Swisscom AG (ADR) ((SCMWY)) has held its Q1 earnings call. Read on for the main highlights of the call.
Swisscom AG’s latest earnings call paints a mixed picture, reflecting both achievements and challenges. While the company has made significant strides in integration and network advancements, it faces ongoing hurdles in reversing service revenue declines and managing contract losses in Italy. Despite effective execution on cost savings and integration, financial metrics reveal pressure from revenue drops.
Integration Progress in Italy
The integration of Fastweb and Vodafone in Italy is progressing smoothly, with the execution of the plan on track. Technical work is completed, and the company anticipates the first cost synergies later in the year. This progress is a positive indicator of Swisscom’s strategic efforts to strengthen its position in the Italian market.
Network and Brand Achievements
Swisscom has been recognized as the Strongest Telco Brand worldwide by Brand Finance and has won numerous network awards. The company has increased its 5G coverage to 86% and FTTH coverage to 53%, showcasing its commitment to expanding its network capabilities and enhancing customer experience.
B2B Growth in Italy
The B2B segment in Italy experienced a 9.2% increase in IT revenue, driven by sales in cloud, cybersecurity, and other IT products. This growth is significant as it marks the first time the segment has surpassed CHF 200 million in Q1 2025, highlighting the potential for further expansion in this area.
Cost Savings Initiatives
Swisscom delivered CHF 9 million in cost savings in Q1 and is on track to achieve its full-year target of CHF 50 million. These savings are being realized through automation and new retail formats, demonstrating Swisscom’s commitment to operational efficiency.
Decline in EBITDA
The group’s EBITDA decreased by 6.6% to CHF 1.27 billion, impacted by declines in Switzerland and integration costs in Italy. This decline underscores the financial challenges Swisscom faces amidst its strategic initiatives.
Service Revenue Decline in Italy
Italy’s B2C service revenue declined by CHF 35 million in Q1, driven by losses in mobile services. This decline is a significant concern as it contributes to overall revenue erosion in the market.
Poste-MVNO Contract Loss
The MVNO contract with Poste Italiane will transition to TIM in 2026, affecting Vodafone’s revenue. The exact timing and extent of this impact are still under discussion, but it represents a future challenge for Swisscom.
Forward-Looking Guidance
During the Q1 2025 conference call, Swisscom confirmed its full-year guidance, projecting revenue between CHF 15 billion and CHF 15.2 billion and EBITDAaL around CHF 5 billion. The company reported a Q1 revenue of CHF 3.75 billion, a slight decrease due to a dip in Switzerland and currency fluctuations. Despite these challenges, Swisscom is focused on achieving cost synergies and stabilizing B2C service revenue in Italy.
In summary, Swisscom’s earnings call reflects a blend of progress and challenges. While the company has achieved notable integration and network milestones, it continues to grapple with revenue declines and contract losses. The forward-looking guidance suggests cautious optimism as Swisscom navigates these complexities, aiming for stability and growth in the coming quarters.