Swisscom Ag · SIX:SCMN
Swisscom — Q2 2015 Earnings Presentation
43 slides from Swisscom's earnings presentation, Aug 19, 2015
Slide 1: Q2 2015 results
Q2 2015 results Analyst and investor presentation 19 August 2015
Slide 2: Agenda
Agenda 2 Welcome and introduction Louis Schmid, IR 1. Positive underlying figures Urs Schaeppi, CEO 2. Unchanged Swiss trends 3. Promising Fastweb results 4. Financials Mario Rossi, CFO Q&A
Slide 3: Group results: reported financials
1. Group results: reported financials Key figures with steady performance 3 Net revenue, reported Q2 2015 net revenue: +58 CHF 2.865 bln, 5’700 5’758 in line with previous quarters in CHF mm ∅ 2’865 Net revenue of HY 2015: CHF 5.758 bln (CHF +58mm YOY) Q2 2015 EBITDA: EBITDA, reported CHF 1.082 bln,
Slide 4: Group results: comparable financials
1. Group results: comparable financials Underlying revenue and EBITDA positive 4 Net revenue, comparable in CHF mm Q1 2015 Q2 2015 H1 2015 Underlying Q2 2015 Swisscom Switzerland 2'336 2'325 4'661 revenue increased by Fastweb 467 453 920 CHF +22mm YOY and Other 90 87 177 underlying HY 2015 Group 2'8
Slide 5: Group results: revenue dynamics
1. Group results: revenue dynamics Positive underlying revenue driven by bundles and Fastweb 5 Underlying HY 2015 Underlying revenue breakdown (YOY changes) revenue up by CHF +168 +105mm YOY (Q2 2015: 150 77 +105 CHF +22mm YOY) 100 +68 22 50 91 +20 28 83 Revenue from Fastweb 40 -10 -3 - in CHF mm im
Slide 6: Swiss trends: 1P metered revenues
2. Swiss trends: 1P metered revenues Usage-based revenues eroding further … 6 1P metered revenues, Swisscom Switzerland 1P metered revenues of HY 2015 down by -89 -126 CHF -126mm YOY (o/w CHF -65mm in 521 Q2 2015) 300 267 432 254 250 1P metered wireless 220 -37 212 revenues of HY 2015 decreased CHF
Slide 7: Swiss trends: 1P non-metered and bundle revenues
2. Swiss trends: 1P non-metered and bundle revenues … but over-compensated by 1P non-metered and bundle revenue increases 7 1P non-metered and bundle revenues, Swisscom Switzerland Higher revenues from1P non-metered +163 +168 wireless and bundle business +83 1’077 overcompensate lower revenues from
Slide 8: Swiss trends: wireless dynamics
2. Swiss trends: wireless dynamics Q2 2015 with solid operational performance 8 Evolution of postpaid und prepaid subs, in ‘000 6.571mm mobile 66% 66% 67% 67% 67% 68% 75% subs (o/w 68% 6'000 postpaid) as per 4'256 4'295 4'334 4'377 4'406 4'440 30.6.2015 50% 4'000 2'173 2'165 2'165 2'163 2'149 2'131
Slide 9: Swiss trends: wireless dynamics, Infinity plus
2. Swiss trends: wireless dynamics Infinity plus* with satisfying attraction 9 Successful multi- Postpaid subs composition, in ‘000 brand approach: +39 +39 +43 +29 +34 5'000 4’295 4’334 4’377 4’406 4’440 4’256 serving different customer 4'000 10% 10% 3% 4% requirements and 3'000 45% 37% stimulating
Slide 10: Swiss trends: wireline dynamics
2. Swiss trends: wireline dynamics Voice line losses accelerating, Broadband performing well 10 Fixed voice lines, in ‘000 2'856 -26 2'830 -19 2'811 -33 2'778 -43 2'735 -38 2'697 3'000 Fixed line losses (-38k in Q2 2015 vs. 2'000 -26k in Q2 2014) accelerating 1'000 +29 +34 +30 37% of fixed voice +33
Slide 11: Swiss trends: wireline dynamics, IPTV
2. Swiss trends: wireline dynamics IPTV driving fixed RGUs up 11 IPTV subs, in ‘000 1'500 +37 +40 +36 1'201 1'238 Q2 2015 with +37k +39 +34 1'125 1'165 1'052 1'091 IPTV net adds 1'000 1'001 +55 1'056 +68 947 +54 +47 879 85% 781 +51 832 85% of all IPTV subs 500 74% are in a bundle subscription - Q1 1
