The Swisscom Group has once again had to announce a gigantic slump in profits. But that’s not the only bad news from the state-owned company.
Swisscom is once again in the spotlight because of a billion-euro acquisition in Italy.
The state-owned company bought Vodafone Italia – on credit – for the price of around 8 billion euros, as reported by muula.ch.
Billions in new debt
The Federal Council’s approval of the purchase decision was granted to the management around Swisscom CEO Christoph Aeschlimann with a higher dividend payout from the 2025 financial year.
Finance Minister Karin Keller-Sutter immediately wrote this into her financial plan.
However, the takeover of Vodafone Italia increased the state-owned company’s net debt by a horrendous 9.1 billion Swiss francs to 15.6 billion Swiss francs, as the purchase price amounted to 7.4 billion Swiss francs in the corporate currency and Swisscom also took on leasing debt of 1.7 billion Swiss francs.
Every resident of Switzerland would now inherit almost 2,000 Swiss francs in debt for this little foray.
The equity ratio even collapsed by 14.3 percentage points, now down to just 32.7 percent.
Profit collapses
What else did the acquisition bring?
Well, Swisscom could not wait for the transaction to be completed and closed the deal on December 31, 2024.
However, this was already associated with a 10 percent drop in profits to around 1.5 billion Swiss francs in the 2024 financial year, as reported by muula.ch.
Swisscom cheers banalities
The bad news in this regard continued today, Thursday. In the first quarter of 2025, net profit fell by as much as 20 percent to just 367 million Swiss francs.
Swisscom, a company majority-owned by the Swiss state, is focusing on the 39 percent increase in revenue to 3.8 billion Swiss francs due to its billion-euro takeover in Italy.
“Strong growth due to the acquisition of Vodafone Italia” was the banal title of their ad hoc announcement.
The quarterly report showing all of the details is not even available in one of the country’s official languages, but is only published in English.
At the start of trading on the stock exchange, as of Thursday, investors immediately took cover and ran for the hills.
Purchase price higher than value
Furthermore, in addition to these developments, there is one more point that must be really scaring the Swiss, and that is the goodwill and intangible assets that accompanied the dubious acquisition in Italy.
Just as with the acquisition of Fastweb, a billion-euro grab, Swisscom has not acquired much in the way of tangible assets with Vodafone Italia, according to the 2024 annual report.
Goodwill of 1.1 billion Swiss francs from the purchase price allocation is recognized for Vodafone Italia.
This means that Swisscom paid over a billion more for the deal than it found valuable assets for in the purchase object.
Over 75 percent intangible assets
Intangible assets amounted to around 4.5 billion Swiss francs. Swisscom found licenses worth 2 billion Swiss francs. The Group also capitalized brand and customer relationships at 1.7 billion Swiss francs.
Together with the goodwill, this amounts to 6.6 billion Swiss francs – which in relation to the purchase price is basically just “Italian air” of over 75 percent.
This means that more than three quarters of the 7.4 billion Swiss francs in debt issued are now virtually … well … virtual.
Swisscom made further changes in the first quarter of 2025 and established a new “Italy” segment.
It is to be hoped that the goodwill will last longer than at Fastweb – even if the euro really depreciates against the franc.
British make good deals
Speaking of goodwill, there is another interesting detail. Of the 6.3 billion Swiss francs in this item, Swisscom Switzerland accounts for the largest share at 4.3 billion Swiss francs.
This arose mainly in 2007 from the buyback of the 25 percent stake in Swisscom Mobile AG.
This had been sold to the Vodafone Group back in 2001.
Vodafone has therefore not only created a lot of Italian air in Swisscom’s consolidated financial statements. But it is obviously clear that the British always do clever deals with the Swiss state.
08.05.2025/kut./ena.
