Segment results
In CHF million |
3. quarter 2019 |
3. quarter 2018 |
Change |
1.1.–30.9. 2019 |
1.1.–30.9. 2018 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue | ||||||||||||
| Swisscom Switzerland | 2,111 | 2,188 | –3.5% | 6,367 | 6,583 | –3.3% | ||||||
| Fastweb | 587 | 577 | 1.7% | 1,770 | 1,757 | 0.7% | ||||||
| Other Operating Segments | 225 | 230 | –2.2% | 687 | 656 | 4.7% | ||||||
| Group Headquarters | – | – | – | 1 | –100.0% | |||||||
| Intersegment elimination | (130) | (111) | 17.1% | (368) | (308) | 19.5% | ||||||
| Net revenue | 2,793 | 2,884 | –3.2% | 8,456 | 8,689 | –2.7% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | ||||||||||||
| Swisscom Switzerland | 907 | 919 | –1.3% | 2,745 | 2,787 | –1.5% | ||||||
| Fastweb | 208 | 204 | 2.0% | 591 | 575 | 2.8% | ||||||
| Other Operating Segments | 46 | 56 | –17.9% | 144 | 148 | –2.7% | ||||||
| Group Headquarters | (20) | (19) | 5.3% | (59) | (71) | –16.9% | ||||||
| Reconciliation pension cost 1 | (15) | (17) | –11.8% | (44) | (46) | –4.3% | ||||||
| Reconciliation lease expense (IAS 17) 2 | – | (51) | –100.0% | – | (150) | –100.0% | ||||||
| Intersegment elimination | (6) | (4) | 50.0% | (17) | (12) | 41.7% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | 1,120 | 1,088 | 2.9% | 3,360 | 3,231 | 4.0% | ||||||
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1 Operating income of segments includes ordinary employer contributions as pension fund expense. The difference to the pension cost according to IAS 19 is recognised as a reconciliation item.
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2 Swisscom has been applying IFRS 16 "Leases" since 1 January 2019. The operating result before depreciation and amortisation (EBITDA) of the segments for 2018 does not include any expenses for operating leases in accordance with IAS 17. The 2018 expense for operating leases in accordance with IAS 17 is shown as a reconciliation item.
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Swisscom Switzerland
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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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue and results | ||||||||||||
| Telecom services | 1,477 | 1,560 | –5.3% | 4,472 | 4,689 | –4.6% | ||||||
| Solution business | 251 | 245 | 2.4% | 750 | 758 | –1.1% | ||||||
| Merchandise | 182 | 173 | 5.2% | 547 | 512 | 6.8% | ||||||
| Wholesale | 169 | 148 | 14.2% | 489 | 434 | 12.7% | ||||||
| Revenue other | 12 | 45 | –73.3% | 51 | 137 | –62.8% | ||||||
| Revenue from external customers | 2,091 | 2,171 | –3.7% | 6,309 | 6,530 | –3.4% | ||||||
| Intersegment revenue | 20 | 17 | 17.6% | 58 | 53 | 9.4% | ||||||
| Net revenue | 2,111 | 2,188 | –3.5% | 6,367 | 6,583 | –3.3% | ||||||
| Direct costs | (471) | (494) | –4.7% | (1,356) | (1,408) | –3.7% | ||||||
| Indirect costs | (733) | (775) | –5.4% | (2,266) | (2,388) | –5.1% | ||||||
| Segment expenses | (1,204) | (1,269) | –5.1% | (3,622) | (3,796) | –4.6% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 907 | 919 | –1.3% | 2,745 | 2,787 | –1.5% | ||||||
| Margin as % of net revenue | 43.0 | 42.0 | 43.1 | 42.3 | ||||||||
| Lease expense | (55) | (57) 1 | –3.5% | (168) | (166) 1 | 1.2% | ||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (372) | (368) | 1.1% | (1,142) | (1,114) | 2.5% | ||||||
| Segment result | 480 | 494 | –2.8% | 1,435 | 1,507 | –4.8% | ||||||
| Operational data at end of period in thousand | ||||||||||||
| Fixed telephony access lines | 1,643 | 1,846 | –11.0% | |||||||||
| Broadband access lines retail | 2,027 | 2,030 | –0.1% | |||||||||
| Swisscom TV access lines | 1,540 | 1,510 | 2.0% | |||||||||
| Mobile access lines | 6,358 | 6,409 | –0.8% | |||||||||
| Revenue generating units (RGU) | 11,568 | 11,795 | –1.9% | |||||||||
| Broadband access lines wholesale | 509 | 472 | 7.8% | |||||||||
| Capital expenditure and headcount | ||||||||||||
| Capital expenditure in property, plant and equipment and intangible assets | 1,324 | 1,102 | 20.1% | |||||||||
| Full-time equivalent employees at end of period (number) | 14,095 | 14,522 | –2.9% | |||||||||
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1 Includes expenses for operating and finance leases in accordance with IAS 17.
