Swisscom targets best operating profit in around 15 years in 2023
Swisscom has almost completely halted the long slide in its telecoms business. Customers are switching less to the competition. And in the current year, Switzerland's largest telecoms group is targeting its highest operating profit in around a decade and a half.
Swisscom aims to generate EBITDA of CHF 4.6 to 4.7 billion in the current year. That would be significantly more than last year, when operating profit fell by 1.6 percent to CHF 4.4 billion.
The reason for the sharp increase was special factors, explained CFO Eugen Stermetz at the annual media conference in Zurich on Thursday. Last year, for example, provisions for legal disputes alone accounted for CHF 157 million. This includes a fine of just under 72 million Swiss francs from the Swiss Federal Competition Commission.
Without the special effects, Swisscom would have generated EBITDA of CHF 4.558 billion in 2022, Stermetz explained. In addition, rising interest rates will reduce pension fund expenses by CHF 90 million in 2023.
Adding it all up, these two reasons alone put Swisscom in the target range of CHF 4.6 billion to CHF 4.7 billion for EBITDA in 2023, Stermetz said.
Swiss core business grew slightly
At the same time, the Group's operations remained stable. Sales fell by only 0.6 percent to 11.1 billion Swiss francs last year. This is due to the weakness of the euro, because of which the growing business in Italy is worth less when translated into francs. At a constant euro exchange rate, Swisscom revenue would have increased by 1 percent.
"I am particularly proud of our consumer business," said the new Group CEO Christoph Aeschlimann, who has been in office since the beginning of June. "We were able to stabilize telecom revenue in the residential customer segment for the first time in seven years. That's a great achievement." The basis for this, he said, was mobile communications, where 166,000 subscription customers were gained. At the same time, customers were less willing to switch.
In the Swiss core business, sales increased slightly by 0.4 percent to CHF 8.3 billion. The small increase was attributable to the IT solutions business with business customers, which compensated for the erosion in telecom services. In Italy, revenue at the Milan-based subsidiary Fastweb continued to grow by 3.8 percent.
The prospects of higher operating profit EBITDA pleased investors. The share shot up by more than 4 percent in the afternoon.
Much less major disruptions
In addition, Swisscom was able to reduce its susceptibility to breakdowns, after major network failures had caused headlines and red heads throughout the country in previous years. In 2022, there were 40 percent fewer major service outages than in 2021, he said. "We have become massively better," Aeschlimann said.
Swisscom wants to reduce complexity in the networks by shutting down obsolete platforms. For example, the obsolete 3G mobile technology is to be discontinued by mid-2025. Platforms in the fixed network would also be decommissioned.
Mobile, residential and business customers all used to have their own network, as Aeschlimann explained: Now they will all be on a common network in the next few years. By 2025, Swisscom should have 40 percent fewer platforms than today.
However, one major construction site remains for the new man at the top. Swisscom's about-face in the dispute with the Weko over fiber-optic construction will take time. The number of fiber optic connections blocked by the Weko has risen further.
And even in 2025, Swisscom will still not be able to put 300,000 lines into operation because the design with one feed line for several households does not meet the requirements of the competition watchdogs. The Competition Commission is insisting on direct lines for every household. (AWP/Johannes Brinkmann)
