Swisscom Ag · SIX:SCMN
Swisscom — FY2017 Earnings Presentation
98 slides from Swisscom's earnings presentation, Feb 7, 2018
Slide 1: FY 2017 results presentation
FY 2017 results presentation Analyst meeting in Zurich - 07 February 2018
Slide 2: Agenda
Agenda FY 2017 results presentation 2 1. Successful 2017 Urs Schaeppi, CEO 2017 in a c 5. Healthy financials nutshell Mario Rossi, CFO 2. Be best-in class Urs Schaeppi, CEO 4. Develop Fastweb 3. Deliver in Switzerland Alberto Calcagno, CEO Fastweb Urs Schaeppi, CEO
Slide 3: 2017 in a nutshell
2017 in a nutshell Urs Schaeppi, CEO Swisscom 2017 in a nutshell Urs Schaeppi, CEO Swisscom
Slide 4: Successful 2017 with all targets met
Highlights Operations Financials Successful 2017 with all targets met Consequent execution of proven strategy leads to another satisfying year for Swisscom 4 Financial results in line Solid RGU momentum Strong inOne uptake. with guidance. in Switzerland. Successful launch of new Postpaid +90k, TV +4
Slide 5: Decent market performance cementing market shares
Highlights Operations Financials Decent market performance cementing market shares Overall stable customer base in Switzerland and Fastweb with growing RGU momentum 5 Swisscom Switzerland Fastweb +56 +76 +41 +14 +14 +30 Q4 net adds in k -81 6'637 (+25) 4'642 2'451 2'047 (+90) 2'014 (+96) 1'065 1'467
Slide 6: Financially solid and figures 2017 in line with expectations
Highlights Operations Financials Financially solid and figures 2017 in line with expectations Underlying EBITDA of Swisscom Switzerland primarily impacted by structural changes 6 Net revenue EBITDA CAPEX Net debt Equity ratio FTE CHF 11'662mn CHF 4'295mn CHF 2'378mn CHF 7'447mn 34.7% 20'506 +19mn YO
Slide 7: Strategic update
Strategic update Urs Schaeppi, CEO
Slide 8: Sector trends
Sector trends Market update Strategic focus Sector trends Structural changes and digitalisation impacting life and businesses fundamentally 8 Structural changes Digitalisation leading to a higher focus on customer experience gaining traction, driving growth and efficiency > c sensitivity Increased p
Slide 9: Market update
Sector trends Market update Strategic focus Market update Swisscom leading in all segments in Switzerland and attacking with Fastweb in Italy 9 Switzerland Italy remains focused on quality with intensifying competition c > Customer expectations unchanged: > Convergence gains momentum reliability and
Slide 10: Unchanged strategic focus
Sector trends Market update Strategic focus Unchanged strategic focus Best-in-class by delivering superior customer experience, efficiency and focused growth 10 Swisscom at heart of the digital transformation (4) Develop the Italian business (1) Best Customer Experience Trough coverage and capacity
Slide 11: (1) Best customer experience
Sector trends Market update Strategic focus (1) Best customer experience It's all about exciting our customers by delivering the best always and everywhere 11 World-in-class- Innovative products Convenient, omni-channel services infrastructure exciting and surprising customers solving problems in mi
Slide 12: (2) High operational efficiency
Sector trends Market update Strategic focus (2) High operational efficiency Focus on digital transformation opportunities and value-based rollout 12 Efficient operations Digital transformation Smart investing > Process optimisation driven by > Virtualisation of network > Best allocation of resources
Slide 13: (3) New growth opportunities
Sector trends Market update Strategic focus (3) New growth opportunities Push innovative consumer solutions and selectively approach outside core 13 Selectively develop new fields of Growth in core business Push in adjacent markets growth in internet-based domains > Increase share of wallet with > P
Slide 14: (4) Develop Fastweb
