Segment results

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

Swisscom Switzerland’s revenue decreased by 2.5% or CHF 52 million to CHF 1,993 million. Revenue from telecoms services decreased by 2.2% or CHF 30 million to CHF 1,324 million. Of this decline, CHF 17 million (–1.8%) was attributable to the Residential Customers segment and CHF 13 million (–3.3%) to the Business Customers segment. Revenue from merchandise dipped by CHF 30 million or 13.8% to CHF 187 million due to the lower number of smartphones sold. By contrast, revenue from IT services rose by 4.9% to CHF 297 million. In an intense market environment, there was a reduction in the number of connections for broadband (–1.3%) and TV (–2.1%), while the number of connections for mobile telephony increased slightly (+0.5%). In mobile communications, the customer structure changed due to an increase in postpaid lines (+126,000) and a similarly pronounced decrease in prepaid lines (–92,000). The share of secondary and third-party brands in the Residential Customers segment rose from 29% to 32%. The number of connections for fixed network telephony dropped (–6.9%) as a result of its substitution with mobile telephony.

The operating expense decreased by 4.6% or CHF 51 million. Direct costs fell by CHF 43 million or 10.2%. There was a drop in both the cost of purchasing merchandise, and subscriber acquisition and subscriber retention costs. Indirect costs fell by CHF 8 million (–1.2%), rising by CHF 10 million if non-recurring items are left out of the equation. In telecommunications, cost savings of CHF 8 million were realised through efficiency improvement measures. By contrast, indirect costs in the area of IT services increased by CHF 18 million. Headcount increased by 4.2% year-on-year to 13,389 FTEs as a result of company acquisitions. Operating income before depreciation and amortisation (EBITDA) remained virtually stable (–0.1%) at CHF 944 million. After adjustments to reflect non-­recurring items, EBITDA fell by 2.0%. Cost-cutting measures partly compensated for the decline in revenue from telecoms services. Capital expenditure increased by 12.9% or CHF 51 million to CHF 445 million mainly due to measures to step up the expansion of the access network with optical fibre and higher investment in the mobile network. Swisscom plans to increase fibre-optic coverage (FTTH) to around 57% by the end of 2025, and to 75–80% by the end of 2030.

Fastweb

Fastweb’s revenue rose year-on-year by 5.6% or EUR 35 million to EUR 658 million. Competition remained fierce. The customer base in the fixed-network business (retail and wholesale) grew by 4.5% overall to 3.30 million. While the customer base in the retail segment fell by 3.0% to 2.58 million due to the challenging market environment, the number of ultra-fast broadband connections provided by Fastweb to other operators (wholesale business) rose to 720,000 (+44.6%). Among retail customers, the share of ultra-fast broadband connections increased by 3 percentage points to 90%. The number of mobile access lines increased by 380,000 (+11.8%) to 3.61 million, with bundled offerings continuing to play an important role here. 43% of broadband customers used a bundled offering combining fixed network and mobile. Revenue from residential customers was almost unchanged year-on-year at EUR 288 million (–0.3%). The lower revenue in the fixed-network business was offset by an increase in the mobile communications segment as a result of the increased customer base. Revenue from business customers increased by 8.8% or EUR 23 million to EUR 284 million, driven by the higher revenue from IT services. Revenue from wholesale business increased by 18.3% or EUR 13 million to EUR 84 million due to the higher number of subscribers.

Operating expenses increased by EUR 31 million (+7.1%). Driven by revenue growth, the operating result before depreciation and amortisation (EBITDA) increased by EUR 4 million (+2.1%). Capital expenditure increased by 2.6% to EUR 157 million due to an increase in customer-driven investment. Headcount increased by 4.5% or 138 FTEs to 3,225 FTEs as the company took on external staff and the growth created a need for more personnel.

Other Operating Segments

Revenue in Other Operating Segments was up by 5.0% or CHF 12 million year-on-year to CHF 252 million, due primarily to higher revenue for cablex construction services. The operating result before depreciation and amortisation (EBIDTA) increased by 3.1% or CHF 1 million to CHF 33 million. The profit margin was down slightly to 13.1% (prior year: 13.3%). Headcount was at 3,333 full-time equivalents, almost on a par with the previous year (+0.5%).