Swisscom Sees More Price Erosion In 2012

Swisscom AG (SCMN.VX) won't be able to offset price erosion with customer growth in 2012, Chief Executive Carsten Schloter said Wednesday.

The telecommunications company suffered price erosion of 508 million Swiss francs in 2011 as more customers used flat rate tariffs and free texting, and roaming rates for mobile phones declined.

This couldn't be overcome by growth in customers and volume that brought in CHF404 million during the year, Schloter said.

"Our customers pay less and less for the services they get from us. They pay almost half a billion less," Schloter said.

"In 2010 we were more than able to offset price erosion by volume and customer growth, but in 2011 price erosion was more pronounced."

He said he expected price erosion to stabilise at the company's Italian unit Fastweb in 2012, but worsen in the Swiss market, which makes up two thirds of Swisscom's business.

"Price erosion will continue to be stronger than the growth we have to set it off," Schloter said.

In a few years, mobile phone customers will only pay for subscriptions and basic fees rather than by the minute, he said.

Swisscom is also facing competition from internet service providers making it possible for customers to send messages via the internet, Schloter said.

He was speaking after Swisscom reported a 4.3% decline in annual revenue to CHF11.47 billion.

Net profit for the period declined to CHF683 million, from CHF1.81 billion in 2010, due to a CHF1.2 billion impairment charge at Fastweb.

-By John Revill, Dow Jones Newswires; [phone] ; [e-mail]