Sector trends Market update Strategic focus (4) Develop Fastweb The leading alternative Telco provider in Italy 14 Leading alternative BB and Strong boost of mobile New opportunities in Leadership in B2B market UBB provider volume and customer focus wholesale > 360° infrastructure > Scale up mobile
Slide 15: Best-in-class infrastructure
Best-in-class infrastructure Urs Schaeppi, CEO
Slide 16: 2017 in a nutshell: technology and innovation leadership
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation 2017 in a nutshell Technology and innovation leadership in all areas 16 Best mobile (data) network. Increasing UBB footprint. Strong cloud proposition and 1st in Switzerland with 75% with >50 Mbps attractive
Slide 17: Increasing UBB footprint in Switzerland
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation Increasing UBB footprint in Switzerland Investment-driven technology strategy to maintain leadership in Switzerland 17 YE 2017 Target 2021 > Broad fibre rollout UBB coverage leveraging FTTS/G.fast UBB coverag
Slide 18: Building the wireless network of the future
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation Building the wireless network of the future Achieve Gigabit-speeds for large parts in Switzerland by extending 4G capacity and … 18 Invest in capacity, performance and functionality to Stay ahead as technolog
Slide 19: New spectrum allocation 2018
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation New spectrum allocation 2018 For 5G additional spectrum is going to be available for use in Switzerland in January 2019 19 A good starting position Addition spectrum for 5G Last auction in 2012 with sufficien
Slide 20: Virtualisation progress
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation Virtualisation progress Transformation to virtualized network functions starts to become real 20 Virtualization benefits start to materialize > First two network functions > Ambition: reduce total cost runnin
Slide 21: All IP migration update
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation All IP migration update Continue the transformation towards All IP in fixed, extend to wireless 21 Wireline: drive All IP transformation forward and realise savings from 2018 onwards Evolution of customers mi
Slide 22: Evolution of our CAPEX envelope
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation Evolution of our CAPEX envelope Ultra-broadband push drives fibre investments up, but overall CAPEX declining … 22 CAPEX1 of Swisscom Switzerland decreasing Drivers of Swiss capital expenses* > Fibre investme
Slide 23: Broad wholesale portfolio enabling attractive infrastructure access
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation Broad wholesale portfolio enabling attractive infrastructure access Swisscom offers highly competitive access services to all operators in Switzerland 23 > Wholesale market leader in Wholesale Access: Switzer
Slide 24: Regulatory topics in the spotlight
Achievements Access 4.5G/5G Spectrum (auction) Virtualisation/IP CAPEX Wholesale Regulation Regulatory topics in the spotlight Manage uncertainties to ensure ongoing favourable environment for the Swiss market 24 Revision not effective before 2020 Radio emission limits Telecom Acts revision Consumer
Slide 25: Best-in-class Retail experience
Best-in-class Retail experience Urs Schaeppi, CEO
Slide 26: 2017 results in a nutshell
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel 2017 results in a nutshell Strong market position successfully maintained due to consequent execution of proven strategy 26 Commercial highlights Financial performance FY 2016 FY 2017 Residential Service revenue CHF
Slide 27: Maximise core in a highly penetrated market as strategic priority
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel Maximise core in a highly penetrated market as strategic priority Defend our value position for Residential Customers / SME and grow in adjacent businesses 27 Residential Customers SME Illustrative revenue share Illu
