Swisscom Ag · SIX:SCMN
Swisscom — Q1 2015 Earnings Presentation
48 slides from Swisscom's earnings presentation, May 6, 2015
Slide 1: Swisscom “up(2)date” Q1 2015 analyst and investor presentation
Swisscom “up(2)date” Q1 2015 analyst and investor presentation Conference call 06 May 2015
Slide 2: Agenda
Agenda 2 Ch. Topic Speaker Welcome & Introduction Bart Morselt, IR 1. Up2date Urs Schaeppi, CEO 2. Operational update Urs Schaeppi, CEO 3. Financial update Mario Rossi, CFO 4. Q&A All Attachments
Slide 3: Agenda
Agenda 3 Ch. Topic Speaker Welcome & Introduction Bart Morselt, IR 1. Up2date Urs Schaeppi, CEO a. Commercially: Vivo, Wingo, infinity+ b. Strategically: local.ch, verticals c. Financially: Q1 2. Operational update Urs Schaeppi, CEO 3. Financial update Mario Rossi, CFO 4. Q&A All Attachments
Slide 4: Swisscom “up2date”
1. Swisscom “up2date” 4 Our strategy … Building the Creating the Realizing the best best infrastructure best experiences growth opportunities Transformation accompanies the change regarding people, business models and technology Our Q1 2015 execution with … … commercial … a commercial … a merger upd
Slide 5: Commercially up2date in Fixed: Differentiation of fixed bundles
a. Commercially up2date in Fixed Differentiation of fixed bundles going forward 5 Next speed move: Our ‘Vivo’ portfolio … from 9 March Vivo packages with speeds up to 1 Gbps Expansion of Swisscom TV 2.0 advance: 1’200 recording hours (6x Bandwidth (max) more than cable) Easy internet access via 2100
Slide 6: Wingo - a no-frills brand for digital natives
a. Commercially up2date in Fixed Wingo - a no-frills brand for digital natives 6 Market dynamics require Our ‘ultra-broadband’ offer … more distinction New brand to target the CHF/month growing customer base of digitally savvy, young people more effectively Product Download 250 Mbps 150 channels Pay
Slide 7: Infinity+ with careless roaming experience in EU
a. Commercially up2date in Mobile Infinity+ with careless roaming experience in EU 7 “All-you-can-eat” price plans enhanced by Our ‘infinity plus’ portfolio … speed increases and voice, SMS and data consumption in Europe Pricings unchanged 0.2 Mbps 2 Mbps 20 Mbps 40 Mbps maximum Bandwidth (max) exce
Slide 8: Strengthening of online advertising position
b. Strategically up2date in Internet Services Strengthening of online advertising position 8 Merger of local.ch • In the course of the PubliGroupe takeover, Swisscom and Tamedia agreed and search.ch to merge their search and advertising platforms local.ch and search.ch in a approved joint subsidiary
Slide 9: Progress made in vertical strategy
b. Strategically up2date in Verticals Progress made in vertical strategy 9 • Swisscom’s acquisition of 9% in Finnova underlines the 9% stake in Finnova close and strategic partnership reinforces our • Stronger innovative power in Banking enabling new steps strategic position and in industrialization
Slide 10: Solid Q1 results 2015
