Sie sind auf Seite 1von 1

Tel.

+44 (0)20 7232 3090 Traded on


AIM, London
Fax +44 (0)20 7232 3099 Stock Exchange

www.iirgroup.com Regulated and


LSE: IIR authorised by

Swisscom AG 24 June 2008

Update Report – 1Q 08 Results

Fastweb drives top-line and the trend expected to continue going forward

Common BUY Fundamental research indicates a 13% upside in the common stock over the next 6-12 months. We
have calculated the target price based on fundamental factors, using a weighted average of target
Stock prices obtained using DCF and comparative valuation methodologies.

Ticker: SCMN.VX
Target price: CHF393.88
Current price: CHF349.50 We reiterate the common stock a BUY with a 6-12 month target price of CHF393.88 per share.

ADR BUY The ADR is expected to increase approximately 39% over the next 6-12 months as the 13%
fundamental upside is augmented by approximately 26 percentage points upside attributable to
anticipated appreciation of the Swiss franc against the US dollar over the same period. We have taken
a 6-12 month investment horizon to value this company as we now expect significant currency impact
Ticker: SCMWY.PK on the ADR over the next 6-12 months1.

Target price: US$46.34


We reiterate the ADR (1 ADR = 0.1 common shares) a BUY with a 6-12 month target price of
Current price: US$33.30
US$46.34.

Supervisor: Jinesh Joshi


Analyst: Saurabh Jain Investment horizon- short term actionable trading strategies
Editor: Shem Pennant This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If
Global Research Director: this report is provided to you by your broker under the Global Settlement, you may now also access (free of
Satish Betadpur, CFA charge) the short term trading outlook that we publish from time to time for this issuer, looking at the coming
5-30 days for readers with a shorter trading horizon. These are available on-line only at
Next news due: www.researchoracle.com.
1H 08 results, August 2008
Report summary
Swisscom reported 23.4% y-o-y growth in revenues to CHF2,933 mn in 1Q 08, above our estimate of
CHF2,624 mn. Revenues from the Residential Customers segment decreased 0.4% y-o-y to CHF1,262
mn in 1Q 08. Revenues from the Small & Medium sized enterprises segment declined 2.1% y-o-y to
CHF279 mn in 1Q 08. In addition, revenues from Corporate business, reported a 2.1% y-o-y growth
while revenues from the Wholesale segment were flat at CHF418 mn in 1Q 08. The 23.4% y-o-y
growth in overall revenues was driven by the consolidation of Fastweb, which reported revenues at
CHF618 mn in 1Q 08. EBITDA margin decreased from 40.7% in 1Q 07 to 39.6% in 1Q 08, mainly due
to higher goods & services purchased expenses, as a percentage of revenues. The increase in Other
operating expenses also supported the decline in EBITDA margin. Operating margin declined 375 bps
y-o-y to 22.3% in 1Q 08, below our estimate of 23.2%, mainly due to higher than anticipated
depreciation and amortization expenses, as a percentage of revenues, incurred by the company in 1Q
08. Similarly, adjusted net margin declined significantly from 19.5% in 1Q 07 to 14.3% in 1Q 08,
mainly due to an increase in tax expenses and financial expenses. Going forward, we expect the
Fastweb to support top-line growth and revenues from Swisscom Switzerland to display a healthy
growth. In addition, Fastweb plans to launch its mobile communications services in FY 2008 and we
expected this to establish a strong foothold in its other services as well. Although, margins are
expected to experience a declining trend going forward, we believe that the common stock currently
trades below its fair value it represents an attractive investment opportunity.

Currency impact for US investors


The impact by itself of the anticipated currency movements on the ADR (now US$33.30), without
considering changes in the share price, is positive and is expected to be:

Page 1 Refer to page 5 for footnotes