Capital expenditure at Swisscom will fall to its lowest level in six years in 2019 as Swiss laws on radiation limits hold up the deployment of new 5G networks, the operator has indicated in its latest set of results.
The Swiss telecom incumbent plans to invest 2.3 billion Swiss francs (US$2.3 billion) in capital expenditure this year, down from about CHF2.4 billion in 2018, as it continues to fight regulations that impose tough limits on radiation from mobile basestations.
Under Switzerland's Ordinance on Non-Ionizing Radiation, those limits are ten times stricter than European Union regulations, according to Swiss operators.
Swisscom AG (NYSE: SCM) said the rollout of 5G would be "more difficult" after Swiss legislators recently decided against relaxing radiation limits. Along with other Swiss businesses, it is continuing to push for what it calls a "moderate liberalization" of the ONIR.
But even if the laws are changed, attitudes might not. In its just-published annual report, Swisscom was forced to acknowledge that the general public's wariness of mobile antennas in Switzerland was impeding network expansion.
"Even without stricter legislation, public concerns about the effects of electromagnetic radiation on the environment and health could further hamper the construction of wireless networks in the future and drive up costs," said the operator.
"The only other country where antenna regulation is so strict is Belgium and our antennas have regulation that is ten times stricter than what the WHO [World Health Organization] deems acceptable," he said. "You have to make sure you stay in the strict radiation regulation of Switzerland and in cities it is even harder because the antennas are more overloaded."
Today's update from Swisscom will add to concern that European nations are falling behind the US and leading Asian countries in the rollout of 5G networks.
Analysts say that crowded markets and unfavorable regulations have weakened the European appetite for investment in the next-generation technology, which promises faster connections and less signaling delay than on today's 4G networks.
Swisscom's annual report shows that capital expenditure hit CHF2.4 billion in each of the five years between 2014 and 2018. A breakdown of spending last year highlights a sharp increase in mobile investments, partly due to the acquisition of new spectrum licenses in Italy, where Swisscom operates a broadband business under the Fastweb SpA (Milan: FWB) brand.
Despite regulatory constraints, Swisscom said it had already built the country's first full standardized 5G network in the city of Burgdorf. It also claims to have pilot 5G networks in operation in seven Swiss cities. A more comprehensive rollout had been delayed, it said, due to the strict legal limits on radiation.
Elsewhere in its annual report, Swisscom revealed that overall revenues edged up 0.4% in 2018, to CHF11.71 billion, while net income dipped 3%, to CHF1.52 billion.
The report also shows that Swisscom cut more than 650 jobs in 2018, or about 3.2% of its entire workforce. The operator blamed digitization for job losses but said most had occurred "through natural fluctuation and (early) retirement."