Swiss telecom market not attractive for foreign investors
According to the Danish telecommunications group TDC, the Swiss telecommunications market is relatively unattractive to foreign investors. Given the large investments required, the barriers to entry are very high. There is currently no reason to sell TDC’s subsidiary Sunrise.
As TDC Chairman of the Board of Directors Vagn Sörensen said on Tuesday at the eighth Communications Days in Biel, there is a senseless duplication of basic infrastructures in Swiss mobile communications. Every provider has to build its own cell phone network. The main problem was the high initial investment in antenna sites, without this promoting competition. There is great resistance to new antennas. Each new antenna requires a lead time of three years. According to SDA, the majority of investment in mobile radio goes into the acquisition of new sites, masts, concrete foundations, buildings and costly administration. It would be better to invest in electronics and services instead.
The current situation does not lead to more competition. The hurdle for new competitors to enter the market is becoming far too high. The high investments are not worthwhile for alternative providers. Switzerland is a special case in Europe. Nowhere else has the former monopolist remained as strong after the liberalization of the market as in this country, with the exception of the Czech Republic. Swisscom already had over 2 million cell phone customers when Sunrise and Orange started out. Today, Swisscom has a market share of around 60 percent, while Sunrise and Orange have around 20 percent. According to Sörensen, it is no longer possible to catch up on this lead. With identical
networks at the same cost, Sunrise and Orange would have 300 percent higher costs per customer than Swisscom.
Sunrise will only invest 500 million in network expansion over the next three years due to the increasing demand for bandwidth. Investments amounted to 35 percent of pre-tax profit in the first half of 2009. This high ratio is not sustainable in the long term, said Sörensen. It would be difficult to introduce a new generation of mobile communications (LTE) under the current circumstances. If common masts are erected across all three mobile networks and each provider retains its own electronics, a few thousand antennas can be saved, as Sunrise CEO Christoph Brand said in an interview with the news agency AWP.
There are the same problems with the fixed network as with mobile telephony, said Sörensen. Here, too, the expensive duplication of the basic infrastructure required high investments without bringing additional competition. In the case of the fiber optic network, 80 percent of investments were made in cables and ducts. Only Swisscom and the electricity companies, the majority of which are owned by the state, invested here.
Sunrise has gained market share in all segments in recent months. The TDC President said in an interview with the news agency AWP that there was therefore no direct consideration of separating from Sunrise.
