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2 Segment information

Changes in segment reporting

Swisscom has further increased the level of digitisation within its organisational structure in order to strengthen areas with close customer proximity and boost the company’s effectiveness in the highly competitive ICT market. Through these adjustments Swisscom also wants to improve the customer experience from a single source, simplify processes and increase efficiency in order to create greater scope for innovation. As a result of the organisational changes, the Small and Medium-Sized Enterprises division has been dissolved. The telecommunications and solutions business with small and medium-sized enterprises is now included in the Retail Customers segment as part of segment reporting. Swisscom Directories (localsearch) has been transferred to the new Digital Business division, which is reported under Other Operating Segments. In addition, all field service functions of Swisscom Switzerland are disclosed newly under the Retail Customers segment. Furthermore, fleet management from the Participations division (Other Operating Segments) has been transferred to the IT, Network & Infrastructure segment. The prior year’s figures have been restated as follows:

In CHF million   Reported   Adjustment   Restated
             
Net revenue Financial year 2016
Retail Customers (former Residential Customers)   5,160   1,105   6,265
Small and Medium-Sized Enterprises   1,367   (1,367)  
Enterprise Customers   2,611   (71)   2,540
Wholesale   989   (10)   979
IT, Network & Infrastructure (former IT, Network & Innovation)   129   44   173
Elimination   (816)   116   (700)
Swisscom Switzerland   9,440   (183)   9,257
Fastweb   1,957     1,957
Other Operating segments   594   195   789
Group Headquarters   2     2
Elimination   (350)   (12)   (362)
Total net revenue   11,643     11,643
             
Segment result Financial year 2016
Retail Customers (former Residential Customers)   2,748   753   3,501
Small and Medium-Sized Enterprises   847   (847)  
Enterprise Customers   722   32   754
Wholesale   388   (9)   379
IT, Network & Infrastructure (former IT, Network & Innovation)   (2,508)   17   (2,491)
Swisscom Switzerland   2,197   (54)   2,143
Fastweb   124     124
Other Operating segments   27   54   81
Group Headquarters   (114)     (114)
Reconciliation pension cost   (72)     (72)
Elimination   (14)     (14)
Total segment result   2,148     2,148

General information

Operating segments requiring to be reported are determined on the basis of the management approach. Accordingly, external segment reporting reflects the Group’s internal financial reportingto the Chief Operating Decision Maker. Reporting is divided into the segments “Retail Customers”, “Enterprise Customers”, “Wholesale”, and “IT, Network & Infrastructure”, 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 & Infrastructure segment charge any network costs to other segments. Other services between the segments are recharged between the segments at market prices. The results of the Retail Customers, Enterprise Customers and Wholesale segments correspond to a contribution margin before network costs. The results of the IT, Network & Infrastructure segment consist of operating expenses and depreciation and amortisation less the revenue from the rental and administration of buildings and vehicles as well capitalised costs and other income. The segment results of Swisscom Switzerland correspond in aggregate to the operating results (EBIT) of Swisscom Switzerland. 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 expense includes the costs of goods and services purchased, personnel expense and other operating costs less capitalised costs of 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 pension cost as provided for under IAS 19 is reported in the column “Eliminations”. For the first quarter of 2017, an expense of CHF 20 million is disclosed under “Eliminations” as a pension cost reconciliation item in accordance with IAS 19 (CHF 18 million in the first quarter of 2016).

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”.

Net revenue and the results of the individual segments for the first three months of 2017 are as shown below:


1.1.–31.3.2017, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
segments
 
Group Head-
quarters
 

Elimination
 

Total
Net revenue from external customers   2,227   482   122       2,831
Net revenue with other segments   19   2   65     (86)  
Net revenue   2,246   484   187     (86)   2,831
Segment result   561   15   23   (26)   (23)   550
Financial income and financial expense, net                       (49)
Share of results of associates                       (1)
Income before income taxes                       500
Income tax expense                       (127)
Net income                       373

1.1.–31.3.2017, in CHF million
  Retail
Customers
  Enterprise
Customers
 
Wholesale
  IT, Network &
Infrastructure
 
Elimination
  Swisscom
Switzerland
Net revenue from external customers   1,497   586   138   6     2,227
Net revenue with other segments   20   26   68   36   (131)   19
Net revenue   1,517   612   206   42   (131)   2,246
Segment result   899   181   104   (623)     561

Net revenue and the results of the individual segments for the first three months of 2016 are as shown below:


1.1.–31.3.2016, in CHF million, restated
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
segments
 
Group Head-
quarters
 

Elimination
 

Total
Net revenue from external customers   2,285   480   120       2,885
Net revenue with other segments   20   2   50     (72)  
Net revenue   2,305   482   170     (72)   2,885
Segment result   591   (19)   12   (30)   (19)   535
Financial income and financial expense, net                       (79)
Share of results of associates                      
Income before income taxes                       456
Income tax expense                       (92)
Net income                       364

1.1.–31.3.2016, in CHF million, restated
  Retail
Customers
  Enterprise
Customers
 
Wholesale
  IT, Network &
Infrastructure
 
Elimination
  Swisscom
Switzerland
Net revenue from external customers   1,532   609   139   5     2,285
Net revenue with other segments   33   33   78   36   (160)   20
Net revenue   1,565   642   217   41   (160)   2,305
Segment result   907   194   91   (600)   (1)   591