Swisscom sales fail to get a rise

Swisscom's local and long-distance traffic as decreased in 2004 Keystone Archive

Swisscom has reported a slight increase in net profit last year to SFr1.59 billion ($1.38 billion) as sales stagnated at just under SFr10.06 billion.

The results of Switzerland’s main telecommunications provider are roughly in line with forecasts.

Core profit – earnings before interest, tax, depreciation and amortisation (Ebita) – slipped by 2.2 per cent to SFr4.4 billion in 2004 compared with the previous year’s results Swisscom said on Thursday.

The company said it recorded a 65 per cent increase in the number of ASDL (high-speed internet) connections and a three per cent rise in the number of mobile phone customers last year.

But revenue from fixed-line telephone services, including local and long-distance traffic as well as internet traffic, decreased.

The number of full-time employees dropped by 3.7 per cent to 15,477 in 2004 as the company pursued its ongoing programme to slash costs.

Cautious outlook

For 2005, the former state monopoly said it expected revenues of around SFr10 billion and core profits of around SFr4.2 billion.

“The outlook is a little weak … disappointing,” Bank Leu analyst Steven Frey told Reuters, adding he would have expected the company to forecast flat core profits in 2005.

Zurich Cantonal Bank market analyst Claude Zehnder agreed that the Ebita guidance was below expectations, but added Swisscom had a tendency to give a cautious outlook at first to raise it later during the year.

“The rest was on the dot,” he said, referring to the 2004 earnings figures.

Swisscom is courting the Czech telecoms group, Cesky Telecom, after selling its stake in debitel, a German-based mobile-phone services provider, in 2004.

The telecoms carrier has been looking to expand again beyond the borders of its own home market to make better use of available cash and help compensate for a lack of domestic growth opportunities.

Swisscom said it would return SFr2 billion to shareholders via a share buy-back programme in 2005 and will increase its dividend by SFr1 to SFr14 per share. Its biggest shareholder is still the state, which has a 61.4 per cent stake.

swissinfo with agencies

Key facts

Net profit 2004: SFr1.59 billion (+1.6%)
Sales 2004: SFr10.06 billion (+0.3%)
Full-time employees: 15,477 (-3.7%)
ADSL accesses: 802,000 (+64.7%)
Mobile customers: 3.9 million (+3.0%)