Swisscom banks on bundling as competition bites

Swisscom is banking on the popularity of bundled offerings, and in particular of its new flexible inOne packages, to counter declining rates in subscriber growth, including of TV services.

At the end of March 2017, over 1.7 million customers were using a bundled package, an increase of 18.6% year-on-year. Revenue from bundled contracts increased by 12.1% to CHF676 million.

Swisscom’s inOne product combines TV, broadband, fixed-line and flat-rate mobile telephony for up to five people, with the ability to modify or remove different elements to suit individual requirements.

Swisscom had 1.438 million TV subscribers at the end of March, up 20,000 on the previous quarter, and up 8.7% year-on-year.

Bundled contracts now account for 1.383 million of the total, with individual TV subscriptions now numbering only 55,000, down from 121,000 a year ago.

Swisscom said that it had managed to grow its TV base – albeit at a reduced rate of increase – despite fierce competition in the market.

The company said that its Italian subsidiary Fastweb performed well in a difficult market environment, turning in small but significant increases in revenues and subscriber numbers.

Overall, Swisscom saw net revenues decline by 1.8% with a fall in fixed-line subscribers and price reductions contributing to the decline.

The company nevertheless confirmed that it is on track to meet its objectives for the year, despite a challenging market.

“We earned a solid result in the first quarter, and we did this under continuing heavy pressure and in a difficult environment. The trends in 2016 are continuing in the first quarter of 2017, as expected. Core business, especially fixed-line telephony, fell significantly. The intensive competition, strongly driven by promotions, and high level of market saturation are challenging our revenue and profitability,” said Urs Schaeppi, CEO of Swisscom.

“Welcome factors are the continuing growth in TV and bundled products and the major advances in expanding our ultra-fast broadband network. I am also pleased by the market success of Fastweb in mobile telephony and the broadband area. For the rest of the year I am expecting continuing heavy pressure on prices. However, I am also expecting a boost in sales, thanks to inOne, our new bundled product range. Our financial forecast for 2017 is unchanged – we are on track.”