Swisscom misses 1H forecasts

Swiss incumbent Swisscom fell short of analyst’s forecasts for 1H net profit, despite offsetting declining voice revenues with higher income from data traffic during the period.
 
Switzerland’s largest telecommunications company reported a 14.4% decline in 1H net income to 873 million Swiss Francs (€635 million), as net revenues remained flat year-on-year at 5.9 billion Francs.
 
The company said the fall was primarily due to a €70 million provision it set aside to cover the costs of legal proceedings against its troubled Italian broadband division FastWeb.
 
FastWeb generated net revenues of €935 million in 1H10, as subscribers grew 7.6% to 1.7 million.
 
Although analysts predicted higher profits they were buoyed by the telco’s performance in its domestic market, and remain confident it will hit full-year cash flow targets of 2.6 billion Francs after it reported a figure of 1.42 billion for 1H10, WSJ.com reported.
 
Mobile subscribers in its home market grew 4% to 5.6 million, which combined with an increase in data usage to minimize the impact of lower voice revenues.
 
Data revenues surged 33% in 1H due increased smartphone sales, with half of the 585,000 handsets Swisscom sold during the period being smartphones.
 
Domestic TV subscribers grew 91.1% to 317,000, and broadband users were stable on 1H09, at 1.7 million.
 
The firm stands by its full year forecasts, predicting revenues of 9.15 billion Francs, and EBITDA of 3.75 billion. FastWeb is forecast to generate revenue of €1.95 billion.

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