Swisscom 2Q Net Slips; Expects To Name New CEO By Year-End

By John Revill and Neil MacLucas

ZURICH--Swisscom AG (SCMN.VX) Wednesday reported a 6.8% fall in second-quarter profit as the telecommunications giant said it would continue following the strategy outlined by its late chief executive, whom it expects to replace by the end of the year.

Swisscom, which is 57% owned by the Swiss government, said it will continue an infrastructure investment plan developed last year by Carsten Schloter, who was found dead in his home in July.

The infrastructure plan is designed to offer higher Internet speeds and digital Tv to consumers as the company continues to expand outside of its core fixed- and mobile-phone businesses.

"Our results are solid and we are on track," said interim CEO Urs Schaeppi. "We'll continue to pursue our strategy with a strong focus on customer service and innovation, and despite ongoing competition and price pressure we are confident about the second half of the year."

Swisscom's expansion comes as the company's battles falling revenue from its traditional businesses. Last year, the company said 400 million Swiss francs ($431 million) from price erosion was offset by revenue from new sources.

In the quarter ended June 30, Swisscom said net profit fell to CHF427 million from CHF458 million a year ago. Revenue increased 1% to CHF2.86 billion.

Swisscom also said Mr. Schaeppi, the current head of Swisscom's domestic business, will remain as acting CEO until the end of the year, when it expects to appoint a "definitive" successor to Mr. Schloter. Analysts say Mr. Schaeppi, who joined Swisscom in 1998, is seen as a favorite to take the job permanently.

Swisscom will again propose a dividend of CHF22 per share for the 2013 financial year.

Write to Neil Maclucas at [e-mail]

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