Swisscom Ag · SIX:SCMN
Swisscom — FY2019 Earnings Presentation
95 slides from Swisscom's earnings presentation, Feb 6, 2020
Slide 1: Swisscom FY 2019 results
Swisscom FY 2019 results Analyst and investor meeting 06 February 2020 in Zurich
Slide 2: Agenda
Agenda Table of meeting contents Generate growth with Fastweb in Italy Alberto Calcagno, CEO Fastweb Push operational excellence Mario Rossi, CFO Swisscom 3 4 Manage maximum value generation in Switzerland Urs Schaeppi, CEO Swisscom 2 Financials 2019 5 and outlook 2020 Mario Rossi, CFO Swisscom Achi
Slide 3: Achievements 2019, Strategic Update and Focus 2020
Achievements 2019, Strategic Update and Focus 2020 Urs Schaeppi, CEO Swisscom
Slide 4: Highlights
Highlights Strong execution along strategic settings #1 infrastructure B2C leadership B2B transformation in Switzerland by innovation initialised • Win of all mobile network tests • Successful launch of 2nd inOne • Several successful product launches • Successful 5G auction mobile generation with >1
Slide 5: Operational performance
Operational performance Leading market position in Switzerland successfully defended. Fastweb growing across all market segments Swisscom Switzerland Fastweb Broadband TV Consumer Broadband (in k) 53% 36% 16% -0.3% stable +1.5% YoY YoY YoY Market share 1) 2'547 2'637 2'033 2'033 1'555 1'519 15 11 28
Slide 6: Key financials in a nutshell
Key financials in a nutshell Solid underlying performance thanks to disciplined cost management in Switzerland and Fastweb growth EBITDA development YOY changes in CHF mn Net CHF 11'453mn (-2.2% YoY) revenue Underlying performance +4 Net CHF 1'669mn +226 +41 4’358 4’213 (+9.7% YoY) income -23 -14 -8
Slide 7: The Swisscom strategy with proven settings…
The Swisscom strategy with proven settings… Successfully defending #1 position across all segments Best Customer Experience Inspire customers with best experiences through the best converged network, innovation excellence and superior service propositions Operational Excellence Push cost initiatives
Slide 8: … and a unique setup of differentiation
… and a unique setup of differentiation Boundlessly serving customers key to establish and keep a premium brand and trust Premium brand Swisscom Premium Premium Premium quality experience innovation < Modern and Broad basket of Qualified and Added values performing innovative and personal service; w
Slide 9: Key success factors 2020
Key success factors 2020 Overall unchanged and continuing to consolidate forces to deliver another successful year Strengthen core business in Switzerland Bring Fastweb to the next growth level • Invest sustainably in leading network position • Convergence and value focus in B2C through strong • Imp
Slide 10: Swisscom Switzerland
Swisscom Switzerland Urs Schaeppi, CEO Swisscom 10
Slide 11: Commercial performance 2019
Commercial performance 2019 Another successful year with plenty of milestones inspiring our customers B2C B2B Successful launch of 2nd inOne mobile generation Promising development of growth areas such as Security, Cloud services and IoT Launch of 3rd brand Coop Mobile with positive momentum, succes
Slide 12: Operational performance 2019
Operational performance 2019 Positive momentum with satisfying results across all segments B2C B2B Net • Overall solid market shares • 74% UBB coverage with >80 • Mobile price pressure impacts • TV #1 position strengthened. ARPU level (CHF 26, -13% YOY) and Mbps or 50% of all 2'202 Market share at 3
Slide 13: Financial performance 2019
Financial performance 2019 Cost savings mostly compensate top-line pressure. OpFCF proxy primarily impacted by spectrum CAPEX Net revenue in CHF mn (YoY changes) OpFCF proxy reconciliation and EBITDAaL changes in CHF mn (YoY changes) 8’563 3'491 -2.8% -2.4% Lease 1'567 226 (-5) Others expense 3) (+5
