Company Reports

Swisscom is the leading telecom operator in Switzerland. The company has one of the highest market shares among European telecom operators while also charging high prices to customers. High prices have been maintained due to the overall health of the Swiss economy and a supportive regulatory environment.

Cost savings and synergy realizations from Vodafone’s integration supported Swisscom's second-quarter adjusted EBITDAaL of CHF 1.3 billion, up 5.5% year over year and ahead of company-compiled consensus, sending shares up 4%. Though revenue trends improved sequentially, top-line pressure persisted.

Swisscom delivered on its 2025 outlook, reporting CHF 15.05 billion in sales and CHF 5.0 billion in EBITDAal. Management guidance is for revenue of CHF 14.7 billion-CHF 14.9 billion and EBITDAaL of CHF 5.0 billion-CHF 5.1 billion in 2026, implying a 1.7% revenue decline and flat EBITDAaL growth.

Swisscom is the leading telecom operator in Switzerland. The company has one of the highest market shares among European telecom operators while also charging high prices to customers. High prices have been maintained due to the overall health of the Swiss economy and a supportive regulatory environment.

The Morningstar Developed Markets Europe Communication Services Index has returned 23.7% year to date, thanks to renewed hopes for consolidation and modestly improving conditions in markets like Italy.

Swisscom is on its way to close a difficult year marked by pressures in its core Switzerland operations while it tries to integrate the acquisition of Vodafone Italia with Fastweb.

Even if Swisscom’s second-quarter results were largely aligned with company-compiled consensus, we remain cautious on the stock due to top-line pressures in Italy.

Swisscom is the leading telecom operator in Switzerland. The company has one of the highest market shares among European telecom operators while also charging high prices to customers. High prices have been maintained due to the overall health of the Swiss economy, a supportive regulatory environment, and lack of alternatives to Swisscom’s networks.

We are updating our moat ratings for eight European telecom stocks. European telecom companies lack the scale and pricing of international peers. Network redundancies and little cross-border synergies are common, and the regulatory landscape is not supportive of competitive advantages.

Swisscom is the leading telecom operator in Switzerland. The company has one of the highest market shares among European telecom operators while also charging high prices to customers. High prices have been maintained due to the overall health of the Swiss economy, a supportive regulatory environment, and lack of alternatives to Swisscom’s networks.

Swisscom's first-quarter results were a tad below company-compiled consensus, with sales of CHF 3.76 billion and EBITDA after leases of CHF 1.28 billion, a 1.2% and 6.6% decline, respectively. Management maintained its outlook for 2025, when it expects CHF 5 billion in EBITDAaL.

Narrow-moat Swisscom reported mixed full-year results and a tepid preliminary outlook for 2025. Swiss revenue and EBITDA came in a touch behind company compiled consensus, declining 1.7% and 4.0% in 2024, respectively. The main reason for the decline is the continued pricing pressure at the lower end of the domestic market. Fastweb revenue grew ahead of consensus at 6.7% in 2024, but Swisscoms guidance for Italy in 2025, including acquired Vodafone Italia for the first time, was somewhat disappointing; flat revenue, with EBITDAaL and operating cash flow declining 8% and 20% at the midpoint, respectively. The downwardly revised cash flow figure is primarily due to increased integration-related capital expenditures expected in 2025. After incorporating these results, we make no change to our CHF 440 fair value estimate and view the shares as overvalued. We remind investors that Swisscom’s additional financial leverage (now standing at 2.4 times net debt to EBITDA) and the highly competitive nature of the Italian telecommunications market, which does not grow, add significant uncertainty to Swisscom.

Swisscom is the leading telecom operator in Switzerland. The company has one of the highest market shares among European telecom operators while also charging high prices to customers. High prices have been maintained due to the overall health of the Swiss economy, a supportive regulatory environment, and lack of alternatives to Swisscom’s networks.

