Swisscom Ag · SIX:SCMN
Swisscom — FY2002 Earnings Presentation
38 slides from Swisscom's earnings presentation, Mar 26, 2003
Slide 1: Analyst meeting Annual results 2002 back-up slides
Analyst meeting Annual results 2002 “back-up slides” handout at analyst meeting 26 March 2003, Zurich 1
Slide 2: Subject Page
Subject Page 1. Swisscom Fixnet 3 2. Swisscom Mobile 12 3. debitel 16 4. Other 23 5. Group Financials 26 2
Slide 3: 1. Swisscom Fixnet
swirScPry, 1. Swisscom Fixnet
Slide 4: Stabilized decline in Fixnet revenues
Stabilized decline in Fixnet revenues 6,588 - 2% 6,443 Access § Price increase ISDN light 1,441 1,473 +2 % § Hard mobile substitution FX, incl. intersegment revenues § Increased F2M traffic Traffic 1,435 -6 % 1,354 § Introduction renumbering plan § Market share losses, surf effect 1 and mobile subs.
Slide 5: Penetration still very high, but access substitution due to mobile starting to become visible
Penetration still very high, but access substitution due to mobile starting to become visible Access Lines (Voice) Comments § Overall penetration still at over 98% 4,097 - 0.6% 4,074 households ISDN+ § Loss of ca. 1.5% access lines due to hard 857 + 6.3% 911 Primary mobile substitution 1 § Estimated
Slide 6: Stabilized traffic market shares
Stabilized traffic market shares Overall market share stabilized Substantial additional win-backs achieved, at 59% 1 net-churn reduced Number of winbacks/quarter (in ‘000) Market Share (%) of Swisscom Fixnet Total 103 209 80 77 Local 74 DLD 67 F2M 47 48 Ø 52 46 Int. Overall Ø26 67 65 62 60 60 60 Ø 2
Slide 7: Improved Service to the customer
Improved Service to the customer Substantial improvements in Customer Care 2001 2002 § First resolution rate – fulfillment N.A. 90% – assurance 60% 80% § Response time high 90 secs1) <20 sec's for 80% value customers Customer satisfaction high, stable and comparable to competition § Trust, brand and
Slide 8: Tight OPEX control: OPEX reduced, despite increased restructuring costs
Tight OPEX control: OPEX reduced, despite increased restructuring costs Top changes Description (in CHF mm) - 1.3% 5000 4,599 4,540 Personnel: § Headcount reduction (>600 FTE’s) 4000 +6 % § Increased restructuring charges (CHF 1,751 1,668 50mm higher than in 2001) 3000 733 700 Termination to § Reduc
Slide 9: Reduced CAPEX while growing in new businesses
Reduced CAPEX while growing in new businesses CAPEX Investing in the future (in CHF mm) § ADSL equipment 597 - 2% 585 § SDH equipment New business 336 + 9% + new capacity 367 § High capacity bandwidth for Existing metro services 261 -16% installations 218 2001 2002 § Optical cable, transport network
Slide 10: Strong ADSL growth, surpassed the inflection point of maximum cash exposure
Strong ADSL growth, surpassed the inflection point of maximum cash exposure ADSL growing faster Aggressive growth last months of 2002 to than cable exceed 215 k contracts signed 1 Market share of registered broadband HH Number of new ADSL contracts/month (in ‘000) Total 40 k 215 k 100% = 153K + 197%
Slide 11: Bluewin secured leadership
Bluewin secured leadership Despite aggressive broadband growth sustained narrowband leadership Narrowband users Registered broadband HH 197% 455k 1,5mm 7% 1,6mm Other Cable 125 ISPs 1 Other 53% 53% 135 Cablecom 1 ISP’s 153k 101% Other ADSL 86 53 ISP’s Bluewin 47% 47% 15 67 109 Bluewin 18 500% 2001 2
Slide 12: 2. Swisscom Mobile
swirScPry, 2. Swisscom Mobile
Slide 13: Strong operational performance 2002
Strong operational performance 2002 Subscriber development Comments § Market penetration in Switzerland reaches Postpaid Prepaid 4000 77.5% at year-end 3,605 3,373 3500 § Market gross adds reduced to 1.6mm, of which 3,024 3000 1,307 Swisscom Mobile achieves over 50% 1,221 (in thousand) 2500 2,200 1,
