BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Telecomunications sector of Switzerland

Given that Switzerland boasts one of the highest standards of living in the world, it comes as no surprise that its telecoms industry is highly developed. BMI’s latest figures reveal high penetration rates in all sectors, particularly the broadband market, where the unbundling of the ‘last mile’ connection is allowing alternative operators to compete more effectively with incumbent operator Swisscom.

However, Switzerland’s mobile market has not performed as well as many of its regional peers in recent years. Penetration in 2005 was just 92.1%, which seems high until compared with the rates of 95%, 112% and 125% recorded in Germany, the UK and Italy respectively. BMI therefore believes that the Swiss market has room for future growth, although recent performance has been sporadic. Operators usually enjoy their busiest sales period during the final quarter of the year, but in 2005, subscriber growth actually slowed down during Q4. Growth during the first half of 2006 was steadier, with subscriber numbers up by 3.6%. This makes us confident that the mobile market is on course to reach our-year end forecast of 7.35mn subscribers. Not withstanding another slowdown in subscriber additions, BMI predicts that penetration will exceed 100% during 2007, rising to 111% by 2010.

One slightly surprising characteristic of the Swiss mobile market is that 3G services have been very slow to take-off. Given the highly developed nature of the Swiss economy, the popularity of internet services and consumers’ considerable spending power, BMI would have expected Swiss mobile users to embrace 3G technology more enthusiastically. However, the response has so far been muted and we do not expect services to really take off until 2007. Even by 2010, we predict that less than 20% of the customer base will be using 3G services, compared with rates of 40-60% elsewhere in Western Europe. Part of the explanation for this may be the high cost of basic mobile services. Mobile market leader Swisscom Mobile consistently records average revenue per user (ARPU) levels of above EUR40, while for thirdranked Orange, this figure is over EUR55. As a comparison, rates of EUR25-30 are the norm across much of Europe.

Switzerland has not changed its position in BMI’s Business Environment Rankings for Western Europe. However, an adjustment to our calculations has seen Switzerland gain some points for future growth potential while sustained economic growth has led to an improvement of its long-term economic risk rating. But as always, Switzerland is let down by the continued government ownership of a majority stake in Swisscom. A buyback of share capital and forthcoming capital reduction will see the government’s stake fall from 62.4% to 58.4%, but following the parliament’s rejection of privatisation plans earlier this year, we do not expect a sale any time soon.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Business Environment

West European Markets

Switzerland

Table: Western Europe Business Environment Ranking

Switzerland Telecommunications Industry SWOT

Chapter 3 - Industry Forecast Scenario

Fixed-line

Table: Switzerland Telecom Sector – Fixed-lines – Historical Data & Forecasts

Internet

Table: Switzerland Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table: Switzerland Telecoms Sector – Mobiles – Historical Data & Forecasts

Chapter 4 - Macroeconomic Forecast

Small Pause In Q4

Table: Switzerland – Macroeconomic Forecasts

Chapter 5 - Country Snapshot: Switzerland Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 6 - Competitive Landscape

Table - Key Players: Switzerland Telecoms Sector

Table: Selected Telecoms Operators Financial Indicators

Fixed-Line Overview

Table: Regional Fixed-Line Penetration Overview

Internet Overview

Table: Regional Broadband Penetration Overview

Mobile Overview

Table: Regional Mobile Penetration Overview

Market Data

Fixed-Line

Table – Swiss Fixed-line Market (Q206)

Broadband

Table – Swiss Broadband Market (Q206)

Mobile

Table: Swiss Cellular Market (Q206)

Table – Switzerland Mobile Net Additions (H106)

Industry Developments

Roaming Charges

Chapter 7 - Company Monitor

Regional Case Study: Ericsson

Table: Major European Ericsson 3G Contracts

Selected Profiles – Operators

Swisscom

Orange Communications

TDC Switzerland (sunrise)

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Europe Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of European Telecommunications Sources

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BMI's European Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include:.