Slide 14: The best fully converged network as a key strategic ingredient
The best fully converged network as a key strategic ingredient for Swisscom Smart combining of different technologies to deliver best customer experience Best performance Best coverage Best reliability • Defend leading market shares • Inspire customers through best • Cement outstanding NPS by with s
Slide 15: En route to offer an outstanding network experience in a new decade
En route to offer an outstanding network experience in a new decade Unchanged CAPEX envelope for Swisscom Switzerland Rationales to accelerate UBB investments CAPEX evolution and breakdown • Substantial shift in the mix enabling higher investments in access despite lower CAPEX Remain competitive • C
Slide 16: Swisscom accelerates its fibre rollout
Swisscom accelerates its fibre rollout New ambition to cover 50-60% of Switzerland with bandwidth of ≤10 Gbps by 2025 UBB situation as per YE 2019 New converged UBB rollout plan • On track according to current plan to cover Coverage ambitions 2025 90% of Switzerland with >80Mpbs by 2021 • 50-60% wit
Slide 17: Swisscom winner of all important mobile network tests
Swisscom winner of all important mobile network tests Successful 5G auction with top allocation for Swisscom 4G+ expansion on track Since April 2019 5G rollout ongoing • 4G+ coverage increased in 2019 by +32% to 72% allowing • 2019 auction: all targets met speeds up to 500 Mbps • Reasonable price of
Slide 18: B2C Swisscom Switzerland
B2C Swisscom Switzerland Urs Schaeppi, CEO Swisscom
Slide 19: B2C Focus 2020
Manage long-term value generation through a balanced execution plan Roadmap to successfully defend leading market position and stabilise top-line contributions Strengthen broadband position 1 Focus 2020 to increase competitiveness B2C 2 Innovate entertainment and smart products to enable best home e
Slide 20: Permanent network upgrades through coverage extension and speed raises
Permanent network upgrades through coverage extension and speed raises 1 Strengthening broadband position is essential to keep competitive edge Top speed up to 10 Gbps … … with positive NPS effects Upgraded rollout plan Net Promoter Score inOne home customer base • 90% with 300-500 Mbps t/o 50-60% F
Slide 21: #1 TV position with 36% market share thanks to best home experience
#1 TV position with 36% market share thanks to best home experience 2 Next generation with new features and entertainment attributes Launch of the new Swisscom TV platform 4.0 in Q4 2019 Basic features Own content TV air (fully converged), up to 1200h cloud recordings, +300 1 2 Teleclub with access
Slide 22: Smart home products with increasing relevance
Smart home products with increasing relevance 2 Integrating Smart Home in our existing Home platforms delivers a unique customer experience Increasing usage of smart home products The smart remote control for your home # connected devices with Forecasts Swisscom Home App Swisscom Home App (in k) • 3
Slide 23: 2nd inOne mobile generation successfully launched
2nd inOne mobile generation successfully launched 3 Strong market demand with KPIs being slightly above own expectations New Swisscom core offering in wireless inOne mobile basic inOne mobile go inOne mobile premium • Unlimited calls and SMS/MMS within • Unlimited surfing, calls and SMS/MMS within •
Slide 24: inOne with ongoing market interest
inOne with ongoing market interest 3 Core brand of Swisscom a success story thanks to simplicity, freedom and constant value enrichment inOne evolution RGUs in k inOne breakdown RGUs in k 2’751k customers with ø 1.97 RGUs inOne mobile inOne broadband 5’240 5’422 +19% 4’833 5’039 4’559 2’166 +19% 4’1
