Swisscom 2013 Profit Target Misses Estimates on Pension Cost

Swisscom AG, Switzerland’s biggest phone company, forecast 2013 earnings that may be lower than analyst estimates as it makes an adjustment for pension costs.

Earnings before interest, taxes, depreciation and amortization will total at least 4.25 billion francs ($4.67 billion), Swisscom said. Analysts estimated 2013 Ebitda of 4.36 billion francs, according to data compiled by Bloomberg. A new accounting standard will result in a “non-cashflow relevant” rise in pension costs of 110 million francs, the company said.

“Lower Ebitda guidance has to be seen negative,” Serge Rotzer, an analyst at Vontobel, said in a note. “Full-year 2012 results have been broadly in line with expectations.”

Swisscom, based in Bern, is introducing new offerings to attract customers in the face of competition, pressure on prices and changes in consumer behavior. Growth in customers and volume will raise direct costs, mainly for acquiring new clientss and the procurement of handsets, the company said today. Maintenance and expansion of the network will also temporarily increase indirect costs, Swisscom said.

The stock fell 0.3 percent to 403.5 francs at 11:31 a.m. in Zurich. The shares have risen 2.5 percent this year, giving the company a market value of 20.9 billion francs.

Vivo Casa

In June, the company started new flat-rate mobile and Internet plans and it has started bundled offerings such as Vivo Casa, which combines fixed-line access with telephony, Internet and TV. Swisscom said today that 788,000 customers used its combined offerings such as Vivo Casa at the end of 2012.

Fourth-quarter net income was 376 million francs compared with a net loss of 835 million francs a year earlier, when Swisscom had a writedown for Italian fixed-line unit Fastweb. Sales rose to 2.96 billion francs from 2.93 billion francs.

If all 2013 targets are met, Swisscom said, it plans a dividend of 22 francs a share, in line with the 2012 payout announced today.

“Maintaining our stable dividend, which has a yield of 6 percent -- 6 percent in today’s interest climate, in Swiss francs -- is phenomenally attractive,” Chief Executive Officer Carsten Schloter said at press conference in Zurich today. “Investors should expect us to follow a dividend policy characterized by stability, which is a unique selling point in today’s context.”

Fastweb Growth

Sales will fall to 11.3 billion francs this year from 11.4 billion francs last year, Swisscom said. That revenue forecast was in line with the average of analyst estimates compiled by Bloomberg.

Swisscom bought Fastweb in 2007 to make up for slowing growth in Switzerland. Fastweb added 63,000 users in the fourth quarter for a total of 1.77 million. The business posted more than twice as many net customer gains in 2012 than in 2011 helped by the bundled TV and broadband offering with Sky Italia Srl, which attracted 151,000 customers to date, Swisscom said.

Swisscom expects capital expenditure to drop to 2.4 billion francs this year from 2.53 billion francs in 2012. Capital expenditure in Switzerland will increase to 1.75 billion francs from 1.65 billion francs, the company said.

To contact the reporter on this story: Chiara Remondini in Milan at cremondini@bloomberg.net

To contact the editor responsible for this story: James Ludden at jludden@bloomberg.net

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