Swisscom, Sunrise, Salt agree mobile termination rate cuts

CHF 1000 notes

Swiss operators predicted that a voluntary agreement to cut mobile termination rates will have a minimal impact on their earnings when the changes come into effect in 2017.

Sunrise and Swisscom announced that they had agreed a range of reductions along with Salt that will come into force from Jan. 1, 2017 to ensure the trio meet regulations covering interconnection rates that are defined in Switzerland’s Telecommunications Act. The agreement will also see further reductions in termination rates in 2018 and 2019.

In a statement announcing the agreement, Swisscom predicted that the changes will reduce its 2017 revenue by around CHF50 million (€46.1 million/$50.2 million). However, because that decline will be offset by a related reduction in operating costs, the operator expects the lower termination rates to have “a relatively neutral impact on EBITDA” during the year.

Sunrise also predicted a minimal impact on group earnings in a statement regarding the deal. The operator expects that the reduction in termination rates will reduce its overall revenues by between 2 per cent and 3 per cent in 2017, but noted that it would provide more concrete forecasts when it issues its financial guidance for the year.

Each operator noted that the agreement will have no direct impact on the charges paid by consumers, which in turn helps to minimise the impact on their earnings.

Sunrise explained that the lack of change in consumer tariffs means that the reduction in termination rates “is largely offset on gross profit level.”

Salt and Sunrise agreed to reduce termination rates from CHF0.0735 per minute at present to CHF0.043 per minute on Jan. 1, 2017. The fee will fall to CHF0.039 on Jan. 1, 2018, and then to CHF0.035 on Jan. 1, 2019.

The rate for calls terminating on Swisscom’s network will fall from CHF0.0595 currently to CHF0.031 in January 2017, CHF0.0295 in 2018, and CHF0.028 in 2019.