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2nd Interim Report 2023
2nd Interim Report 2023
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2nd Interim Report 2023
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Table of contents for the 2nd Interim Report 2023 report

2nd 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 Dividend5 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
  2nd quarter
2023
  2nd quarter
2022
 
Change
  1st half-year
2023
  1st half-year
2022
 
Change
                         
Revenue 1
Residential Customers   1,099   1,108   –0.8%   2,235   2,239   –0.2%
Business Customers   763   766   –0.4%   1,535   1,557   –1.4%
Wholesale   136   136   –%   270   269   0.4%
Infrastructure & Support Functions   19   18   5.6%   38   36   5.6%
Intersegment elimination   (17)   (17)   –%   (34)   (34)   –%
Swisscom Switzerland   2,000   2,011   –0.5%   4,044   4,067   –0.6%
Fastweb   617   615   0.3%   1,236   1,230   0.5%
Other Operating Segments   258   259   –0.4%   501   500   0.2%
Intersegment elimination   (172)   (172)   –%   (331)   (330)   0.3%
Total revenue   2,703   2,713   –0.4%   5,450   5,467   –0.3%
                         
Operating income before depreciation and amortisation (EBITDA) 1
Residential Customers   741   730   1.5%   1,489   1,476   0.9%
Business Customers   334   339   –1.5%   679   691   –1.7%
Wholesale   86   74   16.2%   166   155   7.1%
Infrastructure & Support Functions   (247)   (326)   –24.2%   (478)   (575)   –16.9%
Intersegment elimination   (1)   1   –%   –   1   –100.0%
Swisscom Switzerland   913   818   11.6%   1,856   1,748   6.2%
Fastweb   206   222   –7.2%   393   413   –4.8%
Other Operating Segments   21   41   –48.8%   55   83   –33.7%
Reconciliation pension cost 2   10   (15)   –%   19   (30)   –%
Intersegment elimination   (11)   (12)   –8.3%   (20)   (23)   –13.0%
Total EBITDA   1,139   1,054   8.1%   2,303   2,191   5.1%
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 Swisscom Directories Ltd (localsearch), 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
  2nd quarter
2023
  2nd quarter
2022
 
Change
  1st half-year
2023
  1st half-year
2022
 
Change
                         
Revenue and operating income before depreciation and amortisation (EBITDA)
Telecom services   1,341   1,357   –1.2%   2,689   2,722   –1.2%
IT services   292   285   2.5%   583   574   1.6%
Merchandise   175   185   –5.4%   392   407   –3.7%
Wholesale   132   133   –0.8%   263   263   –%
Revenue other   44   34   29.4%   86   69   24.6%
External revenue   1,984   1,994   –0.5%   4,013   4,035   –0.5%
Intersegment revenue   16   17   –5.9%   31   32   –3.1%
Revenue   2,000   2,011   –0.5%   4,044   4,067   –0.6%
Direct costs   (393)   (400)   –1.8%   (816)   (820)   –0.5%
Indirect costs   (694)   (793)   –12.5%   (1,372)   (1,499)   –8.5%
Operating expense   (1,087)   (1,193)   –8.9%   (2,188)   (2,319)   –5.6%
EBITDA   913   818   11.6%   1,856   1,748   6.2%
Margin as % of revenue   45.7   40.7       45.9   43.0    
                   
Operating free cash flow proxy
EBITDA   913   818   11.6%   1,856   1,748   6.2%
Lease expense   (55)   (55)   –%   (111)   (111)   –%
EBITDA after lease expense (EBITDAaL)   858   763   12.5%   1,745   1,637   6.6%
Capital expenditure   (427)   (391)   9.2%   (821)   (755)   8.7%
Operating free cash flow proxy   431   372   15.9%   924   882   4.8%
                   
Operational data in thousand and headcount
Fixed telephony access lines               1,271   1,369   –7.2%
Broadband access lines retail               2,012   2,026   –0.7%
TV access lines               1,549   1,582   –2.1%
Mobile access lines               6,195   6,157   0.6%
Access lines wholesale               682   692   –1.4%
Full-time equivalent employees               13,054   12,927   1.0%

Swisscom Switzerland’s revenue decreased slightly by 0.6% or CHF 23 million to CHF 4,044 million. Revenue from telecoms services decreased by 1.2% or CHF 33 million to CHF 2,689 million. Of the decrease, CHF 25 million (–3.1%) is attributable to the Business Customers segment; revenue from telecoms services in the Residential Customers segment remained almost stable at CHF 1,919 million (–0.4%). In contrast, revenue from IT services with business customers rose by 1.6% to CHF 583 million. Market saturation is reflected in fewer connections and declining subscriber bases for broadband retail (–0.7%) and TV (–2.1%). Fixed network telephony (–7.2%) is significantly affected by its substitution with mobile telephony. In mobile telephony, the number of subscribers increased slightly (+0.6%), while the customer structure changed due to an increase in postpaid lines (+164,000) and a similarly strong decrease in prepaid connections (–126,000). The share of secondary and third-party brands in the Residential Customers segment rose from 25% to 30%.

