Swisscom Ag · SIX:SCMN
Swisscom — Q1 2022 Earnings Presentation
41 slides from Swisscom's earnings presentation, Apr 28, 2022
Slide 1: Q1 2022 results
Analyst & investor presentation Q1 2022 results 28 April 2022
Slide 2: Agenda
Agenda Introduction Louis Schmid, IR 1. Highlights Urs Schaeppi, CEO 2. Business review Urs Schaeppi, CEO 3. Financial results Eugen Stermetz, CFO Questions & answers all Appendix 2
Slide 3: Highlights
1 Highlights 3
Slide 4: Q1 achievements
1 Q1 achievements Solid financial Ongoing high investments Access deal results: in Gigabit-networks with Sunrise UPC Q1 EBITDA margin COMCO investigation pending successfully 41.1% (+1.0pp) extended Swisscom 1st provider making subscriptions CO2 neutral B2B Solutions On track Positive growing to ach
Slide 5: Q1 market performance
1 Q1 market performance Improving net adds momentum in Switzerland. Fastweb's RGU base growing Swisscom Switzerland Fastweb Fixed +38 +177 +105 +57 +35 +18 +34 Q1 21 Q1 22 +9 +5 +1 Net adds reported in k 1 -7 -7 -6 -15 -19 -25 -32 Broadband TV Fixed voice Postpaid Wholesale Broadband Wholesale Mobil
Slide 6: Q1 financial performance
1 Q1 financial performance Positive EBITDA development: margin improved by 1.0pp to 41.1% EBITDA development in CHF mn and YOY changes in CHF mn Q1 2022 Net Underlying performance +23 2'768 revenue (-1.2% YOY) 1’124 +14 +6 +3 -10 1’137 EBITDA 1'137 (+1.2% YOY) EBITDA Swisscom Others Currency EBITDA
Slide 7: Q1 macro-economic update
1 Q1 macro-economic update Energy prices, hardware availability and inflation of general concern Macro-economic situation … … with no impact on Swisscom's FY 22 guidance Covid-19 pandemic Energy cost Geopolitical issues • CHF 120mn (o/w vast majority for electricity) in 2021 • 2022 with limited expo
Slide 8: Business Review
2 Business Review 8
Slide 9: Swisscom priorities 2022
2 Swisscom priorities 2022 Along the group strategy and ambitious goals 2025 to empower the digital future Push digital momentum Consequent execution on 2 (digital shift, digital first 3 efficiency measures. proposition) and further Continuous focus on costs develop Fastweb into 'infrastructured OTT
Slide 10: Making Switzerland's infrastructure future-proof
2 Making Switzerland's infrastructure future-proof Swisscom continuously and heavily invests in next-generation networks Fibre • Continuous investments in UBB extension and FTTH based on P2MP topology COMCO investigation pending (but P2P-compatible) • Intensive talks with COMCO (to find an agreement
Slide 11: Customer-centric innovation in B2C
2 Permanent customer-centric innovation to deliver best customer experience Maximise value in B2C customer base through well tuned promotional activities Q1 with slightly softer promotional intensity in the market … … and solid operational results Own brand blue promotions with FMC focus or hardware
Slide 12: B2C operational performance
2 B2C operational performance Overall solid KPIs and better churn rates Wireline Q1 21 Q1 22 FM converged RGUs in k Churn rate p.a. ARPUs in CHF (YOY) broadband subs 88 88 1'733 1'736 • Solid RGU base 11.6% 1'512 1'517 9.8% • BB share of 2nd/3rd brands: 5% (+1pp YOY) 37 38 45% (+2) (0) -1pp YOY • 82
Slide 13: Balanced value-oriented offerings
2 New Swisscom portfolio coming soon Striving for growth in new customer segments, churn prevention and life-time value stimulation BETTER EASIER MORE ATTRACTIVE More of everything Via app Better value for money Reduced promotional intensity Balanced value- wingo for promo game oriented offerings wi
Slide 14: B2B commercial update and operational performance
2 B2B commercial update and operational performance Telco business with robust RGU base and continuous price pressure, Solutions with growth Enterprises regain focus on digitalisation after Covid-19 dip Total RGU base 2'502k -0.4% YOY Robust market 1st large smart metering position in Telco project
Slide 15: Operational excellence update and results
