Swisscom profits drop 3.5% y-o-y, braces business against OTT services

9 Aug 2012

Fixed line incumbent Swisscom has booked a 1.8% drop in net revenues for the first half of 2012, compared to the same period of 2011, having taken in CHF5.62 billion (USD5.79 billion) in the six-month period. Earnings before interest, tax, depreciation and amortisation (EBITDA) totalled CHF2.24 billion for the period under review, compared to CHF2.27 billion a year earlier. Greater focus on the telco’s fibre rollout schemes resulted in an 11.9% jump in CAPEX for H1 2012 to CHF1.02 billion. Meanwhile, net profits dipped 3.5% year-on-year to CHF928 million.

Swisscom attributed the decline in earnings to pricing pressures from its competitors, and changes in customer behaviour. Swisscom noted that subscribers are increasingly eschewing traditional voice and text services in favour of IP-based applications and social media platforms. Wireless voice traffic has declined from a peak of 1.70 billion minutes in Q4 2011 to 1.63 billion minutes in Q2 2012, whilst fixed voice telephony has experienced a slightly sharper fall, from 2.30 billion minutes to 1.99 billion minutes over the same period. Similarly, SMS usage has also flagged and is showing a downward trend, though the decline is less consistent: 741 million SMS messages were send in Q4 2010, declining to 730 million in Q2 2011 before rising to 747 million the following quarter. In the first half of 2012, SMS usage has actually begun to improve slightly, with Swisscom recording 691 million messages in Q1, and 694 million in Q2.

Looking forward, Swisscom expects over-the-top (OTT) providers to increasingly circumvent SMS and voice usage with applications such as ‘Whatsapp’ and Viber. The telco noted that 46% of active devices as at Q2 2012 were smartphones – compared to 32% a year earlier and expects the figure to rise to 60% over the next twelve months – and are therefore able to use such OTT services to avoid paying for messaging services. To counteract this, in late June Swisscom introduced a wave of selection of tariffs offering unlimited voice, SMS and data usage, with the price of the offering altering only the speed of downloads: 0.2Mbps for ‘XS’ (CHF59), 1Mbps for ‘S’ (CHF75), 7.2Mbps for ‘M’ (CHF99), 21Mbps for ‘L’ (CHF129) and 100Mbps for ‘XL’ (CHF169).

Despite falling revenues and wavering traffic, the triple-play provider reported 1.694 million broadband customers (up 4.7% y-o-y), 694,000 pay-TV users (35.5%) and 6.114 million wireless accounts (3.4%). Its bundled services continued to grow in popularity, meanwhile, with a total of 699,000 customers subscribed to multi-play packages. Of these, 237,000 were ‘2Play’, 374,000 ‘3Play’ and 88,000 were ‘4Play’.

Switzerland, Swisscom