Swisscom Ag · SIX:SCMN
Swisscom — Q1 2013 Earnings Presentation
48 slides from Swisscom's earnings presentation, May 2, 2013
Slide 1: Swisscom Q1 – “decellent” financially decent & operationally excellent
Swisscom Q1 – “decellent” financially decent & operationally excellent Q1 2013 results presentation 2 May 2013
Slide 2: Agenda “Decellent”
Agenda “Decellent” 2 1. Decent financial results Carsten Schloter, CEO – Q1 on track to deliver FY guidance – FY guidance unchanged – Price and volume development impact on revenues 2. Excellent operational results – Volume dynamics improving – Market position stronger 3. Continued investments – To
Slide 3: Revenues and EBITDA in line with FY guidance
1. Decent financial results Revenues and EBITDA in line with FY guidance 3 Group revenues and Group revenues and EBITDA as % of FY actuals EBITDA in CHF mm (2010-2012) or Guidance (2013) 3'000 2'802 2'734 25.5% 2'500 25.0% 24.3% 24.5% 2'000 Ø2010-2013: 24.0% 1'500 Revenues 24.1% 1'098 1'031 23.5% EB
Slide 4: EBITDA like for like: in Q1 around 25% of FY decline
1. Decent financial results EBITDA like for like: in Q1 around 25% of FY decline 4 in CHF mm 2013 Q1/2012 Q1/2013 YoY 2012 Guidance YoY Reported EBITDA 1,098 1,031 -67 4,477 > 4,25 bln <-0.23 bln Adjustment of following items Plan Amendments Pension (all in Q4) -157 Additional ordinary Pension cost
Slide 5: FY guidance unchanged
1. Decent financial results FY guidance unchanged 5 CHF bln 2012 A 2013 E*) Splits into: Revenues 11.384 ~11.3 CHF 9.34 bln for Swisscom w/o Fastweb + € 1.6 bln for Fastweb (constant yoy without hubbing) EBITDA 4.477 >4.25 CHF 3.64 bln for Swisscom w/o Fastweb restated**) + € 0.5 bln for Fastweb (co
Slide 6: Revenue decline from continued price erosion
1. Decent financial results Revenue decline from continued price erosion, whereas Q1 also had exceptional seasonal effects 6 Q1 2013 compared to Q1 2012 1P wireless total: - 8 (seasonal) - 62+ 11= -59mm revenues -44 1P wireline total: -10 (seasonal) -13 - 44 = -67mm revenues 2'802 Revenues (CHF mm)
Slide 7: EBITDA dynamics
1. Decent financial results EBITDA dynamics 7 Q1 2013 compared to Q1 2012 1'098 EBITDA (CHF mm) -16 -49 -15 -12 1'031 -9 o/w +84 -8 wireless -50 seasonality -10 wireline seasonality o/w Compares to Compares to Compares to o/w revenue revenue revenue --4 Directories -13 mm -10 mm extra reduction of r
Slide 8: Price and volume effects for Swisscom Switzerland
1. Decent financial results Price and volume effects together for Swisscom Switzerland only. Without seasonal impact. 8 Revenue change YoY Q1 2013 compared to Q1 2012 in CHF mm +51 60 40 +35 -108mm in 1P 5 62 59 20 +9 30 11 3 0 6 -8 Total -13 (excl. -20 -44 seasonal -62 effects) +95mm total in bundl
Slide 9: Rapidly changing proportion of metered versus non-metered revenues
1. Decent financial results Rapidly changing proportion of metered versus non-metered revenues 9 CHF mm per quarter, Swisscom Switzerland traffic & access revenues -31mm YoY (o/w -18 seasonal, i.e. -13 on a comparable basis) Relative 1'650 1'682 1'648 1'653 1'682 1'648 1'664 Relative 1'642 1'627 1'6
Slide 10: Estimated allocation of revenue changes wireless versus wireline
1. Decent financial results Estimated allocation of revenue changes of wireless versus wireline. Without seasonal impact. 10 Revenue change YoY Q1 2013 compared to Q1 2012 in CHF mm 60 40 32 20 20 2 15 19 7 0 -10 -3 -20 -51 Total -13 -40 (excl. seasonal -60 effects) -80 -57 -100 -120 1P 2P 3P 4P tot
Slide 11: Volume dynamics improving: RGUs grew nearly 1%
2. Excellent operational results Volume dynamics improving: RGUs in Q1 grew by nearly 1% (compared to 0.6% a year ago) 11 Net adds (RGUs, 000) Quarterly growth on base (%) 200 150 153 154 1.0% 147 150 171 100 0.6% 50 36 19 0.2% 5 0 -3 -15 -0.2% -50 -65 -81 -81 -87 -90 -100 -0.6% Q1 2012 Q2 2012 Q3 2
Slide 12: Bundle strategy works, penetration going up while reducing churn