Slide 12: Swiss trends: wireline dynamics, fixed bundles
2. Swiss trends: wireline dynamics Appetite for fixed bundle unbroken 12 Fixed line RGUs in bundles (in ‘000) and penetration (in %) 3’365k fixed line RGUs in bundles as per 30.6.2015 +134 +137 3’365 +118 +152 3’231 Q2 2015 with +134 3’094 2’824 2’942 +134k fixed line 2’690 RGUs (YOY unchanged) o/w
Slide 13: Swiss trends: fibre evolution
2. Swiss trends: fibre evolution Higher broadband demand in FTTS footprint 13 Footprint of new fibre technologies* (in ‘000) and FTTH KPIs (in %) As 1.591mm homes 1’591 1’401 1’489 equipped with new 1’178 fibre technologies as 958 per 30.6.2015 822 975k homes with FTTH passed as per 30.6.2015 FTTS r
Slide 14: Swiss trends: business market
2. Swiss trends: business market ENT offers an incomparable broad portfolio 14 Cloud market in Switzerland Digital readiness for business transformation Product challenger Leader Follower Market challenger Source: study of Experton (2015) about 490 cloud providers in Switzerland Source: research of
Slide 15: Fastweb: revenue breakdown by segment
3. Fastweb: revenue breakdown by segment Strong Q2 performance 15 Quarterly revenues [in EUR mm] 1) Consumer Enterprise Wholesale + 4% +6% 222 202 191 200 188 188 187 190 193 196 177 188 +9% 45 37 31 34 35 46 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2014 2015 2014 2015 1) incl
Slide 16: Fastweb: FCF proxy
3. Fastweb: FCF proxy On track to deliver positive FCF in 2015 16 Quarterly figures [in EUR mm] 515 134 145 136 140 108 128 120 120 EBITDA ./. 562 156 147 136 132 142 142 120 122 CAPEX Q1 Q2 Q3 Q4 FY Q1 Q2 2014 2014 2014 2014 2014 2015 2015 = FCF -34 -14 12 -11 -47 -27 8 proxy Q2 2015 FCF proxy posi
Slide 17: Fastweb: operational performance
3. Fastweb: operational performance Strong evolution of broadband net adds 17 Broadband net adds evolution - overall market 581k Net Adds (from FY 2013 to HY 2015) 229K1 Growth of Italian broadband market is gaining traction: 130K almost 2x net adds in HY 2015 118K vs. HY 2014 44K 60K Fastweb le
Slide 18: Fastweb: UBB update
3. Fastweb: UBB update Fastweb further expands its NGAN capabilities 18 NGAN roll out at 77% completion vs. YE 2016 Over 50% of Italian Ultra Over 25% of Fastweb target1 with 5.8mm Broadband lines on residential customers on HHs/Businesses under Fastweb NGAN NGAN network coverage in 65 cities as of
Slide 19: Agenda
Agenda 19 Welcome and introduction Louis Schmid, IR 1. Positive underlying figures Urs Schaeppi, CEO 2. Unchanged Swiss trends 3. Promising Fastweb results 4. Financials Mario Rossi, CFO Q&A
Slide 20: Revenue dynamics
4. Revenue dynamics 20 Reported revenue in CHF mm w/o exceptionals increased by CHF +105mm (+1.8%) +58mm YOY ∑ Without FX and Q1: +91 -65 +27 +40 -10 -11 +72 M&A effects, net Q2: +77 -66 -7 +28 -10 -36 -14 revenue went up by CHF +105mm YOY +68 +168 -131 +20 (+1.8%) -20 -47 +58 Traffic, +17 Hard- all
Slide 21: Comparable revenue breakdown by segments
4. Comparable revenue breakdown by segments 21 Underlying HY 2015 Swisscom Switzerland in CHF mm revenue increased by w/o exceptionals +57 (Q1 +53, Q2 +4) CHF +105mm YOY ∑ (o/w CHF +22mm in Q2 2015) Q1: +50 +0 -3 +6 +40 -10 +83 Q2: +20 -3 -18 +5 +28 -10 +22 Underlying HY 2015 +68 revenue of Swisscom
Slide 22: EBITDA breakdown
