Depreciation and amortisation, non-operating results
In CHF million, except where indicated |
3. quarter 2019 |
3. quarter 2018 |
Change |
1.1.–30.9. 2019 |
1.1.–30.9. 2018 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating income before depreciation and amortisation (EBITDA) | 1,120 | 1,088 | 2.9% | 3,360 | 3,231 | 4.0% | ||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (538) | (530) 1 | 1.5% | (1,649) | (1,610) 1 | 2.4% | ||||||
| Depreciation of right-of-use assets | (60) | – | (182) | – | ||||||||
| Operating income (EBIT) | 522 | 558 | –6.5% | 1,529 | 1,621 | –5.7% | ||||||
| Net interest expense on financial assets and liabilities | (13) | (27) | –51.9% | (44) | (85) | –48.2% | ||||||
| Interest expense on lease liabilities | (9) | (6) | 50.0% | (24) | (18) | 33.3% | ||||||
| Other financial result | (26) | (3) | (51) | (3) | ||||||||
| Result of equity-accounted investees | (1) | 3 | 1 | 3 | ||||||||
| Income before income taxes | 473 | 525 | –9.9% | 1,411 | 1,518 | –7.0% | ||||||
| Income tax expense | (72) | (99) | –27.3% | (230) | (305) | –24.6% | ||||||
| Net income | 401 | 426 | –5.9% | 1,181 | 1,213 | –2.6% | ||||||
| Attributable to equity holders of Swisscom Ltd | 401 | 427 | –6.1% | 1,183 | 1,217 | –2.8% | ||||||
| Attributable to non-controlling interests | – | (1) | –100.0% | (2) | (4) | –50.0% | ||||||
| Earnings per share (in CHF) | 7.74 | 8.24 | –6.1% | 22.84 | 23.49 | –2.8% | ||||||
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1 Including depreciation of assets under finance leases of CHF 25 million.
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Due to the application of IFRS 16 Leases effective 1 January 2019, right-of-use assets are recognised and depreciated. The depreciation of right-of-use assets amounted to CHF 182 million in the first nine months of 2019. The depreciation and amortisation of property, plant and equipment and intangible assets increased by CHF 39 million or 2.4% year-on-year to CHF 1,649 million, mainly reflecting an increase in depreciation and amortisation at Swisscom Switzerland and at Fastweb. Net interest expense excluding leasing declined from CHF 85 million to CHF 44 million as a result of lower average interest expense. Negative effects of CHF 40 million arising from the fair value adjustment of interest rate swaps weighed on the other financial result (CHF –51 million) in 2019. Income tax expense was CHF 230 million (prior year: CHF 305 million), corresponding to an effective income tax rate of 16.3% (prior year: 20.1%). Income tax expense for the first nine months of 2019 includes positive tax effects of CHF 62 million resulting from the revaluation of deferred income tax items in connection with the adoption of the Swiss tax reform. Swisscom’s net income decreased by CHF 32 million or 2.6% to CHF 1,181 million, and earnings per share were down from CHF 23.49 to CHF 22.84.
Swiss tax reform
The tax reform that was adopted in the referendum in May 2019 will reduce Swisscom’s average consolidated tax rate by around 1.5% to 19.5%. Furthermore, the consolidated financial statement for full-year 2019 will include a positive tax effect of around CHF 260 million. Around CHF 60 million was already recorded as income up to September 2019. The remaining CHF 200 million is expected in the fourth quarter of 2019. These tax effects in the 2019 consolidated financial statement do not impact current tax payments but are spread over a period of around ten years. The positive tax effects result from the accounting of deferred taxes under international Financial Reporting Standards (IFRS) as a consequence of lower cantonal tax rates and value adjustments made within the scope of the transitional rule concerning the regular taxation of the holding company.