2. Excellent operational results Bundle strategy works, with penetration going up constantly while reducing churn. 12 Lower churn represents a higher customer life time value Bundle penetration churn 70% 14% Churn: 4P with 2.6x less churn than 1P fixed: The “higher” the bundle, the lower churn is 66
Slide 13: Rollout Infinity (new mobile tariffs) progressing well
2. Excellent operational results Rollout Infinity (new mobile tariffs) progressing well 13 Penetration Infinity on # Infinity customers (000) postpaid customer base Residential & SME 1'400 40% 1'200 35% 30% 1'000 25% 800 20% 600 15% 400 10% 200 5% - 0% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Infinit
Slide 14: Infinity has stimulated Swisscom’s share of net adds
2. Excellent operational results Rollout Infinity (new mobile tariffs) has stimulated Swisscom’s share of net adds 14 Share of net adds vs Spread of net adds share share of subscribers over market share 100% 16% 15% Launch Infinity 90% 12% tariff plans 80% 77% 8% 70% 4% Swisscom market share of net
Slide 15: Infinity created positive balance between in- and outportings
2. Excellent operational results Infinity helped to create a positive balance between in- and outportings 15 Net number of postpaid customers moving to Swisscom from other operators 16'000 Launch Infinity tariff plans 14'000 12'000 10'000 8'000 6'000 4'000 2'000 - Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1
Slide 16: Infinity caused ARPU dilution initially
2. Excellent operational results Infinity caused ARPU dilution initially. Curve is improving, without XL customers a positive 16 ARPU impact from upselling can be expected from late 2013 onwards. ARPU impact of movers within the given quarter (in CHF/month) 2 0 -1 -2 -2 -3 -4 -4 -6 -6 -8 -8 -10 Befo
Slide 17: Good momentum at Fastweb
2. Excellent operational results Good momentum at Fastweb 17 Net adds (000) 100 94 80 63 59 60 40 35 19 31 20 0 -20 -40 Q1 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 net adds fixed net adds mobile MVNO Strong growth in net adds, especially driven by successful package with Sky. Also good growth in
Slide 18: Continued investments to drive market position and profitability
3. Continued investments To drive mid- and long term market position and profitability 18 Mobile market share Switzerland, Q4 2012 By investing 90% substantially 78% 79% more (17pp 77% 80% more than 71% …a lot more FCF market share 70% share can be 62% of subs)… generated 60% 50% 40% 30% 20% 10% 0%
Slide 19: Swiss FTTH rollout progressing well
3. Continued investments Swiss FTTH rollout progressing well 19 # homes passed (000) penetration 900 24% 800 21% 21% 700 18% 600 576 14% 15% 500 387 12% 400 12% 9% 300 8% 200 6% 100 3% 0 0% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 homes passed FTTH footprint % (RHS) connected % (RHS) (within FTTH foo
Slide 20: Investing into mobile capacity, spectrum and coverage
3. Continued investments Investing into mobile capacity, spectrum and coverage to stay ahead of competition 20 Biggest spectrum available –until 2028 Rapid LTE rollout, before others have even started 70 80% 62 60 70% 51 w/o TDD 60% 50 50% 40 32.7 40% 30 27 w/o TDD 30% 20 ??? 20% 10 10% 0 0% EU6 avg
Slide 21: In conclusion on the first chapters
In conclusion on the first 3 chapters Wrap up 21 1. Financially decent • Despite Q1 below last year (in part driven by seasonality), on track to achieve FY guidance • Key drivers of revenue and EBITDA reduction are price effects (especially in 1P mobile) and volume effects (esp. in 1P fixed) • Bundl
Slide 22: Agenda “Decellent”
Agenda “Decellent” 22 1. Decent financial results Carsten Schloter, CEO – Q1 on track to deliver FY guidance – FY guidance unchanged – Negative price and positive volume development leads to 2% revenue decline 2. Excellent operational results – Volume dynamics improving – Market position stronger 3.
