Swisscom doubles profit

Swisscom doubled its profit in 2003 swissinfo.ch

Switzerland’s leading telecommunications firm, Swisscom, has said it doubled its profit in 2003, despite a stagnation in turnover.

The company also announced that it would be buying back SFr2 billion ($1.6 billion) worth of shares.

In a statement released on Wednesday, Swisscom said its net income had increased by 90.4 per cent to SFr1.57 billion in 2003.

This was up from SFr824 million the previous year, when earnings were hit by a large write-down on Swisscom’s 93 per cent share in the German mobile phone company, debitel.

The firm confirmed it was in talks to sell its stake in debitel, which might bring in around SFr850 million.

Sales at the majority government-owned telecoms operator were flat at SFr14.58 billion.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) for 2003 rose by 5.2 per cent to SFr4.64 billion.

The figure beat analysts’ forecasts of SFr4.58 billion; however, Swisscom said it expected core earnings to fall in 2004.

“Without the debitel group, Swisscom expects to post consolidated revenue of about SFr10 billion and EBITDA of approximately SFr4.3 billion for fiscal 2004, in the face of continuing strong competition and unchanged regulatory conditions,” said the company.

Last mile

Chief executive Jens Alder told swissinfo that Swisscom would vigorously defend its control of the “last mile” of fixed line telephone connections.

The company has come under increasing pressure – notably in parliament – to open the last mile to competitors.

Consumers currently pay a monthly fee for the use of the fixed line network, even if they are not Swisscom customers.

“We have to compete for the last mile,” he said. “The main competitors are cable operators who provide TV services, broadband internet and telephony, and obviously we have to counter-attack by doing not only telephony and broadband internet but also TV services.

“Therefore we have invest in TV and that is the reason why we are in such a battle over the last mile.”

Share buy-back

Swisscom also unveiled a long-awaited share buy-back of up to SFr2 billion.

It proposed a dividend of SFr13 per share, bringing its total payout to shareholders to SFr2.9 billion.

“We have a promise out in the market that all cash generated will be returned to the shareholders provided we are not doing acquisitions. Last year we did not do significant acquisitions; on the contrary we sold participations, so we are returning cash to the shareholders,” said Alder.

“That is good news for shareholders and it’s good news for the company.”

Analysts said that Swisscom was one of the few European telecoms groups to emerge with cash after a sharp drop in the sector’s valuation in 2000.

They also said it had committed itself to returning some of its cash to shareholders if it failed to make any large acquisitions.

swissinfo with agencies

Key facts

Core profit rose by 5.2% to SFr4.64 billion.
Net income was SFr1.57 billion in 2003, up from SFr824 million in 2002.
Sales were flat at SFr14.58 billion.