Narrow-moat Swisscom’s third-quarter revenue declined by 1.2% to CHF 2.719 billion, slightly below company-compiled consensus. Cost-cutting measures in the telecom segment partly relieved top-line pressure on EBITDA, which came in at CHF 1.159 billion, down 1.3% year on year but ahead of expectations. Management reiterated its guidance of CHF 11.0 billion in revenue and CHF 4.5 billion to CHF 4.6 billion in EBITDA for the full year. With no changes to our forecast, we maintain our CHF 440 fair value estimate and view shares as overvalued at current levels.

Narrow-moat Swisscom's second-quarter revenue came in ahead of company-compiled consensus at CHF 2.751 billion, a 1.8% increase year over year. Group-level EBITDA was in line at CHF 1.124 billion for the quarter, a 1.3% decline year over year and Swisscom is on track to meet its full-year guidance. Management maintained its 2024 guidance for revenue of CHF 11.0 billion and EBITDA of CHF 4.5 billion-CHF 4.6 billion. Overall, these results support our outlook for Swisscom and we make no changes to our forecasts. We reiterate our CHF 440 fair value estimate and view the shares as overvalued at current levels.

Narrow-moat Swisscom’s revenue decreased by 1.6% in the first quarter to CHF 2.703 billion, with EBITDA decreasing by 0.8% to CHF 1.155 billion, although the decrease would have been greater, close to 1.5%, after excluding nonrecurring items and at constant exchange rates. Management reaffirmed its 2024 guidance of CHF 11.0 billion revenue and CHF 4.5 billion to CHF 4.6 billion in EBITDA. We are maintaining our CHF 440 per share fair value estimate, with shares being overvalued, trading in the CHF 500 range. The board intends to distribute a CHF 22 dividend per share, which has been stable now for 13 years thanks to the stability of the Swiss market.

Swisscom is the leading telecom operator in Switzerland. The company has one of the highest market shares among European telecom operators while also charging high prices to customers. High prices have been maintained due to the overall health of the Swiss economy, a supportive regulatory environment, and lack of alternatives to Swisscom’s networks.

Swisscom announced it will be acquiring 100% of Vodafone Italia for EUR 8.0 billion in an all-cash deal. It represents a 7.8 enterprise value/EBITDA after leases multiple before synergies, and 5.1 times after its expected synergies are realized. The acquisition will be fully financed with debt, significantly raising Swisscom's net debt/EBITDA ratio from 1.5 times to 2.6 times. We remain highly skeptical about Swisscom's decision to add significant financial leverage to its balance sheet to enter a market with irrational competitive behavior and strong revenue and margin pressures. Based on our estimates, this deal is value-neutral to Swisscom at best, with a risk of value destruction if synergies are less than expected or competitive pressures intensify in Italy. The deal is still awaiting regulatory approval and is expected to close in the first quarter of 2025. We maintain our CHF 440 fair value estimate and narrow moat rating for Swisscom.

Narrow-moat Swisscom’s revenue and EBITDA slightly beat consensus expectations for 2023. Sales increased by 0.9% organically in the year, while EBITDA increased by 2.3% organically and rose 4.9% on a reported basis due to one-offs and currency effects. Management also provided its outlook for 2024 with an EBITDA (before leases) expectation of around CHF 4.5 billion to CHF 4.6 billion for 2024, compared with CHF 4.6 billion in 2023. Similar to last year, any improvement in EBITDA will mainly come from cutting costs as revenue is expected to remain flat in 2024. The firm also reiterated its dividend of CHF 22 per share. We plan to incorporate the updated outlook into our model, but do not expect to make a material revision to our fair value estimate of CHF 440. We see shares as overvalued.

Swisscom is the leading telecom operator in Switzerland. The company has one of the highest market shares among European telecom operators while also charging high prices to customers. High prices have been maintained due to the overall health of the Swiss economy, a supportive regulatory environment, and lack of alternatives to Swisscom’s networks.