| Valuation method | Value, CHF | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 723.58 | 14 |
| Intrinsic value (DCF) | 466.95 | -26 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 230.63 | -64 |
Swisscom AG (SCMN.SW) is Switzerland's leading telecommunications provider, offering a comprehensive range of mobile, fixed-line, broadband, and IT services. Headquartered in Bern, the company operates through three key segments: Swisscom Switzerland, Fastweb (its Italian subsidiary), and Other Operating segments. Swisscom dominates the Swiss telecom market with a strong infrastructure backbone, providing essential connectivity solutions for residential, business, and wholesale customers. The company also delivers specialized services such as cloud computing, IoT solutions, and digitization services for healthcare and banking sectors. With a history dating back to 1852, Swisscom benefits from its incumbent position, regulatory advantages, and a reputation for reliability. As a critical player in Switzerland's digital economy, Swisscom continues to invest in next-generation networks, including 5G and fiber-optic expansion, while maintaining a stable dividend policy attractive to income-focused investors.
Swisscom presents a stable investment opportunity with its defensive business model, strong cash flow generation, and reliable dividend yield (~5.5%). The company benefits from its near-monopoly in Swiss fixed-line infrastructure and leading mobile market share (~60%), providing revenue stability. However, growth prospects are limited due to market saturation in Switzerland and heavy regulation. The Fastweb segment in Italy offers some growth potential but faces intense competition. Swisscom's low beta (0.27) indicates resilience during market downturns, but investors should note the high capital expenditure requirements for network maintenance and expansion (~20% of revenue) and Switzerland's challenging regulatory environment that caps pricing power. The stock suits conservative investors seeking telecom exposure with lower volatility.
Swisscom maintains a dominant position in Switzerland's telecom market through its incumbent advantages, including ownership of critical infrastructure and strong brand recognition. The company's competitive moat stems from: 1) Infrastructure ownership - controlling 90%+ of Switzerland's fixed-line network; 2) Regulatory protection - as the designated universal service provider; 3) High switching costs for business customers using its enterprise solutions. However, Sunrise (SUN.SW) presents increasing competition in mobile through aggressive pricing, while Salt Mobile (private) targets budget-conscious consumers. In broadband, alternative providers like UPC (Liberty Global) leverage cable networks. Swisscom differentiates through superior network quality (ranked #1 in Switzerland by Ookla) and bundled service offerings. The Fastweb subsidiary competes in Italy's more fragmented market against Telecom Italia (TIM) and Iliad, focusing on fiber and convergence products. Swisscom's main challenges include regulatory pressure to open infrastructure to competitors and limited international growth avenues compared to pan-European peers.