Swisscom wields the axe again

Swisscom has called for more jobs to go Keystone

Switzerland’s leading telecoms provider, Swisscom, is to cut its workforce by about 390 next year, after facing a fall in profit.

The measure will particularly affect staff in the company’s fixed-line division in the cantons of Zurich and Bern.

Company chief executive Jens Alder said he was “satisfied” with the January to September figures, which showed a 17.2 per cent fall in net profit and stagnating turnover.

But the Communications Union condemned the job cuts, arguing that in view of the company’s solid financial position, Swisscom should spend money on measures to save jobs.

The company announced on Wednesday that nine-month profit had fallen to SFr1.14 billion ($960 million), hurt by growing competition and a one-off charge at its Fixnet unit.

Revenues were up by 0.7 per cent to SFr7.53 billion, but operating income before interest, tax, depreciation and amortisation (EBITDA) decreased by 3.5 per cent to SFr3.4 billion.

Lower profitability

Lower profitability at its mobile telephony business and higher expenditure on customer loyalty hit earnings, as did a SFr150-million charge as Swisscom revalued parts of its fixed-line business.

However, the former state monopoly confirmed its 2004 earnings guidance, saying in a statement that it now expected to report EBITDA of at least SFr4.3 billion on revenue of about SFr10 billion.

The company, which faces limited growth opportunities at home after it failed in a bid to take over Austrian neighbour Telekom Austria, is struggling to fend off increased competition from Sunrise, owned by Danish company TDC, and France Telecom’s Orange.

Alder said that Swisscom had not given up on acquisitions but added that it was no longer in talks with Telekom Austria, which pulled out of a possible merger earlier this year because of political opposition.

“I cannot exclude that something [an acquisition] will come through in the near to long-term future,” he told journalists in a conference call.

Increased competition

Swisscom also faces increased competition from the cable television company Cablecom, which has recently moved into telephone services.

In a move aimed at defending its position, Swisscom has lowered its call prices and launched a commercial trial to broadcast television signals over telephone lines.

Alder commented that Swisscom would continue to return cash to shareholders in 2005 if no acquisition was made by the end of the year.

The share buy-back would be on the same level as this year’s SFr2 billion programme.

“Swisscom is an opulent cash cow but it lacks growth dynamics,” analysts at Bank Wegelin said in a note commenting on the company’s nine-month figures.

swissinfo with agencies

Key facts

Swisscom is to shed 2.5 per cent of its workforce next year, or around 390 jobs.
Nine-month financial figures:
Revenues: SFr7.525 billion
Net profit: SFr1.14 billion (-17.2%)

In brief

Swisscom CEO Jens Alder is satisfied with the company’s performance in the first nine months of the year.

Alder says Swisscom will continue to return cash to shareholders in 2005 if no major acquisition is made by the end of the year.

The Communications Union has deplored the new round of job cuts, arguing that Swisscom has enough in its coffers to maintain jobs.