Slide 28: Convergence increasingly knocking at Swiss households' doors
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel Convergence increasingly knocking at Swiss households' doors inOne our new value proposition to fence customers and defend our leading position 28 Convergence gaining importance Our new offering - inOne FM penetratio
Slide 29: Positive inOne performance
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel Positive inOne performance – in line with own expectations 1.3mn customers with 2'658 RGUs thanks to attractive and fully-converged offerings 29 Customer base as of YE 17 Penetration as per 31 Dec 17 > 1.34 million c
Slide 30: inOne with positive impact on customer loyalty but at some cost
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel inOne with positive impact on customer loyalty but at some cost Convergence advantage and freedom have a positive perception effect 30 Customer perception > Simplicity and better price/performance increase NPS H2 201
Slide 31: Leading TV platform in Switzerland with 33% market share
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel Leading TV platform in Switzerland with 33% market share Continuous development of our TV proposition leads to strong net adds 31 Swisscom TV Entertainment OS3 Content strategy > Ambition to act as TV aggregator > Am
Slide 32: Outstanding stickiness and customer loyalty
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel Outstanding stickiness and customer loyalty Foster mobile and smart home products to increase customer experience and sustainability 32 Smart Home Products Mobile Products > Multi Device > New WiFi Router > Data and
Slide 33: Leverage subs base with differentiation in products and services
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel Leverage subs base with differentiation in products and services Multi-brands addressing best value for each customer need 33 Our brand portfolio Postpaid subs base increasing … in k Core value brand, defensive asset
Slide 34: Smart ICT - Outsourcing for SME Customers
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel Smart ICT - Outsourcing for SME Customers All-in-one managed service for IT and communication 34 Smart ICT offering Unique value proposition Launched in Dec 2017 • Comprehensive managed ICT solution Business Internet
Slide 35: Develop customer value thanks to unique multi-channel approach
Achievements Ambitions Convergence TV Added Services Multi-brands SME Multi-channel Develop customer value thanks to unique multi-channel approach Swisscom’s million interactions establish best-in-class customer experiences 35 Mix of customer touchpoints Levers Value potential >13mn inbound > Push i
Slide 36: Best-in-class B2B experience
Best-in-class B2B experience Urs Schaeppi, CEO Swisscom
Slide 37: 2017 results in a nutshell
Achievements Ambitions Telco Cloud Security Banking Digital business 2017 results in a nutshell B2B market offering growth opportunities 37 Commercial highlights Performance Telco business FY 2016 FY 2017 > Mobile Order entries CHF 2.52bn CHF 2.69bn > Win-backs > Innovations in portfolio keep ARPU u
Slide 38: Foster Solutions business to realise new sources of growth
Achievements Ambitions Telco Cloud Security Banking Digital Solutions Foster Solutions business to realise new sources of growth Revenues from Telco and Solutions with diverse contribution trends 38 Enterprise Customers Illustrative revenue share Solutions Cloud and UCC1 and Digital Other Security V
Slide 39: Wireless connectivity business
Achievements Ambitions Telco Cloud Security Banking Digital Solutions Wireless connectivity business Best solutions for business mobiles 39 W- portfolio & market dynamics Internet of Things IoT with connectivity focus Differentiation by continuous portfolio innovation > Revenues growing > Modular de
Slide 40: Wireline connectivity business