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Net revenue for Swisscom Switzerland fell by CHF 216 million or 3.3% to CHF 6,367 million as a result of continuing price pressure and the decline in the number of connections in fixed-line telephony. Revenue from telecommunications services decreased by CHF 217 million or 4.6% to CHF 4,472 million. Of this decline, CHF 132 million (–3.4%) was attributable to the Residential Customers segment and CHF 85 million (–10.9%) to the Enterprise Customers segment. At Enterprise Customers, revenue from the solutions business also declined slightly year-on-year (–1.1%) due to price pressure and lower volumes in the banking sector. This contrasts with revenue from merchandise, which was up on the previous year (+13.1%). The number of inOne customers continues to grow. Swisscom Switzerland had a total of 2.67 million inOne customers at the end of September 2019, with the latest inOne mobile telephony offering alone registering around 890,000 customers in its first eight months since launch. In the Residential Customers segment, inOne accounts for 60% of postpaid mobile lines and 65% of broadband connections. The market is showing signs of saturation in the area of mobile communications and fixed-network services. The mobile subscriber base contracted by 51,000 (–0.8%) year-on-year to 6.36 million. The number of postpaid lines grew by 85,000 year-on-year, while the number of prepaid lines fell by 136,000. The number of broadband connections fell by 3,000 (–0.1%) year-on-year to 2.03 million. The number of TV connections increased year-on-year by 30,000 or 2.0% to 1.54 million, while the number of fixed telephony access lines fell year-on-year by 203,000 or 11.0% to 1.64 million.
Segment expense fell by CHF 174 million or 4.6% to CHF 3,622 million. Direct costs decreased by CHF 52 million or 3.7% to CHF 1,356 million. Higher costs for purchasing services and goods were offset by lower costs for acquiring and retaining customers. Indirect costs were down 5.1% or CHF 122 million to CHF 2,266 million, mainly driven by the declining headcount, the decline in costs for external staff and lower costs for the operation of information systems. Headcount fell year-on-year as a result of efficiency measures by 427 FTEs or 2.9% to 14,095, including 353 FTEs in the first nine months of 2019. The segment result before depreciation and amortisation was CHF 42 million or 1.5% lower at CHF 2,745 million as a result of lower revenue, but was largely offset by the ongoing measures to reduce costs. Due to the expenses for the mobile radio frequencies acquired and higher investments in the expansion of broadband networks, capital expenditure rose by CHF 222 million or 20.1% to CHF 1,324 million. As at end-September 2019, 71% of all households and businesses in Switzerland were connected with ultra-fast broadband exceeding 80 Mbps. 43% of all homes and offices benefit from fast connections with superior bandwidths of more than 200 Mbps.
Fastweb
In EUR 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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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Residential Customers | 277 | 264 | 4.9% | 819 | 785 | 4.3% | ||||||
| Enterprise Customers | 211 | 190 | 11.1% | 627 | 558 | 12.4% | ||||||
| Wholesale | 45 | 49 | –8.2% | 132 | 168 | –21.4% | ||||||
| Revenue from external customers | 533 | 503 | 6.0% | 1,578 | 1,511 | 4.4% | ||||||
| Intersegment revenue | 2 | 2 | – | 6 | 5 | 20.0% | ||||||
| Net revenue | 535 | 505 | 5.9% | 1,584 | 1,516 | 4.5% | ||||||
| Segment expenses | (345) | (327) | 5.5% | (1,055) | (1,020) | 3.4% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 190 | 178 | 6.7% | 529 | 496 | 6.7% | ||||||
| Margin as % of net revenue | 35.5 | 35.2 | 33.4 | 32.7 | ||||||||
| Lease expense | (9) | (5) 1 | 80.0% | (24) | (13) 1 | 84.6% | ||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (141) | (123) | 14.6% | (415) | (373) | 11.3% | ||||||
| Segment result | 40 | 50 | –20.0% | 90 | 110 | –18.2% | ||||||
| Capital expenditure in property, plant and equipment and intangible assets | 443 | 432 | 2.5% | |||||||||
| Full-time equivalent employees at end of period (number) | 2,467 | 2,470 | –0.1% | |||||||||
| Broadband access lines in thousand | 2,610 | 2,518 | 3.7% | |||||||||
| Mobile access lines in thousand | 1,742 | 1,324 | 31.6% | |||||||||
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1 Includes expenses for operating and finance leases in accordance with IAS 17.
