Swisscom CEO criticises plans that would limit operator's ability to generate profit

Swisscom CEO Urs Schaeppi hit out at government proposals that would curb the ability of state-owned companies to generate profits, as the operator reported a 3.7 per cent year-on-year rise in net income for the opening quarter of 2016.

People in Switzerland were tipped to vote in favour of a plan that Bloomberg reported would limit the amount executives at state-owned companies can earn, prohibit cross-company subsidies, and restrict the drive for profitability at companies like Swisscom, which the news agency noted is 51 per cent-owned by the state.

As he presented Swisscom's first-quarter earnings this week, Schaeppi said the operator is against the plans because it would ultimately lead to a lower quality of service for consumers.

Sepp Huber, a Swisscom spokesperson, told Bloomberg that the plan to limit salaries would hamper the operator's ability to hire staff, and that the company would be weakened by the requirement to not generate a profit.

Swisscom announced that net income hit CHF364 million (€331 million/$380 million) in the opening quarter of 2016, compared to CHF351 million in the first quarter of 2015.

Revenue in the recent quarter remained stable at CHF2.8 billion (down 0.3 per cent on the first quarter of 2015), and EBITDA increased by 2.9 per cent year-on-year to CHF1.08 billion. However, operating income (EBIT) declined 1.7 per cent year-on-year to CHF535 million in the recent quarter.

In the company's earnings statement, Schaeppi said the first-quarter 2016 figures show the company remains on track despite challenging market conditions. "The revenue has remained more or less stable and the EBITDA has increased thanks to lower costs," he stated.

Schaeppi noted that Swisscom attracted "a lot of customers with Swisscom TV, broadband connections and FastWeb" in Italy during the opening quarter of 2016. However, he cautioned that "it is harder to see growth" in a highly saturated Swiss market, pointing to the operator's mobile business as an example.

Swisscom increased its total wireless customer numbers from 6.5 million in the first quarter of 2015 to 6.6 million in the recent quarter, as growth in bundled subscriptions offset a decline in pure-play wireless subscribers.

The operator's full earnings report shows that stand-alone mobile users fell from 6.03 million in the first quarter of 2015 to 6 million in the recent quarter, while the number taking a mobile package as part of a bundled service increased from 531 million in the opening quarter of 2015 to 615 million in the recent period.

For more:
- see this Bloomberg report
- view Swisscom's Q1 2016 earnings statement
- see the operator's full Q1 results (PDF)

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