UPDATE 2-Swisscom's core profit eases under pricing pressures

Thu Feb 7, 2013 5:29am EST

* Core profits seen edging lower in 2013

* Weak pricing outweighs rise in mobile, data services

* Customer acquisition, handset costs to weigh

* Shares dip 0.3 percent (Re-leads, adds details, analyst comment)

By Martin de Sa'Pinto

ZURICH, Feb 7 (Reuters) - National telecoms operator Swisscom warned profits remain under pressure this year as increased capital spending outweighs a rise in customer traffic, and as competition weighs on its fixed line business.

Reporting a 4.4 percent fall in core profits for last year, the company said earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to fall a further 3 percent in 2013 to 4.25 billion Swiss francs ($4.7 billion), due to the costs of acquiring new mobile customers and a charge of 110 million francs due to a pension fund accounting change.

Profits for 2012 at the EBITDA level fell to 4.381 billion francs, as weak pricing hit its fixed-line voice business while strong growth in mobile data traffic and bundled TV and broadband services failed to make up for the shortfall, due to costs and pricing pressures.

However, analysts had on average forecast a 4.9 percent fall in EBITDA according to a Reuters poll, and on a like-for-like basis at constant exchange rates the decline was a more contained 0.6 percent.

Swisscom said it would propose an unchanged dividend of 22 francs per share for 2013, provided it meets its targets for this year.

The shares were down 0.22 percent at 403 francs by 1009 GMT, when the Stoxx Europe 600 telecoms sector index was up 1.2 percent.

"The current valuation is substantially above historical levels and reflects a premium of 27 percent (against a historical 15-20 percent) to European peers," Vontobel's analyst Serge Rotzer said in a note, adding that he thought the premium was justified in a depressed sector.

"The rock-solid dividend clearly helps," he said.

The company, majority owned by the Swiss state, posted a 153 percent rise in net income to 1.762 billion francs for 2012, the jump from 2012 mainly attributable to the previous year's 1.3 billion-euro ($1.76 billion) writedown on its Italian unit Fastweb.

Revenue for the year eased 0.7 percent to 11.384 billion Swiss francs.

In November, the group cut its full-year profit forecast when it reported third quarter figures. ($1=0.9105 Swiss francs) (Editing by Jane Merriman and Greg Mahlich)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.