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Segment results


In CHF million
  2. quarter
2022
  2. quarter
2021
 
Change
  1st half-year
2022
  1st half-year
2021
 
Change
                         
Net revenue 1
Residential Customers   1,108   1,112   –0.4%   2,239   2,249   –0.4%
Business Customers   766   752   1.9%   1,557   1,523   2.2%
Wholesale   149   158   –5.7%   296   329   –10.0%
Infrastructure & Support Functions   18   20   –10.0%   36   39   –7.7%
Intersegment elimination   (17)   (19)   –10.5%   (34)   (37)   –8.1%
Swisscom Switzerland   2,024   2,023   –%   4,094   4,103   –0.2%
Fastweb   615   659   –6.7%   1,230   1,293   –4.9%
Other Operating Segments   259   265   –2.3%   500   505   –1.0%
Intersegment elimination   (172)   (167)   3.0%   (330)   (318)   3.8%
Revenue from external customers   2,726   2,780   –1.9%   5,494   5,583   –1.6%
                         
Operating income before depreciation and amortisation (EBITDA) 1
Residential Customers   729   736   –1.0%   1,474   1,464   0.7%
Business Customers   340   348   –2.3%   693   708   –2.1%
Wholesale   75   75   –%   156   164   –4.9%
Infrastructure & Support Functions   (327)   (278)   17.6%   (576)   (539)   6.9%
Intersegment elimination   1     –%   1     –%
Swisscom Switzerland   818   881   –7.2%   1,748   1,797   –2.7%
Fastweb   222   225   –1.3%   413   420   –1.7%
Other Operating Segments   41   49   –16.3%   83   83   –%
Reconciliation pension cost 2   (15)   49       (30)   36    
Intersegment elimination   (12)   (11)   9.1%   (23)   (19)   21.1%
Operating income before depreciation and amortisation (EBITDA)   1,054   1,193   –11.7%   2,191   2,317   –5.4%
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
  2. quarter
2022
  2. quarter
2021
 
Change
  1st half-year
2022
  1st half-year
2021
 
Change
                         
Net revenue and results                        
Telecom services   1,357   1,376   –1.4%   2,722   2,766   –1.6%
Solutions business   292   274   6.6%   589   547   7.7%
Merchandise   178   174   2.3%   392   385   1.8%
Wholesale   146   156   –6.4%   290   325   –10.8%
Revenue other   34   31   9.7%   69   55   25.5%
Revenue from external customers   2,007   2,011   –0.2%   4,062   4,078   –0.4%
Intersegment revenue   17   12   41.7%   32   25   28.0%
Net revenue   2,024   2,023   –%   4,094   4,103   –0.2%
Direct costs   (413)   (420)   –1.7%   (847)   (867)   –2.3%
Indirect costs   (793)   (722)   9.8%   (1,499)   (1,439)   4.2%
Segment expenses   (1,206)   (1,142)   5.6%   (2,346)   (2,306)   1.7%
Segment result before depreciation and amortisation (EBITDA)   818   881   –7.2%   1,748   1,797   –2.7%
Margin as % of net revenue   40.4   43.5       42.7   43.8    
Lease expense   (55)   (59)   –6.8%   (111)   (117)   –5.1%
Depreciation and amortisation   (379)   (383)   –1.0%   (747)   (757)   –1.3%
Segment result   384   439   –12.5%   890   923   –3.6%
                   
Operating free cash flow proxy                
Segment result before depreciation and amortisation (EBITDA)   818   881   –7.2%   1,748   1,797   –2.7%
Lease expense   (55)   (59)   –6.8%   (111)   (117)   –5.1%
EBITDA after lease expense (EBITDA AL)   763   822   –7.2%   1,637   1,680   –2.6%
Capital expenditure   (391)   (382)   2.4%   (755)   (753)   0.3%
Operating free cash flow proxy   372   440   –15.5%   882   927   –4.9%
                   