2 Operational excellence update and results Telco-related cost initiatives on track and reduction committed, quarterly swings on net savings expected Overview of initiatives and Q1 results Outlook 2022 • CHF 100mn FY ambition for Telco- Online first: Manage higher related cost savings reiterated new
Slide 16: Swisscom Switzerland: financial results
2 Swisscom Switzerland: financial results Overall solid thanks to softer service revenue decline and steady contributions from operational excellence Net revenue in CHF mn (YOY) EBITDA in CHF mn (YOY) OpFCF proxy in CHF mn 2'080 -10 +14 2'070 916 930 EBITDA Q1 22 YOY -25 58 56 Lease expense 1 169 14
Slide 17: Fastweb with successful execution of strategic priorities in Q1
Fastweb with successful execution of strategic priorities in Q1 2 In Consumer no fixed price war (to preserve value) but counter-attack on Mobile and boost Wholesale Total RGU base: +215k (+37% YOY) Wholesale • Fixed +38k (YTD) • RGU base steadily growing to 363k (+137% YOY) • Mobile +177k (YTD) • G
Slide 18: Fastweb: Consumer performance
2 Fastweb: Consumer performance Positive Q1 operational results with UBB (+30k) and Mobile (+177k) customer base strongly growing Fixed Mobile ARPU, churn, FMC penetration Broadband subs in k (YOY change) Mobile subs in k (YOY change) ARPU uplift Churn benefit (EUR/month, YOY) (YOY) -1% +28% • Fastw
Slide 19: Fastweb: Enterprise and Wholesale performance
2 Fastweb: Enterprise and Wholesale performance Growth confirmed Enterprise Wholesale Revenues in EUR mn (YOY) Revenues in EUR mn 1 (YOY) +9% • Core services: • +4% YOY driven by +4% +33% YOY, growth private and PA sector driven by wholesale 247 63 lines • Awarded public tender 58 • Other (with low
Slide 20: Fastweb: financial results
2 Fastweb: financial results Q1 EBITDA +3.4%. On track to achieve FY EBITDA guidance Net revenue in EUR mn (YOY) EBITDA in EUR mn (YOY) OpFCF proxy in EUR mn +14 595 Q1 22 YOY 581 63 Wholesale +6 +5 179 185 EBITDA 58 EBITDAaL 2 171 (+6) +10 247 Enterprise 14 14 Lease expense 1 237 +6 CAPEX -157 (-3)
Slide 21: Financial results
3 Financial results 21
Slide 22: Group revenue and changes by segments
3 Group revenue and changes by segments Stable underlying top line: Swisscom Switzerland -0.5% YOY, Fastweb +2.4% YOY in CHF mn Underlying -1 (-0.0%) Swisscom Switzerland -10 (-0.5%) +15 +20 (+2.4%) -6 +2 (-1.2%) -35 -7 -25 -34 2'768 2'803 1 2 3 4 Q1 21 B2C B2B ISF 1 Fastweb Other 2 Currency Q1 22 W
Slide 23: Swisscom Switzerland revenue changes and service revenue dynamics
3 Swisscom Switzerland revenue changes and service revenue dynamics Top line almost stable YOY mainly thanks to better B2C service revenue evolution in Q1 Q1 22 revenue changes by business drivers Service revenue evolution and Q1 22 changes in CHF mn in CHF mn Q1 2021 Q2 Q3 Q4 Q1 2022 Swisscom Switz
Slide 24: Group EBITDA and changes by segments
3 Group EBITDA and changes by segments Strong underlying performance in CHF mn Underlying +23 (+2.0%) Swisscom Switzerland +14 (+1.5%) +17 +6 (+3.4%) +3 +13 +12 (+1.2%) -7 -10 -8 1'137 1'124 1 2 3 4 5 Q1 21 B2C B2B ISF 1 Fastweb Other 2 Currency Q1 22 Wholesale reported impact reported 1 Revenue dec
Slide 25: EBITDA Swisscom Switzerland with OPEX changes and dynamics
3 EBITDA Swisscom Switzerland with OPEX changes and dynamics Operational excellence initiatives with expected savings on Telco-related costs in CHF mn direct cost +13 (-2.9%) indirect cost +11 (-1.5%) +22 -11 +14 +14 (+1.5%) +10 -11 916 -10 930 1 2 3 4 5 Q1 21 Revenue Outpayments Goods Telco Solutio
Slide 26: Capital expenditures
3 Capital expenditures Continuous investments in the infrastructure of the future Swisscom Switzerland in CHF mn Q1 21 ∆ Q1 22 Wireless Fibre (FTTx) Group 540 522 -18 CHF 69mn CHF 99mn CAPEX (-3.3% YOY) -14% YOY -20% YOY Swisscom 371 -7 364 Switzerland (-1.9% YOY) Access, backbone IT systems, All-IP
Slide 27: Free cash flow