Slide 25: Attractive (FM) bundles impact full-churn level and life time value positively
Attractive (FM) bundles impact full-churn level and life time value positively 3 Postpaid ARPU lower due to FM discounts and change of RGU mix driven by 2nd/3rd brands Penetration ratios as per YE 19 ARPUs and churn rates as per YE 19 Avg. revenue in CHF (YOY) FM converged FM converged postpaid valu
Slide 26: Attack with 2nd and 3rd brands to defend market shares
Attack with 2nd and 3rd brands to defend market shares 4 Addressing the market with multi-brands as main weapon for promotional activities Our portfolio of 2nd and 3rd … to stimulate promotional success … … and market performance positively brands further developed and strengthened … Broadband +5k n
Slide 27: Innovate customer interaction with experience stores and digital touchpoints
Innovate customer interaction with experience stores and digital touchpoints 5 Reinforce relevancy of shops by bringing customer experience to the next level New B2C stores experience New mySwisscom App Two new stores to test different Full relaunch of our main app concepts around premium including
Slide 28: 5G with new B2C business opportunities in the future
5G with new B2C business opportunities in the future 6 The increase of speed, coverage, latency and frequency slicing of 5G will allow new consumer business cases Enhanced mobile BB and cloudification for future business opportunities beyond core connectivity Smart Entertainment Cloud Gaming Consume
Slide 29: B2B Swisscom Switzerland
B2B Swisscom Switzerland Urs Schaeppi, CEO Swisscom
Slide 30: B2B Focus 2020
B2B Switzerland - Swisscom #1 business service provider Roadmap of initiatives to be implemented and managed – 2020 a transitional year Focus 2020 Balance legacy and new wireline 1 services to maximize value generation B2B Transformation to OneB2B unit 5 Manage leading mobile position to strengthen
Slide 31: Introductory overview of Swisscom's position in the B2B space
Introductory overview of Swisscom's position in the B2B space Our credo: defend market share in Telco and leverage position in Solutions to capture ICT growth Net revenue of Enterprise Customers Main levers in the B2B business of Swisscom (in CHF mn) Push service differentiation 2'209 Others Hardwar
Slide 32: The journey to tomorrow's SDN-based network services and solutions
The journey to tomorrow's SDN-based network services and solutions 1 Manage technical consolidation to keep market share and maximize margin contribution from fixed connectivity business Structural challenges The Swisscom wireline portfolio • IP migration 99% completed Internet WLAN LAN PWLAN Remote
Slide 33: Wireless service revenue impacted by competition and price pressure
Wireless service revenue impacted by competition and price pressure 2 Hold (value) customers in a challenging market Ongoing price pressure The Swisscom mobile portfolio • RFPs and high competitive dynamics lead to declining ARPUs. Gap to EU Level closing Data Billing and Analytics Platform -12% Swi
Slide 34: 5G and IoT drive new opportunities with data-driven and intelligent solutions
5G and IoT drive new opportunities with data-driven and intelligent solutions 3 Technology leadership enables Swisscom to offer new solutions 5G business opportunities in the B2B context IoT applications for business customers Enhanced Mobile IoT Connect Fixed Wireless Access Global mobile connectiv
Slide 35: Overview of ICT market and expected trends in the Swisscom ICT portfolio
Overview of ICT market and expected trends in the Swisscom ICT portfolio 4 Security and cloud & data centre services fastest growing segments Growing ICT market in Switzerland: CHF 8.2bn The Swisscom IT services portfolio at a glance CAGR 2019, in CHF mn (2019-2022) Our position: Swiss-wide one-stop
