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Segment results

In CHF million   31.03.2022   31.03.2021   Change
             
Net revenue 1
Residential Customers   1,131   1,137   –0.5%
Business Customers   791   771   2.6%
Wholesale   147   171   –14.0%
Infrastructure & Support Functions   18   19   –5.3%
Intersegment elimination   (17)   (18)   –5.6%
Swisscom Switzerland   2,070   2,080   –0.5%
Fastweb   615   634   –3.0%
Other Operating Segments   241   240   0.4%
Intersegment elimination   (158)   (151)   4.6%
Revenue from external customers   2,768   2,803   –1.2%
             
Operating income before depreciation and amortisation (EBITDA) 1
Residential Customers   745   728   2.3%
Business Customers   353   360   –1.9%
Wholesale   81   89   –9.0%
Infrastructure & Support Functions   (249)   (261)   –4.6%
Swisscom Switzerland   930   916   1.5%
Fastweb   191   195   –2.1%
Other Operating Segments   42   34   23.5%
Reconciliation pension cost 2   (15)   (13)   15.4%
Intersegment elimination   (11)   (8)   37.5%
Operating income before depreciation and amortisation (EBITDA)   1,137   1,124   1.2%
1 Swisscom has made adjustments to its financial management as of 1 January 2022 and has restated the previous year's figures accordingly. For further information, see note 2 to the interim financial statements.
2 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.

Swisscom’s reporting focuses on the operating divisions Swisscom Switzerland and Fastweb. The other business divisions are grouped together under Other Operating Segments. Swisscom Switzerland comprises the customer segments Residential Customers, Business Customers and Wholesale, along with the Infrastructure & Support Functions business division. Fastweb is a telecommunications provider for residential and business customers in Italy. Other Operating Segments primarily comprises the Digital Business division, Swisscom Broadcast Ltd (radio transmitters) and cablex Ltd (network construction and maintenance).

The Infrastructure & Support Functions business division does not charge any network costs or management fees for its services to other segments. Any other services between the segments are charged at market prices. Network costs in Switzerland are budgeted, monitored and controlled by the Infrastructure & Support Functions segment, which is managed as a cost centre. For this reason, no revenue is credited to the Infrastructure & Support Functions segment within the segment reporting, with the exception of the rental and administration of buildings and vehicles. The results of the Residential Customers, Business Customers and Wholesale segments thus correspond to a contribution margin before network costs.

Swisscom Switzerland

In CHF million, except where indicated   31.03.2022   31.03.2021   Change
             
Net revenue and results            
Telecom services   1,365   1,390   –1.8%
Solutions business   297   273   8.8%
Merchandise   214   211   1.4%
Wholesale   144   169   –14.8%
Revenue other   35   24   45.8%
Revenue from external customers   2,055   2,067   –0.6%
Intersegment revenue   15   13   15.4%
Net revenue   2,070   2,080   –0.5%
Direct costs   (434)   (447)   –2.9%
Indirect costs   (706)   (717)   –1.5%
Segment expenses   (1,140)   (1,164)   –2.1%
Segment result before depreciation and amortisation (EBITDA)   930   916   1.5%
Margin as % of net revenue   44.9   44.0    
Lease expense   (56)   (58)   –3.4%
Depreciation and amortisation   (368)   (374)   –1.6%
Segment result   506   484   4.5%
             
Operating free cash flow proxy            
Segment result before depreciation and amortisation (EBITDA)   930   916   1.5%
Lease expense   (56)   (58)   –3.4%
EBITDA after lease expense (EBITDA AL)   874   858   1.9%
Capital expenditure   (364)   (371)   –1.9%
Operating free cash flow proxy   510   487   4.7%
             
Operational data in thousand and headcount            
Fixed telephony access lines   1,399   1,491   –6.2%
Broadband access lines retail   2,030   2,028   0.1%
TV access lines   1,586   1,581   0.3%
Mobile access lines   6,151   6,177   –0.4%
Revenue generating units (RGU)   11,166   11,277   –1.0%
Access lines wholesale   703   677   3.8%
Full-time equivalent employees   12,999   12,830   1.3%

Swisscom Switzerland’s net revenue fell by 0.5% or CHF 10 million to CHF 2,070 million. Ongoing competitive and price pressure continued to drive down revenue from telecoms services, which decreased by 1.8% or CHF 25 million to CHF 1,365 million. Of this decline, CHF 4 million (–0.4%) was attributable to the Residential Customers segment and CHF 21 million (–5.0%) to the Business Customers segment. By contrast, revenue from the solutions business rose by 8.8% or CHF 24 million to CHF 297 million. Part of this increase is attributable to the acquisition of the MTF Group companies operating in German-speaking Switzerland and the Principality of Liechtenstein. The decline in Wholesale revenue is partially attributable to the loss of revenue where there is no longer any demand from UPC following the acquisition of Sunrise, and partially attributable to a price-related decline in inbound roaming revenue. The market is still showing signs of saturation and competitive pressure in the area of mobile communications and fixed-network services. The subscriber base in mobile communications shrank by 0.4% or 26,000 year-on-year to 6.15 million. The number of postpaid lines increased by 162,000 year-on-year, while the number of prepaid lines decreased by 188,000. The number of broadband connections remained almost unchanged year-on-year, at 2.03 million (+0.1%). The number of inOne customers continues to grow, however. At the end of March 2022, Swisscom Switzerland recorded 2.51 million inOne customers in the Residential Customers segment. In this segment, inOne accounts for 66% of postpaid mobile lines and 82% of broadband connections. The number of TV connections remained largely stable year-on-year at 1.59 million (+0.3%). The number of fixed telephony access lines fell year-on-year by 6.2% or 92,000 to 1.40 million.

