Swisscom’s net revenue rose by CHF 50 million or 0.4% to CHF 11,434 million. In contrast, operating income before depreciation and amortisation (EBITDA) fell by CHF 175 million or 3.9% to CHF 4,302 million. The fall in EBITDA and higher depreciation and amortisation led to a decline in net income of CHF 120 million to CHF 1,695 million.
Revenue and EBITDA performance were impacted by the euro exchange rate, Fastweb’s wholesale revenue from low-margin interconnection services (hubbing) and corporate acquisitions. At constant exchange rates and excluding these special factors, net revenue fell by 0.8%. The decrease is primarily a result of general price erosion and price reductions for roaming in Swiss business totalling CHF 560 million. The CHF 480 million in customer and volume growth largely offset this decrease. Excluding hubbing, net revenue at Fastweb was down by EUR 16 million or 1.0% to EUR 1,597 million, despite customer growth. Higher revenues from residential customers were offset by a fall in revenue from corporate business resulting from price pressure.
Swisscom’s EBITDA dropped by 2.0% on a like-for-like basis. This reduction was chiefly due to lower revenues in Swiss core business as a consequence of continuing competition and price pressure. Fastweb EBITDA rose year-on-year by EUR 5 million or 1.0% to EUR 505 million.
Excluding the costs of CHF 360 million for the mobile frequencies acquired in 2012, capital expenditure rose by CHF 227 million or 10.5% to CHF 2,396 million, and in Switzerland by CHF 52 million or 3.2% to CHF 1,686 million. This increase is due to expansion of the broadband networks and modernisation of the mobile networks. The increase in capital expenditure at Fastweb by EUR 124 million or 28.1% to EUR 565 million is attributable to expansion of the fibre-optic network in Italy.
Operating free cash flow rose by CHF 96 million or 5.1% to CHF 1,978 million. Net debt fell by CHF 259 million or 3.2% to CHF 7,812 million compared to the end of 2012. The ratio of net debt to EBITDA remained unchanged versus the previous year at 1.8.
Headcount increased year-on-year by 594 FTEs or 3.0% to 20,108 FTEs. While headcount was higher as a result of acquisition of subsidiaries, the insourcing of external staff and expansion of customer service in Swiss business, the number of Fastweb employees was lower due to outsourcing. In Switzerland, the number of employees increased by 1,093 FTEs or 6.7% to 17,362.
Swisscom expects to close the year with revenue of around CHF 11.5 billion and EBITDA of around CHF 4.35 billion. Network infrastructure expansion in both Switzerland and Italy will continue to entail high capital expenditure: this is expected to total CHF 2.4 billion, of which CHF 1.75 billion in Switzerland. If all targets are met, Swisscom will once again propose a dividend of CHF 22 per share for the 2014 financial year.