4. EBITDA breakdown 22 in CHF mm Contribution Margin Reported HY 2015 w/o exceptionals +46 EBITDA decreased (Q1 +36, Q2 +10) by CHF -49mm YOY ∑ Reported Q2 2015 Q1: +32 +21 -17 -21 +13 -3 -35 -10 EBITDA came down Q2: +14 -10 +6 -1 +17 -11 -54 -39 by CHF -39mm +46 +11 +30 YOY, negatively impacted by
Slide 23: Comparable EBITDA breakdown by segments
4. Comparable EBITDA breakdown by segments 23 in CHF mm Underlying HY 2015 EBITDA increased CHF +40mm YOY ∑ (o/w CHF +15 in Q2 2015) Q1: +20 -9 -4 +8 +13 -3 +25 Q2: +26 -6 -8 -3 +17 - 11 +15 Underlying HY 2015 EBITDA of Swisscom +46 +5 +30 Switzerland up (CHF +40 -15 -12 -14 +24mm) but with differen
Slide 24: Net result
4. Net result 24 in CHF mm Net income of CHF 784mm down by CHF -22mm YOY primarily as a tax rate result of lower 20.1% EPS EBITDA 15.13 Earnings per 2,133 -1,028 1,105 -96 -41 +13 -197 784 784 share equals to CHF 15.13 Reported Net Net EBIT Other financial Depreciation income Net interest Tax expens
Slide 25: Capital expenditure
4. Capital expenditure 25 Increase YoY (CHF +25mm) driven by expansion of Swiss fibre network (in CHF mm) Expansion of UBB footprint led to HY 2015 841 298 3 Σ = 1,142 higher CAPEX at Swisscom Switzerland of CHF +72 mm YOY HY 2014 769 346 2 Σ = 1,117 8,427 Swisscom Switzerland Fastweb Other Swisscom
Slide 26: Operating free cash flow
4. Operating free cash flow 26 in CHF mm Increase in NWC of 279 CHF mm (more tied up capital) Lower EBITDA as 30.06.2015 2,133 -1,142 well as higher +33 CAPEX are leading to a lower OpFCF -126 -42 -35 -8 -68 745 of CHF -85 mm YOY ∆ -49 -25 -4 +39 -105 +26 -16 +49 -85 Increase in NWC of 219 CHF mm (m
Slide 27: Outlook 2015
4. Outlook 2015 FX assumption changed 27 FX assumption changed from 1.00 CHF/EUR to 1.05 now, leading to … an increase of revenue guidance: from CHF >11.4 bln to CHF >11.5 bln a mildly better EBITDA outlook: from CHF ~4.2 bln to CHF >4.2 bln a slight change of CAPEX guidance: from CHF 2.3 bln
Slide 28: Agenda
Agenda 28 Welcome and introduction Louis Schmid, IR 1. Positive underlying figures Urs Schaeppi, CEO 2. Unchanged Swiss trends 3. Promising Fastweb results 4. Financials Mario Rossi, CFO Q&A
Slide 29: RGU dynamics
RGU dynamics 29 Net adds of RGUs by products (in ‘000) +73 +66 +71 +66 +26 +29 +29k RGUs in Q2 150 2015 with 3P and 116 117 123 108 4P over- 91 100 compensating 1P 75 losses 52 52 44 52 44 48 50 16 14 16 4 - -4 -2 1P losses in 2015 accelerating -50 -64 -100 -91 -111 -107 Net adds evolution -125 -150
Slide 30: RGU's
RGU’s 30 Swisscom Switzerland Access Lines/Subs/Products (000) YTD, (Change to 30.06.2014 in brackets) Number of Fixed Voice products TV & Access Broadband Mobile in Bundle Sum Δ 1P Single Play 182 (-77) 1,695 (-253) 615 (-130) 6,020 (+27) 1 8,512 (-433) (-4.8%) 2Play 301 (+7) 2 602 (+14) (+2.4%) Bu
Slide 31: ARPU
ARPU 31 YTD, (Change to 30.06.2014 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 14 (-2) 51 (-0) 36 (-0) 37 (-1) 1 40 (-1) 2Play 107 (-4) 2 53 (-2) Bundles 3Play 141 (+4) 3 47 (+1) 4Play 206 (-4
Slide 32: Revenues (RGU x ARPU)
Revenues (RGU x ARPU) 32 Net revenues (CHF mm) YTD, (Change to 30.06.2014 in brackets) Fixed Voice TV & Access Broadband Mobile Sum Δ 1P Single Play 31 (-16) 531 (-81) 325 (-28) 1) 1’362 (-6) 2,249 (-130) (-5.5%) 2Play 189 (+2) 189 (+168) (+18.5%) Bundles 3Play 2) 568 (+116) 568 4Play 320 (+50) 320
Slide 33: TV market Switzerland
