• Group Revenue: CHF 11 billion, stable at the group level with a decline in Switzerland offset by growth in the Italian market.
• EBITDA: CHF 4.355 billion, adjusted for exceptional costs related to the Vodafone Italy transaction.
• Net Income: CHF 1.542 billion, impacted by integration costs from the Vodafone Italy acquisition.
• Free Cash Flow: CHF 1.437 billion, covering the CHF 1.14 billion dividend payout.
• CapEx: CHF 2.3 billion, with increased investments in Switzerland and stable investments in Italy.
• Swiss Revenue: CHF 8 billion, with a decline in telco service revenues partially offset by IT business growth.
• Swiss EBITDA: CHF 3.561 billion, with cost savings partially offsetting service revenue decline.
• Italian Revenue: CHF 2.8 billion, driven by B2B IT services and wholesale growth.
• Italian EBITDA: EUR 706 million, with stable performance despite service revenue challenges.
• Leverage: 2.4x, stable with a net debt of CHF 15.9 billion post-Vodafone Italy acquisition.
• Dividend Proposal: CHF 22 per share, stable despite increased net debt.
• Vodafone Italia 2024 Revenue: Stable at CHF 1 billion EBITDA and CHF 300 million operating free cash flow.
• Guidance 2025: Group revenue CHF 15.0-15.2 billion, EBITDA approximately CHF 5 billion, CapEx CHF 3.1-3.2 billion.

• Warning! GuruFocus has detected 3 Warning Sign with SCMWY.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Swisscom AG (SCMWY) achieved a solid financial performance in 2024, with a stable revenue of CHF11 billion, driven by growth in the Italian market.
• The company successfully completed the acquisition of Vodafone Italia, enhancing its scale and convergence potential in the telecom sector.
• Swisscom AG (SCMWY) maintained its leadership in customer experience in Switzerland, winning all relevant surveys and network tests.
• The company made significant advancements in AI, launching new products and leveraging its AI infrastructure to improve efficiency and product quality.
• Swisscom AG (SCMWY) achieved a milestone in fiber rollout, covering more than half of Switzerland with its FTTH footprint, and plans to reach 90% coverage by 2035.

Negative Points

• Swisscom AG (SCMWY) faced a decline in service revenue in Switzerland, with a CHF112 million drop in 2024, primarily due to competitive pressures.
• The company experienced a negative evolution in the TV market, with a shift towards OTT and streaming offerings impacting traditional TV packages.
• In Italy, Vodafone Italia saw a decline in B2C mobile service revenue, driven by a reduction in subscriber numbers and mobile termination rates.
• The integration of Vodafone Italia involves significant costs, with CHF700 million in integration expenses anticipated, impacting short-term financials.
• Swisscom AG (SCMWY) faces ongoing competitive pressure in the Swiss B2B segment, particularly in the SME space, affecting ARPU and market share.

Q & A Highlights

Q: What impact do you think the recent price increases by Sunrise and Salt will have on the Swiss market and Swisscom? Is there room for Swisscom to adjust prices for new or existing customers? A: Christoph Aeschlimann, CEO, explained that despite Sunrise and Salt increasing prices for existing customers, they remain aggressive in acquiring new customers with significant promotions. This aggressive pricing strategy prevents Swisscom from increasing prices for existing customers, as there is already a substantial ARPU gap with competitors.

Q: After six weeks since acquiring Vodafone Italia, have there been any surprises, positive or negative, about the business? What are the current competitive dynamics in Italy? A: Walter Renna, CEO of Fastweb & Vodafone, noted no negative surprises but highlighted positive aspects such as the high quality of Vodafone Italia's talent and the better-than-expected mobile network quality. He mentioned that the competitive dynamics remain tough with no significant changes observed.

Q: Has the competitive intensity in the B2B sector in Switzerland changed, and can Swisscom continue to achieve more than CHF50 million in cost savings? A: Christoph Aeschlimann stated that B2B remains competitive, especially in the SME segment, where there is pressure on ARPU. Eugen Stermetz, CFO, added that while CHF72 million in cost savings was achieved this year, variations around the CHF50 million target are expected, with no systematic outperformance anticipated.

Q: What is the outlook for stabilizing service revenues in Italy, and how does the guidance reflect potential synergies and cost savings? A: Eugen Stermetz explained that the guidance assumes a gradual reduction in service revenue decline, with synergies and cost savings factored in. The stabilization of service revenues is expected as synergies from the Vodafone integration materialize, particularly in mobile synergies by 2026.

Q: Can Swisscom influence the retail competitive environment by adjusting wholesale fiber pricing, and what are the benefits of the copper switch-off? A: Christoph Aeschlimann stated that wholesale fiber pricing is regulated, preventing Swisscom from influencing retail pricing through wholesale adjustments. The copper switch-off will lead to cost savings, improved customer experience, and potential one-off benefits from selling extracted copper, contributing to long-term cost improvements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.