Swisscom raises full year earnings targets after stable H1

Swisscom CEO Urs Schaeppi

Swisscom raised its guidance for full year EBITDA and capex after generating marginal increases in net profit, revenue and EBITDA during the first half of 2016.

The operator increased its full year EBITDA target from CHF4.2 billion (€3.8 billion/$4.3 billion) to around CHF4.25 billion, and said it now expects 2016 capex to be about CHF2.4 billion rather than the CHF2.3 billion it previously predicted.

Swisscom’s performance during the first half of 2016 was the driving factor behind the revised full year predictions.

The company reported net profit of CHF788 million in the first half, which is 0.5 per cent up on the same period of 2015. EBITDA increased 4.4 per cent year-on-year to CHF2.2 billion in the recent six month period, and revenue was up 0.2 per cent at CHF5.7 billion.

While Swisscom’s first half figures were stable when compared to the same period of 2015, the results mask weakness in its core telecoms business.

In a statement announcing the first half results, CEO Urs Schaeppi explained that Swisscom faced “strong competition” during the first half as a result of “strong price pressure in mobile telecommunications and increasingly cut-throat competition in the core business”.

Indeed, the bulk of Swisscom’s earnings stability came from a strong performance by the company’s solutions business, which Schaeppi said had enjoyed success with corporate customers. The company’s Italian ISP Fastweb also made a “significant contribution to our EBITDA growth over the past six months”, the CEO noted.

The company’s earnings statement showed that Fastweb’s EBITDA grew 28.8 per cent year-on-year over the first half of 2016. In contrast, EBITDA from Swiss operations fell 0.6 per cent year-on-year. However, the company noted that Fastweb’s performance during the period was boosted by a compensation payment from Telecom Italia to settle a legal dispute.

Schaeppi said the operating conditions through the first half of 2016 make it “necessary to deal with costs in a prudent manner and to further increase efficiency within the company.”

For more:
- see this Swisscom announcement (PDF)

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