin is the Swiss market leader. Swisscom Directories has been fully consolidated as from October 1, 2000, and hence contributes to an increase in the segment´s EBITDA.

New pension plan and special contribution to pension scheme

Swisscom is planning to introduce a new, up-to-date occupational pension scheme. This will result in Swisscom making extraordinary contribution payments of CHF 240 million in the fourth quarter of 2001. The analysis of the effect this will have on the income statement has not yet been finalised. A preliminary estimate suggests that the total expense will amount to between CHF 30 and CHF 70 million that would be charged to income in the fourth quarter of 2001. The introduction of the new pension plan has to be ratified by the comPlan Board of Trustees and the employees.

In addition to this extraordinary contribution payment Swisscom will also make a one-off special contribution of CHF 200 million to create a value fluctuation reserve for its own comPlan scheme. This amount will be booked against existing provisions without affecting income. comPlan has been operational only since 1999 and in contrast to other Swiss pension schemes has no value fluctuation reserve because it had coverage of only 100% when it became independent from the federal government. The development of the capital markets in the past ruled out the formation of reserves in comPlan.

Outlook for 2001: Slight growth in revenue and higher EBITDA

The positive development of EBITDA until September 30, 2001 will not be sustained throughout the fourth quarter of 2001. Growth in Mobile and debitel will slow down as a result of the high levels of market penetration in mobile communications. There will be higher expenses in the fourth quarter of 2001 including for marketing.

The capital markets have considerably decreased their valuation of the telecommunications sector in 2001. Taking into consideration this market valuation, Swisscom will also assess the book value of its own holdings, amongst which debitel. Any value adjustment will be made at year end. Swisscom anticipates a marginal increase in revenue for the 2001 financial year. Given unchanged market conditions, EBITDA is expected to exceed last year´s figure. Extraordinary gains recorded on the sale of the 25% shareholding in Swisscom Mobile Ltd and on the sale of two real-estate packages are expected to lead to a marked increase in net income.

For a copy of the detailed Interim Report, visit: EN.html

Bern, 21 November 2001

Cautionary statement regarding forward-looking statements
This communication contains statements that constitute "forward-looking statements". In this communication, such forward-looking statements include, without limitation, statements relating to our financial condition, results of operations and business and certain of our strategic plans and objectives.Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors which are beyond Swisscom´s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors detailed in Swisscom´s past and future filings and reports filed with the U.S. Security and Exchange Commission and posted on our websites. Readers are cautioned not to put undue reliance on forward-looking statements, which speak only of the date of this communication. Swisscom disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.


Swisscom AG
Media Relations
3050 Bern