Swisscom sees renewed profit erosion

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Swiss telecommunications group Swisscom on Wednesday reported a 7.5 percent drop in second quarter net profit, adding to a decline triggered by a tax fraud probe at its Italian subsidiary Fastweb.

Net income reached 496 million Swiss francs (361 million euros, 478 million dollars) over the period, the company said in a statement.

That brought six month net profit to 873 million francs, a decline of 14.4 percent compared to the first half of 2009.

Profits during the first quarter had fallen by nearly a fifth under the burden of 102 million francs in provisions set aside for proceedings in Italy against Fastweb.

Prosecutors in Rome issued arrest warrants for 56 people, including Fastweb founder Silvio Scaglia and executives of Telecom Italia's Sparkle, in February over alleged money laundering and tax fraud offences.

Swisscom said its overall first half net revenue grew by by 0.5 percent to 5.95 billion francs while net revenue excluding Fastweb increased by 1.9 percent to 4.62 billion francs, it added.

Growth was driven by mobile data communication and TV services, Swisscom said.

Excluding the provisions for legal action against Fastweb, Swisscom said its outlook for the financial year remained unchanged, with forecast annual net revenue of 9.15 billion francs.

Swisscom acquired Fastweb in 2007, and it had said that it was aware that Italian investigators were looking into allegations of tax evasion during 2003 and 2006.

In April, Swisscom chief executive Carsten Schloter took over interim management of Fastweb while the Italian firm's CEO Stefano Parisi was implicated in the investigation.

Swisscom's share price dropped by 1.1 percent to 390.7 Swiss francs in morning trading (0821 GMT) on the Swiss exchange.

© 2010 AFP

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