Achievements Ambitions Telco Cloud Security Banking Digital Solutions Wireline connectivity business Excellent experience including connectivity and communication services, today and tomorrow 40 W+ portfolio today and in the future Drivers of network services Business Voice Business Business Network
Slide 41: Cloud services contributing growth
Achievements Ambitions Telco Cloud Security Banking Digital Solutions Cloud services contributing growth Swisscom's comprehensive cloud offering supported by excellent services 41 Hybrid cloud strategy Cloud portfolio > Enterprise service cloud - Swisscom with unique and comprehensive portfolio > Pl
Slide 42: Security services gaining traction
Achievements Ambitions Telco Cloud Security Banking Digital Solutions Security services gaining traction Swisscom protects Swiss B2B IT environments from cyber attacks 42 Security offering Threat detection & response > Cyber attacks of major concern for companies > Number and form of attacks increas
Slide 43: New opportunities on the strength of Banking and FinTech
Achievements Ambitions Telco Cloud Security Banking Digital Solutions New opportunities on the strength of Banking and FinTec Swisscom provides digital solutions and outsourcing to the banking industry 43 Banking Shape blockchain activities > Successful and contributing to growth of Solutions > Swis
Slide 44: Growth chances with digital solutions
Achievements Ambitions Telco Cloud Security Banking Digital Solutions Growth chances with digital solutions Digitalisation as key driver of new business opportunities 44 Acting on different layers of digitalisation New Improved Digitised New working business models customer experiences business proc
Slide 45: Operational excellence
Operational excellence Urs Schaeppi, CEO Swisscom dd/mm/yyyy Swisscom, Folienbibliothek 45
Slide 46: Cost program and 2017 results in a nutshell
Achievements Ambitions Initiatives Cost program and 2017 results in a nutshell Cost focus a key priority to maintain Swiss margins stable 46 Deliverables 2017 Operational excellence Investment Many efficiency and simplicity initiatives optimization Cost initialised and running program 2016-2020 Simp
Slide 47: Push strategic cost reductions to the next level
Achievements Ambitions Initiatives Push strategic cost reductions to the next level Accelerate cost reductions to sustain leadership and capture the maximum benefits 47 Cost target 2018-2020 increased by +70% Cumulative (gross) cash savings of CHF -300mn -40 -60 -100 -40 in CHF mn -60 -40 -100 -60 -
Slide 48: Different pillars contributing to future cost reduction accelerations
Achievements Ambitions Initiatives Different pillars contributing to future cost reduction accelerations Enhance simplification, use digital opportunities and optimise network rollout and projects 48 Cost-efficient operations Push digital opportunities Smart investing Artificial Network New Workforc
Slide 49: Develop Fastweb
dd/mm/yyyy Develop Fastweb Alberto Calcagno
Slide 50: 2017 in a nutshell
Achievements Strategy Infrastructure Consumer Corporate Wrap-up 2017 in a nutshell Leading alternative wireline player positioning strengthened 50 (1) Extended NGN infrastructure to 8mn HHs, by far the second largest UBB network in the country (2) Increased UBB adoption with over 1.0mn lines and 43%
Slide 51: Steady EBITDA growth
Achievements Strategy Infrastructure Consumer Corporate Wrap-up Steady EBITDA growth … Another positive year with customers and margins growing for the 18th consecutive quarter 51 FY 2017 financial and operational KPIs EBITDA by operator (Wireline and Mobile, 2011-2016)1 FY 2017 Change YoY Revenues
Slide 52: ... thanks to a unique positioning
Achievements Strategy Infrastructure Consumer Corporate Wrap-up … thanks to a unique positioning Leveraging the best 360° infrastructure available in Italy 52 Fastweb has built a clear competitive advantage by developing four points of excellence … Fiber network Mobile Datacenter WiFi Fibre network