Operational data in thousand and headcount                  
Fixed telephony access lines               1,369   1,471   –6.9%
Broadband access lines retail               2,026   2,027   –%
TV access lines               1,582   1,582   –%
Mobile access lines               6,157   6,169   –0.2%
Revenue generating units (RGU)               11,134   11,249   –1.0%
Access lines wholesale               692   689   0.4%
Full-time equivalent employees               12,927   12,867   0.5%

Swisscom Switzerland’s net revenue decreased by 0.2% or CHF 9 million to CHF 4,094 million. Ongoing competitive and price pressure continued to drive down revenue from telecoms services, which decreased by 1.6% or CHF 44 million to CHF 2,722 million. Of this decline, CHF 6 million (–0.3%) was attributable to the Residential Customers segment and CHF 38 million (–4.6%) to the Business Customers segment. By contrast, revenue from the solutions business rose by 7.7% or CHF 42 million to CHF 589 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 0.2% or 12,000 year-on-year to 6.16 million. The number of postpaid lines increased by 180,000 year-on-year, while the number of prepaid lines decreased by 192,000. The number of broadband connections remained stable year-on-year at 2.03 million. Demand for flexible and customisable subscriptions remains high. At the beginning of May 2022, Swisscom digitised the subscription with the launch of Swisscom blue. Options for speed, TV, telephone, roaming, security and entertainment can be customised to meet individual needs. Since the launch of blue, the subscriptions of the inOne predecessor generation have been migrated on an ongoing basis. At the end of June 2022, Swisscom recorded 2.52 million blue/inOne customers in the Residential Customers segment. In this segment, blue/inOne accounts for 65% of postpaid mobile lines and 82% of broadband connections, while 45% use a combined offering. The number of TV connections also remained stable year-on-year at 1.58 million, while the number of fixed-network access lines fell within the same time by 6.9% or 102,000 to 1.37 million.

Segment expense increased by 1.7% or CHF 40 million to CHF 2,346 million. Direct costs fell by 2.3% or CHF 20 million to CHF 847 million. Alongside the decline in subscriber acquisition and retention costs, costs for roaming calls also fell. Indirect costs increased by 4.2% or CHF 60 million to CHF 1,499 million. In the first half of 2022, indirect costs were impacted by an increase in provisions for legal proceedings in the amount of CHF 82 million. Provisions for this were also increased in the previous year, by CHF 22 million. Adjusted for these provisions, indirect costs remained stable. The decrease in costs due to efficiency improvements was offset by additional costs resulting from the acquisition of companies of the MTF Group. The number of employees increased by 0.5% or 60 full-time equivalents to 12,927 within the year due to the hiring of external staff and the acquisition of companies of the MTF Group. The segment result before depreciation and amortisation decreased by 2.7% or CHF 49 million to CHF 1,748 million; adjusted for the aforementioned provisions the result was an increase of 0.6%. The decline in revenue from telecoms services was more than offset by growth in the solutions business and ongoing efficiency improvement measures.

Capital expenditure was almost unchanged at CHF 755 million (+0.3%). Capital expenditure on the expansion of broadband and mobile networks decreased, while capital expenditure on other infrastructure increased. As at the end of June 2022, 90% of all Swiss homes and offices were connected with ultra-fast broadband exceeding 80 Mbps. 76% of all homes and offices benefited from fast connections of 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
  2. quarter
2022
  2. quarter
2021
 
Change
  1st half-year
2022
  1st half-year
2021
 
Change
                         
Net revenue and results                        
Residential customers   287   288   –0.3%   572   574   –0.3%
Corporate customers   250   244   2.5%   497   481   3.3%
Wholesale   64   66   –3.0%   126   122   3.3%
Revenue from external customers   601   598   0.5%   1,195   1,177   1.5%
Intersegment revenue   3   2   50.0%   4   4   –%
Net revenue   604   600   0.7%   1,199   1,181   1.5%
Segment expenses   (386)   (395)   –2.3%   (796)   (797)   –0.1%
Segment result before depreciation and amortisation (EBITDA)   218   205   6.3%   403   384   4.9%
Margin as % of net revenue   36.1   34.2       33.6   32.5    
Lease expense   (15)   (13)   15.4%   (29)   (27)   7.4%
Depreciation and amortisation   (152)   (147)   3.4%   (299)   (293)   2.0%
Segment result   51   45   13.3%   75   64   17.2%
                   
