Swisscom Ag · SIX:SCMN
Swisscom — Q1 2021 Earnings Presentation
43 slides from Swisscom's earnings presentation, Apr 29, 2021
Slide 1: Q1 2021 results
Analyst & investor presentation Q1 2021 results 29 April 2021
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 Group financials Highlights 3
Slide 4: Q1 achievements
1 Q1 achievements inOne offerings extended 30 days online for just CHF 5.- BICS sale 22.4% stake sold for EUR ~110mn The best network Win of Ookla speed test for the sixth time and win of CHIP mobile network test 2021 Strong performance in Q1 New fibre Operationally and financially on track partners
Slide 5: Q1 market performance
1 Q1 market performance Swiss RGU base with extraordinary effects. Fastweb with ongoing RGU growth Swisscom Switzerland (RGUs in k) Fastweb (RGUs in k) +105 +17 +18 +8 Net adds Q1 underlying reported +1 underlying reported -10 -5 1 -7 -15 -16 2 -32 Broadband TV Fixed voice Postpaid Wholesale Broadba
Slide 6: Q1 financial performance
1 Q1 financial performance Robust set of results. Net income +62% YOY driven by one-offs EBITDA development in CHF mn and YOY changes Q1 2021 Underlying performance +9 Net CHF 2'803mn +7 +10 +4 1’124 1’111 (+2.4% YOY) revenue -8 Net CHF 638mn (+61.9% YOY) income Group Swisscom Currency Group Fastweb
Slide 7: Business Review
2 Business Review 7
Slide 8: 2021 business priorities
2 2021 business priorities Execution fully aligned with strategy Continuously invest in Deliver on leading Strong commitment to Push Fastweb infrastructure access market position in operational excellence in its next chapter of Switzerland growth Deliver maximum Lever #1 market position Realise indi
Slide 9: Swisscom constantly invests in best performing network experiences
2 Swisscom constantly invests in best performing network experiences 5G rollout barriers soften and fibre expansion on track to achieve 39% FTTH coverage by YE 2021 5G+ rollout with regulatory relief Fibre rollout (in waves) progressing well wave I wave II wave III • 5G with adaptive antennas transm
Slide 10: As infrastructure player Swisscom maximises its value proposition
2 As infrastructure player Swisscom maximises its value proposition … … by enabling UBB access through network co-investments or attractive wholesale offerings Market and network context Swisscom's fibre approach • Swisscom invests and is open to co-operations if economics are favourable Growing dem
Slide 11: New fibre partnership with Salt
2 New fibre partnership with Salt Long-term agreement consists of two investment components: feeder and drop Central office Drop Manhole incl. splitter Good to know Feeder • Swisscom builds and owns the FTTH network in Switzerland - along strategic settings and expansion ambitions Vertical • FTTH ro
Slide 12: B2C market dynamics unchanged
2 B2C market dynamics unchanged Differentiation key to keep competitive edge and defend market shares Swisscom well positioned … ... to successfully deliver on leading position • Underlying operational performance as expected • Reported figures (extraordinarily) affected • 2G sunset • Product phase-
Slide 13: B2C operational results
2 B2C operational results Trends unchanged but continuous promotions and extraordinary phase-outs weigh on churn Wireline KPIs as per 31.3.2021 Wireless KPIs as per 31.3.2021 BB 2nd/3rd brand BB Postpaid 2nd/3rd brand Postpaid value RGUs RGUs 2 churn rate p.a. RGUs RGUs 5 churn rate p.a. 1'733k 4% 1
Slide 14: B2B performance
2 B2B performance Satisfying Q1 with service revenue slightly above expectations and Solutions in line Service revenue trend YOY positive … in CHF mn Solutions revenue +2.2% YOY … in CHF mn Q1 20 Q2 Q3 Q4 Q1 21 267 260 259 272 273 -19 -17 -27 -35 -40 YOY change Q1 20 Q2 Q3 Q4 Q1 21 … primarily thank
Slide 15: Cost achievements
2 Cost achievements Cost reduction efforts sustained to increase efficiency of Swiss operations Indirect cost development FTE development (YOY changes in CHF mn) FTEs of Swisscom Switzerland 2020 2021 -226 Q1 -33 -27 13'056 12'857 12'876 12'845 12'830 Q2 -31 Q3 -24 Q4 -41 ∑ -129 > -100 Q1 20 Q2 Q3 Q
Slide 16: Swisscom Switzerland: financial results
2 Swisscom Switzerland: financial results Solid Q1 EBITDA primarily thanks to satisfying top-line evolution and indirect cost savings as expected Net revenue in CHF mn EBITDA in CHF mn OpFCF proxy in CHF mn 2'065 +15 2'080 909 +7 916 EBITDA Q1 21 YOY 164 +9 173 59 58 Lease expense 1 175 +37 212 267