Slide 53: By far the largest alternative NGN footprint
Achievements Strategy Infrastructure Consumer Corporate Wrap-up By far the largest alternative NGN footprint … Fastweb leadership on NGN infrastructure confirmed in 2017 53 Own NGN footprint 20mn1 > Largest NGN footprint by the incumbent 8mn > The 2nd largest NGN infrastructure > Small own NGN footp
Slide 54: ... coupled to a coherent UBB coverage strategy
Achievement Achievements Strategy Infrastructure Consumer Corporate Wrap-up … coupled to a coherent UBB coverage strategy ... Focus in 2018 will be to upgrade existing footprint in order to further accelerate UBB adoption 54 Overall footprint (mn HHs, exp’ed as of Dec 18) FTTH footprint (exp’ed Dec
Slide 55: ... and combined with future opportunities in mobile
Achievements Strategy Infrastructure Consumer Corporate Wrap-up ... and combined with future opportunities in mobile Leverage existing asset base to become a convergent player based on 5G 55 Fastweb has all ingredients Wireless roadmap for 5G hybrid ‘fixed/mobile’ infrastructure Networks 5G technolo
Slide 56: Consumer - the leading alternative operator in BB and UBB
Achievements Strategy Infrastructure Consumer Corporate Wrap-up Consumer - the leading alternative operator in BB and UBB … Steady growth of UBB customer base leading to the highest UBB penetration in the market 56 Broadband subscribers (in k) Ultra Broadband subscribers (in k) 2,451 1,034 2,355 810
Slide 57: ... with the highest NPS and a strong portfolio of partners
Achievements Strategy Infrastructure Consumer Corporate Wrap-up … with the highest NPS and a strong portfolio of partners to build scale New partnership with ENI to be launched in 2018 57 Wireline NPS (Dec 2017)1 Netflix ISP Index (Mbps, Dec 2017) Operator 1 Operator 2 Operator 3 3.44 +13% 3.39 +11%
Slide 58: Mobile - Strong boost of volumes coupled to top NPS
Achievements Strategy Infrastructure Consumer Corporate Wrap-up Mobile - Strong boost of volumes coupled to top NPS … 4G services and transparency of commercial offer drive strong performance 58 Mobile active customers (in k) Market mobile net adds 9M 20171 313k 1,065 FY 2017 23% Other MVNO 133k 676
Slide 59: ... also thanks to a distinctive commercial approach
Achievements Strategy Infrastructure Consumer Corporate Wrap-up … also thanks to a distinctive commercial approach Building long-lasting customer relations based on clear value drivers 59 Italian mobile market Our approach of being the ‘Italian Uncarrier’ While mobile prices have been cut significan
Slide 60: Consolidate B2B leadership
Achievements Strategy Infrastructure Consumer Corporate Wrap-up Consolidate B2B leadership Focus on service quality and customer satisfaction driving further growth 60 Market shares on revenues Overall Corporate1 Private sector1 Public sector1 9.4% 8.8% 8.8% 8.7% Others 10.3% 9.7% 9.1% 8.1% 32% 25.1
Slide 61: Strategic ambitions in a nutshell
Achievements Strategy Infrastructure Consumer Corporate Wrap-up Strategic ambitions in a nutshell Steadily increasing market shares 61 5 years market share ambitions Consumer > Scale up mobile and push convergence 20-25% 3-5% 16% 1% > Further accelerate UBB adoption to increase customer stickiness >
Slide 62: Financial results 2017 and outlook
Financial results 2017 and outlook Mario Rossi, CFO Swisscom
Slide 63: Reconciliation of key financials
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Reconciliation of key financials Resilient financial performance in line with expectations 63 11'643 11'643 +45 11'662 11'617 Revenues (-0.2%) (+0.2%) -26 Exchange rate +45 in CHF mn Litigations at Fastweb +102 Litigations at Fastweb -60 Exchange rate
Slide 64: Revenue breakdown by segments
