Telco’s annual revenue hurt by surge in value of Swiss franc against euro, dollar.
Telecommunications company Swisscom AG expects the Swiss franc to remain at its recent high levels against the euro during 2012, Chief Financial Officer Ueli Dietiker said Wednesday. The company is assuming a euro exchange rate of CHF1.23 during the year, an average of the rate during 2011, Dietiker told Dow Jones Newswires.
“The Swiss National Bank has a put at 1.20, so I think there is limit it can go downwards, but there is a possibility it could go higher,” Dietiker said on the sidelines of a press conference.
Swisscom’s annual revenue was reduced by CHF250 million during 2011 as a result of the surge in the value of the currency, which reached record highs against the euro and dollar in 2012. But Dietiker said it was mainly a translation effect from its Italian subsidiary Fastweb which affected Swisscom.
“We also have quite a high capital expenditure in Italy. We had EBITDA [earnings before interest, taxes, depreciation and amortization] of EUR506 million, and capital expenditure of EUR448 million, so we had a free cash flow only about EUR70 million. “The real cash impact is limited,” Dietiker said.
Unlike some companies, which have begun regularly moving money out of troubled southern European countries, Swisscom doesn’t repatriate its money regularly from Italy, Dietiker said. Also, Swisscom isn’t making plans for a break-up of the euro, he said.
The company maintained a euro cash pool for the whole group with Deutsche Bank, which it used to buy goods and services, he said.
“We have no fears we will lose that money. We buys goods for about EUR500 million per year in Switzerland, so a low euro or strong swiss franc is good for our operational business.
“The new government in Italy has done a good job, and if you look at the last refinancing they did, the interest rates are coming down. At the moment I don’t have a bad feeling about Italy.”