Swisscom reports 9.7% fall in net income for first six months

Swiss incumbent Swisscom has reported a 9.7% fall in profits for the first half of 2013 due to a combination of rising subscriber acquisition costs and higher network maintenance expenses.

The operator saw net income drop from CHF907 million ($977 million) for the first half of 2012 to CHF819 million this year, with revenues edging down by 0.4%, to CHF5.62 billion.

Swiss incumbent Swisscom has reported a 9.7% fall in profits for the first half of 2013 due to a combination of rising subscriber acquisition costs and higher network maintenance expenses.

The operator saw net income drop from CHF907 million ($977 million) for the first half of 2012 to CHF819 million this year, with revenues edging down by 0.4%, to CHF5.62 billion.

The earnings slide was blamed largely on higher subscriber acquisition costs at its core Swiss business and Fastweb (Milan, Italy), its Italian broadband subsidiary, but Swisscom (Worblaufen, Switzerland) has also been investing heavily in infrastructure to boost its competitiveness against domestic rivals.

The infrastructure investment plan was the brainchild of former chief executive Carsten Schloter, who died last month, but Swisscom said it would continue with the program.

“Our results are solid and we are on track,” said acting chief executive Urs Schaeppi. “We will continue to pursue our strategy with a strong focus on customer service and innovation.”

“Despite continuing competition and price pressure we are confident about the second half of the year,” added Schaeppi. “We are investing a great deal in our network and for our customers, and are convinced that this will pay off in the long term.”

Schaeppi noted that Swisscom had added 42,000 television customers, 37,000 mobile subscribers and 26,000 new customers at Fastweb between April and June.

Swisscom expects full-year capital expenditure in Switzerland to be higher than in 2012, when the operator spent a total of CHF1.2 billion.

But the operator expects overall capital expenditure to fall from CHF2.53 billion in 2012 to about CHF2.4 billion in 2013.

Among other investments, it plans to extend the coverage of its 4G LTE network from 50% of the Swiss population at end June 2013 to about 70% by the end of the year.

Swisscom said that data traffic on its mobile network had continued to soar over the first six months of the year, with volumes up by 130% compared with the first half of 2012.

The operator is now forecasting full-year revenues of more than CHF11.4 billion, up from a previous estimate of CHF11.3 billion, with the increase largely down to M&A activity.

Swisscom is also expecting to appoint a successor to Schloter by the end of the year.