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Revenue breakdown by segments Price pressure weights on revenues in the Retail segment, Fastweb up 64 in CHF mn Q1 Q2 Q3 Q4 +16 +19 +18 +18 +4 +59 +57 +32 -29 -31 -8 -8 -9 -18 -15 +14 -20 -45 -49 -42 +162 +11 -26 -43 +24 -19 (-0.2%) -154 -7 11'643 Swi
Slide 65: OPEX of Swisscom Switzerland
P&L IFRS Cash flow B/S Remuneration Outlook 2018 OPEX of Swisscom Switzerland Delivering on cost transformation and reducing further indirect cost base 65 in CHF mn +11 +5 Q1 Q2 Q3 Q4 +22 +20 +3 +15 +4 +13 +4 +22 -4 0 +1 -10 -2 -5 -20 -16-25 -22 -27 -18-24-12 -24 -43-53-37 -111 -8 +36 (-2.0%) -40 -3
Slide 66: EBITDA breakdown by segments
P&L IFRS Cash flow B/S Remuneration Outlook 2018 EBITDA breakdown by segments Cost saving only partly compensate for top-line erosion, Fastweb solid 66 in CHF mn Q1 Q2 Q3 Q4 +6 +5 +6 +7 +5 +20+12+25+10 +15 +17+15+18 -20 -16 -16 -11 -36-67 -41 -23 +65 0 (-0.5%) +67 -139 -16 4'256 Swisscom Switzerland
Slide 67: Underlying EBITDA changes of Swisscom Switzerland
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Underlying EBITDA changes of Swisscom Switzerland Primarily structural-driven changes impact the domestic margin evolution 67 YOY impact Quarterly evolution FY impact Outlook in CHF mn in CHF mn Q1 Q2 Q3 Q4 Fixed -80 voice lines -19 -20 -19 -22 Outbou
Slide 68: Net income
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Net income Overall sound bottom-line 68 in CHF mn tax rate 20.0% EPS 30.31 FY 2017 4,295 -2,164 2,131 -149 -11 -11 -392 1,568 +2 1,570 EBITDA Net Net Depreciation Tax expenses EBIT income companies reported income Minorities Affiliated financial inter
Slide 69: IFRS 15 - the new revenue recognition accounting standard
P&L IFRS Cash flow B/S Remuneration Outlook 2018 IFRS 15 – the new revenue recognition accounting standard Considerations and implications for Swisscom 69 Key points Financial implications > In general > IFRS 15 standard effective from 1st Jan 2018 > Handset subsidies allocated to hardware Equity ca
Slide 70: Capital expenditure
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Capital expenditure Investing to maintain fixed and mobile network leadership 70 in CHF mn -1.6% 2,416 Other** CAPEX split – Swisscom Switzerland 2017 2,378 682 581 633 Fastweb* 692 IT systems, All-IP & other, 20% Wireless network, 16% CP equipment, S
Slide 71: Operating free cash flow
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Operating free cash flow Increase in cash from operating activities partly due to extraordinary item 71 in CHF mn 4,295 -2,378 FY 2017 +184 +30 +36 -8 1,917 2,159 Δ +2 +38 +40 +358 +2 -32 0 +368 4,293 -2,416 FY 2016 -174 +28 +68 -8 1,877 1,791 EBITDA
Slide 72: Use of 2017 free cash flow
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Use of 2017 free cash flow Two thirds of free cash flow used for shareholder payments 72 in CHF mn 2'159 Operating FCF -155 Net Interest -289 Taxes paid 1'715 Free cash flow -1'140 Dividend of CHF 22/share -176 M&A and other effects -399 Net debt redu
Slide 73: Smooth maturity profile
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Smooth maturity profile Further improvement of financing costs expected in 2018 73 Maturity profile as per 31.12.2017* in CHF mn > Several refinancing transactions lower our interest expense in 2018 by CHF 25mn, with full impact in 2019 in the range o
Slide 74: Shareholder distribution for the fiscal year 2017
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Shareholder distribution for the fiscal year 2017 Reliable dividend payments in harmony with cash flow and capital allocation 74 Dividend policy Payments per share 22 22 22 22 22 22 in CHF 2013 2014 2015 2016 2017 2018E > Swisscom targets a solid shar
Slide 75: Guidance
P&L IFRS Cash flow B/S Remuneration Outlook 2018 Guidance Net revenue of CHF ~11.6bn, EBITDA ~4.2bn and CAPEX <2.4bn 75 2017 Expected Expected 2017 Adjust- YOY change IFRS 15 2018 in CHF mn pro YOY change Splits into: reported ments Swisscom impact outlook ** forma w/o Fastweb Fastweb ~ CHF 9.2bn fo