Slide 36: Swisscom's IT services portfolio with growth opportunities and challenges
Swisscom's IT services portfolio with growth opportunities and challenges 4 Well positioned to participate in fastest growing segments security and cloud & data center Overview of levers developing Swisscom's ICT business Business applications • Several growth initiatives with selective products • M
Slide 37: Strengthen #1 market position by building OneB2B unit
Strengthen #1 market position by building OneB2B unit 5 Realize synergies along our strategic settings Levers of value creation in B2B Process and IT advantages One portfolio with thanks to automation and standardized B2B products scale benefits with simple tariff settings Customer excellence by Opt
Slide 38: Fastweb
Fastweb Alberto Calcagno, CEO Fastweb
Slide 39: Strong performance with strategic delivery across all market segments
Strong performance with strategic delivery across all market segments On track to become a leading Italian convergent infrastructure player 1 2019 financial Strategy update 2 and operational results Fastweb Focus 2020 Outlook and targets 4 2020 priorities 3 and roadmap 39 3 Fastweb
Slide 40: Strategy update
Strategy update 1 Two fundamental customer needs are emerging in Telco markets A B Customers expect an Fiber-like performance everywhere OTT-like experience with no distinction between wireline and mobile Fastweb long-term strategy addresses both needs 40 3 Fastweb
Slide 41: Becoming an infrastructure-based OTT
Becoming an infrastructure-based OTT 1 To build unparalleled competitive advantage Infrastructure-based OTT Coupling OTTs service capabilities with NGN infrastructure Customers B2C, B2B, Wholesale OTT Platform A Enabling new generation UBB services UBB Infrastructure B Leveraging all wireline and mo
Slide 42: The first Telco with same service capabilities as OTTs
The first Telco with same service capabilities as OTTs 1 A new generation of UBB services based on software-defined network functions Customers Few standard Inbound-only Unique web interface One day Digital-only offers sale channels for all Business Units activation customer care Shorter time2market
Slide 43: Deploying the largest proprietary UBB footprint operated by an OLO in Europe
Deploying the largest proprietary UBB footprint operated by an OLO in Europe 1 Moving beyond wireline/mobile distinction Customers OTT Platform Own UBB infrastructure B Leveraging all wireline and mobile NGN access technologies 1. UBB service capability to reach 90% population coverage by 2026 2020
Slide 44: 2019 financial results: positive performance in line with guidance
2019 financial results: positive performance in line with guidance 2 Growing revenues and EBITDAaL. OpFCF proxy over EUR 100mn Net revenue in EUR mn (YoY) EBITDAaL in EUR mn (YoY) OpFCF proxy in EUR mn (YoY) 2’218 (+5%) YoY change 750 EBITDA 252 (-22) Wholesale (+5%) Q4 2019 862 207 50 (+6) Lease ex
Slide 45: 2019 operational results: B2C performance
2019 operational results: B2C performance 2 Distinctive commercial approach and effective customer base management are paying off B2C operational KPIs B2C customer experience Broadband subs in k (YoY change) UBB subs in k (YoY change) NPS (YoY change) 1 2’637 1’698 2’610 1’607 (+21%) • Steady YoY CB
Slide 46: 2019 operational results: B2B performance
2019 operational results: B2B performance 2 Enterprise market share up to 33%, Wholesale growth mainly driven by BTS backhauling and volume UBB Corporate Wholesale Revenues in EUR mn (YoY) Revenues in EUR mn (YoY) 862 252 (+11%) Growth drivers (-8%) 235 • PA: FY 19 +16% YoY (+6%) • ICT VAS: FY 19 +1