c. Financially up2date Solid Q1 results 2015 10 Net revenue in MCHF 2893 2904 2821 Top-line of Q1 2015 with CHF 2.9 billion (+72mm YoY) Q1 2014 Q1 2015 Q1 2015 reported reported comparable 1) 1) Adjustments: FX +55 MCHF, M&A -44 MCHF EBITDA in MCHF 1086 1061 1051 Q1 2015 EBITDA adjusted by FX, M&A a
Slide 11: Agenda
Agenda 11 Ch. Topic Speaker Welcome & Introduction Bart Morselt, IR 1. Up2date Urs Schaeppi, CEO 2. Operational update Urs Schaeppi, CEO a. Mobile CH b. Fixed CH a.+b. RGUs CH c. Fastweb IT 3. Financial update Mario Rossi, CFO 4. Q&A All Attachments
Slide 12: Wireless market update
a. Wireless market update Swisscom with continued outperformance 12 Total mobile subs 15'000 +0.7% +0.1% +0.3% 11’171 11’053 11’127 11’136 +1.1% YoY Swisscom with 6555k 10'000 mobile subs at end of Q1 and quarterly 5'000 growth above market +0.5% +0.6% 6'540 6'555 6'429 6'460 6'499 +0.6% +2.1% +0.2%
Slide 13: Satisfying Infinity and churn trends
a. Swisscom Mobile update Satisfying Infinity and churn trends 13 4'000 Infinity subs and penetration 80% 63% 65% 58% 61% % of own postpaid basis Despite flattening of 55% 3'000 52% 60% growth trend, 47% infinty subs in k 42% Infinity with 54k net 37% 1'893 1'990 2'084 2'138 adds in Q1 2015 2'000 30
Slide 14: Broadband market update
b. Broadband market update Swisscom Retail performing well 14 Total broadband subs 4'000 +1.3% +1.2% +0.6% 3’482 3’377 3’421 3’462 +4.3% YoY 3'000 Swisscom (Retail and Wholesale) with 2/3 of BB market share. 2'000 462 -2.2% 452 -1.5% 445 -0.7% 442 -0.5% 440 Swisscom Retail 1'000 +1.2% +0.9% +1.0% 1'
Slide 15: Swisscom with solid IPTV market share gains
b. IPTV market update Swisscom with solid IPTV market share gains 15 Total IPTV subs 5'000 +0.3% +0.4% 4’455 4’392 4’405 +0.7% 4’436 +4.3% YoY 4'000 Swisscom IPTV subs 3'000 base up by +3.1% in Q1 2015. 2'000 +16.5% YoY +14.2% YoY At YE 2014 Swisscom 1'000 +3.7% +3.1% +3.6% +3.1% 1'052 1'091 1'125 1
Slide 16: Fixed line growing thanks to BB and IPTV
b. Swisscom Fixed update Fixed line growing thanks to BB and IPTV 16 8'000 Swisscom fixed line RGUs Q1oQ1 +2.9% YoY +2.5% YoY 6'000 5’531 5’690 5’833 5’844 +1.8% Voice line erosion (-4.2%) over- 791 860 902 943 1'000 1'052 1'091 1'125 1'165 1'201 +14.2% compensated by BB 4'000 1'727 1'751 1'767 1'78
Slide 17: IPTV penetration and UBB footprint growing
b. Swisscom Fixed update IPTV penetration and UBB footprint growing 17 IPTV subs and penetration 63% 57% 59% 60% 62% 2'000 51% 53% 55% 65% 46% 49% % of own postpaid basie infinty subs in k IPTV penetration in 1'500 45% our own BB base at 1'000 25% 63% as per Q1 2015 500 791 860 902 943 1'000 1'052 1
Slide 18: RGU growth and move to bundles unbroken
a.+b. Revenue generating units update RGU growth and move to bundles unbroken 18 RGU breakdown by service 14'000 12’373 12’399 12'000 11’748 11’851 11’912 11’975 12’097 12’170 12’236 12’307 791 860 902 943 1'000 1'052 1'091 1'125 1'165 1'201 RGU total 10'000 1'727 1'751 1'767 1'781 1'811 1'833 1'855
Slide 19: Italian Residential and Corporate update
c. Italian Residential and Corporate update Strong performance across all segments... 19 119K ITALIAN MARKET BROADBAND NET ADDS IN 1Q 20151 44% FASTWEB BROADBAND NET ADDS MARKET CO-LEADER ALSO IN 1Q Estimated growth of Italian Broadband market equal to 119k net adds in 1Q 2015 compared to 109k one
