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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 “Network & IT” which are grouped under Swisscom Switzerland, “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 intersegmental services are cross-charged at market rates. The results of the segments Residential Customers, Small & Medium-Sized Enterprises, Enterprise Customers and Wholesale correspond to 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 costs 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 costs and other income.

Segment expense contains the ordinary employer contributions as pension costs. The difference between the statutory employer contributions and the pension cost in accordance with IAS 19 is disclosed in the column “Elimination”. For the first nine months of 2016, an expense of CHF 55 million is disclosed under “Elimination” as a pension cost reconciliation item in accordance with IAS 19 (CHF 54 million in the first nine months 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 the results of the individual segments for the first nine months of 2016 are as shown below:


1.1.–30.9.2016, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
  Group
Head-
quarters
 
Elimi-
nation
 

Total
Net revenue from external customers   6,973   1,435   235       8,643
Net revenue with other segments   49   6   189   1   (245)  
Net revenue   7,022   1,441   424   1   (245)   8,643
Segment result   1,736   76   26   (84)   (63)   1,691
Financial income and financial expense, net                       (181)
Share of results of associates                       1
Income before income taxes                       1,511
Income tax expense                       (314)
Net income                       1,197

1.1.–30.9.2016, 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   3,742   996   1,776   436   23     6,973
Net revenue with other segments   104   24   159   302   75   (615)   49
Net revenue   3,846   1,020   1,935   738   98   (615)   7,022
Segment result   2,096   642   543   298   (1,842)   (1)   1,736

Net revenue and the results of the individual segments for the first nine months of 2015 are as shown below:


1.1.–30.9.2015, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
  Group
Head-
quarters
 
Elimi-
nation
 

Total
Net revenue from external customers   7,019   1,375   257       8,651
Net revenue with other segments   53   3   192   1   (249)  
Net revenue   7,072   1,378   449   1   (249)   8,651
Segment result   1,739   (47)   8   (80)   (66)   1,554
Financial income and financial expense, net                       (194)
Share of results of associates                       18
Income before income taxes                       1,378
Income tax expense                       (320)
Net income                       1,058

1.1.–30.9.2015, 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   3,766   996   1,799   433   25     7,019
Net revenue with other segments   111   24   151   281   72   (586)   53
Net revenue   3,877   1,020   1,950   714   97   (586)   7,072
Segment result   2,127   659   615   107   (1,769)     1,739