Segment results
In CHF million |
2. quarter 2020 |
2. quarter 2019 |
Change |
1st half-year 2020 |
1st half-year 2019 |
Change |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue | ||||||||||||
| Residential Customers | 1,101 | 1,141 | –3.5% | 2,239 | 2,331 | –3.9% | ||||||
| Business Customers | 778 | 804 | –3.2% | 1,557 | 1,636 | –4.8% | ||||||
| Wholesale 1 | 224 | 243 | –7.8% | 449 | 464 | –3.2% | ||||||
| IT, Network & Infrastructure | 21 | 21 | –% | 43 | 44 | –2.3% | ||||||
| Intersegment elimination | (99) | (114) | –13.2% | (192) | (214) | –10.3% | ||||||
| Swisscom Switzerland | 2,025 | 2,095 | –3.3% | 4,096 | 4,261 | –3.9% | ||||||
| Fastweb | 599 | 602 | –0.5% | 1,179 | 1,183 | –0.3% | ||||||
| Other Operating Segments | 247 | 275 | –10.2% | 490 | 540 | –9.3% | ||||||
| Intersegment elimination | (165) | (169) | –2.4% | (322) | (321) | 0.3% | ||||||
| Revenue from external customers | 2,706 | 2,803 | –3.5% | 5,443 | 5,663 | –3.9% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | ||||||||||||
| Residential Customers | 684 | 697 | –1.9% | 1,387 | 1,419 | –2.3% | ||||||
| Business Customers | 339 | 354 | –4.2% | 675 | 710 | –4.9% | ||||||
| Wholesale | 125 | 129 | –3.1% | 257 | 255 | 0.8% | ||||||
| IT, Network & Infrastructure | (259) | (272) | –4.8% | (506) | (547) | –7.5% | ||||||
| Intersegment elimination | 2 | – | 1 | (1) | ||||||||
| Swisscom Switzerland | 891 | 908 | –1.9% | 1,814 | 1,836 | –1.2% | ||||||
| Fastweb | 208 | 211 | –1.4% | 389 | 393 | –1.0% | ||||||
| Other Operating Segments | 40 | 48 | –16.7% | 82 | 98 | –16.3% | ||||||
| Group Headquarters | (19) | (20) | –5.0% | (33) | (37) | –10.8% | ||||||
| Reconciliation pension cost 2 | (16) | (15) | 6.7% | (31) | (29) | 6.9% | ||||||
| Elimination | (7) | (11) | –36.4% | (13) | (21) | –38.1% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | 1,097 | 1,121 | –2.1% | 2,208 | 2,240 | –1.4% | ||||||
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1 Including intersegment recharges of services performed by other network providers.
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2 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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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 with 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 Ltd (up to now, in some cases within Residential Customers). 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 accordingly. Further information can be found in Note 2 in the Notes to the consolidated interim financial statements.
