Business Strategy and Outlook
| Javier Correonero |Swisscom has a strong market position as the incumbent in wealthy Switzerland with a benign regulator. While it has a high-quality network and a product portfolio tilted toward premium offerings, we see few opportunities for growth in the domestic market, which generates almost 80% of earnings. The main Swiss market segments in which the firm operates have almost reached saturation. As a result, the firm’s strategy is to maintain its leading position by ongoing investments in fiber and ultrabroadband, grow cloud and IT security services, and optimize its cost base. This is a reasonable strategy, in our view. Swisscom's business-to-business solutions are one of the few areas that can generate new growth, but the firm has been historically slow to capture the local cloud, Internet of Things, and security services market growth. Additionally, these high-growth ICT services are a small part of the firm’s overall offering. In our view, average revenue per user is likely to remain under pressure, caused by price discounts mainly in convergent offerings.