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6 Segment information

Changes in segment reporting

Swisscom conducts its activities for large corporate clients from the business areas Corporate Business, Network & IT and Swisscom IT Services, bundled together in order to react to the needs of corporate clients from a single source and to offer rapid cloud-based solutions. The new business segment Enterprise Customers services all large corporate clients, thereby advancing to become one of the largest ICT service providers in Switzerland for large corporations. From now on, the business area IT, Network & Innovation is responsible for the operation of all IT systems thereby taking over the operation of the IT platforms previously managed by Swisscom IT Services. It is responsible for the development and production of standardised IT and network services for the entire Group. In addition, it now manages the real estate located in Switzerland. As a result of these modifications, Swisscom IT Services and Swisscom Real Estate Ltd are integrated into segment reporting for the segments Enterprise Customers as well as IT, Network & Innovation. Previously, these business units were reported under Other Operating Segments. The prior year’s figures have been restated as follows:

In CHF million   Reported   Adjustment   Restated
             
Net revenue for financial year 2014            
Residential Customers   5,326   (164)   5,162
Small and Medium-Sized Enterprises   1,159   172   1,331
Enterprise Customers   1,788   781   2,569
Wholesale   929     929
IT, Network & Innovation     126   126
Elimination   (571)   (217)   (788)
Swisscom Switzerland   8,631   698   9,329
Fastweb   2,047     2,047
Other Operating Segments   1,889   (1,224)   665
Group Headquarters   2     2
Elimination   (866)   526   (340)
Total net revenue   11,703     11,703
             
Segment result Financial year 2014            
Residential Customers   2,823   (92)   2,731
Small and Medium-Sized Enterprises   850   44   894
Enterprise Customers   832   22   854
Wholesale   381     381
IT, Network & Innovation   (2,483)   173   (2,310)
Elimination     (1)   (1)
Swisscom Switzerland   2,403   146   2,549
Fastweb   (119)     (119)
Other Operating Segments   186   (144)   42
Group Headquarters   (126)   (2)   (128)
Elimination   (22)     (22)
Total segment result   2,322     2,322

General disclosures

Operating segments requiring to be reported are determined on the basis of the management approach. Accordingly, external segment reporting reflects the internal organisational and management structure used within the Group as well as internal financial reporting to the Chief Operating Decision Maker. The segment information disclosed is in line with that reported in the internal reporting system. Reporting is divided into the segments “Residential Customers”, “Small and Medium-Sized Enterprises”, “Enterprise Customers”, “Wholesale” and “IT, Network & Innovation” which are regrouped under Swisscom Switzerland, as well as “Fastweb” and “Other Operating Segments”. In addition, “Group Headquarters”, which includes unallocated costs, are reported separately in segment reporting. Further segment disclosures are set out in Note 3.16.

Group Headquarters charges no management fees for its financial management and the segment IT, Network & Innovation charges no network costs to other segments. Other services between the segments are recharged between the segments at market prices. The results of the segments Residential Customers, Small and Medium-Sized Enterprises, Enterprise Customers and Wholesale equate to a contribution margin prior to network costs. The segment results of IT, Network & Innovation reports, as its segment result, operating expenses and depreciation and amortisation, less revenues from the rental and management of real estate, the capitalised costs of self-constructed assets and other income. The segment results of Swisscom Switzerland correspond in aggregate to the operating results (EBIT) of Swisscom Switzerland. The services offered by the individual operating segments are described in Note 3.16. The segment results of Fastweb and Other Operating Segments correspond to the operating results (EBIT) of these units. This latter encompasses net revenues from external customers and other segments, less segment expenses, depreciation and amortisation and impairment losses on property, plant & equipment and intangible assets. Segment expenses comprise the costs of materials and services, personnel expenses and other operating costs less capitalised costs of self-constructed assets and other income.

Segment expense includes ordinary employer contributions as retirement-benefit expense. The difference between the ordinary employer contributions and the retirement-benefit expense as provided for under IAS 19 is reported in the column “Eliminations”. In 2015, an amount of CHF 60 million is included in the column “Eliminations” as a reconciling item to retirement-benefit expense in accordance with IAS 19 (prior year: no expense).

Services provided to or sales of assets recharged between the individual segments may include unrealised gains or losses. These are eliminated and are reported in the segment information in the column “Eliminations”.