Slide 17: Fastweb: network and commercial update
2 Fastweb: network and commercial update Providing best experiences everywhere Fibre: unique positioning with NeXXt FTTH @2.5 Gbps • Only player offering >1 Gbps on consumer market • FiberCop has been set up to rollout fibre up to 56% of Italy by 2025 5G FWA: the 1st provider to bring real UBB servi
Slide 18: Fastweb: Consumer performance
2 Fastweb: Consumer performance Solid results in line with expectations Fixed Mobile ARPU, churn, NPS Broadband subs in k (YOY change) Mobile subs in k (YOY change) ARPU uplift Churn benefit (EUR/month, YOY) (YOY) +4% +16% 27% -47% 2’765 2’066 2’659 • Steady customer 1’779 base growth (+4% YOY) • +1
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) +12% +12% • +12% YOY driven by private and PA sector • No Covid-19 impact on 58 • Core services: 237 business generation 52 stable YOY 211 and cash-in 13 7 Other
Slide 20: Fastweb: financial results
2 Fastweb: financial results In line with FY guidance Net revenue in EUR mn EBITDA in EUR mn OpFCF proxy in EUR mn +38 581 Q1 21 YOY 543 58 Wholesale +9 179 EBITDA 52 +6 170 237 14 Lease expense 1 EBITDAaL 2 165 (+8) +26 Enterprise 13 211 +8 CAPEX -154 (-16) 157 165 EBITDAaL 2 280 +6 286 Consumer Op
Slide 21: Financial results
3 Financial results 21
Slide 22: Group revenue and changes by segments
3 Group revenue and changes by segments Top-line improved thanks to positive development of Swisscom Switzerland and growing Fastweb in CHF mn Underlying +53 (+1.9%) +41 Swisscom Switzerland +15 (+0.7%) +13 +66 (+7.0%) -3 (+2.4%) +10 +9 -1 -3 2'803 2'737 1 2 3 4 Q1 20 B2C B2B ISF 1 Fastweb Other 2 C
Slide 23: Swisscom Switzerland: revenue changes and service revenue dynamics
3 Swisscom Switzerland: revenue changes and service revenue dynamics Overall top-line dynamics as expected. Service revenue trends slightly better partially driven by Covid-19 Q1 21 revenue changes by business drivers Service revenue evolution and Q1 21 changes in CHF mn in CHF mn Q1 2020 Q2 Q3 Q4 Q
Slide 24: Group EBITDA and changes by segments
3 Group EBITDA and changes by segments Satisfying underlying results thanks to steady cost management in Switzerland and growing Fastweb in CHF mn Underlying +9 (+0.8%) Swisscom Switzerland +7 (+0.8%) +10 (+5.3%) +4 +13 +6 +4 +1 (+1.2%) -8 -4 1'124 1'111 1 2 3 4 5 6 Q1 20 B2C B2B ISF 1 Fastweb Other
Slide 25: EBITDA Swisscom Switzerland with OPEX changes and dynamics
3 EBITDA Swisscom Switzerland with OPEX changes and dynamics Operational excellence initiatives with expected impacts lowering indirect costs on a recurring basis in CHF mn direct cost -35 (+8.5%) indirect cost +27 (-3.6%) +15 +25 +7 -9 -8 +2 (+0.8%) -18 909 916 1 2 3 4 5 Q1 20 Goods Q1 21 Revenue S
Slide 26: Capital expenditures
3 Capital expenditures Invest in critical infrastructure of the future Swisscom Switzerland Q1 20 ∆ Q1 21 IT systems, All-IP, Group CHF 540mn Wireless CP equipment CHF 516mn +24 (+4.7% YOY) and other CAPEX CHF 80mn +3% YOY CHF 77mn -1% YOY Swisscom CHF 367mn +4 CHF 371mn Switzerland (+1.1% YOY) Copp
Slide 27: Free cash flow
3 Free cash flow FCF increase of CHF +81mn driven by better NWC development partly compensating higher income taxes paid in CHF mn 1’124 -75 1'049 -540 -198 -19 Q1 21 -21 +12 -13 270 509 Δ +13 0 +13 -24 -11 +184 -2 -8 -79 -3 +81 1’111 -75 1'036 -516 -119 Q1 20 520 -16 189 -205 +14 -5 EBITDA Lease EB
Slide 28: Net income
3 Net income Earnings per share up (+62% YOY) thanks to stable EBIT evolution combined with positive one-offs in CHF mn tax rate 1 EPS 13.8% 12.32 Q1 21 1’124 -538 -70 516 -17 -11 +252 0 -102 638 0 638 Δ +13 -1 0 +12 -5 0 +266 -1 -28 +244 -1 +243 tax rate 1 EPS 15.8% 7.63 Q1 20 1’111 -537 -70 504 -1
Slide 29: Financial implications from partnership with Salt
3 Financial implications from partnership with Salt Agreement (classified as financial lease) leads to new wholesale revenues and positive FCF effects Avg. 12m effect 2021-2025 2026+ • Physically dark fibres in P2MP turf (allocated Wholesale revenue +++ 0 to Salt) classified as financial lease (IFRS
Slide 30: New guidance FY 2021
3 New guidance FY 2021 Net revenue of CHF ~11.3bn (up), EBITDA of CHF 4.3-4.4bn (up) and CAPEX of CHF 2.2-2.3bn (down) reported sofar2 new in CHF mn figures 2020 outlook 2021 outlook 20213 Splits into: CHF ~8.6bn for Swisscom w/o Fastweb + Revenue 11'100 ~11'100 ~11'300 EUR ~2.4bn for Fastweb CHF 3.