Slide 23: Group results: Revenues
4. Group results 23 Revenues in CHF mm Without FX and hubbing effects, revenue went down w/o exceptionals CHF 60mm YOY -60 (-2.1%). Underlying top-line -68 of Fastweb -21 -8 -9 +/-0 decreased by CHF -15 -7 -8 -4 Wholesale 15mm YOY, due to 2,802 +4 IN-elimination +8 FX 2,734 lower revenues appreciati
Slide 24: Group results: EBITDA
4. Group results 24 EBITDA in CHF mm w/o exceptionals -76 EBITDA w/o exceptionals down CHF 76 mm. EBITDA of Swisscom +9 -67 Switzerland w/o -38 -10 -10 -5 one-offs down -13 CHF 63 mm. 4,584 1‘098 +17 restructuring 1‘031 Swisscom Switzerland cost w/o exceptionals (-6.1%) -10 pension cost Segment Resi
Slide 25: Group results: Net Result
4. Group results 25 Net Result in CHF mm In Q1/13, net income of the group amounts to CHF 390 mm. tax rate 18.9% EPS Decrease of net 7.49 income is mainly driven by lower EBITDA. 1,031 -491 540 -56 -9 +6 -91 390 -2 388 Earnings per share equals to Reported Net Net Other financial EBIT Depreciation T
Slide 26: Group results: OpFCF
4. Group results 26 OpFCF in CHF mm Increase in NWC of 315 CHF mm YTD March 2013 Strong increase (more tied up capital) in receivables in 1,031 -474 2013 with an OpFCF impact of +4 CHF –113 mm -123 -57 +3 YOY. -29 -110 245 Inventory ∆ -67 +28 -113 -3 -8 -31 -49 +5 -238 increase Increase in NWC of 11
Slide 27: Segmental results: Residential
5. Segmental results 27 Residential 31.03.2013 YoY 1) Top line down due to Net revenue in MCHF 1'231 -1.7% less GSM days (CHF -8 mm) and other Direct costs in MCHF -304 7.4% 2) seasonal effects Indirect costs in MCHF -217 -1.8% (CHF -11mm directories, to be Contribution margin 2 in MCHF 710 -5.1% co
Slide 28: Segmental results: Small & Medium Enterprises
5. Segmental results 28 Small & Medium Enterprises 31.03.2013 YoY 1) Net revenue in MCHF 280 -2.8% Lower revenue Direct costs in MCHF -36 5.9% due to # of GSM 2) / working days Indirect costs in MCHF -31 0.0% (CHF -4 mm) and price Contribution margin 2 in MCHF 213 -4.5% erosion effects. Contribution
Slide 29: Segmental results: Corporate
5. Segmental results 29 Corporate 31.03.2013 YoY 1) Net revenue in MCHF 439 -2.0% Wireless with a mixed revenue Direct costs in MCHF -97 0.0% result: access up Indirect costs in MCHF 2) -122 0.8% (CHF +12 mm YOY) and Contribution margin 2 in MCHF 220 -4.3% wireless traffic Contribution margin 2 in %
Slide 30: Segmental results: Wholesale
5. Segmental results 30 Wholesale 31.03.2013 YoY Revenue from external customers in MCHF 149 -2.6% Net revenue Intersegment revenue in MCHF 88 0.0% down YOY due to lower roaming Net revenue in MCHF 237 -1.7% rates and Direct costs in MCHF -135 -4.3% revenue 1) decrease in data Indirect costs in MCHF
Slide 31: Segmental results: Networks and support functions
5. Segmental results 31 Networks and support functions 31.03.2013 YoY Personnel expenses in MCHF -177 -6.8% Lower personnel Rent in MCHF -46 -2.1% expenses (CHF -13 Maintenance in MCHF -42 5.0% mm YOY) driven by lower restructuring IT expenses in MCHF -74 4.2% cost. Other OPEX in MCHF -68 -4.2% Indi
Slide 32: Segmental results: FASTWEB
5. Segmental results 32 FASTWEB Volume market (consumer) Value market (executive/wholesale) • Last year FASTWEB was the only operator with • Acquisitions in the Private segment were stable positive net adds in each quarter vs. 2012: the win rate of corporate negotiations • Preliminary 1Q results con
Slide 33: Segmental results: FASTWEB commercial performance
5. Segmental results 33 FASTWEB Continuously improving commercial performance in the volume market … 94k net adds vs. 59k in 1Q 2012 (59% YoY growth) indicate that FASTWEB go-to-market strategy is paying off …is supporting BU consumer revenue increase BU Consumer revenues are up by 4 MEUR YoY, sugge
Slide 34: Segmental results: FASTWEB financials
5. Segmental results 34 FASTWEB W/o low margin Q1/2012 Q1/2013 YoY YoY wholesale hubbing and Consumer in MEUR 182 186 4 2,2% seasonal effects, net revenues are about in Enterprise in MEUR 185 179 -6 -3,2% line. Wholesale in MEUR 56 33 -23 -41,1% Net revenues in MEUR 423 398 -25 -5,9% EBITDA decrease
Slide 35: Segmental results: Other
5. Segmental results 35 Other 31.03.2013 YoY Swisscom IT services Swisscom IT Services in MCHF 129 -6.5% external revenue Group Related Business in MCHF 74 12.1% down due to economic Hospitality Services in MCHF 11 -26.7% environment Other in MCHF 9 -10.0% External revenue in MCHF 223 -2.6% Construc
Slide 36: Agenda “Decellent”
Agenda “Decellent” 36 1. Decent financial results Carsten Schloter, CEO – Q1 on track to deliver FY guidance – FY guidance unchanged – Negative price and positive volume development leads to 2% revenue decline 2. Excellent operational results – Volume dynamics improving – Market position stronger 3.
