Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Swisscom AG (SCMWY, Financial) confirmed its full-year guidance for 2024, indicating stability in its financial outlook.
- The company achieved significant milestones in its network expansion, covering over 50% of Switzerland with fiber-to-the-home (FTTH) and increasing 5G coverage to 85% of the population.
- Fastweb, Swisscom AG (SCMWY)'s Italian subsidiary, continues to show strong growth, particularly in mobile and wholesale segments, contributing positively to overall revenue.
- The company is actively working on cost savings through automation and AI, which are expected to improve efficiency and reduce operational costs.
- Swisscom AG (SCMWY) launched new products and services, including energy offerings in Italy and a loyalty program in Switzerland, aimed at enhancing customer engagement and generating additional revenue streams.
Negative Points
- Swisscom AG (SCMWY) reported a slight decrease in Q3 revenue and EBITDA, with a 1.2% and 1.3% decline respectively, indicating some financial pressure.
- The competitive environment in Switzerland remains highly promotional, impacting service revenue trends and ARPU, particularly in the consumer fixed line segment.
- The company faces challenges in stabilizing broadband connections in Switzerland, with a reported loss of 9,000 connections in Q3.
- There is ongoing pressure in the B2B segment with a 2.9% decrease in telco service revenue, driven by decreasing prices.
- The Vodafone Italia acquisition is still under regulatory review, with potential delays due to a Phase 2 investigation by the Italian Competition Authority.
Q & A Highlights
Q: How is the competitive environment in Switzerland affecting Swisscom's service revenue trends and ARPU development?
A: Christoph Aeschlimann, CEO, noted that the competitive environment remains highly promotional, with no change in behavior from competitors like Sunrise, which has increased promotional durations. Swisscom does not expect a positive trend reversal in the near future. However, ARPU remains stable, particularly in broadband, due to measures like changing pricing on options and migrating customers to new tariffs.
Q: What is Swisscom's view on the future of the fiber network and potential co-financing or NetCo models?
A: Christoph Aeschlimann, CEO, stated that Swisscom sees the wholesale business as a positive evolution and plans to continue building out the fiber footprint. Swisscom has no intention of spinning out the NetCo and believes in a vertically integrated telco operator model, owning its network build-out and generating revenues from the growing wholesale business.
Q: Are there any consolidation opportunities for Swisscom with smaller fiber alternates or infra owned by municipalities in Switzerland?
A: Christoph Aeschlimann, CEO, mentioned that there is not much activity in terms of consolidation of altnets in Switzerland. Swisscom will focus on upgrading its existing copper network to FTTH and building out its fiber footprint, although it would consider opportunities if municipalities decide to sell their networks.
Q: How does Swisscom plan to manage the economics of its new loyalty program?
A: Christoph Aeschlimann, CEO, explained that the loyalty program will be financed within the current cost envelope, aiming to decrease churn and modify other activities like device financing. The program is not expected to generate incremental costs and offers revenue opportunities, such as discounted cinema tickets, which can lead to additional sales in cinemas.
Q: What is the status of the potential Huawei ban in Switzerland, and how might it affect Swisscom?
A: Christoph Aeschlimann, CEO, noted that the Swiss government is working on a law to potentially introduce vendor bans based on geopolitical situations, but there is currently no appetite or intention to implement such a ban. The law would provide a legal basis for action if needed in the future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
