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Swisscom AG SCMN

Morningstar Rating
CHF 503.20 −2.20 (0.44%)
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Company Report

Swisscom Earnings: Outlook Indicates Little to No EBITDA Growth in 2024; Maintaining Our Fair Value

Narrow-moat Swisscom’s revenue and EBITDA slightly beat consensus expectations for 2023. Sales increased by 0.9% organically in the year, while EBITDA increased by 2.3% organically and rose 4.9% on a reported basis due to one-offs and currency effects. Management also provided its outlook for 2024 with an EBITDA (before leases) expectation of around CHF 4.5 billion to CHF 4.6 billion for 2024, compared with CHF 4.6 billion in 2023. Similar to last year, any improvement in EBITDA will mainly come from cutting costs as revenue is expected to remain flat in 2024. The firm also reiterated its dividend of CHF 22 per share. We plan to incorporate the updated outlook into our model, but do not expect to make a material revision to our fair value estimate of CHF 440. We see shares as overvalued.

Price vs Fair Value

SCMN is trading at a 14% premium.
Price
CHF 503.20
Fair Value
CHF 623.00
Uncertainty
Medium
1-Star Price
CHF 594.00
5-Star Price
CHF 241.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The Swiss regulatory environment has been supportive of Swisscom for decades. The firm is not obliged to give competitors access to its fiber network. Regulators have never forced the entrance of new mobile operators into the market.

Bears

Xavier Niel owns Salt Mobile and also controls Iliad. Iliad is known for having disrupted several telecom markets, including France and Italy.

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News

Trading Information

Previous Close Price
CHF 505.40
Day Range
CHF 501.60509.20
52-Week Range
CHF 493.90619.40
Bid/Ask
CHF 0.00 / CHF 510.00
Market Cap
CHF 26.07 Bil
Volume/Avg
82,138 / 81,491

Key Statistics

Price/Earnings (Normalized)
15.22
Price/Sales
2.35
Dividend Yield (Trailing)
4.37%
Dividend Yield (Forward)
4.37%
Total Yield
4.37%

Company Profile

Swisscom is the incumbent telecom operator in Switzerland, with a high market share in mobile and fixed-line markets. It charges high prices compared with its competitors and other European peers due to the historical stability of the Swiss telecom market and a favorable regulatory environment. It also owns Fastweb in Italy, which has a broadband network and operates as a wireless reseller.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Large Value
Total Number of Employees
19,729

Competitors

Valuation

Metric
SCMN
KKPNY
LBTYA
Price/Earnings (Normalized)
15.2217.04
Price/Book Value
2.245.650.35
Price/Sales
2.352.620.99
Price/Cash Flow
6.226.313.51
Price/Earnings
SCMN
KKPNY
LBTYA

Financial Strength

Metric
SCMN
KKPNY
LBTYA
Quick Ratio
0.620.620.99
Current Ratio
0.860.651.30
Interest Coverage
16.745.29−3.34
Quick Ratio
SCMN
KKPNY
LBTYA

Profitability

Metric
SCMN
KKPNY
LBTYA
Return on Assets (Normalized)
7.07%6.71%−7.37%
Return on Equity (Normalized)
15.50%31.28%−14.90%
Return on Invested Capital (Normalized)
14.01%9.77%−6.53%
Return on Assets
SCMN
KKPNY
LBTYA
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