Slide 20: Fastweb Ultra Broadband update
c. Fastweb Ultra Broadband update …with outstanding operational results in FTTS areas thanks to UBB service capabilities… 20 INVESTMENTS IN NGA REAL UBB SERVICE CAPABILITIES HIGHER NPS OF ACTIVE CUSTOMERS Connection speed up to 100 Mbps and 80 17 p.p. higher Net Promoter Score vs. LLU in Mbps on ave
Slide 21: Fastweb: monetizing investments in NGA
c. Fastweb Ultra Broadband update …that enable to monetize investments in NGA 21 MORE ACTIVE HIGHER LOWER DIRECT ARPU COST x x CUSTOMERS 1.4 Euro/month ARPU 3 Euro/month per improvement thanks to customer lower recurring take up of premium UBB network access cost (SLU option1 5.79 Euro/month vs. LLU
Slide 22: Agenda
Agenda 22 Ch. Topic Speaker Welcome & Introduction Bart Morselt, IR 1. Up2date Urs Schaeppi, CEO 2. Operational update Urs Schaeppi, CEO 3. Financial update Mario Rossi, CFO a. P&L b. CAPEX & FCF c. New segment reporting d. Refinancing e. Outlook 4. Q&A All Attachments
Slide 23: Revenue dynamics Q1-2015
a. Revenue dynamics Q1-2015 23 Without FX and M&A in CHF mm effects, revenue went up CHF 83mm YOY w/o exceptionals (2.9%) +83mm (+2.9%) Exceptionals: M&A is overcompensated by +91 +40 the currency effect +27 -10 -11 +72 -65 Traffic, +10 Hard- - all Swisscom segments lower roaming ware 2,893 Switzerl
Slide 24: Comparable revenue breakdown by segments
a. Comparable revenue breakdown by segments 24 Top-line w/o in CHF mm exceptionals Swisscom Switzerland increased by CHF w/o exceptionals 83mm +53 Top-line of +40 Swisscom +50 +0 +6 Switzerland up -10 -3 +83 by CHF 53mm - all driven by segments +33 Service with Residential, 2,904 2,821 Revenue Retai
Slide 25: EBITDA breakdown Q1-2015
a. EBITDA breakdown Q1-2015 25 in CHF mm EBITDA down CHF 10mm, Contribution Margin like-for-like up w/o exceptionals CHF 25mm YOY +36 The exceptionals higher pension cost +32 +21 +13 and currency impact take away 35mm in -17 -21 -3 -10 -35 group EBITDA 1,061 Swisscom Switzerland 1,051 (-0.9%) EBITDA
Slide 26: Comparable EBITDA breakdown by segments
a. Comparable EBITDA breakdown by segments 26 EBITDA of Swisscom in CHF mm Switzerland up CHF 15mm Residential Customers with a higher contribution. The increase in Service Revenue Retail is partly compensated by higher +20 +8 +13 cost for customer retention +25 -9 -4 -3 and higher indirect cost 1,0
Slide 27: Net result
a. Net result 27 in CHF mm Net income of CHF 351mm down by CHF 22mm primarily as a result of lower other financial result tax rate of CHF 34mm due to 21.1% EPS foreign exchange 6.78 losses and a negative effect from the fair value adjustment of 1,051 -507 544 -47 -57 +5 -94 351 351 interest rate swa
Slide 28: Capital expenditure
b. Capital expenditure 28 Increase YoY (CHF +30mm) driven by expansion of Swiss fibre network Expansion of UBB (in CHF mm, ytd) footprint leads to higher CAPEX Q1 2015 388 160 1 = 549 at Swisscom Switzerland (CHF +42 mm) Q1 2014 346 173 = 519 8,427Swisscom Switzerland Fastweb Other Fastweb with CHF