Slide 14: High management attention to improve cost efficiencies
High management attention to improve cost efficiencies Breakdown of costs Comments (in CHF mm) 2001 2002 § Network and interconnection cost stable 700 626 627 616 595 although traffic increased 600 § SAC at CHF 212mm reduced by 15%, 500 SRC doubled to CHF 141mm 400 353 324 325 321 300 269 § Total CO
Slide 15: Strict customer focus to provide superior quality
Strict customer focus to provide superior quality 0 2 4 6 8 10 Swisscom Mobile: 8.35 § USP network quality: Best competitor: 7.60 – We offer to our customers all state-of-the-art technologies on mobile communication such as GSM, GPRS, UMTS, WLAN at the best coverage within Switzerland and abroad. 0
Slide 16: 3. debitel
swirScPry, 3. debitel
Slide 17: debitel operational performance 2002
debitel operational performance 2002 Germany International Group 12'000'000 § Customer growth despite deactivation of 10'000'000 Subscriber 8'000'000 sleeping customers (Germany: 1.4mm, 6'000'000 international: 0.3mm) and saturated 4'000'000 markets 2'000'000 0 § International contribution increased
Slide 18: Strengthening of distribution power through attractive distribution program
Strengthening of distribution power through attractive distribution program § Extension of the exclusive distribution contract with EP: for five more years (Germany); EP: took a 2%-stake in debitel; 2% retention programme open for 93% debitel further sales partners stake shares § Co-operation with a
Slide 19: Current status - ESP implementation
3G Current status - ESP implementation § Implementation of ESP model in Germany on track – First company to offer content billing – Specified access to network operators' infrastructure ensured by ESP-contracts – Advanced product and service development of Jamba! – Technical ability of hosting platf
Slide 20: ESP model - general conditions for further implementation
3G ESP model - general conditions for further implementation Secure debitel's positioning regarding the German regulatory framework for UMTS - debitel is actively involved to review German telecommunication law § Ability of billing various services and contents - implementation of new billing system
Slide 21: Product / service development
Product / service development § Extension of debitel mobile service offerings: – Multi-Media Messaging Services (MMS) – in addition to own portal (Jamba!) access to network operator portals such as i-Mode, Vodafone Life! – launch of "partner card" (2 SIM-cards, 1 monthly fee) across different networ
Slide 22: Strategic direction 2003
Strategic direction 2003 § Further consolidation of the telecommunication market, especially in Germany - will be closely examined by debitel § Additional expansion to be evaluated § Target setting 2003 and onwards: Ê Ongoing transformation of the service provider model into the enhanced service pro
Slide 23: 4. Other
swirScPry, 4. Other
Slide 24: Operational performance 2002
Operational performance 2002 Swisscom Systems Swisscom IT Services § Operational performance § Completed PMI process below assumed – approx. 3,000 PBX sold and 90,000 rent costs and maintain contracts § Market growth below expectations generated high price pressure § Market development – Swisscom Sy
Slide 25: Product-/service development
Product-/service development Swisscom Systems Swisscom IT Services § Successfully introduced IP-based systems § Redefined existing solution sets to meet and system extensions of major suppliers market requirements and demand (Siemens, Nortel, Ascom) to serve those § Defined portfolio across 3 key tr
Slide 26: 5. Group Financials
swirScPry, 5. Group Financials
Slide 27: Solid operating performance ...
