Swisscom Expects Franc to Stay Strong, Lowers Sales Outlook

By John Revill

ZURICH--Telecommunications company Swisscom AG (SCMN.VX) Wednesday said it expects the Swiss franc to remain strong against the euro for the rest of this year and into 2013, as it lowered its sales outlook for 2012.

"For next year we also expect EUR/CHF at 1.20," said Chief Executive Carsten Schloter.

The Swiss company Wednesday lowered its euro/Swiss franc exchange rate assumptions for the year from 1.23 to 1.20, knocking 100 million Swiss francs ($103 million) from its revenue expectations.

Swisscom now expects net revenue of CHF11.3 billion for 2012, down from the CHF11.4 billion it predicted in May.

Although most of its business is in Switzerland, Swisscom gets about 18% of its revenue in euros from Fastweb, its Italian subsidiary.

Swisscom had expected an exchange rate of 1.23 at the beginning of the year, but following the development of the euro and action by the Swiss National Bank to defend its 1.20 floor introduced last year, Chief Financial Officer Ueli Dietiker said there had been almost no change in the exchange rate.

"For 2012 we expect the euro/franc at 1.20," Mr. Dietiker told a conference call.

"But we have kept our Ebitda [earnings before interest, depreciation and amortization] guidance of CHF4.4 billion because of the strength of our operations. We want to show that foreign exchange only has an impact on the revenue side and we are able to defend Ebitda."

At 0640 GMT, the euro was trading at CHF1.2010.

-Write to John Revill at [e-mail]