The operating expense decreased by 5.6% or CHF 131 million. Direct costs fell slightly by 0.5% to CHF 816 million. The costs for subscriber acquisition and retention increased, while the costs for purchasing services and merchandise decreased. Indirect costs fell by CHF 127 million (–8.5%) and were influenced primarily by non-recurring items in connection with provisions for legal proceedings. In the first half of 2023, provisions for legal proceedings of CHF 10 million (net) were reversed with an effect on EBITDA. In the same period of the previous year, provisions of CHF 82 million had been recognised with an effect on EBITDA. Excluding these items, indirect costs fell by CHF 35 million (–2.5%). In telecommunications, cost savings of CHF 40 million were realised through efficiency improvement measures and optimised network maintenance. In the area of IT services, indirect costs rose by CHF 5 million. Headcount increased year-on-year by 1.0% to 13,054 FTEs. The increase can be attributed primarily to the acquisition of Axept Business Software AG in the current financial year. Operating income before depreciation and amortisation (EBITDA) was up by 6.2% or CHF 108 million to CHF 1,856 million. Without the non-recurring items mentioned, it increased by 0.9% or CHF 16 million. The decline in revenue from telecoms services was more than compensated for thanks to ongoing cost-cutting measures. Capital expenditure increased by 8.7% or CHF 66 million to CHF 821 million mainly due to the expansion and upgrading of 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
  2nd quarter
2023
  2nd quarter
2022
 
Change
  1st half-year
2023
  1st half-year
2022
 
Change
                         
Revenue and operating income before depreciation and amortisation (EBITDA)
Residential customers   291   287   1.4%   580   572   1.4%
Corporate customers   266   250   6.4%   527   497   6.0%
Wholesale   70   64   9.4%   141   126   11.9%
External revenue   627   601   4.3%   1,248   1,195   4.4%
Intersegment revenue   1   3   –66.7%   3   4   –25.0%
Revenue   628   604   4.0%   1,251   1,199   4.3%
Operating expense   (418)   (386)   8.3%   (853)   (796)   7.2%
EBITDA   210   218   –3.7%   398   403   –1.2%
Margin as % of revenue   33.4   36.1       31.8   33.6    
                   
Operating free cash flow proxy
EBITDA   210   218   –3.7%   398   403   –1.2%
Lease expense   (14)   (15)   –6.7%   (27)   (29)   –6.9%
EBITDA after lease expense (EBITDAaL)   196   203   –3.4%   371   374   –0.8%
Capital expenditure   (144)   (142)   1.4%   (297)   (299)   –0.7%
Operating free cash flow proxy   52   61   –14.8%   74   75   –1.3%
        .          
Operational data in thousand and headcount
Broadband access lines retail               2,631   2,712   –3.0%
Broadband access lines wholesale               532   386   37.8%
Mobile access lines               3,343   2,805   19.2%
Full-time equivalent employees               3,117   2,880   8.2%

Fastweb’s revenue rose year-on-year by 4.3% or EUR 52 million to EUR 1,251 million. Competition remained fierce. The customer base in the fixed-network business (end-customer and wholesale) grew by 2.1% overall to 3.16 million. Although this fell by 3.0% to 2.63 million in the end-customer business as a result of the value strategy pursued by Fastweb and due to the challenging market environment, the number of ultra-fast broadband connections provided by Fastweb to other operators rose to 532,000 (+37.8%). Among end customers, the share of ultra-fast broadband connections increased by 3 percentage points to 88%. The number of mobile access lines increased by 538,000 (+19.2%) to 3.34 million, with bundled offerings continuing to play an important role here. 42% of broadband customers used a bundled offering combining fixed network and mobile. Revenue from residential customers increased by 1.4% or EUR 8 million to EUR 580 million, mainly as a result of the greater mobile customer base. Revenue from business customers increased by 6.0% or EUR 30 million to EUR 527 million, driven by the strong market position in the area of public administration. Revenue from wholesale business increased by 11.9% or EUR 15 million to EUR 141 million due to the higher number of subscribers.

Operating expense and operating income before depreciation and amortisation (EBITDA) increased due to revenue growth and were influenced by the recognition of provisions for legal proceedings in the amount of EUR 13 million in the first half of 2023. Without this effect, operating expense rose by EUR 44 million (+5.5%) and EBITDA by 2.0% or EUR 8 million to EUR 411 million. Capital expenditure fell by 0.7% to EUR 297 million due to a decrease in customer-driven investment. Headcount increased by 8.2% or 237 FTEs to 3,117 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
  2nd quarter
2023
  2nd quarter
2022
 
Change
  1st half-year
2023
  1st half-year
2022
 
Change
                         
Revenue and operating income before depreciation and amortisation (EBITDA)
External revenue   104   106   –1.9%   204   206   –1.0%
Intersegment revenue   154   153   0.7%   297   294   1.0%
Revenue   258   259   –0.4%   501   500   0.2%
Operating expense   (237)   (218)   8.7%   (446)   (417)   7.0%
EBITDA   21   41   –48.8%   55   83   –33.7%
Margin as % of revenue   8.1   15.8       11.0   16.6    
                   
Operating free cash flow proxy
EBITDA   21   41   –48.8%   55   83   –33.7%
Lease expense   (3)   (2)   50.0%   (5)   (5)   –%
EBITDA after lease expense (EBITDAaL)   18   39   –53.8%   50   78   –35.9%
Capital expenditure   (10)   (8)   25.0%   (18)   (14)   28.6%
Operating free cash flow proxy   8   31   –74.2%   32   64   –50.0%
                   
Headcount
Full-time equivalent employees               3,326   3,260   2.0%

Revenue in Other Operating Segments remained almost stable year-on-year at CHF 501 million (+0.2%). Operating income before depreciation and amortisation (EBITDA) fell by 33.7% or CHF 28 million to CHF 55 million due primarily to one-off charges in connection with customer projects and lower operating income from localsearch (advertising and directory platform business for Swiss SMEs). Accordingly, the profit margin fell to 11.0% (prior year: 16.6%). Headcount increased by 2.0% or 66 FTEs to 3,326 FTEs, partly as the result of an acquisition in the previous year.