Its Fastweb unit drives the operator’s profits and remains the frontrunner for a deal for Vodafone Italy – even as Wind Tre changes course
Swisscom announced it will increase salaries by 1.9% in 2024, following negotiations between the operator and its social partners, the trade union syndicom and the employee association transfair. The rise will benefit around 10,000 Swisscom employees who are subject to the collective employment agreement.
To take account of inflation, most employees will receive a general salary increase, which will vary according to their position in the salary band. A further part of the sum is earmarked for individual salary increases. Employees whose salary is above the salary band will receive a one-off payment.
Fragility of markets
Given the current fragility of markets everywhere transfair union said while it had hoped for more, the agreement was “an acceptable compromise due to the market situation”. The pay deal follows the operator’s FY2023 results last week which saw it grow profit 4.9%, mainly driven by its Fastweb business in Italy.
The Group posted EBITDA of CHF 4.62 billion (€4.876 billion) in 2023 while analysts had expected 4.61 billion, a company-compiled consensus showed. Fastweb’s revenue increased to €2.63 billion (up 6.1% year on year). For 2024, Swisscom expects revenue of around CHF 11 billion, compared with CHF 11.07 billion last year. It forecast annual EBITDA in a range of CHF 4.5 billion to 4.6 billion.
Its Italian operator grew revenues from both business and wholesale markets – and its customer base – even while its core broadband market was treading water in a competitive market. “Our subsidiary Fastweb in Italy is also on the move – it has been growing continuously for ten years now,” said Swisscom CEO Christoph Aeschlimann (pictured above).
Italian twists and turns
The Italian market is in the throes of consolidation. Vodafone Group recently confirmed it was having “active discussions” with Swisscom about the fate of its local unit and rejected an offer from Iliad to merge their Italian businesses. Vodafone said it was “pursuing other deals”. Iliad later confirmed Vodafone had rejected a revised 50:50 proposal to create a new operator with a combined enterprise value of €14.7 billion.
A combined Vodafone-Iliad would have become the leader in the Italian market, ahead of Telecom Italia and CK Hutchison’s Wind Tre.
Negotiations between Vodafone Italy and Fastweb continue. The latter has a fibre network and offers mobile through network-sharing deals, will not face the tough regulatory hurdles as a deal with Iliad would have. On the other hand, the potential synergies lower, according to analysts speaking to Reuters. A Swisscom spokesperson declined to comment on the matter in an email to Reuters, saying the company would not publish additional statements.
CK Hutchison turns windy
In keeping with the speed-dating approach to partnerships in the Italian market, CK Hutchison has terminated the proposed sale of 60% of its network assets to Sweden’s EQT Infrastructure. The sale was agreed on 12 May 2023. CK Hutchison said its termination is “owing to conditions precedent to closing not being satisfied by an agreed longstop date of 12 February 2024”.
CK Hutchison said it will continue to explore possible alternative infrastructure transactions to bring value to the company, including possible infrastructure transactions with EQT Infrastructure should the appropriate opportunity arise.