Slide 31: Questions & answers
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Slide 32: Appendix
Appendix 32
Slide 33: Key financials
Key financials Reported and underlying revenue and EBITDA in CHF mn 2020 2021 Change Q/Q Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue, reported 2'737 2'706 2'758 2'899 11'100 2'803 +66 Currency effect -13 -13 Underlying change +53 EBITDA, reported 1'111 1'097 1'148 1'026 4'382 1'124 +13 Currency e
Slide 34: Swisscom Switzerland
Swisscom Switzerland Wireless ARPU and IFRS15 adjustments Swisscom Switzerland Swisscom Switzerland 47 44 45 45 44 43 43 43 43 42 36 35 35 34 36 35 35 34 35 34 in CHF in CHF Q1 20 Q2 Q3 Q4 Q1 21 Q1 20 Q2 Q3 Q4 Q1 21 Blended (reported) Blended (IFRS15) Postpaid (reported) Postpaid (IFRS15) Residentia
Slide 35: Residential Customers
Residential Customers Segment reporting as per 31.03.2021 31.03.2021 YoY Net revenue in MCHF 1) 1'149 1.1% Net revenue increased Direct costs in MCHF -279 12.5% driven by higher handset Indirect costs in MCHF 2) -171 -8.1% sales, however service Contribution margin 2 in MCHF 699 -0.6% revenue decrea
Slide 36: Business Customers
Business Customers Segment reporting as per 31.03.2021 31.03.2021 YoY Net revenue in MCHF 1) 778 -0.1% Net revenue flattish (-0.1%), the Direct costs in MCHF -202 3.6% decrease in service revenue Indirect costs in MCHF 2) -238 -3.6% (-3.9%) due to price erosion and Contribution margin 2 in MCHF 338
Slide 37: Wholesale
Wholesale Segment reporting as per 31.03.2021 31.03.2021 YoY External revenue in MCHF 173 5.5% Intersegment revenue in MCHF 70 14.8% Net revenue in MCHF 243 8.0% Revenue from external Direct costs in MCHF -99 11.2% customers up by 5.5%. due to BBCS growth and positive Indirect costs in MCHF 1) -6 50
Slide 38: Infrastructure & Support Functions
Infrastructure & Support Functions Segment reporting as per 31.03.2021 31.03.2021 YoY Net revenue in MCHF 19 -9.5% Direct costs in MCHF -2 100.0% Workforce expenses in MCHF -230 4.5% Contribution margin 2 Maintenance in MCHF -51 -5.6% improved by 1.1%. Network IT expenses in MCHF -32 -3.0% maintenan
Slide 39: Fastweb
Fastweb Segment reporting as per 31.03.2021 31.03.2021 YoY Consumer revenue in MEUR 286 2.1% Enterprise revenue in MEUR 237 12.3% Consumer revenue up by Wholesale revenue in MEUR 1) 58 11.5% 2.1% YOY driven by the Net revenue in MEUR 1) 581 7.0% increase in customer base. OPEX in MEUR 2) -402 7.8% E
Slide 40: Other
Other Segment reporting as per 31.03.2021 31.03.2021 YoY External revenue in MCHF 104 -4.6% Net revenue in MCHF 1) 240 -0.4% OPEX in MCHF 2) -206 3.5% External revenue on level EBITDA in MCHF 34 -19.0% of prior year. EBITDA margin in % 14.2% Depreciation & amortisation in MCHF -13 -13.3% Lease expen
Slide 41: Well balanced and diversified maturity profile
Well balanced and diversified maturity profile Successful rating reviews in Q1 underpinning A credit ratings Debt maturity profile as per Q1 2021 1) 2021 554 • Portfolio mix: Fix 94% vs floating 6% 2022 500 • Ø interest rate of 1.08% 2023 250 • Ø duration of 6.39 years 2024 666 • CHF 2.2bn committed
Slide 42: 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 42
Slide 43: 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