2 Segment information
Changes in segment reporting
Swisscom has further increased the level of digitisation within its organisational structure in order to strengthen areas with close customer proximity and boost the company’s effectiveness in the highly competitive ICT market. Through these adjustments, Swisscom also wants to improve the customer experience from a single source, simplify processes and increase efficiency in order to create greater scope for innovation. As a result of the organisational changes, the Small and Medium-Sized Enterprises division has been dissolved. The telecommunications and solutions business with small and medium-sized enterprises is now included in the Residential Customers segment as part of segment reporting. Swisscom Directories (localsearch) has been transferred to the new Digital Business division, which is reported under Other Operating Segments. In addition, all field service functions of Swisscom Switzerland are reported under the Residential Customers segment. Fleet management froom the Participations division (Other Operating Segments) has also been transferred to the IT, Network & Infrastructure segment. The prior year’s figures have been restated as follows:
In CHF million | Reported | Adjustment | Restated | |||
---|---|---|---|---|---|---|
Net revenue Financial year 2016 | ||||||
Residential Customers | 5,160 | 1,105 | 6,265 | |||
Small and Medium-Sized Enterprises | 1,367 | (1,367) | – | |||
Enterprise Customers | 2,611 | (71) | 2,540 | |||
Wholesale | 989 | (10) | 979 | |||
IT, Network & Infrastructure (former IT, Network & Innovation) | 129 | 44 | 173 | |||
Elimination | (816) | 116 | (700) | |||
Swisscom Switzerland | 9,440 | (183) | 9,257 | |||
Fastweb | 1,957 | – | 1,957 | |||
Other Operating Segments | 594 | 195 | 789 | |||
Group Headquarters | 2 | – | 2 | |||
Elimination | (350) | (12) | (362) | |||
Total net revenue | 11,643 | – | 11,643 | |||
Segment result Financial year 2016 | ||||||
Residential Customers | 2,748 | 753 | 3,501 | |||
Small and Medium-Sized Enterprises | 847 | (847) | – | |||
Enterprise Customers | 722 | 32 | 754 | |||
Wholesale | 388 | (9) | 379 | |||
IT, Network & Infrastructure (former IT, Network & Innovation) | (2,508) | 17 | (2,491) | |||
Swisscom Switzerland | 2,197 | (54) | 2,143 | |||
Fastweb | 124 | – | 124 | |||
Other Operating Segments | 27 | 54 | 81 | |||
Group Headquarters | (114) | – | (114) | |||
Reconciliation pension cost | (72) | – | (72) | |||
Elimination | (14) | – | (14) | |||
Total segment result | 2,148 | – | 2,148 |
General information
Operating segments requiring to be reported are determined on the basis of the management approach. Accordingly, external segment reporting reflects the Group’s internal financial reporting to the Chief Operating Decision Maker. Reporting is divided into the segments “Residential Customers”, “Enterprise Customers”, “Wholesale”, and “IT, Network & Infrastructure”, which are grouped under Swisscom Switzerland, as well as “Fastweb”, and “Other Operating Segments”. “Group Headquarters”, which includes non-allocated costs, is reported separately.
Group Headquarters does not charge any management fees to other segments for its financial management services, nor does the IT, Network & Infrastructure segment charge any network costs to other segments. Other services between the segments are recharged between the segments at market prices. The results of the Residential Customers, Enterprise Customers and Wholesale segments correspond to a contribution margin before network costs. The results of the IT, Network & Infrastructure segment consist of operating expenses and depreciation and amortisation less the revenue from the rental and administration of buildings and vehicles as well capitalised costs and other income. The segment results of Swisscom Switzerland correspond in aggregate to the operating results (EBIT) of Swisscom Switzerland. The segment results of Fastweb and Other Operating Segments correspond to the operating results (EBIT) of these units. This latter encompasses net revenues from external customers and other segments, less segment expenses, depreciation and amortisation and impairment losses on property, plant & equipment and intangible assets. Segment expense includes the costs of goods and services purchased, personnel expense and other operating costs less capitalised costs of self-constructed assets and other income.
Segment expense contains the ordinary employer contributions as pension costs. The difference between the ordinary employer contributions and the pension cost as provided for under IAS 19 is reported in the column “Eliminations”. For the first nine months of 2017, an expense of CHF 75 million is disclosed under “Elimination” as a pension cost reconciliation item in accordance with IAS 19 (CHF 55 million in the first nine months of 2016).
Services provided to or sales of assets recharged between the individual segments may include unrealised gains or losses. These are eliminated and are reported in the segment information in the column “Eliminations”.
Net revenue and the results of the individual segments for the first nine months of 2017 are as shown below:
1.1.–30.9.2017, in CHF million |
Swisscom Switzerland |
Fastweb |
Other Operating Segments |
Group Head- quarters |
Elimi- nation |
Total |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Net revenue from external customers | 6,676 | 1,544 | 383 | 1 | – | 8,604 | ||||||
Net revenue with other segments | 61 | 7 | 229 | 1 | (298) | – | ||||||
Net revenue | 6,737 | 1,551 | 612 | 2 | (298) | 8,604 | ||||||
Segment result | 1,646 | 201 | 80 | (71) | (90) | 1,766 | ||||||
Financial income and financial expense, net | (118) | |||||||||||
Share of results of associates | (6) | |||||||||||
Income before income taxes | 1,642 | |||||||||||
Income tax expense | (373) | |||||||||||
Net income | 1,269 |
1.1.–30.9.2017, in CHF million |
Residential Customers |
Enterprise Customers |
Wholesale |
IT, Netowork & Infrastructure |
Elimi- nation |
Swisscom Switzerland |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Net revenue from external customers | 4,456 | 1,771 | 430 | 19 | – | 6,676 | ||||||
Net revenue with other segments | 61 | 80 | 268 | 106 | (454) | 61 | ||||||
Net revenue | 4,517 | 1,851 | 698 | 125 | (454) | 6,737 | ||||||
Segment result | 2,616 | 568 | 330 | (1,868) | – | 1,646 |
Net revenue and the results of the individual segments for the first nine months of 2016 are as shown below:
1.1.–30.9.2016, in CHF million, restated |
Swisscom Switzerland |
Fastweb |
Other Operating Segments |
Group Head- quarters |
Elimi- nation |
Total |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Net revenue from external customers | 6,828 | 1,434 | 380 | 1 | – | 8,643 | ||||||
Net revenue with other segments | 62 | 7 | 184 | – | (253) | – | ||||||
Net revenue | 6,890 | 1,441 | 564 | 1 | (253) | 8,643 | ||||||
Segment result | 1,699 | 76 | 63 | (84) | (63) | 1,691 | ||||||
Financial income and financial expense, net | (181) | |||||||||||
Share of results of associates | 1 | |||||||||||
Income before income taxes | 1,511 | |||||||||||
Income tax expense | (314) | |||||||||||
Net income | 1,197 |
1.1.–30.9.2016, in CHF million, restated |
Residential Customers |
Enterprise Customers |
Wholesale |
IT, Netowork & Infrastructure |
Elimi- nation |
Swisscom Switzerland |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Net revenue from external customers | 4,577 | 1,791 | 436 | 24 | – | 6,828 | ||||||
Net revenue with other segments | 100 | 90 | 295 | 107 | (530) | 62 | ||||||
Net revenue | 4,677 | 1,881 | 731 | 131 | (530) | 6,890 | ||||||
Segment result | 2,665 | 568 | 290 | (1,824) | – | 1,699 |