Slide 37: Attachm. Restatement
Attachm. Restatement 37 • The organizational changes per 1.1.2013 (as announced on September 14, 2012) cause some costs to move between segments • The reporting structure itself remains unchanged • A new accounting standard for the measurement and recognition of pension benefits has a significant im
Slide 38: Attachm. Restatement of segment results and pension cost
Attachm. Restatement of segment results and pension cost 38 • Key changes take place on FTEs and costs. This results in small moves on EBITDA between segments. • Pension cost: recognition of cash contributions in segment results (EBITDA). Difference between cash contributions and pension cost in acc
Slide 39: Attachm. Main changes of revised pension accounting standard (IAS 19R)
Attachm. Main changes of revised pension accounting standard (IAS 19R) 39 2012 reported 2012 restated •increase of gain from plan amendments •increase in net interest cost due to the elimination of the expected return on plan assets assumption •including net interest cost component in finance expe
Slide 40: Attachm. Impact of revised pension accounting standard on P&L
Attachm. Impact of revised pension accounting standard (IAS 19R) on P&L 40 Pension cost will increase by CHF 110 mm in 2013 compared with 2012 reported and CHF 206 mm with 2012 restated revised 2013E 2012 IAS 19R 2012 2013E versus 2012 in CHF mm reported impact restated reported restated Gain from p
Slide 41: Attachm. No impact on EBITDA 2013 guidance
Attachm. No impact on EBITDA 2013 guidance 41 Pension cost recognized in EBITDA will increase by CHF 110 mm in 2013 compared with 2012 reported and CHF 206 mm with 2012 restated 2012 IAS 19R 2013 reported impact guidance in CHF mm in CHF mm in CHF mm in CHF bln EBITDA reported 4'381 ‐110 4.25 restat
Slide 42: Attachm. TV market Switzerland
Attachm. TV market Switzerland 42 Market volumes (000) digital TV Maket digital + analogue 4‘159 4‘060 4‘138 Market Market Digital TV * 3‘992 share: 3‘755 3‘537 730 18 % Satellite/Terrestrial * 730 38 48 1% Sunrise * Analogue TV 1) 1'059 25 % CATV / Net Integrators * 1'052 2‘401 1‘920 742 1) 810 20
Slide 43: Attachm. RGU’s
Attachm. RGU’s 43 Swisscom Switzerland Access Lines/Subs/Products (000) YTD, (Change to 31.03.2012 in brackets) Number of Fixed Voice products TV & Access Broadband Mobile in Bundle Sum Δ 1P Single Play 291 (+55) 2,272 (-264) 909 (-114) 5,937 (+37) 1 9,409 (-286) (-2.9%) 2Play 257 (+17) 2 514 (+34)
Slide 44: Attachm. ARPU
Attachm. ARPU 44 YTD, (Change to 31.03.2012 in brackets) TV (incl. Number Weighted VOD and of average per 1,2) Pay per Fixed Voice Broad- 1) 2) products underlying in Bundle product View & Access band Mobile 1P Single Play 23 (-5) 52 (-1) 37 (-1) 38 (-4) 1 41 (-3) 2Play 113 +5) 2 56 (+3) Bundles 3Pl
Slide 45: Attachm. Revenues (RGU x ARPU)
Attachm. Revenues (RGU x ARPU) 45 Net revenues (CHF mm) YTD, (Change to prior year in brackets) Fixed Voice TV & Access Broadband Mobile Sum Δ 1P Single Play 19 (+0) 359 (-51) 196 (-16) 673 (-59) 1,247 (-126) (-9.2%) 2Play 86 (+9) 86 (+95) (+37%) Bundles 3Play 168 (+35) 168 4Play 95 (+51) 95 Net Rev
Slide 46: Attachm. Handsets & SACs
Attachm. Handsets & SACs 46 Smartphone share 67% 65% Handsets in ‘000 557 425 468 300 368 322 307 359 328 312 358 366 285 SAC/SRC CHF mm 20 20 21 15 20 17 19 17 19 15 Corporate Segments 15 17 14 127 85 128 111 98 108 Residential Segment 93 80 92 94 94 87 94 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 201
Slide 47: Attachm. Receivables
Attachm. Receivables 47 Receivables (in MCHF) 31.12.12 EOP 31.03.13 EOP Change in Q1/13* 2‘824 2‘987 +163 31.12.11 EOP 31.03.12 EOP Change in Q1/12 2‘978 3‘017 +39 31.12.10 EOP 31.03.11 Change in Q1/11 2‘742 2‘893 +151 * Cash and non Cash Changes
Slide 48: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements 48 ”This communication contains statements that constitute "forward-looking statements". In this communication, such forward-looking statements include, without limitation, statements relating to our financial condition, results of operations