Segment results
In CHF million |
2. quarter 2019 |
2. quarter 2018 |
Change |
1st half-year 2019 |
1st half-year 2018 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue | ||||||||||||
| Swisscom Switzerland | 2,093 | 2,191 | –4.5% | 4,256 | 4,395 | –3.2% | ||||||
| Fastweb | 602 | 606 | –0.7% | 1,183 | 1,180 | 0.3% | ||||||
| Other Operating Segments | 237 | 228 | 3.9% | 462 | 426 | 8.5% | ||||||
| Group Headquarters | – | 1 | –100.0% | – | 1 | –100.0% | ||||||
| Intersegment elimination | (129) | (106) | 21.7% | (238) | (197) | 20.8% | ||||||
| Net revenue | 2,803 | 2,920 | –4.0% | 5,663 | 5,805 | –2.4% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | ||||||||||||
| Swisscom Switzerland | 909 | 933 | –2.6% | 1,838 | 1,868 | –1.6% | ||||||
| Fastweb | 206 | 199 | 3.5% | 383 | 371 | 3.2% | ||||||
| Other Operating Segments | 48 | 51 | –5.9% | 98 | 92 | 6.5% | ||||||
| Group Headquarters | (21) | (31) | –32.3% | (39) | (52) | –25.0% | ||||||
| Reconciliation pension cost 1 | (15) | (14) | 7.1% | (29) | (29) | – | ||||||
| Reconciliation lease expense (IAS 17) 2 | – | (47) | –100.0% | – | (99) | –100.0% | ||||||
| Intersegment elimination | (6) | (6) | – | (11) | (8) | 37.5% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | 1,121 | 1,085 | 3.3% | 2,240 | 2,143 | 4.5% | ||||||
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1 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.
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2 Swisscom has been applying IFRS 16 "Leases" since 1 January 2019. The operating result before depreciation and amortisation (EBITDA) of the segments for 2018 does not include any expenses for operating leases in accordance with IAS 17. The 2018 expense for operating leases in accordance with IAS 17 is shown as a reconciliation item.
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Swisscom Switzerland
In CHF million, except where indicated |
2. quarter 2019 |
2. quarter 2018 |
Change |
1st half-year 2019 |
1st half-year 2018 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue and results | ||||||||||||
| Telecom services | 1,489 | 1,571 | –5.2% | 2,995 | 3,129 | –4.3% | ||||||
| Solution business | 248 | 249 | –0.4% | 499 | 513 | –2.7% | ||||||
| Merchandise | 169 | 166 | 1.8% | 365 | 339 | 7.7% | ||||||
| Wholesale | 162 | 145 | 11.7% | 320 | 286 | 11.9% | ||||||
| Revenue other | 7 | 42 | –83.3% | 39 | 92 | –57.6% | ||||||
| Revenue from external customers | 2,075 | 2,173 | –4.5% | 4,218 | 4,359 | –3.2% | ||||||
| Intersegment revenue | 18 | 18 | – | 38 | 36 | 5.6% | ||||||
| Net revenue | 2,093 | 2,191 | –4.5% | 4,256 | 4,395 | –3.2% | ||||||
| Direct costs | (424) | (454) | –6.6% | (885) | (914) | –3.2% | ||||||
| Indirect costs | (760) | (804) | –5.5% | (1,533) | (1,613) | –5.0% | ||||||
| Segment expenses | (1,184) | (1,258) | –5.9% | (2,418) | (2,527) | –4.3% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 909 | 933 | –2.6% | 1,838 | 1,868 | –1.6% | ||||||
| Margin as % of net revenue | 43.4 | 42.6 | 43.2 | 42.5 | ||||||||
| Lease expense | (57) | (53) 1 | 7.5% | (113) | (109) 1 | 3.7% | ||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (389) | (376) | 3.5% | (770) | (746) | 3.2% | ||||||
| Segment result | 463 | 504 | –8.1% | 955 | 1,013 | –5.7% | ||||||
| Operational data at end of period in thousand | ||||||||||||
| Fixed telephony access lines | 1,683 | 1,906 | –11.7% | |||||||||
| Broadband access lines retail | 2,024 | 2,028 | –0.2% | |||||||||
| Swisscom TV access lines | 1,529 | 1,501 | 1.9% | |||||||||
| Mobile access lines | 6,368 | 6,434 | –1.0% | |||||||||
| Revenue generating units (RGU) | 11,604 | 11,869 | –2.2% | |||||||||
| Unbundled fixed access lines | 79 | 95 | –16.8% | |||||||||
| Broadband access lines wholesale | 502 | 462 | 8.7% | |||||||||
| Capital expenditure and headcount | ||||||||||||
| Capital expenditure in property, plant and equipment and intangible assets | 954 | 711 | 34.2% | |||||||||
| Full-time equivalent employees at end of period (number) | 14,236 | 14,562 | –2.2% | |||||||||
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1 Includes expenses for operating and finance leases in accordance with IAS 17.