TV market Switzerland 33 Market volumes (000) digital TV Market digital + analogue Market share: Market Digital TV * 4‘324 4‘455 4‘484 4‘161 2) 3‘917 4‘033 540 526 12 % Satellite/Terrestrial 557 107 122 582 3% Sunrise 74 38 Analogue TV 1'245 28 % CATV / Net Integrators 1) 2) 1'256 1'276 1'301 2‘275
Slide 34: Handsets & SACs
Handsets & SACs 34 sold handsets postpaid 96% 90% 92% Smartphone share 74% 71% 66% active user postpaid Handsets (in ‘000) 407 470 491 366 352 332 346 369 337 283 SAC/SRC in CHF mm (a) (mobile and wireline products together) 22 Corporate 30 Segments 26 23 22 24 23 27 18 19 136 Residential 87 85 89 1
Slide 35: Segment 'Residential'
Segment ‘Residential’ 35 Q2/15 Q2oQ2 30.06.2015 YoY 1) Net revenue up by Net revenue in MCHF 1'283 1.6% 2'574 2.8% 2.8%, driven by the Direct costs in MCHF -285 -4.4% -596 1.9% higher Service 2) Revenue Retail Indirect costs in MCHF -256 2.8% -506 2.6% (increase in subs) Contribution margin 2 in MCH
Slide 36: Segment 'Small & Medium Enterprises'
Segment ‘Small & Medium Enterprises’ 36 Q2/15 Q2oQ2 30.06.2015 YoY 1) Net revenue in MCHF 340 3.3% 667 2.6% The acquisition of Direct costs in MCHF -42 -14.3% -84 -14.3% ’yellow pages’ Indirect costs in MCHF 2) -66 40.4% -134 44.1% (part of the PubliGroupe Contribution margin 2 in MCHF 232 -0.4% 449
Slide 37: Segment 'Enterprise Customers'
Segment ‘Enterprise Customers’ 37 Q2/15 Q2oQ2 30.06.2015 YoY 1) Net revenue in MCHF 650 1.4% 1'307 3.0% Direct costs in MCHF -143 9.2% -284 4.4% Topline, cost and 2) FTE increased Indirect costs in MCHF -281 1.4% -578 6.8% primarily due to Contribution margin 2 in MCHF 226 -3.0% 445 -2.4% the acquis
Slide 38: Segment 'Wholesale'
Segment ‘Wholesale’ 38 Q2/15 Q2oQ2 30.06.2015 YoY Revenue from external customers in MCHF 140 0.7% 288 1.4% Intersegment revenue in MCHF 94 5.6% 176 1.7% Revenue from external Net revenue in MCHF 234 2.6% 464 1.5% customers Direct costs in MCHF -136 2.3% -260 -0.4% up 1.4% 1) Indirect costs in MCHF
Slide 39: Segment 'IT, Network and Innovation'
Segment ‘IT, Network and Innovation’ 39 Q2/15 Q2oQ2 30.06.2015 YoY Net revenue in MCHF 31 -3.1% 65 3.2% Direct costs in MCHF - - - - Personnel expenses in MCHF -220 6.8% -438 6.1% Lower gain on sale Rent in MCHF -49 8.9% -98 7.7% of real estate leads to lower CM2 Maintenance in MCHF -41 -14.6% -83 -
Slide 40: Segment 'Fastweb'
Segment ‘Fastweb’ 40 Q2/15 Q2oQ2 30.06.2015 YoY Consumer revenue in MEUR 196 4.3% 389 3.5% Net revenues increased 6.9% YOY Enterprise revenue in MEUR 200 6.4% 391 7.1% 1) Wholesale revenue in MEUR 37 8.8% 82 26.2% 1) All segments report Net revenue in MEUR 433 5.6% 862 6.9% 2) an increase in OPEX in
Slide 41: Segment 'Other'
Segment ‘Other’ 41 Q2/15 Q2oQ2 30.06.2015 YoY Net revenue down by 10.2% YOY due to External revenue in MCHF 87 -16.3% 177 -10.2% lower revenue out of Net revenue in MCHF 1) 156 -7.1% 300 -3.8% construction 2) activities OPEX in MCHF -137 1.5% -265 3.1% EBITDA in MCHF 19 -42.4% 35 -36.4% EBITDA margi
Slide 42: Regulatory update
Regulatory update Draft decree of the ComCo Secretariat on Swisscom’s marketing of Sport Programmes 42 Recent Developments • The ComCo Secretariat started in April 2013 to inquire Swisscom’s position in the marketing of sports programmes • On 23 July 2015 the ComCo Secretariat issued a draft decree
Slide 43: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements 43 ”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