Swisscom AG (ADR) ((SCMWY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Swisscom AG’s recent earnings call painted a mixed picture, reflecting both achievements and challenges. The company demonstrated operational efficiencies and technological advancements, notably in its integration efforts in Italy. However, revenue declines in both Switzerland and Italy, particularly in the B2B segment, were significant due to competitive pressures and macroeconomic factors.
Successful Service Tests and Innovation in Switzerland
Swisscom has excelled in customer service, winning all four service tests, which underscores their dedication to customer satisfaction. The company also introduced an AI chatbot service for private consumers and launched a successful ‘We are Family’ offering, catering to family needs.
Steady Integration and Synergy Realization in Italy
The integration of Swisscom’s operations with Fastweb in Italy is on track, with synergies and integration costs aligning with expectations. A new product portfolio has been launched, and SIM migration is progressing well, aiming to achieve approximately CHF 200 million in synergies by 2026.
Cost Savings and Operational Efficiency
Swisscom reached its full-year cost savings target of CHF 50 million by the end of Q3 2025. This achievement was driven by digitization and the application of AI in customer service, enhancing operational efficiency.
Network Expansion and Fiber Growth
Swisscom’s network expansion continues, with 5G plus coverage reaching 88% and fiber rollout at 55% in Switzerland. In Italy, 5G plus coverage is at 87%, and FTTH rollout stands at 54%, marking significant progress in infrastructure development.
Positive Trends in Italian B2C Mobile and Broadband
The Italian B2C market is showing positive signs, with significant decreases in churn and improvements in net adds in mobile and broadband segments, indicating a successful market turnaround.
Revenue Decline in Switzerland and Italy
Swisscom reported a Q3 revenue of CHF 3.7 billion, a decline of 1.8%. Year-to-date revenue is down 2.1%, with notable declines in service revenue in both Switzerland and Italy.
B2B Service Revenue Erosion
In Switzerland, B2B service revenue saw a decline of CHF 45 million, attributed to price competition and lower IT service growth amid challenging macroeconomic conditions.
Challenges in Italian B2B Segment
The Italian B2B segment faced revenue declines due to the conclusion of large public administration projects, impacting overall performance.
Forward-Looking Guidance
Swisscom confirmed its full-year guidance, projecting group revenues at the lower end of approximately CHF 15 billion and an EBITDAaL of CHF 5 billion. CapEx is expected between CHF 3.1 billion and CHF 3.2 billion. Despite revenue challenges, Swisscom remains committed to cost efficiencies and improvements in IT and wholesale segments.
In summary, Swisscom’s earnings call revealed a balanced outlook with both achievements and challenges. While operational efficiencies and technological advancements are commendable, the company faces significant revenue pressures in Switzerland and Italy. The forward-looking guidance suggests a cautious yet optimistic approach, focusing on cost efficiencies and strategic growth areas.