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Net revenue for Swisscom Switzerland fell by CHF 139 million or 3.2% to CHF 4,256 million as a result of continuing price pressure and the decline in the number of connections in fixed-line telephony. Revenue from telecommunications services decreased by CHF 134 million or 4.3% to CHF 2,995 million. Of this decline, CHF 78 million (–3.0%) was attributable to the Residential Customers segment and CHF 56 million (–10.6%) to the Enterprise Customers segment. At Enterprise Customers, revenue from the solutions business contracted on the back of price pressure and lower volumes in the banking sector. This decrease was offset by higher revenue from merchandise. The number of inOne customers continues to grow. Swisscom Switzerland had a total of 2.57 million inOne customers at the end of June 2019, with the latest inOne mobile offering alone registering around 570,000 customers in its first five months since launch. In the Residential Customers segment, inOne accounts for 58% of postpaid mobile lines and 63% of broadband connections. The market is showing signs of saturation in the area of mobile communications and fixed-network services. The mobile subscriber base contracted by 66,000 (–1.0%) to 6.37 million. The number of postpaid lines grew by 73,000 year-on-year, while the number of prepaid lines fell by 139,000. Year-on-year, the number of broadband connections fell by 4,000 or 0.2% to 2.02 million. The number of TV connections increased year-on-year by 28,000 or 1.9% to 1.53 million, while the number of fixed telephony access lines fell year-on-year by 223,000 or 11.7% to 1.68 million.
Segment expense fell by CHF 109 million or 4.3% to CHF 2,418 million. Direct costs decreased by CHF 29 million or 3.2% to CHF 885 million. Higher costs for purchasing goods were offset by lower costs for subscriber acquisition and retention. Indirect costs were down 5.0% or CHF 80 million to CHF 1,533 million, mainly driven by the declining headcount and lower costs for external staff. Headcount fell year-on-year as a result of efficiency measures by 326 FTEs or 2.2% to 14,236, including 212 FTEs in the first half of 2019. The segment result before depreciation and amortisation was CHF 30 million or 1.6% lower at CHF 1,838 million as a result of lower revenue, but was largely offset by the ongoing cost-cutting measures. Due to the expenses for the mobile radio frequencies acquired and higher investments in the expansion of broadband networks, capital expenditure rose by CHF 243 million or 34.2% to CHF 954 million. As at end-June 2019, 68% of all households and businesses were connected with ultra-fast broadband exceeding 80 Mbps. 40% of all homes and offices benefit from connections with superior bandwidths of more than 200 Mbps.
Fastweb
In EUR million, except where indicated |
2. quarter 2019 |
2. quarter 2018 |
Change |
1st half-year 2019 |
1st half-year 2018 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Residential Customers | 273 | 264 | 3.4% | 542 | 521 | 4.0% | ||||||
| Enterprise Customers | 214 | 188 | 13.8% | 416 | 368 | 13.0% | ||||||
| Wholesale | 45 | 66 | –31.8% | 87 | 119 | –26.9% | ||||||
| Revenue from external customers | 532 | 518 | 2.7% | 1,045 | 1,008 | 3.7% | ||||||
| Intersegment revenue | 3 | 1 | 200.0% | 4 | 3 | 33.3% | ||||||
| Net revenue | 535 | 519 | 3.1% | 1,049 | 1,011 | 3.8% | ||||||
| Segment expenses | (353) | (349) | 1.1% | (710) | (693) | 2.5% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 182 | 170 | 7.1% | 339 | 318 | 6.6% | ||||||
| Margin as % of net revenue | 34.0 | 32.8 | 32.3 | 31.5 | ||||||||
| Lease expense | (9) | (4) 1 | 125.0% | (15) | (8) 1 | 87.5% | ||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (134) | (121) | 10.7% | (274) | (250) | 9.6% | ||||||
| Segment result | 39 | 45 | –13.3% | 50 | 60 | –16.7% | ||||||
| Capital expenditure in property, plant and equipment and intangible assets | 297 | 297 | – | |||||||||
| Full-time equivalent employees at end of period (number) | 2,451 | 2,483 | –1.3% | |||||||||
| Broadband access lines in thousand | 2,600 | 2,500 | 4.0% | |||||||||
| Mobile access lines in thousand | 1,629 | 1,280 | 27.3% | |||||||||
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1 Includes expenses for operating and finance leases in accordance with IAS 17.
