For the three months ended September 30, Swisscom posted net income down 12% at CHF 470m ($375m) from CHF 534m ($427m) in the year-ago quarter. Despite the decline, net income beat average market forecasts of CHF 442m ($353m). Revenue rose 1.6% to CHF 2.42bn ($1.93bn) from CHF 2.386bn ($1.9bn) a year ago, but again topped analyst expectations.
Swisscom faces a possible fine of CHF 489m ($400m) regarding high mobile termination fees, and is also struggling to grow in a highly saturated market with few growth opportunities. During the last quarter most of its major units reported a decline in revenue.
Swisscom’s Fixnet unit, which deals with access and telephony services to residential and business customers, reported strong growth in broadband accesses, with the number of ADSL customers rising 29.2% to 1.3 million. This offset the news that the number of analog and digital access lines dropped by 2.1% to 3.76 million. Fixnet’s share of the telephony market is stable at around 56%.
Swisscom’s mobile operation saw a rise in customer numbers, up by 389,000 or 9.3% to 4.56 million, due primarily to new price models. Swisscom Mobile commands a 64% share of the market.
The Solutions unit provides fixed-line domestic and international voice telephony services to business customers, and this unit saw a 7.2% fall in revenues due to increased competition and price pressure.
Swisscom’s last remaining major unit is its Other segment, which comprises Swisscom IT Services, Broadcast, Antenna Hungaria, the Accarda Group and Swisscom Eurospot, its hotspot operator. Revenues at this unit actually rose 28.9%, thanks in part to the acquisition of Antenna Hungaria and Comit.
Meanwhile, Swisscom’s management remained relatively non-committal over media reports that Vodafone was considering offloading its 25% stake in Swisscom Mobile. The Wall Street Journal, which quoted people familiar with the situation, said Vodafone may consider selling its Swiss stake for approximately $3bn as part of its cost saving drive to rid itself of non-core assets.
Swisscom owns the rest of Swisscom Mobile and is the likely buyer. However, Swisscom CEO Carsten Schloter said no decision has been made so far and no timeline is in place. It is correct that we are considering whether this stake still makes sense, he said.
Looking forward, Swisscom stuck to its forecasts and said that it expects net revenue in the 2006 financial year of around CHF 9.5bn ($7.6bn) with an operating income expected to be CHF 3.7bn ($2.96bn).
Swisscom’s ADS shares on the New York Stock Exchange rose 1% to $35.29 following the news.