Swisscom Switzerland
In CHF million, except where indicated |
2. quarter 2020 |
2. quarter 2019 |
Change |
1st half-year 2020 |
1st half-year 2019 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue and results | ||||||||||||
| Telecom services | 1,409 | 1,494 | –5.7% | 2,848 | 3,005 | –5.2% | ||||||
| Solution business | 260 | 256 | 1.6% | 527 | 513 | 2.7% | ||||||
| Merchandise | 175 | 169 | 3.6% | 350 | 365 | –4.1% | ||||||
| Wholesale | 158 | 162 | –2.5% | 322 | 320 | 0.6% | ||||||
| Revenue other | 1 | (6) | 6 | 15 | –60.0% | |||||||
| Revenue from external customers | 2,003 | 2,075 | –3.5% | 4,053 | 4,218 | –3.9% | ||||||
| Intersegment revenue | 22 | 20 | 10.0% | 43 | 43 | –% | ||||||
| Net revenue | 2,025 | 2,095 | –3.3% | 4,096 | 4,261 | –3.9% | ||||||
| Direct costs | (401) | (423) | –5.2% | (806) | (885) | –8.9% | ||||||
| Indirect costs | (733) | (764) | –4.1% | (1,476) | (1,540) | –4.2% | ||||||
| Segment expenses | (1,134) | (1,187) | –4.5% | (2,282) | (2,425) | –5.9% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 891 | 908 | –1.9% | 1,814 | 1,836 | –1.2% | ||||||
| Margin as % of net revenue | 44.0 | 43.3 | 44.3 | 43.1 | ||||||||
| Lease expense | (58) | (56) | 3.6% | (116) | (112) | 3.6% | ||||||
| Depreciation and amortisation | (390) | (389) | 0.3% | (767) | (770) | –0.4% | ||||||
| Segment result | 443 | 463 | –4.3% | 931 | 954 | –2.4% | ||||||
| Operating free cash flow proxy | ||||||||||||
| Segment result before depreciation and amortisation (EBITDA) | 891 | 908 | –1.9% | 1,814 | 1,836 | –1.2% | ||||||
| Lease expense | (58) | (56) | 3.6% | (116) | (112) | 3.6% | ||||||
| EBITDA after lease expense (EBITDA AL) | 833 | 852 | –2.2% | 1,698 | 1,724 | –1.5% | ||||||
| Capital expenditure | (409) | (601) | –31.9% | (776) | (954) | –18.7% | ||||||
| Operating free cash flow proxy | 424 | 251 | 68.9% | 922 | 770 | 19.7% | ||||||
| Operational data in thousand and headcount | ||||||||||||
| Fixed telephony access lines | 1,564 | 1,683 | –7.1% | |||||||||
| Broadband access lines retail | 2,048 | 2,050 | –0.1% | |||||||||
| Swisscom TV access lines | 1,551 | 1,529 | 1.4% | |||||||||
| Mobile access lines | 6,264 | 6,368 | –1.6% | |||||||||
| Revenue generating units (RGU) | 11,427 | 11,630 | –1.7% | |||||||||
| Broadband access lines wholesale | 533 | 502 | 6.2% | |||||||||
| Full-time equivalent employees | 12,608 | 13,271 | –5.0% |
Net revenue for Swisscom Switzerland fell by CHF 165 million or 3.9% to CHF 4,096 million as a result of the continuing competitive and price pressure and lower roaming revenues. The Covid-19 pandemic has led to a sharp reduction in customer travel, resulting in lower roaming revenues of CHF 41 million. Revenue from telecommunications services decreased by CHF 157 million or 5.2% to CHF 2,848 million. Of this decline, CHF 82 million (–4.0%) was attributable to the Residential Customers segment and CHF 75 million (–8.0%) to the Business Customers segment. By contrast, revenue from the solutions business with business customers rose by 2.7% to CHF 527 million. In the merchandise area, the high volume of the previous year was not matched, with revenue falling by 4.1% to CHF 350 million. The number of inOne customers continues to grow. At the end of June 2020, Swisscom recorded 2.39 million inOne customers in the Residential Customers segment. In this segment, inOne accounts for 68% of postpaid mobile lines and 72% 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 year-on-year by 104,000 (–1.6%) to 6.26 million. The number of post-paid lines grew by 61,000. In the case of prepaid lines, it fell by 165,000. The number of broadband connections remained close to stable year-over-year (–0.1%). The number of TV connections increased by 22,000 or 1.4% to 1.55 million versus the previous year. In fixed-line telephony, the downward trend is slowing as the switch to IP technology has been completed. The number of fixed telephony access lines fell year-on-year by 119,000 or 7.1% to 1.56 million.