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Fastweb’s net revenue rose by EUR 68 million or 4.5% year-on-year to EUR 1,584 million. Despite difficult market conditions, Fastweb’s broadband customer base grew by 92,000 or 3.7% year-on-year to 2.61 million. Fastweb is also growing in the fiercely competitive mobile telephony market. The number of mobile access lines increased by 418,000 year-on-year or 31.6% to 1.74 million. 34% of subscribers use a bundled offering combining fixed network and mobile. Residential customer revenue rose by EUR 34 million or 4.3% to EUR 819 million as a result of customer growth. Fastweb held its strong position in the market for business customers, with revenue from business customers up EUR 69 million or 12.4% to EUR 627 million as a result of higher revenue with public administrations. Revenue from wholesale business, by contrast, decreased by EUR 36 million or 21.4% to EUR 132 million.
The segment result before depreciation and amortisation rose EUR 33 million or 6.7% to EUR 529 million due to the growth in revenue. At EUR 443 million, capital expenditure remained at the high level of the previous year, driven by the further expansion of the network infrastructure. Fastweb’s headcount was unchanged year-on-year at 2,467 FTEs.
Other Operating Segments
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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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue from external customers | 117 | 138 | –15.2% | 383 | 408 | –6.1% | ||||||
| Intersegment revenue | 108 | 92 | 17.4% | 304 | 248 | 22.6% | ||||||
| Net revenue | 225 | 230 | –2.2% | 687 | 656 | 4.7% | ||||||
| Segment expenses | (179) | (174) | 2.9% | (543) | (508) | 6.9% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 46 | 56 | –17.9% | 144 | 148 | –2.7% | ||||||
| Margin as % of net revenue | 20.4 | 24.3 | 21.0 | 22.6 | ||||||||
| Lease expense | (2) | (3) 1 | –33.3% | (8) | (10) 1 | –20.0% | ||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (15) | (13) | 15.4% | (50) | (43) | 16.3% | ||||||
| Segment result | 29 | 40 | –27.5% | 86 | 95 | –9.5% | ||||||
| Capital expenditure in property, plant and equipment and intangible assets | 32 | 31 | 3.2% | |||||||||
| Full-time equivalent employees at end of period (number) | 2,724 | 2,615 | 4.2% | |||||||||
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1 Includes expenses for operating and finance leases in accordance with IAS 17.
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The net revenue of the Other Operating Segments rose year-on-year by CHF 31 million or 4.7% to CHF 687 million. The increase was mainly due to higher revenue from construction services rendered by cablex. The decline in revenue from external customers was attributable to the loss of Billag’s mandate to collect national radio and television licence fees. The segment result before depreciation and amortisation decreased by CHF 4 million or 2.7% year-on-year to CHF 144 million. This corresponds to a profit margin of 21.0%. Headcount rose by 109 FTEs or 4.2% to 2,724 FTEs, driven primarily by the hiring of new employees at cablex due to higher order volumes.
Group Headquarters and reconciliation
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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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Group Headquarters | (20) | (19) | 5.3% | (59) | (71) | –16.9% | ||||||
| Reconciliation pension cost | (15) | (17) | –11.8% | (44) | (46) | –4.3% | ||||||
| Reconciliation lease expense (IAS 17) | – | (51) | –100.0% | – | (150) | –100.0% | ||||||
| Intersegment elimination | (6) | (4) | 50.0% | (17) | (12) | 41.7% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | (41) | (91) | –54.9% | (120) | (279) | –57.0% |
In 2018, the expense relating to operating lease arrangements were recognised as an operating expense and are shown here as a reconciliation item. As of 1 January 2019, this expense will be replaced by depreciation and interest. The other net costs not assigned to the operating segments, which comprise Group Headquarters, pension cost reconciliation and intersegment eliminations, declined by CHF 9 million to CHF 120 million.