Swisscom increases profit but cuts jobs

Profit is up at Swisscom but turnover is down and jobs will go Keystone

Leading Swiss telecoms provider Swisscom says it is to cut 260 jobs next year despite an increase in profit as it battles to stay ahead of the competition.

It comes in the same week that competitor Cablecom announced that market conditions would force it to cut the same number of posts in 2006.

On Thursday the market leader announced that year-on-year profit had risen by 44.6 per cent to SFr1.65 billion ($1.2 billion), but that net revenue had decreased by three per cent to SFr7.3 billion.

In a statement, Swisscom reiterated that it expected to close 2005 with a drop in turnover to SFr9.6 billion.

Swisscom’s turnover last year was just over SFr10 billion. It made a net profit of almost SFr1.6 billion.

“In response to the fiercely competitive operating environment, Swisscom aims to bring about further efficiency improvements,” it said.

Panagiotis Spiliopoulos, telecoms analyst at Bank Vontobel, told swissinfo the Swisscom results were slightly better than he had expected.

“Generally speaking we have seen the same trends as the results for the first half of 2005. Namely, an acceleration in the weak trends on fixed net… and decelerating growth in voice traffic and ADSL.

“Net sales are a bit weaker than expected, but they still have very good cost control.”

Job losses

Swisscom said it would shed around 260 jobs in individual areas of its operations, but that overall headcount in Switzerland would rise slightly owing to the creation of new business areas.

The 260 jobs account for 1.7 per cent of all full-time positions. The company said it would actively help affected employees in the search for new jobs and that they would receive full pay for a specified period.

The largest number of jobs – 190 – will go at the landline division, Swisscom Fixnet, with a further 50 jobs going in the mobile phone division and 20 jobs in central operations.

Swisscom said fierce competition, the introduction of new technologies and intervention by the regulator had forced it to cut jobs. The cuts come on top of 356 job losses in the first nine months of this year.

Cablecom, Switzerland’s largest cable operator, announced on Tuesday it was cutting its workforce by 15 per cent in the light of increased competition and difficult market conditions.

On Wednesday, Swisscom confirmed it is in takeover talks for Ireland’s Eircom. The cash-rich company has made no secret of the fact it is interested in making acquisitions abroad.

swissinfo with agencies

Key facts

Swisscom year-on-year results:
Turnover: down 3% at SFr7.29 billion
Profit: up 44.6% at SFr1.65 billion
Full-time employees: down 2.3% at 15,288