Segment expense declined by CHF 143 million or 5.9% to CHF 2,282 million. Direct costs fell by CHF 79 million (–8.9%). In addition to the decline in subscriber acquisition and retention costs, the costs for roaming and for purchasing goods also fell. Indirect costs fell by 4.2% or CHF 64 million to CHF 1,476 million. This is chiefly due to the lower headcount and lower costs for advertising. In addition, fewer customer service deployments as a result of the stable networks and platforms have led to a reduction in costs. Headcount fell year-on-year as a result of efficiency measures by 663 FTEs or 5.0% to 12,608, including 447 FTEs in the first half of 2020. The segment result before depreciation and amortisation was CHF 22 million or 1.2% lower at CHF 1,814 million. The decline as a result of lower revenue could be largely offset by the ongoing measures to reduce costs. Capital expenditure decreased by 18.7%. In the previous year, expenditure for mobile radio frequencies amounting to CHF 196 million was included. Adjusted for these expenses, capital expenditure rose on the back of higher investment for the expansion of broadband networks by CHF 18 million or 2.4% to CHF 776 million. As at end-June 2020, over 4.1 million or 77% of all households and businesses were connected with ultra-fast broadband exceeding 80 Mbps. Some 2.8 million or 53% of all homes and businesses benefit from fast connections with bandwidths of more than 200 Mbps. Of these, more than 1.6 million have been upgraded to FTTH. Swisscom intends to make ultra-fast broadband available in every Swiss municipality by the end of 2021, even in remote locations. In addition, compared to 2019 levels, Swisscom plans to double FTTH coverage for households and businesses to up to 60% by the end of 2025.
Fastweb
In EUR million, except where indicated |
2. quarter 2020 |
2. quarter 2019 |
Change |
1st half-year 2020 |
1st half-year 2019 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue and results | ||||||||||||
| Residential Customers | 282 | 273 | 3.3% | 562 | 542 | 3.7% | ||||||
| Enterprise Customers | 224 | 214 | 4.7% | 435 | 416 | 4.6% | ||||||
| Wholesale | 55 | 45 | 22.2% | 105 | 87 | 20.7% | ||||||
| Revenue from external customers | 561 | 532 | 5.5% | 1,102 | 1,045 | 5.5% | ||||||
| Intersegment revenue | 1 | 3 | –66.7% | 3 | 4 | –25.0% | ||||||
| Net revenue | 562 | 535 | 5.0% | 1,105 | 1,049 | 5.3% | ||||||
| Segment expenses | (367) | (348) | 5.5% | (740) | (700) | 5.7% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 195 | 187 | 4.3% | 365 | 349 | 4.6% | ||||||
| Margin as % of net revenue | 34.7 | 35.0 | 33.0 | 33.3 | ||||||||
| Lease expense | (13) | (13) | –% | (26) | (25) | 4.0% | ||||||
| Depreciation and amortisation | (142) | (135) | 5.2% | (286) | (274) | 4.4% | ||||||
| Segment result | 40 | 39 | 2.6% | 53 | 50 | 6.0% | ||||||
| Operating free cash flow proxy | ||||||||||||
| Segment result before depreciation and amortisation (EBITDA) | 195 | 187 | 4.3% | 365 | 349 | 4.6% | ||||||
| Lease expense | (13) | (13) | –% | (26) | (25) | 4.0% | ||||||
| EBITDA after lease expense (EBITDA AL) | 182 | 174 | 4.6% | 339 | 324 | 4.6% | ||||||
| Capital expenditure | (138) | (154) | –10.4% | (276) | (297) | –7.1% | ||||||
| Operating free cash flow proxy | 44 | 20 | 120.0% | 63 | 27 | 133.3% | ||||||
| Operational data in thousand and headcount | ||||||||||||
| Broadband access lines | 2,692 | 2,600 | 3.5% | |||||||||
| Mobile access lines | 1,830 | 1,549 | 18.1% | |||||||||
| Full-time equivalent employees | 2,605 | 2,451 | 6.3% |
Fastweb’s net revenue rose by EUR 56 million or 5.3% year-on-year to EUR 1,105 million. Despite a challenging market environment, the customer base in the broadband business grew by 92,000 or 3.5% to 2.69 million year-over-year. The number of mobile lines rose by 281,000 or 18.1% to 1.83 million despite market saturation and strong competition. Bundles offerings remain a point of focus. 33% of subscribers use a bundled offering combining fixed network and mobile. Residential customer revenue rose by EUR 20 million or 3.7% to EUR 562 million as a result of customer growth. Fastweb held its strong position in the market for business customers. Revenue from business customers increased by EUR 19 million or 4.6% to EUR 435 million as a result of higher revenue with private companies and public administrations. Revenue from wholesale business increased by EUR 18 million or 20.7% to EUR 105 million.