Operating free cash flow proxy                
Segment result before depreciation and amortisation (EBITDA)   218   205   6.3%   403   384   4.9%
Lease expense   (15)   (13)   15.4%   (29)   (27)   7.4%
EBITDA after lease expense (EBITDA AL)   203   192   5.7%   374   357   4.8%
Capital expenditure   (142)   (147)   –3.4%   (299)   (301)   –0.7%
Operating free cash flow proxy   61   45   35.6%   75   56   33.9%
                   
Operational data in thousand and headcount                  
Broadband access lines retail               2,712   2,774   –2.2%
Broadband access lines wholesale               386   190   103.2%
Mobile access lines               2,805   2,188   28.2%
Full-time equivalent employees               2,880   2,750   4.7%

Fastweb’s net revenue rose year-on-year by 1.5% or EUR 18 million to EUR 1,199 million. Competitive dynamics remain high. Due to the very challenging market environment, the broadband customer base decreased by 2.2% or 62,000 to 2.71 million within the year. However, the share of ultra-fast broadband connections grew by 8 percentage points year-on-year to 85%. The number of mobile lines increased by 28.2% or 617,000 year-on-year to 2.81 million. Bundled offerings continue to play an important role. 40% of subscribers use a bundled offering combining fixed network and mobile. Residential customer revenue fell by 0.3% or EUR 2 million to EUR 572 million as a result of strong competition. On the other hand, revenue from business customers rose by 3.3% or EUR 16 million to EUR 497 million, driven by higher revenue from public authorities. Revenue from wholesale business increased by 3.3% or EUR 4 million to EUR 126 million, while the number of wholesale broadband connections rose year-on-year by 103.2% or 196,000 to 386,000.

At EUR 796 million, segment expenses remained at the same level year-on-year (–0.1%). The segment result before depreciation and amortisation increased by 4.9% or EUR 19 million to EUR 403 million as a result of the growth in revenue. Capital expenditure was almost unchanged year-on-year at EUR 299 million (–0.7%). Fastweb’s headcount increased by 4.7% or 130 FTEs to 2,880 FTEs, mainly as a result of the hiring of external staff.

Other Operating segments


In CHF million, except where indicated
  2. quarter
2022
  2. quarter
2021
 
Change
  1st half-year
2022
  1st half-year
2021
 
Change
                         
Net revenue and results                        
Revenue from external customers   106   112   –5.4%   206   216   –4.6%
Intersegment revenue   153   153   –%   294   289   1.7%
Net revenue   259   265   –2.3%   500   505   –1.0%
Segment expenses   (218)   (216)   0.9%   (417)   (422)   –1.2%
Segment result before depreciation and amortisation (EBITDA)   41   49   –16.3%   83   83   –%
Margin as % of net revenue   15.8   18.5       16.6   16.4    
Lease expense   (2)   (3)   –33.3%   (5)   (6)   –16.7%
Depreciation and amortisation   (12)   (14)   –14.3%   (23)   (27)   –14.8%
Segment result   27   32   –15.6%   55   50   10.0%
                   
Operating free cash flow proxy                
Segment result before depreciation and amortisation (EBITDA)   41   49   –16.3%   83   83   –%
Lease expense   (2)   (3)   –33.3%   (5)   (6)   –16.7%
EBITDA after lease expense (EBITDA AL)   39   46   –15.2%   78   77   1.3%
Capital expenditure   (8)   (10)   –20.0%   (14)   (19)   –26.3%
Operating free cash flow proxy   31   36   –13.9%   64   58   10.3%
                   
Headcount                  
Full-time equivalent employees               3,260   3,493   –6.7%

The net revenue of the Other Operating Segments remained largely unchanged year-on-year at CHF 500 million (–1.0%). The segment result before depreciation and amortisation also remained steady year-on-year at CHF 83 million. The profit margin stood at 16.6% (previous year: 16.4%). The headcount decreased by 6.7% or 233 FTEs to 3,260 FTEs, mainly as a result of the sale of the French subsidiary local.fr.