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Fastweb’s net revenue rose by EUR 38 million or 3.8% year-on-year to EUR 1,049 million. Despite difficult market conditions, Fastweb’s broadband customer base grew by 100,000 or 4.0% year-on-year to 2.60 million. Fastweb is also growing in the fiercely competitive mobile telephony market. Year-on-year, the number of mobile access lines increased by 349,000 or 27.3% to 1.63 million. Around 33% of subscribers use a bundled offering combining fixed network and mobile. Residential customer revenue rose by EUR 21 million or 4.0% to EUR 542 million as a result of customer growth. Fastweb held its strong position in the market for business customers, with revenue from business customers up by EUR 48 million or 13.0% to EUR 416 million as a result of higher revenue with public administrations. Revenue from wholesale business, by contrast, decreased by EUR 32 million or 26.9% to EUR 87 million.
The segment result before depreciation and amortisation was CHF 21 million or 6.6% higher at CHF 339 million on the back of the growth in revenue. At EUR 297 million, capital expenditure remained at the high level of the previous year, driven by the further expansion of the network infrastructure. Fastweb’s headcount was down slightly on the previous year at 2,451 FTEs.
Other Operating Segments
In CHF million, except where indicated |
2. quarter 2019 |
2. quarter 2018 |
Change |
1st half-year 2019 |
1st half-year 2018 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue from external customers | 128 | 143 | –10.5% | 266 | 270 | –1.5% | ||||||
| Intersegment revenue | 109 | 85 | 28.2% | 196 | 156 | 25.6% | ||||||
| Net revenue | 237 | 228 | 3.9% | 462 | 426 | 8.5% | ||||||
| Segment expenses | (189) | (177) | 6.8% | (364) | (334) | 9.0% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 48 | 51 | –5.9% | 98 | 92 | 6.5% | ||||||
| Margin as % of net revenue | 20.3 | 22.4 | 21.2 | 21.6 | ||||||||
| Lease expense | (3) | (4) 1 | –25.0% | (6) | (7) 1 | –14.3% | ||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (17) | (15) | 13.3% | (35) | (30) | 16.7% | ||||||
| Segment result | 28 | 32 | –12.5% | 57 | 55 | 3.6% | ||||||
| Capital expenditure in property, plant and equipment and intangible assets | 19 | 19 | – | |||||||||
| Full-time equivalent employees at end of period (number) | 2,663 | 2,588 | 2.9% | |||||||||
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1 Includes expenses for operating and finance leases in accordance with IAS 17.
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The net revenue of the Other Operating Segments rose year-on-year by CHF 36 million or 8.5% to CHF 462 million. The increase was mainly due to higher revenue from construction services rendered by cablex. The decline in revenue from external customers was driven by the loss of Billag’s mandate to collect national radio and television licence fees. The segment result before depreciation and amortisation improved year-on-year by CHF 6 million or 6.5% to CHF 98 million. This corresponds to a profit margin of 21.2%. Headcount rose by 75 FTEs or 2.9% to 2,663 FTEs, driven primarily by the hiring of new employees at cablex to cope with higher order volumes.
Group Headquarters and reconciliation
In CHF million, except where indicated |
2. quarter 2019 |
2. quarter 2018 |
Change |
1st half-year 2019 |
1st half-year 2018 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Group Headquarters | (21) | (31) | –32.3% | (39) | (52) | –25.0% | ||||||
| Reconciliation pension cost | (15) | (14) | 7.1% | (29) | (29) | – | ||||||
| Reconciliation lease expense (IAS 17) | – | (47) | –100.0% | – | (99) | –100.0% | ||||||
| Intersegment elimination | (6) | (6) | – | (11) | (8) | 37.5% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | (42) | (98) | –57.1% | (79) | (188) | –58.0% |
In 2018, the expense relating to operating lease arrangements were recognised as an operating expense and are shown here as a reconciliation item. As of 1 January 2019, this expense will be replaced by depreciation and interest. The other net costs not assigned to the operating segments, which comprise Group Headquarters, pension cost reconciliation and inter-segment eliminations, declined by CHF 10 million to CHF 79 million.