Slide 47: 2020 priorities and roadmap
2020 priorities and roadmap 3 Flawless execution to fully exploit strong opportunities Priorities Levers Highlights Opportunities WindTre agreement Customer base migration Enabling long-term sustainable FMC Mobile 5G on WindTre network and proposition 5G deployment in 1H 2020 Linkem agreement Co-dep
Slide 48: Leveraging on 5G Mobile and 5G FWA
Leveraging on 5G Mobile and 5G FWA 3 Strategic partnerships enabling full financial sustainability of a distinctive FMC proposition 5G Mobile – WindTre agreement 5G FWA – Linkem agreement Agreement highlights Main 2020 milestones • Goal: deployment of two 5G FWA networks capable of connection speed
Slide 49: Accelerate growth in B2B
Accelerate growth in B2B 3 Selective M&A in Corporate and organic growth in Wholesale Corporate: expand offer portfolio Wholesale: push UBB volume business Mid-term growth of Corporate wireline market will be Execute already-signed contracts driven by ICT VAS, which will represent 65% of total • Fur
Slide 50: Outlook and targets
Outlook and targets 4 Financial and market share growth expected to continue in 2020 and beyond 2020 financial outlook Mid term market share ambitions 2020 targets FY 2022 targets 4-5% Revenues > +3% YoY 2% Mobile Consumer 8-10% EBITDAaL +4-6% YoY Wholesale 3% UBB lines 1) 36-38% CAPEX stable 33% Co
Slide 51: Operational Excellence
Operational Excellence Mario Rossi, CFO Swisscom
Slide 52: Operational excellence
Operational excellence Absolutely key for Swisscom management to compensate revenue pressure 1 Results Roadmap 20-22 Operational 2 to further realise OPEX savings and CAPEX efficiency gains excellence CAPEX initiatives 5 Focus 2020 3 B2C initiatives B2B initiatives 4 52 4 Operational Excellence
Slide 53: Another year with successful execution of realising OPEX savings
Another year with successful execution of realising OPEX savings 1 Swisscom lowered indirect cost of Swisscom Switzerland by CHF 360mn over the last 4 years Solid execution on cost program… …translate in a set of benefits in CHF mn Achievements Targets Reduce Improve service requests # of customer 2
Slide 54: Roadmap 2020 and beyond …
Roadmap 2020 and beyond … 2 … to further realise OPEX savings and CAPEX efficiency gains Push cost program to the next level ... … by executing on 3 layers in CHF mn Ambitions 20-22 2020 ~100 Digitisation 2021 ~100 Operations Network 2022 ~100 54 4 Operational Excellence
Slide 55: B2C initiatives …
B2C initiatives … 3 … to reduce complexity in products and organisation Less is more • Streamlining portfolio • Call centres: automate standard requests; human interaction for complex inquires • Leverage shop capacity Reinforce customer field services Push online • Integration of customer field serv
Slide 56: B2B initiatives…
B2B initiatives… 4 … to create a more modern and efficient working environment Strategic partner management • Benefit from synergies in the mid and Outsourcing of non-key activities corporate market • Increase sales efficiency • Strengthen channel partner management • Leverage on product phase outs
Slide 57: Network initiatives …
Network initiatives … 5 … to leverage full potential of initiatives to lower operating cost Further optimise network rollout (speed & cost) Leverage new ways of working • Renegotiate purchasing contracts • Insourcing in own, shored development • Further lever prime contractor model center to win tal
Slide 58: Financials 2019 and Outlook 2020
Financials 2019 and Outlook 2020 Mario Rossi, CFO Swisscom
Slide 59: Reconciliation of key financials
Reconciliation of key financials Financial performance in line with guidance Net revenue in CHF mn -172 -89 11’714 11’714 11’542 11’453 EBITDA in CHF mn +4 -56 -29 +226 4’213 4’439 4’443 4’358 FY 2018 Adjustments FY 2018 Underlying FY 2019 Restructuring Exchange rate FY 2019 reported leases adjusted
