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2 Segment information

Changes in segment reporting

As of 1 January 2020, Swisscom amended its organisational structure in Switzerland and renamed the former “Enterprise Customers” segment “Business Customers”. In order to provide all business customers with a customer experience tailored to their needs, Swisscom merged the SME segment and the corporate customer segment. As a result, the telecommunications and solutions business with small and medium-sized enterprises is now reported in the Business Customers segment (previously Residential Customers) in segment reporting. In addition, Swisscom has bundled its Customer Field Services at its subsidiary cablex with effect from 1 January 2020. This makes it possible to create even more customer experiences and to be even closer to customers. In addition, various areas were transferred between the segments of Swisscom Switzerland and Group Headquarters as of 1 January 2020. The prior-year amounts were restated as follows:

In CHF million   Reported   Adjustment   Restated
             
Net revenue Financial year 2019
Residential Customers   5,691   (955)   4,736
Business Customers (former Enterprise Customers)   2,312   928   3,240
Wholesale   968     968
IT, Network & Infrastructure   85     85
Elimination   (493)   37   (456)
Swisscom Switzerland   8,563   10   8,573
Fastweb   2,468     2,468
Other Operating Segments   929   150   1,079
Group Headquarters   1     1
Elimination   (508)   (160)   (668)
Total net revenue   11,453     11,453
             
Segment result Financial year 2019
Residential Customers   3,265   (631)   2,634
Business Customers (former Enterprise Customers)   603   673   1,276
Wholesale   524   (14)   510
IT, Network & Infrastructure   (2,642)   (33)   (2,675)
Swisscom Switzerland   1,750   (5)   1,745
Fastweb   155     155
Other Operating Segments   114   (1)   113
Group Headquarters   (74)   6   (68)
Elimination   (77)     (77)
Total segment result   1,868     1,868

General information

WSGE_DP_GR_Swisscom_Segmente

Reporting is divided into the segments “Residential Customers”, “Business 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. The remaining services between the segments are recharged at market prices. The results of the Residential Customers, Business Customers and Wholesale segments thus correspond to a contribution margin before network costs.

Segment expense encompasses the direct and indirect costs, which include personnel expense, other operating expense less capitalised self-constructed assets and other income. Pension cost includes ordinary employer contributions. The difference between the ordinary employer contributions and the pension cost as provided for under IAS 19 is reported in the column “Elimination”. In the first three months of 2020, an expense of CHF 15 million is disclosed under “Elimination” as a pension cost reconciliation item in accordance with IAS 19 (prior year: CHF 14 million).

Leases between the segments are not recognised in the balance sheet in accordance with IFRS 16. The reported lease expense of the segments comprises depreciation and interest on leases excl. depreciation of indefeasible rights of use (IRU) of CHF 6 million (prior year: CHF 7 million) and the accounting for the rental of buildings between segments. The lease expense of assets of low value is reported as direct costs.

Capital expenditure consists of the purchase of property, plant and equipment and intangible assets and payments for indefeasible rights of use (IRU). In general, IRUs are paid in full at the beginning of the use and are classified as leases under IFRS 16. From an economic point of view, IRU payments will be considered as capital expenditure in the segment information. Capital expenditure in the first three months of 2020 includes IRU payments of CHF 3 million (prior year: CHF 2 million).

Swisscom Switzerland sells some mobile handsets on a subsidised basis in a bundled offering with a mobile communications contract. As a result of the reallocation of revenue over the pre-delivered components (mobile handset), revenue is recognised earlier than the date of invoicing. This results in contract assets deriving from this business being recognised. In the segment reporting of Swisscom Switzerland, the recognition and dissolution of these contract assets is reported as other revenue. The amounts invoiced are reported under revenue from telecommunications services or merchandise.

