Swisscom's results for 2017 remained at more or less the same level as in 2016. Net revenues increased slightly (+0.2 percent) to CHF 11.66 billion, however the core business in Switzerland sank by 2.1 percent to CHF 9.06 billion. EBITDA was unchanged at CHF 4.30 billion, and net income fell 2.2 percent to CHF 1.57 billion. Despite the tough competitive conditions in the Swiss market, the group said it recorded market success with TV connections, bundled offerings and business services for corporate customers, as well as at its Italian business Fastweb.
The decrease in revenues from the core business in Switzerland resulted primarily from falling revenue with fixed-line telephony and lower income from roaming services. EBITDA stabilised at the level of 2016, but it included also restructuring and one-off income from legal disputes at Fastweb. After adjustment, EBITDA fell slightly by 0.5 percent. Again, EBITDA was affected by the decrease in the Swiss core business (-2.4 percent) due to the decline in fixed-line telephony connections, pressure on pricing, increased inclusion of roaming in the basic charge and low subscription growth in a saturated market. EBITDA was positively affected, however, by cost savings and growth at Fastweb.
The group-wide headcount fell to 20,506 at year-end, including 17,688 FTEs in Switzerland, which equates to 684 fewer employees than at the end of 2016. Due to the decline in the Swiss business, the group said it will need to continue to cut costs in 2018. The cost base is set to be reduced from 2018 to 2020 by CHF 100 million per year.
Simultaneously, the company will continue to invest heavily in networks and infrastructure, as the investment is paying off. At CHF 2.38 billion, group-wide capex remained high in 2017. Of this, Swisscom invested CHF 1.678 billion or 71 percent in Switzerland and was therefore on budget. The share of capital expenditure as a proportion of revenue continues to stand at around one fifth (20.4 percent; in 2016: 20.8 percent).
At the end of 2017, Swisscom had connected some 3.9 million households and businesses with broadband of more than 50 Mbps, around 2.5 million of which benefit from speeds of more than 100 Mbps. Swisscom intends to make fibre-optic technology available to every Swiss municipality by the end of 2021.
In the mobile sector, more than 99 percent of Swisscom customers benefit from LTE, and Swisscom covers 80 percent of Swiss population with LTE advanced at up to 300 Mbps. Some 60 percent can achieve speeds of 450 Mbps.
Swisscom said it recorded success with its new bundled offering inOne which has over 1.3 million customers. By the end of 2017, the number of customers using a bundled offering had increased year-on-year by 235,000 or 14.1 percent to some 1.91 million (growth in Q4: +57,000 customers). Revenue from bundled contracts rose year-on-year by 13.4 percent to CHF 2.84 billion.
The number of Swisscom mobile lines was virtually unchanged year-on-year at 6.6 million (+0.4 percent), after adding 56,000 during Q4 2017. The number of postpaid lines rose year-on-year by 90,000, while the number of prepaid lines fell by 65,000.
Swisscom will introduce new functionalities for the mobile network in 2018 with the Rich Communication Suite. This will allow customers to exchange content before the call and also to share pictures, videos or locations during the call. The demand for mobile data services remains high: in 2017, around 55 percent more mobile data traffic was transmitted compared with the prior year.
Mobiles are increasingly being used to surf the web outside of Switzerland, too; data traffic generated abroad grew by 74 percent last year, while voice traffic increased 5 percent. Around 75 percent of roaming data volume was no longer billed to residential customers since it was included as part of the mobile service. Constant price reductions and inclusive services impacted the 2017 results by around CHF 50 million.
Enterprise customers posted an increase in incoming orders of 7 percent (around CHF 2.70 billion). With external customers, there was a slight fall in revenue (-0.8 percent) at CHF 2.40 billion. Revenue from telecommunications services fell by 3.8 percent, whereas the IT business grew by 1.1 percent (+CHF 12 million, of which CHF 5 million in Q4 2017). The corporate business exceeded the revenue targets set.
For this year, Swisscom forecasts revenue stable at around CHF 11.6 billion, EBITDA dropping to around CHF 4.2 billion, and capital expenditure of less than CHF 2.4 billion. The dividend shall remain unchanged at CHF 22 per share. By the end of the year, the headcount is expected to fall to around 17,000 FTEs.