Slide 29: Operating free cash flow
b. Operating free cash flow 29 in CHF mm Slightly lower Increase in NWC of 177 CHF mm (more tied up capital) EBITDA as well as higher CAPEX are 31.03.2015 1,051 -549 compensated by a +34 better NWC +19 development -122 -3 -20 -66 344 leading to a higher OpFCF of CHF +10 mm ∆ -10 -30 -64 +107 -49 -5
Slide 30: New segment reporting as from Q1 2015
c. New segment reporting as from Q1 2015 30 New structure Swisscom Schweiz Small & IT, Medium Networks Other Residential -Sized Enterprise and operating Customers Enterprises Customers Wholesale Innovation segments Corporate Fastweb Residential Customers local.ch Old structure Small & Medium-Sized E
Slide 31: Two successful CHF bond issuances in March 2015
d. Two successful CHF bond issuances in March 2015 31 Bond details 0.25%, 2015 - 2023 1.00%, 2015 - 2035 Amount CHF 250 Mio. CHF 150 Mio. Tenor 8 years 20 years Spread + 18 bps + 40 bps Ratings A/A2 Issuer Swisscom AG Use of proceeds general corporate purposes Maturity profile and financing structur
Slide 32: Outlook 2015 confirmed
e. Outlook 2015 confirmed 32 Expected Expected 2014 2014 2015 change for results FX impact results change for outlook in bln CHF 2015 reported pro-forma 2015 Swisscom (CHF 1.21/EUR) (CHF 1.00/EUR) Fastweb (CHF 1.00/EUR) w/o Fastweb Net 11.703 -0.4 11.331 +0.1 0 >11.4 revenue EBITDA 4.413 -0.1 4.315
Slide 33: Agenda
Agenda 33 Ch. Topic Speaker Welcome & Introduction Bart Morselt, IR 1. Up2date Urs Schaeppi, CEO 2. Operational update Urs Schaeppi, CEO 3. Financial update Mario Rossi, CFO 4. Q&A All Attachments
Slide 34: Agenda
Agenda 34 Ch. Topic Speaker Welcome & Introduction Bart Morselt, IR 1. Up2date Urs Schaeppi, CEO 2. Operational update Urs Schaeppi, CEO 3. Financial update Mario Rossi, CFO 4. Q&A All Attachments
Slide 35: RGU’s
RGU’s 35 Swisscom Switzerland Access Lines/Subs/Products (000) YTD, (Change to 31.03.2014 in brackets) Number of Fixed Voice products TV & Access Broadband Mobile in Bundle Sum Δ 1P Single Play 200 (-71) 1,763 (-244) 650 (-123) 6,024 (+39) 1 8,637 (-399) (-4.4%) 2Play 302 (+15) 2 604 (+30) (+5.2%) B
Slide 36: ARPU
ARPU 36 YTD, (Change to 31.03.2014 in brackets) 1,2) Number Weighted of average per Fixed Voice products underlying 1) 2) 3) in Bundle TV & Access Broadband Mobile product 1P Single Play 15 (-2) 52 (+0) 35 (-1) 37 (-1) 1 39 (-1) 2Play 107 (-4) 2 53 (-2) Bundles 3Play 143 (+7) 3 48 (+2) 4Play 207 (-4
Slide 37: Revenues (RGU x ARPU)
Revenues (RGU x ARPU) 37 Net revenues (CHF mm) YTD, (Change to 31.03.2014 in brackets) Fixed Voice TV & Access Broadband Mobile Sum Δ 1P Single Play 18 (-5) 271 (-43) 163 (-15) 1) 671 (-2) 1,123 (-65) (-5.5%) 2Play 95 (+1) 95 (+91) (+20.7%) Bundles 3Play 2) 278 (+64) 278 4Play 157 (+26) 157 Net Reve
Slide 38: TV market Switzerland
TV market Switzerland 38 Market volumes (000) digital TV Market digital + analogue Market share: Market Digital TV * 4‘455 4‘476 4‘324 4‘161 2) 3‘917 4‘033 540 534 12 % Satellite/Terrestrial 557 107 114 582 2% Sunrise 74 38 Analogue TV 1'249 28 % CATV / Net Integrators 1) 2) 1'256 1'276 1'301 2‘275
