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1st Interim Report 2023
1st Interim Report 2023
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1st Interim Report 2023
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Table of contents for the 1st Interim Report 2023 report

1st Interim Report 2023
KPIsFinancial review
SummarySegment resultsDepreciation and amortisation, non operating resultsCash flowsNet asset positionOutlook
Consolidated interim financial statements
Consolidated statement of comprehensive income (unaudited)Consolidated balance sheet (unaudited)Consolidated statement of cash flows (unaudited)Consolidated statement of changes in equity (unaudited)
Notes to the interim financial statements
About this report1 Accounting policies2 Segment information3 Operating costs4 Dividends5 Financial liabilities6 Financial result7 Net current operating assets8 Provisions and contingent liabilities
Alternative performance measures
Reconciliation of alternative performance measures
Further Information
Share informationQuarterly review 2022 and 2023Forward looking statements
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Segment results

In CHF million   31.03.2023   31.03.2022   Change
             
Revenue 1
Residential Customers   1,136   1,131   0.4%
Business Customers   772   791   –2.4%
Wholesale   134   133   0.8%
Infrastructure & Support Functions   19   18   5.6%
Intersegment elimination   (17)   (17)   –%
Swisscom Switzerland   2,044   2,056   –0.6%
Fastweb   619   615   0.7%
Other Operating Segments   243   241   0.8%
Intersegment elimination   (159)   (158)   0.6%
Total revenue   2,747   2,754   –0.3%
             
Operating income before depreciation and amortisation (EBITDA) 1
Residential Customers   748   746   0.3%
Business Customers   345   352   –2.0%
Wholesale   80   81   –1.2%
Infrastructure & Support Functions   (231)   (249)   –7.2%
Intersegment elimination   1   –   –%
Swisscom Switzerland   943   930   1.4%
Fastweb   187   191   –2.1%
Other Operating Segments   34   42   –19.0%
Reconciliation pension cost 2   9   (15)   –%
Intersegment elimination   (9)   (11)   –18.2%
Total EBITDA   1,164   1,137   2.4%
1 Swisscom has changed the revenue recognition for roaming contracts with minimum guarantees as of 1 January 2023 and made adjustments to the financial management. The previous year's figures have been adjusted accordingly. For further information, see notes 1 and 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 to other segments for its services. The remaining 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   31.03.2023   31.03.2022   Change
             
Revenue and operating income before depreciation and amortisation (EBITDA)            
Telecoms services   1,348   1,365   –1.2%
IT services   291   289   0.7%
Merchandise   217   222   –2.3%
Wholesale   131   130   0.8%
Revenue other   42   35   20.0%
External revenue   2,029   2,041   –0.6%
Intersegment revenue   15   15   –%
Revenue   2,044   2,056   –0.6%
Direct costs   (423)   (420)   0.7%
Indirect costs   (678)   (706)   –4.0%
Operating expense   (1,101)   (1,126)   –2.2%
EBITDA   943   930   1.4%
Margin as % of revenue   46.1   45.2    
             
Operating free cash flow proxy            
EBITDA   943   930   1.4%
Lease expense   (56)   (56)   –%
EBITDA after lease expense (EBITDAaL)   887   874   1.5%
Capital expenditure   (394)   (364)   8.2%
Operating free cash flow proxy   493   510   –3.3%
             
Operational data in thousand and headcount            
Fixed telephony access lines   1,292   1,399   –7.6%
Broadband access lines retail   2,017   2,030   –0.6%
TV access lines   1,558   1,586   –1.8%
Mobile access lines   6,177   6,151   0.4%
Access lines wholesale   688   703   –2.1%
Full-time equivalent employees   12,841   12,999   –1.2%

Swisscom Switzerland’s revenue decreased slightly by 0.6% or CHF 12 million to CHF 2,044 million. Revenue from telecoms services decreased by 1.2% or CHF 17 million to CHF 1,348 million. Of the decrease, CHF 12 million (–3.0%) is attributable to the Business Customers segment, while revenue from telecoms services in the Residential Customers segment remained almost stable at CHF 960 million (–0.5%). In contrast, revenue from IT services increased slightly by 0.7% to CHF 291 million. Market saturation is reflected in fewer connections and declining subscriber bases for broadband retail (–0.6%) and TV (–1.8%). Fixed network telephony (–7.6%) is significantly affected by its substitution with mobile telephony. In mobile telephony, the number of subscribers increased slightly (+0.4%), while the customer structure changed due to an increase in postpaid lines (+161,000) and a similarly strong decrease in prepaid connections (–135,000). The share of secondary and third-party brands in the Residential Customers segment rose from 24% to 29%.