Slide 76: Appendix
Appendix
Slide 77: Key financials - reported vs. underlying
Appendix Key financials - reported vs. underlying 77 in CHF mn 2016 2017 Change Q/Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue, reported 2’885 2’884 2’874 3’000 2’831 2'859 2'914 3'058 -54 -25 +40 +58 o/w currency effect -12 -5 +22 +40 -12 -5 +22 +40 Revenue, underlying change -42 -20 +18 +18 EBITD
Slide 78: Retail Customers - segment reporting
Appendix Retail Customers - segment reporting 78 Q4 2017 Q4/Q4 31.12.2017 YoY Net revenue decreased Net revenue in MCHF 1) 1'536 -3.3% 6'053 -3.4% driven by lower service Direct costs in MCHF -421 2.4% -1'397 -2.1% revenue. Indirect costs in MCHF 2) -315 1.6% -1'144 -3.6% Service revenue decreased (
Slide 79: Retail Customers - wireless performance
Appendix Retail Customers - wireless performance 79 Subscriptions (in k) ARPU (in CHF) Service Revenue (in CHF mn) YoY 50 43 43 130% 6'000 240% 42 5'365 5'313 5'370 110% YoY 40 +5 84% 86% 90%700 689 688 84% 664 -25 5'000 30 70% 190% 20 50%600 4'000 30% 3'305 3'333 3'375 +70 140% 10 500 10% -59 523 4
Slide 80: Retail Customers - wireline performance
Appendix Retail Customers - wireline performance 80 Subscriptions (in k) ARPU and ARPH (in CHF) 801 Service Revenue (in CHF mn) YoY 120% 50 41 41 130% 6'000 110% 41 701 685 YoY 40 654 661 -24 5'506 5'326 86% 89% 89% 5'283 -223 80% 100% 30 601 117 5'000 -80 1'418 89%90% 20 197 132 86% 1'467 30% 1'453
Slide 81: Retail Customers - convergence performance
Appendix Retail Customers - convergence performance 81 Subscriptions and Bundles (in k) ARPB/U (in CHF) and Service Revenue (in CHF mn) 5'705 YoY FM penetration (in %) YoY 6'000 5'505 30% 744 +90 +757 350 30% 33% 711 4'948 29% 654 5'000 25% 300 26% 28% 30% +21 336 4'000 18% 250 20% 27% 23% 320 16% 3
Slide 82: Retail Customers - RGUs and bundle subscriptions as per YE 2017
Appendix Retail Customers - RGUs and 1P-4P bundle subscriptions as per YE 2017 82 Retail Customers In k, YTD (change to 31.12.2016 in brackets) Sum of RGUs Avg. # of RGUs TV Voice Broadband Postpaid Prepaid per subscriptions per subscriptions 1P subscriptions 1 (-78) 500 (-422) 78 (-206) 2'374 (-204
Slide 83: Retail Customers - FY 2017 ARPUs
Appendix Retail Customers - FY 2017 ARPUs 83 Retail Customers In CHF YTD, (Change to 31.12.2016 in brackets) TV Voice Broadband Postpaid Prepaid 1P subscriptions 17 (+4) 49 (+2) 32 (-2) 37 (-1) ARPU standalone blended: 38 (+0) 2P bundle subscriptions 91 (-5) 3P bundle ARPB: 132 (-4) subscriptions AR
Slide 84: Retail Customers - FY 2017 service revenue
Appendix Retail Customers - FY 2017 service revenue 84 Retail Customers In CHF mn YTD, (Change to 31.12.2016 in brackets) TV Voice Broadband Postpaid Prepaid 1P Total standalone: 2'546 (-477) subscriptions 30 (-10) 418 (-229) 134 (-106) 1'964 (-132) t/o Wireline 582 t/o Wireless 1'964 2P bundle subs
Slide 85: Enterprise Customers - segment reporting
Appendix Enterprise Customers - segment reporting 85 Q4 2017 Q4/Q4 31.12.2017 YoY Net revenue down -1.3%, Net revenue in MCHF 1) 657 -0.3% 2'508 -1.3% decrease in service revenue Direct costs in MCHF -202 -2.9% -728 -5.7% (-3.8%) due to price erosion and reduced access volumes, Indirect costs in MCH
Slide 86: Enterprise Customers - subs and revenue performance
Appendix Enterprise Customers - subs and revenue performance 86 Subscriptions (in k) YoY Service Revenue (in CHF mn) Solutions Revenue (in CHF mn) 400 80% 75% YoY 1'518 1'523 1'512 -6 350 71% 75% 70% YoY 283 288 +5 233 217 207 -26 290 300 273 272 -1860% 264 38 38 38 +0 18 20 22 250 50% 200 145 40% 1
Slide 87: Wholesale - segment reporting
Appendix Wholesale - segment reporting 87 Q4 2017 Q4/Q4 31.12.2017 YoY Revenue from external External revenue in MCHF 148 -4.5% 578 -2.2% customers down 2.2%. Intersegment revenue in MCHF 98 5.4% 366 -5.7% Lower revenue from lower mobile termination fees Net revenue in MCHF 246 -0.8% 944 -3.6% partl