Segment information 2020


2020, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
 
Group
Headquarters
 

Elimination
 

Total
Residential customers   1,120   300         1,420
Business customers   766   225   109       1,100
Wholesale customers   164   53         217
Net revenue from external customers   2,050   578   109       2,737
Net revenue from other segments   21   2   134     (157)  
Net revenue   2,071   580   243     (157)   2,737
Direct costs   (405)   (212)   (17)     8   (626)
Indirect costs   (743)   (187)   (184)   (14)   128   (1,000)
Segment result before depreciation and amortisation   923   181   42   (14)   (21)   1,111
Lease expense   (58)   (14)   (3)   (1)   1   (75)
Depreciation and amortisation   (377)   (153)   (15)     2   (543)
Segment result   488   14   24   (15)   (18)   493
Interest expense on lease liabilities                       11
Operating income                       504
Financial income and financial expense, net                       (37)
Result of equity-accounted investees                       1
Income before income taxes                       468
Income tax expense                       (74)
Net income                       394
                         
Segment result before depreciation and amortisation   923   181   42   (14)   (21)   1,111
Lease expense   (58)   (14)   (3)   (1)   1   (75)
Capital expenditure   (367)   (148)   (7)     6   (516)
Operating free cash flow proxy   498   19   32   (15)   (14)   520

Segment information Swisscom Switzerland 2020


2020, in CHF million
 
Residential
Customers
 
Business
Customers
 

Wholesale
  IT,
Network &
Infrastructure
 

Elimination
  Total
Swisscom
Switzerland
Fixed-line   505   226         731
Mobile   497   196         693
Revenue other     15         15
Telecom services   1,002   437         1,439
Solutions business     267         267
Merchandise   120   55         175
Wholesale       164       164
Revenue other   (2)   1     6     5
Net revenue from external customers   1,120   760   164   6     2,050
Net revenue from other segments   18   19   61   16   (93)   21
Net revenue   1,138   779   225   22   (93)   2,071
Direct costs   (249)   (197)   (89)   (3)   133   (405)
Indirect costs   (186)   (246)   (4)   (266)   (41)   (743)
Segment result before depreciation and amortisation   703   336   132   (247)   (1)   923
Lease expense   (11)   (8)     (39)     (58)
Depreciation and amortisation   (16)   (20)     (341)     (377)
Segment result   676   308   132   (627)   (1)   488
                         
Capital expenditure   (5)   (9)     (353)     (367)

Segment information 2019


2019, in CHF million, restated
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
 
Group
Headquarters
 

Elimination
 

Total
Residential customers   1,169   304         1,473
Business customers   816   228   138       1,182
Wholesale customers   158   47         205
Net revenue from external customers   2,143   579   138       2,860
Net revenue from other segments   23   2   127     (152)  
Net revenue   2,166   581   265     (152)   2,860
Direct costs   (462)   (208)   (12)     (1)   (683)
Indirect costs   (776)   (191)   (203)   (17)   129   (1,058)
Segment result before depreciation and amortisation   928   182   50   (17)   (24)   1,119
Lease expense   (56)   (13)   (3)   (1)   5   (68)
Depreciation and amortisation   (381)   (156)   (18)     1   (554)
Segment result   491   13   29   (18)   (18)   497
Interest expense on lease liabilities                       8
Operating income                       505
Financial income and financial expense, net                       (20)
Result of equity-accounted investees                       2
Income before income taxes                       487
Income tax expense                       (104)
Net income                       383
                         
Segment result before depreciation and amortisation   928   182   50   (17)   (24)   1,119
Lease expense   (56)   (13)   (3)   (1)   5   (68)
Capital expenditure   (353)   (161)   (8)     4   (518)
Operating free cash flow proxy   519   8   39   (18)   (15)   533

Segment information Swisscom Switzerland 2019


2019, in CHF million, restated
 
Residential
Customers
 
Business
Customers
 

Wholesale
  IT,
Network &
Infrastructure
 

Elimination
  Total
Swisscom
Switzerland
Fixed-line   514   244         758
Mobile   520   217         737
Revenue other     16         16
Telecom services   1,034   477         1,511
Solutions business     257         257
Merchandise   122   75         197
Wholesale       158       158
Revenue other   13   1     6     20
Net revenue from external customers   1,169   810   158   6     2,143
Net revenue from other segments   21   22   63   17   (100)   23
Net revenue   1,190   832   221   23   (100)   2,166
Direct costs   (273)   (231)   (87)   (3)   132   (462)
Indirect costs   (195)   (245)   (8)   (295)   (33)   (776)
Segment result before depreciation and amortisation   722   356   126   (275)   (1)   928
Lease expense   (13)   (7)     (36)     (56)
Depreciation and amortisation   (25)   (21)     (335)     (381)
Segment result   684   328   126   (646)   (1)   491
                         
Capital expenditure   (3)   (11)     (339)     (353)