Slide 60: Group revenue breakdown by segments
Group revenue breakdown by segments Divergent top-line evolutions (with Switzerland down and Italy up) being in line with expectations Q1 Q2 Q3 Q4 +14 +20 +25+25 +53 +18 -7 -4 +4 +2 +2 +7 +25+19+34 in CHF mn -30 -13 -22 -34 -29 -27 -48 -54 -46 -36-21 -67 -94 +131 -172 (-1.5%) -112 +88 -178 +15 -60 -
Slide 61: OPEX of Swisscom Switzerland
OPEX of Swisscom Switzerland Operational excellence initiatives with expected impacts lowering OPEX on a recurring basis Q1 Q2 Q3 Q4 +13 +57 +0 +3 +11 +17 +24 +5 -21 -9 -13 -24 -35 -46 in CHF mn -43 -67 -22 -25 -14 -33 -74 -65 -63 -16 +103 -94 -220 -2 -33 (-4.2%) -194 5’230 -93 direct costs -127 ind
Slide 62: 2019 margin dynamics of Swisscom Switzerland
2019 margin dynamics of Swisscom Switzerland YOY changes fully inline with expectations Service revenue … … and EBITDA dynamics of Swisscom Switzerland YOY changes in CHF mn SAC/SRC = -290 -20 Indirect cost +194 Wholesale Hardware & others -41 Others +127 B2C -58 -59 +102 +66 Fixed voice -112 = -23
Slide 63: Group EBITDA breakdown by segments
Group EBITDA breakdown by segments Cost saving initiatives partly compensate top-line erosion in Switzerland. Fastweb up YOY Q1 Q2 Q3 Q4 +39 +48 +12 +12 +21 +12 -14 +16 +8 +11 +10 in CHF mn +17 -27 -29 -29 -18 -16 -7 -13 -31 +124 +41 -14 +4 -48 (+0.1%) -99 Swisscom Switzerland -23 4’439 (Q1: -6, Q2:
Slide 64: Net income
Net income Net income up by 9.7% as a result of lower tax expenses in CHF mn EPS 32.28 FY 2019 4’358 -2'166 -282 1’910 -62 -42 -54 -28 -55 1'669 +3 1'672 EBITDA EBIT Net Net Tax expenses Depreciation Depreciation income income right of use reported companies Minorities Affiliated SC Share- financial
Slide 65: Capital expenditures
Capital expenditures Network continuously improving for customer experience +1.4% IT systems, All-IP, Wireless: CP equipment, 2’404 2’438 17% and other: 22% 1'565 Other* 667 757 Fastweb** Spectrum 196 757 CHF mn Switzerland Swisscom Copper access, 1’620 Switzerland 1’565 backbone & w/o spectrum lice
Slide 66: Free cash flow
Free cash flow Cost for new spectrum licenses impacts free cash flow. Without CAPEX spectrum FCF up by CHF +222mn YoY in CHF mn 4’358 -2’242 -196 FY 2019 -294 +146 +48 -63 -371 -41 1'626 1'345 Δ +145 +162 -196 -294 -183 +285 -16 +70 -77 -53 +26 4’213 -2’404 0 0 FY 2018 -139 +64 -133 1’809 -294 +12 1
Slide 67: Use of 2019 free cash flow
Use of 2019 free cash flow Shareholder payment well covered 1'626 OpFCF proxy Stable attractive dividend of CHF 22 per share since 2011 -63 Net interest -371 Taxes paid • Proposal to AGM (6 April 2020) to pay CHF 22 per share again +153 Change NWC and other CF Dividend time table: 7 April last in CH
Slide 68: Swisscom debt portfolio as per 31.12.2019
Swisscom debt portfolio as per 31.12.2019 Further improvement of financing costs achieved Nominal debt by type Debt portfolio mix 32% 78% • 2019 refinancing transactions • CHF 200mn, coupon 0.5%, 10 yrs CHF fixed vs. • CHF 80mn, coupon 0.75%, 14.5 yrs • CHF 125mn, coupon 0.0%, 25 yrs 51% 6.4bn float
Slide 69: Guidance FY 2020
Guidance FY 2020 Net revenue of CHF ~11.1bn, EBITDA CHF ~4.3bn and CAPEX CHF ~2.3bn Expected YOY change Expected 2019 2020 Swisscom w/o YOY change in CHF mn reported Fastweb in EUR mn outlook*** Splits into: Fastweb CHF ~8.7bn for Swisscom w/o Fastweb + Revenue 11'453 <0 >0 ~11'100 EUR ~2.3bn for Fa
Slide 70: Final Remarks
Final Remarks Urs Schaeppi, CEO Swisscom
Slide 71: Swisscom with clear market standing and steady execution beliefs …