Slide 39: Handsets & SACs
Handsets & SACs 39 sold handsets postpaid 95% 87% 89% Smartphone share 74% 70% 65% active user postpaid Handsets (in ‘000) 407 470 491 366 352 332 346 369 337 SAC/SRC in CHF mm (a) (mobile and wireline products together) 22 Corporate Segments 30 26 23 22 24 23 27 18 136 Residential 87 85 89 103 84 9
Slide 40: Reported vs. comparable EBITDA
Reported vs. comparable EBITDA 40 EBITDA development YOY (in CHF mm) Q1-2014 Q1-2015 Change YOY Swisscom Switzerland 940 955 +15 Fastweb 132 130 -2 All other -11 -34 -23 Reported EBITDA 1’061 1’051 -10 o/w Currency effect -15 -15 Higher pension cost -20 -20 Comparable EBITDA 1’061 1’086 +25
Slide 41: Segment ‘Residential’
Segment ‘Residential’ 41 31.03.2015 YoY 1) Net revenue up by Net revenue in MCHF 1'291 4.0% 4.0%, driven by the Direct costs in MCHF -311 8.4% higher Service 2) Indirect costs in MCHF -250 2.5% Revenue Retail (increase in subs) Contribution margin 2 in MCHF 730 2.8% and higher device Contribution ma
Slide 42: Segment ‘Small & Medium Enterprises’
Segment ‘Small & Medium Enterprises’ 42 31.03.2015 YoY 1) Net revenue in MCHF 327 1.9% The acquisition of Direct costs in MCHF -42 -14.3% 2) ’yellow pages’ Indirect costs in MCHF -68 47.8% (part of the PubliGroupe Contribution margin 2 in MCHF 217 -4.0% transaction in Sept Contribution margin 2 in %
Slide 43: Segment ‘Enterprise Customers’
Segment ‘Enterprise Customers’ 43 31.03.2015 YoY 1) Net revenue in MCHF 657 4.6% Topline, cost and Direct costs in MCHF -141 0.0% FTE increased Indirect costs in MCHF 2) -297 12.5% primarily due to the acquisition Contribution margin 2 in MCHF 219 -1.8% of Veltigroup Contribution margin 2 in % 33.3%
Slide 44: Segment ‘Wholesale’
Segment ‘Wholesale’ 44 31.03.2015 YoY Revenue from external customers in MCHF 148 2.1% Intersegment revenue in MCHF 82 -2.4% Revenue from external Net revenue in MCHF 230 0.4% customers Direct costs in MCHF -124 -3.1% up 2.1% 1) Indirect costs in MCHF -5 -16.7% Contribution margin 2 in MCHF 101 6.3%
Slide 45: Segment ‘IT, Network and Innovation’
Segment ‘IT, Network and Innovation’ 45 31.03.2015 YoY Net revenue in MCHF 34 9.7% Direct costs in MCHF - #DIV/0! Personnel expenses in MCHF -218 5.3% Overall, CM2 nearly Rent in MCHF -49 6.5% on prior year level Maintenance in MCHF -42 -8.7% IT expenses in MCHF -56 12.0% Other OPEX in MCHF -82 3.8%
Slide 46: Segment ‘Fastweb’
Segment ‘Fastweb’ 46 31.03.2015 YoY Consumer revenue in MEUR 193 2.7% Net revenues Enterprise revenue in MEUR 191 7.9% increased 8.3% YOY 1) Wholesale revenue in MEUR 45 45.2% 1) Net revenue in MEUR 429 8.3% All segments report 2) an increase in OPEX in MEUR -309 7.3% revenue EBITDA in MEUR 120 11.1
Slide 47: Segment ‘Other’
Segment ‘Other’ 47 31.03.2015 YoY Net revenue on prior year level External revenue in MCHF 90 -3.2% 1) Net revenue in MCHF 144 0.0% Increase in net 2) OPEX in MCHF -128 4.9% revenue due to acquisition is EBITDA in MCHF 16 -27.3% compensated by EBITDA margin in % 11.1% lower revenue out of constructi
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