The segment result before depreciation and amortisation rose EUR 16 million or 4.6% to EUR 365 million owing to the growth in revenue. Capital expenditure decreased by EUR 21 million or 7.1% year-on-year to EUR 276 million. In the previous year customer-driven capital expenditure was above average. Fastweb’s headcount increased by 154 FTEs or 6.3% to 2,605 FTEs year-on-year as a result of company acquisitions and the hiring of external staff.
Other Operating Segments
In CHF million, except where indicated |
2. quarter 2020 |
2. quarter 2019 |
Change |
1st half-year 2020 |
1st half-year 2019 |
Change |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue and results | ||||||||||||
| Revenue from external customers | 106 | 128 | –17.2% | 215 | 266 | –19.2% | ||||||
| Intersegment revenue | 141 | 147 | –4.1% | 275 | 274 | 0.4% | ||||||
| Net revenue | 247 | 275 | –10.2% | 490 | 540 | –9.3% | ||||||
| Segment expenses | (207) | (227) | –8.8% | (408) | (442) | –7.7% | ||||||
| Segment result before depreciation and amortisation (EBITDA) | 40 | 48 | –16.7% | 82 | 98 | –16.3% | ||||||
| Margin as % of net revenue | 16.2 | 17.5 | 16.7 | 18.1 | ||||||||
| Lease expense | (3) | (4) | –25.0% | (6) | (7) | –14.3% | ||||||
| Depreciation and amortisation | (14) | (17) | –17.6% | (29) | (35) | –17.1% | ||||||
| Segment result | 23 | 27 | –14.8% | 47 | 56 | –16.1% | ||||||
| Operating free cash flow proxy | ||||||||||||
| Segment result before depreciation and amortisation (EBITDA) | 40 | 48 | –16.7% | 82 | 98 | –16.3% | ||||||
| Lease expense | (3) | (4) | –25.0% | (6) | (7) | –14.3% | ||||||
| EBITDA after lease expense (EBITDA AL) | 37 | 44 | –15.9% | 76 | 91 | –16.5% | ||||||
| Capital expenditure | (11) | (11) | –% | (18) | (19) | –5.3% | ||||||
| Operating free cash flow proxy | 26 | 33 | –21.2% | 58 | 72 | –19.4% | ||||||
| Headcount | ||||||||||||
| Full-time equivalent employees | 3,567 | 3,633 | –1.8% |
The net revenue of the Other Operating Segments decreased year-on-year by CHF 50 million or 9.3% to CHF 490 million. The decline in revenue from external customers is essentially due to revenue contractions at cablex and Swisscom Broadcast as well as to the loss of Billag’s mandate to collect national radio and television licence fees. Accordingly, the segment result before depreciation and amortisation declined by CHF 16 million or 16.3% to CHF 82 million and the profit margin slipped to 16.7% (previous year 18.1%). Headcount fell by 66 FTEs or 1.8% to 3,567 FTEs, driven primarily by the reduction in staff at Billag and a lower headcount at Swisscom Directories Ltd (localsearch).
Group Headquarters and reconciliation
In CHF million, except where indicated |
2. quarter 2020 |
2. quarter 2019 |
Change |
1st half-year 2020 |
1st half-year 2019 |
Change |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Group Headquarters | (19) | (20) | –5.0% | (33) | (37) | –10.8% | ||||||
| Reconciliation pension cost | (16) | (15) | 6.7% | (31) | (29) | 6.9% | ||||||
| Elimination | (7) | (11) | –36.4% | (13) | (21) | –38.1% | ||||||
| Operating income before depreciation and amortisation (EBITDA) | (42) | (46) | –8.7% | (77) | (87) | –11.5% |
The 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 77 million.