Swisscom, TDC face tight competition, pricing pressures

Mounting price pressures in the mobile sector are a growing challenge for operators in European markets, as illustrated by latest results and forecasts from both Swisscom and Denmark's TDC.

According to Bloomberg, Swisscom's domestic operations reported a 0.7 percent decline in revenue due to competition, price pressures and the changing behaviour of customers as they switch from traditional services such as mobile calls and text messages to IP-based applications and social media platforms.

"There is continuing price erosion in the Swiss mobile market, but we were almost capable to fully compensate this by the acquisition of new customers," Bloomberg quoted Swisscom CEO Carsten Schloter as saying on a call to discuss the operator's second-quarter results.

Swisscom is relying on a mix of new customers and new offerings to offset domestic price competition. Reuters reported that Swisscom's second-quarter net profit fell 3.5 percent to around €389.6 million, beating analysts' average forecast of €379.6 million in a Reuters poll. Revenue was 1.4 percent lower at € 2.34 billion. The company has also cut its revenue guidance for the year to €9.4 billion this year compared with a February prediction of around €9.5 billion, Bloomberg added.

Denmark's TDC also saw its first-half profits fall by 4 percent to €689 million due to price pressure and competition on the mobile market. "We continue to see in the Danish mobile market a very intense competitive situation, and unfortunately that has translated into continued price pressure," CFO Pernille Erenbjerg told Reuters.

A sharper decline was prevented by a strong performance in TDC's landline and pay-TV business.

"Overall, a quite good report from TDC, which shows that they are good at resisting the sharp competitive pressure thanks to their wide brand palette," Sydbank analyst Morten Imsgard said, according to Reuters.

For more:
- see this Reuters article
- see this Bloomberg article
- see this separte Reuters article

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