Swisscom AG (SCMN.VX) expects higher earnings at its Italian unit Fastweb during 2012 despite the economic troubles in the country, Chief Executive Carsten Schloter said Wednesday.

"Fastweb is now self financing. We had [earnings before interest, taxes, depreciation and amortization] of 506 million euros in 2012, and this figure is expected to grow slightly in 2012," Schloter said.

He noted the challenging business environment in Italy, which led Swisscom to take an impairment charge that reduced its net income by 1.2 billion Swiss francs.

During 2011 net revenue at Fastweb, which was acquired by Swisscom in 2007 for around EUR4.6 billion, declined 7.1% to EUR1.75 billion, Swisscom said.

Schloter said he expects revenue to be stable in 2012, but profit to grow as the company introduces cost cuts of EUR120 million over the next two years and reduces bad debts.

"There is a lot of turmoil in Italy, economic, financial and political. We had to adapt our strategy and we have done that. Our business takes into consideration the turmoil in Italy," Schloter said.

Customer numbers at Fastweb grew by 68,000 in 2011 to 1.6 million, he said. "Half of this growth we generated in the last quarter. The partnership with Sky has picked up speed."

-By John Revill, Dow Jones Newswires; +41 43 443 8042; john.revill@dowjones.com

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