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Segment results

In CHF million, except where indicated   2018   2017   Change
Net revenue
Residential Customers   5,924   6,053   –2.1%
Enterprise Customers   2,410   2,510   –4.0%
Wholesale 1   894   944   –5.3%
IT, Network & Infrastructure   159   167   –4.8%
Intersegment elimination   (570)   (616)   –7.5%
Swisscom Switzerland   8,817   9,058   –2.7%
Fastweb   2,426   2,164   12.1%
Other Operating Segments   907   850   6.7%
Group Headquarters   2   1   100.0%
Intersegment elimination   (438)   (411)   6.6%
Revenue from external customers 2   11,714   11,662   0.4%
             
Operating income before depreciation and amortisation (EBITDA)
Residential Customers   3,373   3,482   –3.1%
Enterprise Customers   755   822   –8.2%
Wholesale   446   446   0.0%
IT, Network & Infrastructure   (1,166)   (1,250)   –6.7%
Swisscom Switzerland   3,408   3,500   –2.6%
Fastweb   777   845   –8.0%
Other Operating Segments   186   180   3.3%
Group Headquarters   (78)   (111)   –29.7%
Reconciliation item pension cost 3   (60)   (92)   –34.8%
Intersegment elimination   (20)   (27)   –25.9%
Operating income before depreciation and amortisation (EBITDA) 2   4,213   4,295   –1.9%
1 Including intersegment recharges of services performed by other network providers.
2 Swisscom has applied IFRS 15 “Revenue from Contracts with Customers”
since 1 January 2018. The prior year’s figures have not been adjusted. If
IFRS 15 had not been applied, net revenue in 2018 would be CHF 5 million
lower (Swisscom Switzerland CHF –9 million; Fastweb CHF +4 million)
and EBITDA CHF 43 million higher (Swisscom Switzerland CHF +12 million;
Fastweb CHF +31 million).
3 Operating income of segments includes ordinary employer contributions as pension fund expense. The difference to the pension cost according to IAS 19 is recognised as a reconciliation item.

Swisscom’s reporting focuses on the three operating divisions Swisscom Switzerland, Fastweb and Other Operating Segments. Group Headquarters, which includes non-allocated costs, is reported separately. Swisscom Switzerland comprises the customer segments Residential Customers, Enterprise Customers and Wholesale, as well as the IT, Network & Infrastructure division. Fastweb is a telecommunications provider for residential and business customers in Italy. Other Operating Segments primarily comprises the Digital Business division, Swisscom Broadcast Ltd (radio transmitters) and cablex Ltd (network construction and maintenance).

The IT, Network & Infrastructure segment does not charge any network costs to other segments, nor does Group Headquarters charge any management fees to other segments. The remaining services between the segments are recharged at market prices. Network costs in Switzerland are budgeted, monitored and controlled by the IT, Network & Infrastructure division, which is managed as a cost centre. For this reason, no revenue is credited to the IT, Network & Infrastructure segment within the segment reporting, with the exception of the rental and administration of buildings and vehicles. The results of the segments “Residential Customers”, “Enterprise Customers” and “Wholesale” correspond to a contribution margin prior to network costs.

Segment expense comprises direct costs, personnel expenses and other operating costs less capitalised costs of self-constructed assets and other income. Segment expense includes ordinary employer contributions as pension fund expense. The difference between the ordinary employer contributions and the past service cost under IAS 19 is reported as a reconciliation item between the operating incomes of the segments and Group operating income.