Segment information 2014 and 2015

Segment information for 2015 of Swisscom may be analysed as follows:


2015, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
  Group
Head-
quarters
 
Elimi-
nation
 

Total
Net revenue from external customers   9,475   1,862   340   1     11,678
Net revenue from other segments   70   5   263   1   (339)  
Net revenue   9,545   1,867   603   2   (339)   11,678
Segment result   2,218   (16)   (5)   (117)   (68)   2,012
Financial income and financial expense, net                       (272)
Share of results of associates                       23
Income before income taxes                       1,763
Income tax expense                       (401)
Net income                       1,362
                         
Associates   105   42   76       223
Capital expenditure in property, plant and equipment and other intangible assets   1,817   581   48     (19)   2,427
Depreciation, amortisation and impairment losses   1,383   635   74     (6)   2,086
Gain (loss) on disposal of property, plant and equipment, net   20     (3)       17
Share of results of associates   16     7       23

Segment information 2015 of Swisscom Switzerland may be analysed as follows:


2015, in CHF million
 

Residential
Customers
  Small and
Medium-
Sized
Enterprises
 

Enterprise
Customers
 

Whole-
sale
 
IT,
Network &
Innovation
 

Elimi-
nation
  Total
Swisscom
Switzer-
land
Net revenue from external customers   5,075   1,339   2,449   579   33     9,475
Net revenue from other segments   149   31   205   377   97   (789)   70
Net revenue   5,224   1,370   2,654   956   130   (789)   9,545
Segment result   2,797   859   818   198   (2,454)     2,218
                             
Associates   31   2   15   56   1     105
Capital expenditure in property, plant and equipment and other intangible assets   180   50   171     1,416     1,817
Depreciation, amortisation and impairment losses   136   48   92     1,107     1,383
Gain (loss) on disposal of property, plant and equipment, net         (5)     25     20
Share of results of associates   (3)       19       16

Segment information 2014 of Swisscom is to be analysed as follows:


2014, in million CHF,
restated
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
  Group
Head-
quarters
 
Elimi-
nation
 

Total
Net revenue from external customers   9,253   2,043   406   1     11,703
Net revenue from other segments   76   4   259   1   (340)  
Net revenue   9,329   2,047   665   2   (340)   11,703
Segment result   2,549   (119)   42   (128)   (22)   2,322
Financial income and financial expense, net                       (260)
Share of results of associates                       26
Income before income taxes                       2,088
Income tax expense                       (382)
Net income                       1,706
                         
Associates   68   47   67       182
Assets held for sale       109       109
Capital expenditure in property, plant and equipment and other intangible assets   1,768   682   38     (28)   2,460
Depreciation, amortisation and impairment losses   1,286   744   61   5   (5)   2,091
Gain (loss) on disposal of property, plant and equipment, net   52     (3)       49
Share of results of associates   26           26

Segment information 2014 of Swisscom Switzerland is to be analysed as follows:


2014, in million CHF,
restated
 

Residential
Customers
  Small and
Medium-
Sized
Enterprises
 

Enterprise
Customers
 

Whole-
sale
 
IT,
Network &
Innovation
 

Elimi-
nation
  Total
Swisscom
Switzer-
land
Net revenue from external customers   5,006   1,301   2,344   570   32     9,253
Net revenue from other segments   156   30   225   359   94   (788)   76
Net revenue   5,162   1,331   2,569   929   126   (788)   9,329
Segment result   2,731   894   854   381   (2,310)   (1)   2,549
                             
Associates     3     64   1     68
Capital expenditure in property, plant and equipment and other intangible assets   161   37   152     1,418     1,768
Depreciation, amortisation and impairment losses   114   21   88     1,063     1,286
Gain (loss) on disposal of property, plant and equipment, net   (1)     (1)     54     52
Share of results of associates     2     24       26

Disclosures by geographical regions

­Swisscom’s operations are conducted mainly in Switzerland where it provides a comprehensive range of telecommunication services. Business activities abroad mainly relate to Fastweb which primarily provides fixed-network and IP-based products in Italy. Net revenue and assets are allocated to regions. Net revenue and assets are allocated according to the registered office of the related Group company.

  2015   2014
In CHF million   Net revenue   Non-current assets   Net revenue   Non-current assets
Switzerland   9,764   14,151   9,586   13,423
Italy   1,864   2,904   2,048   3,281
Other countries in Europe   43   125   55   151
Other countries outside Europe   7     14  
Not allocated     592     651
Total   11,678   17,772   11,703   17,506

Disclosures by products and services

In CHF million   2015   2014
Mobile access lines single subscriptions   2,804   2,852
Fixed access lines single subscriptions   3,439   3,832
Bundles   2,248   1,938
Other   3,186   3,080
Not allocated   1   1
Total net revenue   11,678   11,703

The products and services offered by each operating segment are described in Note 3.16.

Significant customers

­Swisscom has a large number of customers. No individual customer accounted for more than 10% of segment revenue in 2014 and 2015.