Swisscom 2013 profit falls on higher capex costs

Swisscom suggested it was a victim of its own success in 2013, with higher costs associated with increased investment impacting net profit for the year.

The Swiss incumbent's net income fell 6.6 per cent to 1.6 billion Swiss francs (€1.3 billion) as depreciation and amortisation costs increased by 94 million francs (€76.9 million) on the back of higher infrastructure capex during 2013, as it rolled out a comprehensive domestic fibre network and continued to deploy LTE.

EBITDA fell 3.9 per cent year-on-year to 4.3 billion francs, due to lower core revenues, higher domestic network maintenance and IT expenses.

Despite the higher costs, CEO Urs Schaeppi hailed 2013 as a solid year for the operator amid tough competition. "We consolidated our market position. We continued to gain many new customers in the fourth quarter for our television service (+57,000), in mobile communications (+61,000) and at Fastweb (+31,000 broadband access lines)," he said.

Swisscom said its domestic LTE network covered 85 per cent of the population by end-2013, and that 1 million of its customers now own an LTE-enabled device.

Around 1.7 million mobile subscribers are also now using its NATEL infinity packages, which offer unlimited calls, SMS, and data. The operator said customers using this tariff generated higher ARPU than its other mobile services in the fourth quarter, and contributed to a 116 per cent annual increase in mobile data traffic during 2013.

By end-2013, around 400,000 mobile users were using iO, a smartphone app offering free calls and messages that launched at the end of June. A further 50,000 customers signed up to iO in January, the operator revealed.

Demand for mobile and TV services fuelled a near 33 per cent year-on-year rise in bundled services revenues in 2013. Subscriptions grew 27 per cent through 2013, taking total users to 1 million by end-December.

Bundled web and TV services also fuelled a rise in subscriber numbers at Fastweb, the operator's Italian broadband business. Swisscom said a 9.9 per cent increase in Fastweb users means the unit is growing faster than the overall Italian broadband market, despite strong competition and price pressure.

Swisscom predicted moderate growth for 2014, but still plans capex of 2.4 billion francs for the year – some 1.75 billion of which will be invested in its domestic infrastructure. The operator aims to generate EBITDA of 4.35 billion francs, and revenue of 11.5 billion francs.

For more:
- see this Swisscom earnings release

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