Italian broadband company Fastweb is suffering from the economic downturn to such an extent that parent company Swisscom has written off €973 million from its annual accounts.
Fastweb, which provides a range of communications services to enterprise and retail customers, has been hit by Italy’s high sovereign debt, weak economic growth, increasing unemployment and political uncertainty.
In a statement, Swisscom said these factors have impaired future growth and the company's current value, forcing the write down.
Fastweb’s retail arm has been particularly hard hit with a larger than expected fall in ARPU and customer churn due to increasing saturation of the broadband market and intensive price competition.
In addition, Swisscom said Fastweb is burdened with high bad debt losses.
However, the operator said a new business plan anticipates average annual revenue growth of 2.5 percent – down from 5.1 percent – over the next five years.
It noted that a partnership with Sky and the expansion of mobile services coupled with cost reductions of €120 million over the next two years would drive growth.
Swiscomm purchased Fastweb for €4.6 billion in 2007 - an appropriate figure given the situation at that time, according to the operator – but is booking a corporate value of €2.9 billion for 2011.