Segment expense declined by 2.1% or CHF 24 million to CHF 1,140 million. Direct costs fell by 2.9% or CHF 13 million to CHF 434 million. In addition to the decline in subscriber acquisition and retention costs, costs for roaming traffic also fell. Indirect costs decreased by 1.5% or CHF 11 million to CHF 706 million. This decline in costs thanks to efficiency measures was partially offset by additional costs resulting from the acquisition of MTF Group companies. Headcount increased by 1.3% or 169 FTEs year-on-year to 12,999 FTEs due to the hiring of external staff and the acquisition of MTF Group companies. The segment result before depreciation and amortisation increased by 1.5% or CHF 14 million to CHF 930 million. The decline in revenue from telecoms services was more than offset thanks to growth in the solutions business and ongoing cost-cutting measures.

Capital expenditure fell by 1.9% or CHF 7 million to CHF 364 million. Capital expenditure in the expansion of broadband networks decreased, while capital expenditure in other infrastructure increased. As at the end of March 2022, 90% of all Swiss homes and offices were connected with ultra-fast broadband exceeding 80 Mbps. 74% of all homes and offices benefited from fast connections at over 200 Mbps. Swisscom aims to double the rolling out of the fibre-optic network to homes and offices (FTTH) to around 60% in Switzerland by 2025 using P2MP (point-to-multipoint) architecture. The Competition Commission questioned the network architecture and imposed precautionary measures in December 2020, which the Federal Administrative Court confirmed in 2021. Swisscom is interested in a rapid solution; to this end, it is holding in-depth discussions with the Competition Commission.

Fastweb

In EUR million, except where indicated   31.03.2022   31.03.2021   Change
             
Net revenue and results            
Residential Customers   285   286   –0.3%
Corporate Business   247   237   4.2%
Wholesale   62   56   10.7%
Revenue from external customers   594   579   2.6%
Intersegment revenue   1   2   –50.0%
Net revenue   595   581   2.4%
Segment expenses   (410)   (402)   2.0%
Segment result before depreciation and amortisation (EBITDA)   185   179   3.4%
Margin as % of net revenue   31.1   30.8    
Lease expense   (14)   (14)   –%
Depreciation and amortisation   (147)   (146)   0.7%
Segment result   24   19   26.3%
             
Operating free cash flow proxy            
Segment result before depreciation and amortisation (EBITDA)   185   179   3.4%
Lease expense   (14)   (14)   –%
EBITDA after lease expense (EBITDA AL)   171   165   3.6%
Capital expenditure   (157)   (154)   1.9%
Operating free cash flow proxy   14   11   27.3%
             
Operational data in thousand and headcount            
Broadband access lines retail   2,731   2,765   –1.2%
Broadband access lines wholesale   363   153   137.3%
Mobile access lines   2,649   2,066   28.2%
Full-time equivalent employees   2,737   2,733   0.1%

Fastweb’s net revenue rose year-on-year by 2.4% or EUR 14 million to EUR 595 million. Competition has intensified further. Due to the very challenging market conditions, Fastweb’s broadband customer base declined by 1.2% or 34,000 to 2.73 million. By contrast, the number of mobile lines increased by 28.2% or 583,000 year-on-year to 2.65 million. Bundled offerings continue to play an important role. 39% of subscribers use a bundled offering combining fixed network and mobile. Residential customer revenue fell by 0.3% or EUR 1 million to EUR 285 million as a result of strong competition. Revenue from business customers rose by 4.2% or EUR 10 million to EUR 247 million, driven by higher revenue from public authorities. Revenue from wholesale business increased by 10.7% or EUR 6 million to EUR 62 million, while the number of broadband access lines rose year-on-year by 137.3% or 210,000 to 363,000.

The segment result before depreciation and amortisation was 3.4% or EUR 6 million higher at EUR 185 million on the back of the growth in revenue. Capital expenditure increased by 1.9% or EUR 3 million year-on-year to EUR 157 million, largely as a result of increased capital expenditure in network infrastructure. Fastweb’s headcount was practically unchanged year-on-year at 2,737 FTEs.

Other Operating segments

In CHF million, except where indicated   31.03.2022   31.03.2021   Change
             
Net revenue and results            
Revenue from external customers   100   104   –3.8%
Intersegment revenue   141   136   3.7%
Net revenue   241   240   0.4%
Segment expenses   (199)   (206)   –3.4%
Segment result before depreciation and amortisation (EBITDA)   42   34   23.5%
Margin as % of net revenue   17.4   14.2    
Lease expense   (3)   (3)   –%
Depreciation and amortisation   (11)   (13)   –15.4%
Segment result   28   18   55.6%
     
Operating free cash flow proxy            
Segment result before depreciation and amortisation (EBITDA)   42   34   23.5%
Lease expense   (3)   (3)   –%
EBITDA after lease expense (EBITDA AL)   39   31   25.8%
Capital expenditure   (6)   (9)   –33.3%
Operating free cash flow proxy   33   22   50.0%
             
Headcount            
Full-time equivalent employees   3,273   3,514   –6.9%

The net revenue of the Other Operating Segments remains largely unchanged year-on-year at CHF 241 million (+0.4%). The segment result before depreciation and amortisation increased by 23.5% or CHF 8 million to CHF 42 million thanks to lower costs, and the profit margin rose accordingly to 17.4% (prior year: 14.2%). The headcount decreased by 6.9% or 241 FTEs to 3,273 FTEs, mainly as a result of the sale of the French subsidiary local.fr.