Swisscom fights SMS decline with triple-play offerings

Swisscom, Switzerland's biggest telecoms provider, posted first-quarter profits of €379.4 million, a fall of 3.8 per cent compared to the year-ago period.

The operator said net revenue fell 2.1 per cent in the quarter to €2.3 billion. The company blamed the decline on customers increasingly using new IP-based apps and social media platforms over traditional voice and text messaging services.

Swisscom said in a statement that IP-based apps led to a 28 per cent fall in revenue from directly billed text messages during the first quarter of 2012. Swisscom suffered further hurt with the average price per megabyte billed to customers also falling by 25 per cent. These two factors helped to push the company's ARPU down by 4.3 per cent to €36.6.

"This set of results seems to indicate that the company has reached a near-bottom, with the Swiss business providing stability," Saeed Baradar, a telecoms sales specialist at Societe Generale, said in a note reported by Bloomberg. "Defensive credentials are re-established and in my view a good place to hide in a sector which is in long-term structural decline."

On a brighter note, the company said it was offsetting growing competition by gaining subscribers and launching flat-rate and triple-play bundles, such as Vivo Casa, which combines telephone, broadband and TV services. The operator said a total of 659,000 customers were using bundled products at the end of the first quarter, 42 per cent more than in the previous year.

Despite facing intensified pressure on prices, Swisscom said it invested €305 million in local infrastructure, an increase of 24 per cent, as it rolls out its broadband network across the country. The company said it continued to expect 2012 net revenue of €9.5 billion and EBITDA of €3.66 billion.

For more:
- see this Swisscom release
- see this Reuters article
- see this Bloomberg article

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