The operating expense decreased by 2.2% or CHF 25 million. Direct costs remained almost stable. The costs for subscriber acquisition and retention increased, while the costs for purchasing services and merchandise decreased. Indirect costs fell by CHF 28 million (–4.0%). In telecommunications, cost savings of CHF 27 million were realised through efficiency improvement measures and optimised network maintenance. In the area of IT services, in­direct costs remained stable. Headcount fell by 1.2% to 12,841 FTEs. Operating profit before depreciation and amortisation (EBITDA) increased by 1.5% or CHF 13 million to CHF 943 million. The decline in revenue from telecoms services was more than compensated for thanks to ongoing cost-cutting measures.

Capital expenditure increased by 8.2% or CHF 30 million to CHF 394 million mainly due to transport networks. Swisscom plans to increase fibre-optic coverage (FTTH) to around 55% by the end of 2025, and to 70–80% by 2030.

Fastweb

In EUR million, except where indicated   31.03.2023   31.03.2022   Change
             
Revenue and operating income before depreciation and amortisation (EBITDA)            
Residential Customers   289   285   1.4%
Corporate Business   261   247   5.7%
Wholesale   71   62   14.5%
External revenue   621   594   4.5%
Intersegment revenue   2   1   100.0%
Revenue   623   595   4.7%
Operating expense   (435)   (410)   6.1%
EBITDA   188   185   1.6%
Margin as % of revenue   30.2   31.1    
             
Operating free cash flow proxy            
EBITDA   188   185   1.6%
Lease expense   (13)   (14)   –7.1%
EBITDA after lease expense (EBITDAaL)   175   171   2.3%
Capital expenditure   (153)   (157)   –2.5%
Operating free cash flow proxy   22   14   57.1%
             
Operational data in thousand and headcount            
Broadband access lines retail   2,662   2,731   –2.5%
Broadband access lines wholesale   498   363   37.2%
Mobile access lines   3,231   2,649   22.0%
Full-time equivalent employees   3,087   2,737   12.8%

Fastweb’s revenue rose year-on-year by 4.7% or EUR 28 million to EUR 623 million. Competition remained fierce. The customer base in the fixed-network business (end-customer and wholesale) grew by 2.1% to 3.16 million. While this fell by 2.5% to 2.66 million in the end-customer business as a result of the value strategy pursued by Fastweb and because of the challenging market environment, the number of ultra-fast broadband connections provided by Fastweb to other operators rose to 498,000 (+37.2%). Among end customers, the share of ultra-fast broadband connections increased by 4 percentage points to 87%. The number of mobile access lines increased by 582,000 (+22.0%) to 3.2 million, with bundled offerings continuing to play an important role here. 41% of broadband customers used a bundled offering combining fixed network and mobile. Revenue from residential customers increased by 1.4% or EUR 4 million to EUR 289 million, mainly as a result of the greater mobile customer base. Revenue from business customers increased by 5.7% or EUR 14 million to EUR 261 million, driven by the strong market position in the area of public administration. Revenue from wholesale business increased by 14.5% or EUR 9 million to EUR 71 million due to the higher number of subscribers.

Operating expenses increased by EUR 25 million (+6.1%). Driven by revenue growth, the operating result before depreciation and amortisation (EBITDA) increased by EUR 3 million (+1.6%). Capital expenditure fell by 2.5% to EUR 153 million due to a decrease in customer-driven investment. Headcount increased by 12.8% or 350 FTEs to 3,087 FTEs as the company took on external staff and the growth created a need for more personnel.

Other Operating Segments

In CHF million, except where indicated   31.03.2023   31.03.2022   Change
             
Revenue and operating income before depreciation and amortisation (EBITDA)            
External revenue   100   100   –%
Intersegment revenue   143   141   1.4%
Revenue   243   241   0.8%
Operating expense   (209)   (199)   5.0%
EBITDA   34   42   –19.0%
Margin as % of revenue   14.0   17.4    
     
Operating free cash flow proxy            
EBITDA   34   42   –19.0%
Lease expense   (2)   (3)   –33.3%
EBITDA after lease expense (EBITDAaL)   32   39   –17.9%
Capital expenditure   (8)   (6)   33.3%
Operating free cash flow proxy   24   33   –27.3%
             
Headcount            
Full-time equivalent employees   3,324   3,273   1.6%

Revenue in Other Operating Segments remained almost stable year-on-year at CHF 243 million (+0.8%). Due to higher costs, the operating result before depreciation and amortisation (EBIDTA) decreased by 19% or CHF 8 million to CHF 34 million, and the profit margin shrank accordingly to 14.0% (prior year: 17.4%). Headcount increased by 1.6% or 51 FTEs to 3,324 FTEs, partly as the result of an acquisition.