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2 Segment information

Reportable operating segments are determined on the basis of a management approach. Accordingly, external segment reporting reflects the Group’s internal financial reporting to the Chief Operating Decision Maker. Reporting is divided into the segments “Residential Customers”, “Small & Medium-Sized Enterprises”, “Enterprise Customers”, “Wholesale”, and “IT, Network & Innovation”, which are grouped under Swisscom Switzerland, as well as “Fastweb”, and “Other Operating Segments”. “Group Headquarters”, which includes non-allocated costs, is reported separately.

Group Headquarters does not charge any management fees to other segments for its financial management services, nor does the IT, Network & Innovation segment charge any network costs to other segments. Other intersegment services are charged at market rates. The results of the Residential Customers, Small & Medium-Sized Enterprises, Enterprise Customers and Wholesale segments are reported as a contribution margin before network costs. The results of the IT, Network & Innovation segment consist of operating expenses and depreciation and amortisation less the revenue from the rental and administration of buildings and capitalised self-constructed assets and other income. The sum of the segment results of Swisscom Switzerland corresponds in aggregate to the operating result (EBIT) of Swisscom Switzerland. The segment results of Fastweb and Other Operating Segments correspond to the operating result (EBIT) of these units. The latter reflects the net revenues from external customers and other segments less segment expense and depreciation, amortisation and impairment losses on property, plant and equipment and intangible assets. Segment expense includes the costs of goods and services purchased, personnel expense and other operating costs less capitalised self-constructed assets and other income.

Segment expense contains the ordinary employer contributions as pension costs. The difference between the ordinary employer contributions and the retirement benefit expense as provided for under IAS 19 is reported in the column “Elimination”. For the first half of 2016, an expense of CHF 35 million is disclosed under “Elimination” as a pension cost reconciliation item in accordance with IAS 19 (CHF 36 million in the first half of 2015).

Unrealised gains and losses may arise as a result of recharging services and sales of assets between the segments. These are eliminated and are reported in the segment information in the column “Elimination”.

Net revenue and segment results of the individual segments for the first half of 2016 are presented below:


1st half-year
2016, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
  Group
Head-
quarters
 
Elimi-
nation
 

Total
Net revenue from external customers   4,650   961   157   1     5,769
Net revenue with other segments   32   4   118     (154)  
Net revenue   4,682   965   275   1   (154)   5,769
Segment result   1,168   49   15   (57)   (40)   1,135
Financial income and financial expense, net                       (145)
Share of results of associates                      
Income before income taxes                       990
Income tax expense                       (202)
Net income                       788

1st half-year
2016, in CHF million
 

Residential
Customers
  Small and
Medium-
Sized
Enterprises
 

Enterprise
Customers
 


Wholesale
 

IT, Network &
Innovation
 

Elimi-
nation
 

Swisscom
Switzerland
Net revenue from external customers   2,488   662   1,202   287   11     4,650
Net revenue with other segments   71   17   106   182   50   (394)   32
Net revenue   2,559   679   1,308   469   61   (394)   4,682
Segment result   1,408   428   364   193   (1,224)   (1)   1,168

Net revenue and segment results of the individual segments for the first half of 2015 are presented below:


1st half-year
2015, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
  Group
Head-
quarters
 
Elimi-
nation
 

Total
Net revenue from external customers   4,661   920   177       5,758
Net revenue with other segments   36   1   123   1   (161)  
Net revenue   4,697   921   300   1   (161)   5,758
Segment result   1,250   (46)   1   (58)   (42)   1,105
Financial income and financial expense, net                       (137)
Share of results of associates                       13
Income before income taxes                       981
Income tax expense                       (197)
Net income                       784

1st half-year
2015, in CHF million
 

Residential
Customers
  Small and
Medium-
Sized
Enterprises
 

Enterprise
Customers
 


Wholesale
 

IT, Network &
Innovation
 

Elimi-
nation
 

Swisscom
Switzerland
Net revenue from external customers   2,499   652   1,205   288   17     4,661
Net revenue with other segments   75   15   102   176   65   (397)   36
Net revenue   2,574   667   1,307   464   82   (397)   4,697
Segment result   1,405   429   401   193   (1,178)     1,250