Swisscom with clear market standing and steady execution beliefs … … to generate maximum cashflows enabling a predictable shareholder remuneration every year Value #1 in attacker in Our positioning • Fully integrated and converged Switzerland Italy Telco and ICT operator Our execution • Be long-term
Slide 72: Appendix
Appendix
Slide 73: Key financials
Key financials Reported and underlying revenue and EBITDA in CHF mn 2018 2019 Change Q/Q, FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Revenue, reported 2'885 2'920 2'884 3'025 11'714 2'860 2'803 2'793 2'997 11'453 -25 -117 -91 -28 -261 Currency effect 18 23 24 24 89 +18 +23 +24 +24 +89 Revenue,
Slide 74: Swisscom Switzerland
Swisscom Switzerland Wireless ARPU and IFRS15 adjustments Swisscom Switzerland Swisscom Switzerland 53 50 54 54 52 50 50 48 50 47 49 46 49 46 48 45 39 36 39 37 39 37 38 36 38 35 38 35 38 36 37 35 in CHF Q1 18 Q2 Q3 Q4 Q1 19 Q2 Q3 Q4 Q1 18 Q2 Q3 Q4 Q1 19 Q2 Q3 Q4 Blended (reported) Blended (IFRS15) P
Slide 75: Swisscom's TV subscriptions constantly growing since launch in 2006
Swisscom's TV subscriptions constantly growing since launch in 2006 Swisscom with 1.55mn TV subs and 36% market share Swisscom subs 36% UPC 24% Launch Launch 4K TV 4.0 TV UHD TV 3.0 1.55mn 1) box market share YE 2019 Launch TV 2.0 Others 1mn 8% TV subs Sunrise Other cable 6% operators Replay 26% Lea
Slide 76: TV market in Switzerland
TV market in Switzerland Swisscom #1 with 36% market share (+10pp since YE 2014) Market subscriptions in k 4’455 4’489 4’410 4’396 4’316 4’282 1) 540 12 % 512 397 344 318 236 6% Satellite/others 107 3% 134 163 214 244 277 6% Sunrise 1) 69 2% Salt 1) 1256 28 % 1210 1180 1170 1152 1115 26 % Cable oper
Slide 77: Retail Customers
Retail Customers Segment reporting as per 31.12.2019 Q4 2019 Q4/Q4 31.12.2019 YoY Net revenue in MCHF 1) 1'471 -2.1% 5'691 -3.9% Direct costs in MCHF -378 -7.4% -1'293 -8.4% Net revenue decrease driven by 2) lower service revenue. Indirect costs in MCHF -271 -6.2% -983 -6.4% Service revenue decrease
Slide 78: Retail Customers
Retail Customers Wireless performance Subscriptions (in k) ARPU (in CHF) Service Revenue (in CHF mn) 6'000 YoY 50 130% 41 41 40 5'109 140% 40 110% 5'076 5'088 +12 84% 88% 85% 90% 5'000 30 70% 120% 79% 20 50% YoY 78% 77% 10 70030% 642 4'000 100% 10% -27 622 615 3'504 3'526 +144 0 600-10% 3'382 Q4 18
Slide 79: Retail Customers
Retail Customers Wireline performance Subscriptions (in k) ARPU and ARPH (in CHF) Service Revenue (in CHF mn) 50 130% 41 41 41 6'000 110% YoY 40 YoY 90% 5'158 108% -85 30 90% 91% 701 643 120% -19 5'073 5'073 91% 70% 628 624 5'000 20 50% 60 36 32 103% 601 30% 94% -28 100% 1'519 1'540 1'555 10 10%91%
Slide 80: Retail Customers
Retail Customers Performance of fixed and FM bundles ARPB/U (in CHF) and Subscriptions and Bundles (in k) FM penetration (in %) Service Revenue (in CHF mn) YoY 6'209 +200 40% YoY 6'009 6'154 39% 6'300 40%350 36% 40% 834 828 +3 825 35%300 38% 35% 5'300 38% 35% 30% 30%250 335 321 315 -20 4'300 25% 21%
Slide 81: Enterprise Customers
Enterprise Customers Segment reporting as per 31.12.2019 Q4 2019 Q4/Q4 31.12.2019 YoY Net revenue in MCHF 1) 590 -3.3% 2'312 -4.0% Direct costs in MCHF -204 0.0% -786 3.8% 2) Net revenue down -4.0%, Indirect costs in MCHF -213 -2.7% -821 -3.1% decrease in service revenue Contribution margin 2 in MCH
Slide 82: Enterprise Customers
Enterprise Customers Subs and revenue performance Subscriptions (in k) Service Revenue (in CHF mn) Solutions Revenue (in CHF mn) 400 1'476 YoY 80% YoY 350 300 84% 82% 81% 70% 269 271 271 +2 300 YoY 1'386 -122 251 147 248 60% 1'354 250 -27 15 227 221 50% 106 -68 15 15 35 79 200 40% 200 127 31 112 30
Slide 83: New segment reporting as a consequence of OneB2B transformation
