Swisscom Spending 'Hundreds of Millions' Upgrading Mobile Network
December 21 2011 - 9:00AM
Dow Jones News
Swisscom AG (SCMN.VX) Wednesday said it will invest "several
hundred million" Swiss francs over the next five years to overhaul
its mobile phone network.
The move will consolidate the company's position in the growing
mobile phone data services market and help it overcome the erosion
of revenue in its mobile phone voice business.
Swisscom's revenue has fallen by 4.9% this year as flat-rate
tariffs for mobiles grew in popularity and charges for mobile
termination and data roaming fell.
In contrast, revenue from mobile phone data transmission has
risen by 12.5% as more people bought smart phones and the volume of
data traffic doubled.
To deal with the increased demand, Swisscom said Wednesday it
will work with Ericsson to update the technology in all of its
6,000 mobile phone base stations.
Analysts welcomed the additional investment, saying it could
help Swisscom, Switzerland's dominant player with 62% Swiss mobile
subscribers, defend its market share against rivals such as France
Telecom's (FTR.FR) Orange unit and privately held Sunrise.
"Data has become increasingly important," said Michael Inauen,
an analyst at Zuercher Kantonalbank. "But as a result of the
increased use the network in certain places is quite slow. If you
want to sell more data service you have to have a very good
service."
Swisscom already had the widest coverage in Switzerland, but
this investment would widen the gap further with Orange and
Sunrise.
"This shows Swisscom is not standing still," he said.
It could also help Swisscom sell more of its quadruple bundles
of TV, fixed-line, mobile and broadband to consumers, which are
more profitable and create more customer loyalty.
Swisscom declined to reveal the exact amount of the investment,
but said it would be part of its normal capital expenditure of
around CHF2 billion.
The company said the investment was being made to meet
increasing customer demand.
"More and more people are using their phones to browse the
Internet while on the move, and they expect to be connected
everywhere to listen to music, watch TV or access their emails,"
Swisscom spokesman Carsten Roetz said.
Swisscom needed to increase the speed of its network in order to
maintain its existing customers and attract new ones, he said.
Swisscom said it will also increase network capacity at heavily
frequented locations and press ahead with LTE expansion--the faster
broadband system used for data services on mobile phones.
In addition, the maximum possible speed of the existing HSPA
network will be doubled to 84 megabits per second.
Swisscom, which is 54% owned by the Swiss government, said the
measure will begin in January 2012, with all 6,000 base stations
upgraded by mid-2014.
-By John Revill, Dow Jones Newswires; +41 43 443 8042 ;
john.revill@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