Swisscom '11 Net Cut By CHF1.2 Billion On Fastweb Impairment
December 14 2011 - 1:18AM
Dow Jones News
Swisscom AG (SCMN.VX) Wednesday said the difficult economic
situation in Italy has led to an impairment at its Italian unit
Fastweb, which will reduce its 2011 net income by 1.2 billion Swiss
francs.
MAIN FACTS:
- The difficult economic situation and increasing interest rates
have lead to reduced prospects for growth and higher cost of
capital in Italy.
- As a result, the business plan of the Italian subsidiary
Fastweb has been adapted and the book value impaired, which will
reduce Swisscom's net income in the 2011 annual financial
statements by CHF1.2 billion.
- Cash flow and dividends to shareholders will not be adversely
affected by this impairment.
- At the upcoming Annual General Meeting, an increase in
dividends by CHF 1.00 to CHF22.00 per share is being proposed.
- The impairment will also have no impact on the level of
capital expenditures in Switzerland.
- Swisscom acquired Fastweb in 2007 to profit from the growth in
the Italian broadband market through that company's modern fibre
optic infrastructure, and thus to allow it compensate for the
expected erosion in revenues and earnings in the Swiss
business.
- Fastweb developed positively since the acquisition: in 2010,
the company's revenues increased by roughly 50% to EUR1.9 billion;
during the same period, EBITDA adjusted for one-off items rose by
more than 50% to approximately EUR490 million.
- In the wake of the sovereign debt crisis, Italy's economic
situation has worsened in the last few months. Yields on government
bonds have increased significantly, as have the spreads over the
low-risk interest rates of the euro.
- High sovereign debt, weak economic growth, increasing
unemployment and political uncertainty are risk factors which have
impaired future growth and thus the company's value.
- In an impairment test for Fastweb, Italy's increased country
risk premium was therefore accounted for through a supplement to
the cost of capital and the company's growth outlook reduced.
-Zurich Bureau, Dow Jones Newswires, +41 43 443 80 47;
zurichdjnews@dowjones.com
Swisscom (PK) (USOTC:SCMWY)
Historical Stock Chart
From Sep 2024 to Oct 2024
Swisscom (PK) (USOTC:SCMWY)
Historical Stock Chart
From Oct 2023 to Oct 2024