New segment reporting as a consequence of OneB2B transformation Transfer of SME impacts operational and financial KPIs Restatement of 2019 figures as per Q1 2020 Market overview Residentials SOHO SME Corporates 2019 ~8.4mn inhabitants (1-4 FTEs) (5-249 FTEs) (>250 FTEs) Enterprise Customers format ~
Slide 84: Wholesale
Wholesale Segment reporting as per 31.12.2019 Q4 2019 Q4/Q4 31.12.2019 YoY External revenue in MCHF 154 16.7% 643 13.6% Intersegment revenue in MCHF 65 -22.6% 325 -0.9% Net revenue in MCHF 219 1.4% 968 8.3% Direct costs in MCHF -94 -12.1% -427 -0.7% Revenue from external 1) Indirect costs in MCHF -3
Slide 85: New Telecoms Act passed in H1 2019 …
New Telecoms Act passed in H1 2019 … … ensuring favourable investment conditions also in the future Telecoms Act Fixed regulation Mobile regulation • Revision completed in H1 2019 • Only copper access remains • No access regulation • New act effective as from regulated H2 2020 (expected) • Roaming w
Slide 86: Solution Business
Grow broadband business against alternative network competitors Swisscom with an attractive wholesale access portfolio Leading wholesale access portfolio and … … attractive conditions led to volume growth Carrier Line Service Basic und Premium • Dedicated high-quality Point-to-Point Data Transmissio
Slide 87: IT, Network and Infrastructure
IT, Network and Infrastructure Segment reporting as per 31.12.2019 Q4 2019 Q4/Q4 31.12.2019 YoY Net revenue in MCHF 20 0.0% 85 7.6% Direct costs in MCHF -3 0.0% -11 0.0% Workforce expenses in MCHF -259 19.9% -847 1.3% Maintenance in MCHF -51 -1.9% -198 4.2% IT expenses in MCHF -50 -9.1% -170 -11.5%
Slide 88: Spectrum overview in Switzerland
Spectrum overview in Switzerland Newly acquired spectrum of Swisscom – total of 200 MHz 180 Existing spectrum of Swisscom – total of 255 MHz Combined spectrum of competitors – total of 565 MHz 90 90 60 120 40 30 40 60 60 in MHz per band 45 15 10 40 30 30 25 25 20 10 700 FDD 700 SDL 800 FDD 900 FDD 1
Slide 89: Fastweb
Fastweb Segment reporting as per 31.12.2019 Q4 2019 Q4/Q4 31.12.2019 YoY Consumer revenue in MEUR 285 7.5% 1'104 5.1% Enterprise revenue in MEUR 235 5.9% 862 10.5% 1) Wholesale revenue in MEUR 114 12.9% 252 -8.0% 1) Net revenue in MEUR 634 7.8% 2'218 5.4% OPEX in MEUR 2) -413 6.4% -1'468 4.3% Consum
Slide 90: Other
Other Segment reporting as per 31.12.2019 Q4 2019 Q4/Q4 31.12.2019 YoY External revenue in MCHF 126 -17.1% 509 -9.1% 1) Net revenue in MCHF 242 -4.3% 929 2.2% 2) Net revenue up by 2.2% YoY OPEX in MCHF -198 -2.9% -741 4.1% driven by higher revenue at EBITDA in MCHF 44 -10.2% 188 -4.6% Cablex for con
Slide 91: Pension plan
Pension plan Situation as per 31.12.2019 Valuation differences between Swiss pension law and IFRS Evolution IFRS deficit in 2019 Difference of CHF 2.2bn due to different actuarial decrease of CHF 138mn (-11.5%) 110% … assumptions … valuation method 88% profit cash equity / other comprehensive & loss
Slide 92: Pension plan
Pension plan Reported costs and outlook in CHF mn 2018 2019 Change 2020 reported reported 20/19 estimated Operating pension cost (EBITDA) 346 325 15 340 Net interest (financial result) 6 8 -6 2 Total pension cost (P&L) 352 333 -18 342 Company contributions (cash payments) 282 278 2 280 Operating pen
Slide 93: Prudent financial policy…
Prudent financial policy… …consistent with a stable and predictable dividend approach Equity ratio Net debt/EBITDA 2019 IFRS 16 target target in CHF mn reported adjusted 30% 1.9x (IFRS 16 adjusted) EBITDA 4'358 4'358 Lease expense - -294 EBITDAaL 4'064 Committed to solid credit ratings Net debt 6'75
Slide 94: Investor contact
Investor contact Bild Louis Schmid Tamara Andenmatten Head Investor Relations Investor Relations Manager [email protected] [email protected] +41 58 221 62 79 +41 58 221 12 79 94
Slide 95: 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