ZURICH: Telecommunications group Swisscom said its full-year net income fell by more than a fifth after price cuts for roaming fees, fallout from the strong Swiss franc and tougher competition hurt its business.
The company said it would reduce costs over the coming years through job cuts, efficiency measures and migration of its network to All-IP technology.
"As a result of strong competition and price pressure, we set ourselves the goal of reducing our costs by over 300 million francs by 2020," Chief Executive Urs Schaeppi said. Swisscom said it expected revenue to hold above 11.6 billion Swiss francs ($11.6 billion) in 2016, compared to 11.678 billion reported for 2015.
It forecast operating income before depreciation and amortisation of 4.2 billion francs this year, and capital expenditure of over 2.3 billion francs.
The company said it plans to cut several hundred jobs in supporting units and other operations, even as it adds 500 jobs in growth areas this year.
"Overall, Swisscom expects the headcount in Switzerland at the end of 2016 to be slightly lower than at the end of 2015," the company said.
"The costs associated with the social plan will be recognised in Swisscom's income statement in the 2015 Annual Report with a one-off cost of 70 million francs."
Swisscom's shares were down 3.4 percent at 0852 GMT, while analysts rated the results from "solid" to "soft", noting improvements in the fourth quarter and the stock's defensiveness in the current environment.
"Guidance is a tiny bit weaker than expected but Swisscom tends to be pretty conservative here," Citigroup analysts said in a note before the market open.
"Stock likely to be down today given the worsening trends but, given a short interest of 8 percent, it probably ends the day flat."
Swisscom reported full-year net income of 1.36 billion Swiss francs, down 20.2 percent and behind analyst estimates of 1.41 billion francs in a Reuters poll. It proposed an unchanged dividend of 22 francs per share.
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