Berne, 09 November 2010
|Net revenue (in CHF millions)||8925||8976||0,6%|
|EBITDA (in CHF millions)||3593||3545||-1,3%|
|EBIT (in CHF millions)||2163||2067||-4,4%|
|Net income (in CHF millions)||1533||1408||-8,2%|
|Operating free cash flow * (in CHF millions)||2154||2023||-6,1%|
|Broadband access lines in Switzerland, retail
(in thousands as at 30 September)
Swisscom TV customers in Switzerland
(as at 30 September in thousands)
Mobile customers in Switzerland
(as at 30 September in thousands)
Broadband customers in Italy
(as at 30 September in thousands)
|Capital expenditure (in CHF millions)||1315||1276||-3,0%|
|Group employees (FTEs as at 30 September)||
* EBITDA - Capital expenditure +/- changes in net working capital - dividend payout to minority shareholders
During the first nine months of 2010, Swisscom's net revenue increased by CHF 51 million or 0.6% to CHF 8,976 million. At constant exchange rates, this amounts to an increase of 2.5%. Net revenue posted by the Italian subsidiary Fastweb rose in the local currency by 2.9% to EUR 1,405 million. Swisscom's net revenue excluding Fastweb increased by 2.3% to CHF 7,032 million. The increase is primarily attributable to the economic recovery, company acquisitions made by Swisscom IT Services as well as growth in mobile communications and in bundled offerings for residential customers.
In the first quarter of 2010, a provision of EUR 70 million (CHF 102 million) was recognised for the VAT proceedings against Fastweb. Operating income before depreciation and amortisation (EBITDA) fell by CHF 48 million or 1.3% in the first nine months of the year to CHF 3,545 million. Adjusted for the aforementioned provision and currency effects, EBITDA rose by 2.8% year-on-year.
Net income fell by CHF 125 million or 8.2% to CHF 1,408 million, primarily as a consequence of the provision of EUR 70 million recognised for the VAT proceedings against Fastweb. Higher depreciation also contributed to a reduction in net income. The CHF 39 million or 3.0% decrease in capital expenditure to CHF 1,276 million was mainly due to currency effects. Adjusted for currency effects, capital expenditure fell by 0.2%.
Operating free cash flow declined by CHF 131 million or 6.1% to CHF 2,023 million, due primarily to an increase in net working capital. Net debt was reduced over the reporting period by CHF 780 million to CHF 8,807 million. Within the space of a year, headcount fell by 1.0% to 19,511 full-time employees, and is largely unchanged compared with the end of 2009.
The trend towards bundled offerings and new price models such as flat-rate tariffs continued in the Swiss business. 157,000 customers have already signed up for the Casa Trio bundled offering, which combines fixed-line telephony, Internet and TV. The number of Swisscom TV customers almost doubled in the space of a year to 358,000 at the end of September 2010. Swisscom won a total of 126,000 new TV customers in the first nine months.
The number of unbundled fixed lines increased by 123,000 year-on-year to 238,000. The unbundling led to a reduction in the number of broadband lines with wholesale customers of 123,000 to 240,000. By contrast, Swisscom was able to increase the number of broadband lines with end customers by 112,000 or 7.8% year-on-year to 1.55 million, which resulted overall in a slight decline in the number of DSL broadband lines of 0.6% to 1.79 million.
The number of mobile customers in Switzerland rose year-on-year by 223,000 to 5.8 million (+4%). Price erosion in mobile communications is continuing, standing at around 7% in comparison with the previous year (prices by volume). However, this decline was offset by growth in customer numbers and an increased volume of mobile data traffic in particular.
In the first nine months of 2010, Swisscom sold 953,000 mobile devices, of which almost half were smartphones. In comparison with the previous year, revenue from mobile data transmissions from Swisscom customers rose by 36% to CHF 324 million.
Fastweb's net revenue increased by EUR 40 million or 2.9% year-on-year to EUR 1,405 million. In the second quarter of 2009 and the third quarter of 2010, one-off revenues of EUR 20 million and EUR 15 million are included. Also taking into account a change in revenue recognition, growth in revenue is 5.1% on a like-for-like basis. The number of broadband customers increased by a net 107,000 or 6.7% year-on-year to 1.71 million.
As a result of the VAT proceedings against Fastweb, a provision of EUR 70 million (CHF 102 million) was recognised in the first quarter of 2010 in other operating expenses in the Swisscom consolidated financial statements. This provision was charged in Fastweb's accounts in the fourth quarter of 2009. The provision led to a decline in the segment result before depreciation and amortisation (EBITDA) of Fastweb in the Swisscom consolidated financial statements in the first nine months of 2010 by 15.6% to EUR 341 million (CHF 473 million). EBITDA increased by 4.1% on a like-for-like basis.
Fastweb's capital expenditure decreased by EUR 9 million or 2.9% to EUR 303 million. Some 42% of the investments made were directly connected to customer growth.
With immediate effect, Alberto Calcagno (38) will take over as general manager (Direttore Generale) of Fastweb. He is excellently acquainted with Fastweb and the industry and has been in charge of Fastweb's day-to-day business operations as Chief Operating Officer (COO) for around three years. He will replace Carsten Schloter, who has held the position ad interim. Carsten Schloter will continue to serve as Delegate to the Board of Directors (Ammistratore Delegato) and as Fastweb Chairman. This will allow him to focus his attention again on his core tasks as CEO of Swisscom.
As a consequence of the VAT case against Fastweb and a number of managers, the company's operations have been managed ad interim since 1 April 2010 by the Chairman of Fastweb's Board of Directors Carsten Schloter. Stefano Parisi, who has been suspended since April 2010, and the Fastweb Board of Directors have unanimously agreed that in the interests of the company a new operational management be appointed at Fastweb. Stefano Parisi will continue to be available to Fastweb in his role as CEO of Swisscom ICT Italia.
The financial expectations for the 2010 financial year have been revised upwards compared with the half-year report. Swisscom's expected net revenue (excluding Fastweb) has been revised upwards to around CHF 9.35 billion and EBITDA to around CHF 4.0 billion. Capital expenditure remains unchanged at around CHF 1.3 billion. As a result of a change in revenue recognition, net revenue and EBITDA at Fastweb could be between 3% and 5% down on the previous expectations of EUR 1.95 billion and EUR 580 million (excl. a provision for the VAT proceedings) respectively. Fastweb's capital expenditure could be up to 5% higher than the previous assumption of around EUR 410 million.
Across the Group, Swisscom now anticipates net revenue of around CHF 12 billion and EBITDA of around CHF 4.7 billion (incl. a provision for the VAT proceedings against Fastweb). Expectations concerning revenue and EBITDA have thus been stepped up by some CHF 100 million each. Excluding any special payments of provisions for ongoing legal proceedings, operating free cash flow will remain unchanged at around CHF 2.6 billion.
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.