Nov. 9 (Bloomberg) -- Swisscom AG, Switzerland’s largest phone company, said third-quarter profit rose 4.7 percent, beating analyst estimates. It raised its 2010 targets.
Net income gained to 536 million Swiss francs ($554 million) from 512 million francs a year earlier, the Bern-based company said today. Net revenue advanced 0.7 percent to 3.03 billion francs. Analysts had estimated net income of 510.9 million francs on sales of 2.98 billion francs.
“The Swiss business was very strong,” Serge Rotzer, an analyst at Bank Vontobel, wrote in a note. “We were mainly surprised by the strong profitability of the business. Thanks to the strong Swiss business, Swisscom has lifted its guidance.”
Swisscom sees net revenue, excluding FastWeb SpA, for the full year of about 9.35 billion francs and earnings before interest, tax, depreciation and amortization at about 4 billion francs. The company had previously predicted the measures at about 9.15 billion francs and 3.75 billion francs respectively.
Swisscom rose 1.7 percent to 418.5 francs as of 9:47 a.m. in Zurich, the highest level since February 2008, giving it a market value of 21.7 billion francs.
Swisscom has been dealing with an investigation of alleged value-added-tax fraud and money laundering at FastWeb, Italy’s second-biggest fixed-line company, which it bought in 2007.
The Swiss company forecast total net revenue of about 12 billion francs for the year and Ebitda of about 4.7 billion francs, including a provision for the VAT proceedings against FastWeb. Swisscom said third-quarter ebitda rose 0.6 percent to 1.26 billion francs.
Weak Euro
The forecasts were raised “despite the weak euro,” Chief Executive Officer Carsten Schloter said in a conference call. “This means the Swiss business is doing much better than at the beginning of the year.” The franc has gained 11 percent against the euro this year.
On Nov. 2, FastWeb said third-quarter net income fell to 3.9 million euros ($5.4 million) from 12.6 million euros a year earlier. Revenue rose 5.5 percent to 470.5 million euros.
Net sales and Ebitda at Fastweb may be between 3 percent and 5 percent lower than the previous expectations of 1.95 billion euros and 580 million euros because of a revenue- recognition change. The forecasts exclude a provision for the investigation. FastWeb denies the charges made in the probe.
Swisscom is carrying out a public takeover offer on all outstanding shares of Fastweb, representing about 18 percent of the company. The offer will conclude on Nov. 12.
Dividend
Swisscom expects total cash of 256 million euros, “not endangering the dividend payment capability of the group,” it said in the presentation slides on its website.
“We are leaving our statement regarding the dividend unchanged,” Schloter said. According to Swisscom’s payout policy “up to half of the operating free cash flow is paid out to shareholders in the subsequent year, with payment at least on a par with the previous year’s dividend,” it said in its nine- month interim report today.
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