Slide 88: Wholesale - access portfolio
Appendix Wholesale - access portfolio 88 Carrier Line Service Basic und Premium Solution Business Dedicated high-quality Point-to-Point Data Transmission, CLS Monthly mass market prices 1 2M to 100G symmetric Carrier Ethernet Service Basic und Premium Broadband Connectivity Service BBCS, Layer 2
Slide 89: IT, Network and Infrastructure - segment reporting
Appendix IT, Network and Infrastructure - segment reporting 89 Q4 2017 Q4/Q4 31.12.2017 YoY 2017 and prior year include Net revenue in MCHF 42 0.0% 167 -3.5% provisions for restructuring Direct costs in MCHF -3 - -12 - and other one-off-items. On a comparable basis, Personnel expenses in MCHF -265 2
Slide 90: Network - overview of fixed infrastructure
Appendix Network - overview of fixed infrastructure 90 Bandwidths Exchange Fibre-to-the-Home > Since 2008 with 100 Mbps > Since 2013 with 1 Gbps ▪ 1Gbps Fibre-to-the-Street ▪ up to 500 Mbps approx. > Since 2013 with VDSL2 200m > Since 2016 with G.fast with G.fast DPU in Manhole Fibre-to-the-Building
Slide 91: Swisscom Switzerland - overview of sold handsets and SAC / SRC
Appendix Swisscom Switzerland - overview of sold handsets and SAC / SRC 91 Smartphone share active user postpaid 76% 80% 81% Handsets (in k) 484 337 283 303 356 285 301 365 306 268 244 261 SAC/SRC in CHF mn * Swisscom (mobile and wireline products together) Switzerland 165 145 145 109 107 112 121 11
Slide 92: Swisscom Switzerland - overview of TV market in Switzerland
Appendix Swisscom Switzerland - overview of TV market in Switzerland 92 Market volumes (in k) Market Market share: 4’455 4’489 4’410 4’426 share: 4’324 4’161 512 344 8% Satellite/Terrestrial 1) 3) 540 397 14 % 557 163 215 5% Sunrise 3) 582 107 134 74 1% 38 26 % CATV / Net Integrators 3) 1'256 1'210
Slide 93: Fastweb - segment reporting
Appendix Fastweb - segment reporting 93 Q4 2017 Q4/Q4 31.12.2017 YoY Consumer revenue up by Consumer revenue in MEUR 263 13.9% 986 8.8% 8.8% YOY. Price pressure due Enterprise revenue in MEUR 192 1.6% 710 0.6% to competition Wholesale revenue in MEUR 1) 75 31.6% 248 35.5% overcompensated by the incr
Slide 94: Other - segment reporting
Appendix Other - segment reporting 94 Net revenue up by 7.7% Q4 2017 Q4/Q4 31.12.2017 YoY YoY due to higher revenue External revenue in MCHF 146 5.0% 529 1.9% at Cablex for construction services for Swisscom Net revenue in MCHF 1) 238 5.8% 850 7.7% Switzerland. OPEX in MCHF 2) -187 -0.5% -670 7.2% E
Slide 95: Pension plan - situation as per 31.12.2017
Appendix Pension plan - situation as per 31.12.2017 95 Valuation differences between Swiss pension Reconciliation IFRS deficit 2016 -> 2017 law and IFRS difference of CHF 1.8bn due to different actuarial … decrease of CHF 0.8bn due to asset return profit equity / other 108% … assumptions … valuation
Slide 96: Pension plan - reported costs and outlook
Appendix Pension plan - reported costs and outlook 96 in CHF mn 2016 2017 Change 2018 reported reported 18/17 estimated Operating pension cost (EBITDA) 338 375 -16 359 Net interest (financial result) 25 11 -2 9 Total pension cost (P&L) 363 386 -18 368 Company contributions (cash payments) 271 339 -5
Slide 97: Refinancing - overview of 2017 transactions
Appendix Refinancing - overview of 2017 transactions 97 Instrument rating A2 by Moody’s, A by S&P A2 by Moody’s, A by S&P Status Senior unsecured debt Senior unsecured debt Amount CHF 350mn CHF 150mn Coupon 0.375% 0.750% All in costs 0.355% 0.722% First coupon date 31.05.2018 24.11.2018 Maturity 31.
Slide 98: Cautionary statement
Cautionary statement Regarding forward-looking statements 98 > “This communication contains forward-looking statements. In this communication, such forward-looking statements include, without limitation, statements relating to our financial condition, results of operations and business and certain o