Berne, 05 November 2008
|Net revenue (in CHF millions)||8082||9085||12.4%|
|EBITDA (in CHF millions)||3275||3615||10.4%|
|EBIT (in CHF millions)||1963||2066||5.2%|
|Net income (in CHF millions)||1633||1316||-19.4%|
|Operating free cash flow (OpFCF) to shareholders of Swisscom Ltd*||1602||2124||32.6%|
|Swisscom fixed-line and broadband connections (at 30.9 in millions)||1.558||1.721||10.5%|
|Bluewin TV customers (at 30.9)||52000||95000||82.7%|
|Swisscom mobile lines (at 30.9 in millions)||4.894||5.284||8.0%|
|Fastweb customers (at 30.9 in millions)**||1.201||1.441||20.0%|
|Capital expenditure (in CHF millions)||1343||1365||1.6%|
|Employees (FTEs at 30.9)||19658||19995||1.7%|
* EBITDA - capital expenditure +/- changes in net working capital - dividend paid to minority shareholders
** Prior-year figure revised due to write down of 50,000 inactive customers in Q2 2008 following an agreement with Telecom Italia
At CHF 9,085 million, cumulated net revenue is up 12.4%, or CHF 1,003 million, year-on-year, largely due to the acquisition of Fastweb. Factoring in Fastweb as of 22 May 2007 (CHF 1,124 million increase in revenue year-on-year) and the subsidiaries Antenna Hungária, Accarda and Infonet divested in 2007 (prior-year revenue CHF 156 million), net revenue increased by CHF 35 million (+0.4%) on a like-for-like basis.
Operating income (EBITDA) rose in the first nine months of 2008 by CHF 340 million (+10.4%) to CHF 3, 615 million, with Fastweb accounting for CHF 409 million. On a like-for-like basis EBITDA fell by CHF 38 million (-1.2%). The adjusted fall in EBITDA is largely attributable to the successful launch of iPhone in the third quarter of 2008, with associated investments in future data traffic impacting EBITDA by a total of CHF 45 million.
Operating expenses increased by CHF 716 million (+14.1%) year-on-year to CHF 5,793 million. Adjusted for the acquisition of Fastweb (CHF 834 million) and the spun-off subsidiaries, operating expenses are up CHF 9 million (+0.2%) compared with the previous year.
The CHF 237 million increase in depreciation, amortisation and impairment in the first nine months of 2008 to CHF 1,549 million (+18.1%) is largely attributable to the Fastweb takeover (CHF 384 million). By contrast, the adjusted useful lives for channels and ducts communicated in spring of this year resulted in a cumulative effect of CHF 90 million over the first nine months of 2008.
Net financial expenses for the first nine months of 2008 amount to CHF 395 million, up CHF 269 million compared with the same period last year. The increase is due to a combination of higher net interest expenses of CHF 71 million as a result of the acquisition of Fastweb and the recording of a CHF 126 million provision in the second quarter of 2008 for the early termination of cross-border leasing agreements. In addition, a net gain of CHF 72 million from currency hedges in connection with the Fastweb acquisition was recorded in the second quarter of 2007.
Net income for the first nine months of 2008 fell despite higher EBITDA by CHF 317 million (-19.4%) to CHF 1,316 million. The drop was mainly attributable to the CHF 72 million one-time foreign currency gain recorded the previous year, the CHF 126 million provision recorded in the second quarter of 2008 for the early termination of cross-border leasing agreements and the CHF 157 million gain on the divestment of Antenna Hungária recorded the previous year.
Swisscom Switzerland's revenue with external customers was virtually stable in the first nine months of 2008, recording a slight drop of 0.1% to CHF 6,422 million (Q3 +0.7%). Adjusted for the sale of its subsidiary Infonet at the end of 2007, revenue increased by 0.3% (Q3 +1.1%).
Sales of iPhone got off to an excellent start in mid-July, with over 100,000 units sold within the space of two and half months. Revenue generated by iPhone sales played a key role in driving customer and revenue growth in the third quarter. Costs for handset subsidies and dealer commissions on the other hand rose. Thanks to a combination of sustained customer growth, greater utilisation of new mobile data services and growth in broadband connections and Swisscom's TV offering, the decline in revenue due to price reductions continues to be almost fully offset by a cumulative CHF 300 million.
Broadband communications recorded strong year-on-year growth, with fixed-line broadband connections increasing by 163,000 or +10.5% to 1.721 million (Q3 +22,000). At the end of-September 2008 Bluewin TV counted 95,000 paying customers. Net growth since the end of 2007 stands at 36,000 (Q3 15,000).
The number of mobile subscribers increased year-on-year by 390,000 net (+8.0%) to 5.3 million (Q3 +103,000). The launch of iPhone generated higher-than-average growth in subscription customers in the third quarter. Revenue generated by new mobile data services (excluding SMS) increased by 33% to CHF 277 million in the space of a year. Average number of minutes per mobile subscriber per month (AMPU) rose in the same period by 2.7% to 114, while average revenue per mobile subscriber and month (ARPU) fell by 8.6% to CHF 53 as a result of price cuts.
Swisscom customers are benefiting from lower prices with a comparable level of service. For example, the average price per minute for fixed-line calls fell by 2.7% within a year. In mobile communications, prices for outbound calls (excluding roaming) fell by 12.7%. For outbound roaming calls, customers are benefiting on average from 18.6% lower prices. Data traffic is increasingly penetrating the mass market and growing rapidly while prices for a comparable level of service are falling. For instance, the price for transferring one megabyte of data over the fixed network dropped by 25.3% compared to the previous year, and over the mobile network (including roaming) by 63.7%. The volume of mobile data traffic more than quadrupled year-on-year.
In the first nine months of 2008, Fastweb continued to post strong revenue, EBITDA and customer growth. Adjusted for the effect of a regulatory decision in December 2007 on interconnection prices, 2008 third-quarter net revenue rose year-on-year by 23.1% to EUR 427 million (18.4% in the first nine months). Fastweb posted a net quarterly gain of 43,000 customers (+240,000 compared with the previous year).
Adjusted EBITDA increased in the third quarter of 2008 year-on-year by 25.7% to EUR 127 million (21.2% in the first nine months). On a like-for-like basis EBITDA margin increased during the first nine months of 2008 from 29.2% to 29.9%. Accumulated capital expenditure fell due to lower investment demand by EUR 366 million to EUR 327 million (-10.7%).
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 behaviour of other market participants, the actions of governmental regulators and other risk factors detailed in Swisscom's and Fastweb's past and future filings and reports, including those filed with the U.S. Securities and Exchange Commission and in past and future filings, press releases, reports and other information posted on Swisscom Group Companies' 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.