3 Free cash flow OpFCF proxy up (CHF +34mn YOY) but FCF down (CHF -207mn YOY) due to extra-ordinary NWC effects in CHF mn 1’137 -72 1'065 -522 543 -264 +16 -11 Q1 22 -189 -32 63 ∆ +13 +3 +16 +18 +34 -243 +4 +2 +9 -13 -207 1 1’124 -75 1'049 -540 -198 Q1 21 509 -21 +12 -13 -19 270 EBITDA Lease EBITDAa
Slide 28: Net income
3 Net income EBIT up (CHF +33mn YOY). However, EPS down due to one-off impacts of CHF +207mn in prior year in CHF mn tax rate 1 EPS 18.7% Q1 22 8.63 1’137 -522 -66 549 -15 -11 28 -1 -103 447 0 447 ∆ +13 +16 +4 +33 +2 0 -224 -1 -1 -191 -0 -191 1 2 tax rate 1 EPS 13.8% 12.32 Q1 21 1’124 -538 -70 516 -
Slide 29: Well balanced and diversified maturity profile
3 Well balanced and diversified maturity profile Successful rating reviews in Q1 underpinning A credit ratings Debt maturity profile as per Q1 2022 1) • Portfolio mix: Fix 88% vs floating 12% 2022 500 • Ø interest rate of 0.9% 2023 455 • Ø duration of 5.9 years 2024 654 • CHF 2.2bn committed credit
Slide 30: Guidance FY 2022 confirmed
3 Guidance FY 2022 confirmed Net revenue of CHF 11.1-11.2bn, EBITDA of CHF ~4.4bn and CAPEX of CHF ~2.3bn 2021 2022 in CHF bn reported Splits into: outlook 3 Splits into: CHF 8.6bn for Switzerland 2 CHF 8.5-8.6bn for Switzerland Revenue 11.183 EUR 2.4bn for Fastweb 11.1-11.2 EUR ~2.5bn for Fastweb 4
Slide 31: Questions & answers
Questions & answers 31
Slide 32: Appendix
Appendix 32
Slide 33: Key financials
Key financials Reported and underlying revenue and EBITDA in CHF mn 2021 2022 Change Q/Q Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue, reported 2'803 2'780 2'760 2'840 11'183 2'768 -35 Currency effect 34 +34 Underlying change -1 EBITDA, reported 1'124 1'193 1'148 1'013 4'478 1'137 +13 Provisions f
Slide 34: Residential Customers
Residential Customers Segment reporting as per 31.03.2022 31.03.2022 YoY Net revenue in MCHF 1) 1'131 -0.5% Direct costs in MCHF -220 -7.6% Net revenue decreased 2) driven by lower hardware Indirect costs in MCHF -166 -2.9% sales and service revenue. EBITDA in MCHF 745 2.3% Service revenue with EBIT
Slide 35: Business Customers
Business Customers Segment reporting as per 31.03.2022 31.03.2022 YoY Net revenue in MCHF 1) 791 2.6% Net revenue increased (+2.6%), Direct costs in MCHF -192 9.7% 2) thanks to higher Solutions Indirect costs in MCHF -246 4.2% revenue (+8.8%) and hardware EBITDA in MCHF 353 -1.9% sales (+26.2%), add
Slide 36: Wholesale
Wholesale Segment reporting as per 31.03.2022 31.03.2022 YoY External revenue in MCHF 144 -14.8% Intersegment revenue in MCHF 3 50.0% Net revenue in MCHF 147 -14.0% Revenue from external Direct costs in MCHF -62 -18.4% customers down by -14.8%. Indirect costs in MCHF 1) -4 -33.3% due to MVNO loss an
Slide 37: Infrastructure & Support Functions
Infrastructure & Support Functions Segment reporting as per 31.03.2022 31.03.2022 YoY Net revenue in MCHF 18 -5.3% Direct costs in MCHF -2 0.0% 1) Workforce expenses in MCHF -158 -9.2% Maintenance in MCHF -49 -3.9% EBITDA improved by +4.6% IT expenses in MCHF -32 0.0% (CHF +12mn) due to lower workfo
Slide 38: Fastweb
Fastweb Segment reporting as per 31.03.2022 31.03.2022 YoY Consumer revenue in MEUR 285 -0.3% Enterprise revenue in MEUR 247 4.2% 1) Consumer revenue on Wholesale revenue in MEUR 63 8.6% 1) level of prior year Net revenue in MEUR 595 2.4% impacted by strong OPEX in MEUR 2) -410 2.0% competition. EBI
Slide 39: Other
Other Segment reporting as per 31.03.2022 31.03.2022 YoY External revenue in MCHF 100 -3.8% 1) Net revenue in MCHF 241 0.4% 2) OPEX in MCHF -199 -3.4% EBITDA in MCHF 42 23.5% Net revenue on level of prior year. EBITDA margin in % 17.4% Depreciation & amortisation in MCHF -11 -15.4% Lease expense in
Slide 40: Investor contact
Investor contact Bild Louis Schmid Tamara Hackl Head Investor Relations Investor Relations Manager [email protected] [email protected] +41 58 221 62 79 +41 58 221 12 79 40
Slide 41: Cautionary statement
Cautionary statement Regarding forward looking statements • "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