Solid operating performance ... EBITDA and margins Per employee ratios 1 35% 4,950 31.1% 1000 250 30.4% 28.7% 212 216 4,750 30% 900 225 in CHF thousand 196 in CHF thousand in CHF mm 4,550 800 200 4,409 4,413 25% 710 682 665 4,350 700 175 20% 4,150 600 150 4,034 15% 500 125 3,950 3,750 10% 400 100 20
Slide 28: ... and ongoing healthy balance sheet
... and ongoing healthy balance sheet Net debt and net debt/EBITDA Book leverage and equity ratio 2,891 3000 1.50 70% 49.6% 55.0% 60% 43.0% 38.9% 2000 0.72 1.00 50% 40.0% 642 40% 33.7% 1000 in CHF mm 0.50 30% 25.0% 0.15 0 20% 8.8% 2000 2001 2002 0.00 10% 10.0% -1000 0% -0.66 -0.50 -10% 2000 2001 200
Slide 29: Headcount development
Headcount development 21,777 1 21,946 20,604 21,328 20,470 20000 19,254 1 17,459 17,785 17,171 15000 10000 5000 0 1998 1999 2000 2001 2002 Swisscom incl. debitel Swisscom excl. debitel * All numbers exclude employees of WorkLink 1 The number of FTE employees at the year end 2001 includes 493 employe
Slide 30: Cost breakdown
Cost breakdown Goods and services purchased Other operating expenses (in CHF mm) 1,500 2,500 2001 2002 2001 2002 +164 (18) 1,250 2,000 1,000 1,500 +17 +267 (67) 0,750 1,000 (37) 0,500 (55) 0,500 (2) 0,250 0,000 Equipment Traffic fees Network Other 0,000 purchased fees for Rent, repairs Advertising C
Slide 31: Impairment of debitel goodwill, under IAS
Impairment of debitel goodwill, under IAS (in CHF mm) Goodwill Book value of debitel as per 31.12.2001, € 18 2,084 Amortisation of goodwill (265) Impairment of goodwill (702) Other adjustments, net (64) Book value of debitel [93%] as per 31.12.2002, € 10 1,053 Future amortisation p.a. 156 31
Slide 32: Drivers of financial result
Drivers of financial result Financial expense 2002 Financial income 2002 (in CHF mm) (in CHF mm) Interest on debt and finance lease 246 Interest 168 PV adjustment on accrued liabilities 25 Dividends 8 Impairment charge on Infonet 111 Gain on CB tax lease transactions 28 Impairment charge on Swiss 41
Slide 33: Overview of income tax payments
Overview of income tax payments 1998 1999 2000 2001 2002 P+L Statement Current income tax expense 409 317 439 499 123 Deferred income tax (benefit) expense (90) 218 201 (514) 238 Total income tax expense 319 535 640 (15) 361 CF Statement Income taxes paid 26 135 398 678 537 Balance Sheet Current tax
Slide 34: Tax calculation 2002
Tax calculation 2002 (in CHF m m ) EBT 1 Incom e tax expense Tax rate current deferred total reported num bers 1,395 123 238 361 25.9% Result of the transition from a parent company to a holding company, net (115) (115) Impairment of debitel goodw ill 702 127 80 207 adjusted num bers 2,097 240 213 4
Slide 35: Group cash flow statement (I)
Group cash flow statement (I) (in CHF mm) 2001 2002 EBITDA 4,409 4,413 Change in working capital, net 275 2 Payments for early retirements (225) (43) Special contribution to pension fund (440) Net interests 48 (78) Income taxes paid (678) (537) Gain from cross-border tax lease transactions 28 Net ca
Slide 36: Group cash flow statement (II)
Group cash flow statement (II) (in CHF mm) 2001 2002 Net cash provided by operating activities 3,389 3,785 CAPEX (1,234) (1,222) Proceeds from sale of real estate 1,734 Proceeds from partial sale of Swisscom Mobile 4,282 Proceeds from sale of affiliated companies 73 42 Investments, net (894) (92) Pu
Slide 37: CAPEX analysis
CAPEX analysis Group CAPEX development Capital expenditures 2002 3000 13.3% 15% 12.6% 1400 1,222 14% 2500 13% 1,154 1200 12.0% 12.0% 10.3% in CHF mm 1000 11.1% 12% in CHF mm 2000 8.7% 8.4% 10% 800 1,468 1,450 585 1500 1,305 8% 10% 1,234 1,222 600 8.4% 392 400 1000 5% 8% 200 500 3% 0 6% totalgroup Fi
Slide 38: Change of net debts
Change of net debts Net cash provided by operating activities 3,785 (1,222) Net cash CAPEX 31.12.2001 2,899 Dividends paid Dividends (728) paid to (4,264) minorities Share (304) (in CHF mm) buyback (530) Capital (278) (642) Reduction Other Net debt 30.12.2002 38