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Segment results


In CHF million
  3. quarter
2020
  3. quarter
2019
 
Change
  1.1.–30.9.
2020
  1.1.–30.9.
2019
 
Change
                         
Net revenue
Residential Customers   1,139   1,165   –2.2%   3,378   3,496   –3.4%
Business Customers   757   790   –4.2%   2,314   2,426   –4.6%
Wholesale 1   278   285   –2.5%   727   749   –2.9%
IT, Network & Infrastructure   21   21   –%   64   65   –1.5%
Intersegment elimination   (143)   (148)   –3.4%   (335)   (362)   –7.5%
Swisscom Switzerland   2,052   2,113   –2.9%   6,148   6,374   –3.5%
Fastweb   613   587   4.4%   1,792   1,770   1.2%
Other Operating Segments   269   262   2.7%   759   802   –5.4%
Intersegment elimination   (176)   (169)   4.1%   (498)   (490)   1.6%
Net revenue   2,758   2,793   –1.3%   8,201   8,456   –3.0%
                         
Operating income before depreciation and amortisation (EBITDA)
Residential Customers   684   686   –0.3%   2,071   2,105   –1.6%
Business Customers   339   344   –1.5%   1,014   1,054   –3.8%
Wholesale   134   138   –2.9%   391   393   –0.5%
IT, Network & Infrastructure   (243)   (264)   –8.0%   (749)   (811)   –7.6%
Intersegment elimination   (1)   1   –%       –%
Swisscom Switzerland   913   905   0.9%   2,727   2,741   –0.5%
Fastweb   219   213   2.8%   608   606   0.3%
Other Operating Segments   56   46   21.7%   138   144   –4.2%
Group Headquarters   (15)   (18)   –16.7%   (48)   (55)   –12.7%
Reconciliation pension cost 2   (16)   (15)   6.7%   (47)   (44)   6.8%
Elimination   (9)   (11)   –18.2%   (22)   (32)   –31.3%
Operating income before depreciation and amortisation (EBITDA)   1,148   1,120   2.5%   3,356   3,360   –0.1%
1 Including intersegment recharges of services performed by other network providers.
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.

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 (up to now, in some cases within Residential Customers) at its subsidiary cablex AG (Other Operating Segments). 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
  3. quarter
2020
  3. quarter
2019
 
Change
  1.1.–30.9.
2020
  1.1.–30.9.
2019
 
Change
                         
Net revenue and results
Telecom services   1,413   1,482   –4.7%   4,261   4,487   –5.0%
Solutions business   259   258   0.4%   786   771   1.9%
Merchandise   176   182   –3.3%   526   547   –3.8%
Wholesale   168   169   –0.6%   490   489   0.2%
Revenue other   17     –%   23   15   53.3%
Revenue from external customers   2,033   2,091   –2.8%   6,086   6,309   –3.5%
Intersegment revenue   19   22   –13.6%   62   65   –4.6%
Net revenue   2,052   2,113   –2.9%   6,148   6,374   –3.5%
Direct costs   (426)   (471)   –9.6%   (1,232)   (1,356)   –9.1%
Indirect costs   (713)   (737)   –3.3%   (2,189)   (2,277)   –3.9%
Segment expenses   (1,139)   (1,208)   –5.7%   (3,421)   (3,633)   –5.8%
Segment result before depreciation and amortisation (EBITDA)   913   905   0.9%   2,727   2,741   –0.5%
Margin as % of net revenue   44.5   42.8       44.4   43.0    
Lease expense   (58)   (55)   5.5%   (174)   (167)   4.2%
Depreciation and amortisation   (373)   (372)   0.3%   (1,140)   (1,142)   –0.2%
Segment result   482   478   0.8%   1,413   1,432   –1.3%
                 
Operating free cash flow proxy
Segment result before depreciation and amortisation (EBITDA)   913   905   0.9%   2,727   2,741   –0.5%
Lease expense   (58)   (55)   5.5%   (174)   (167)   4.2%
EBITDA after lease expense (EBITDA AL)   855   850   0.6%   2,553   2,574   –0.8%
Capital expenditure   (410)   (370)   10.8%   (1,186)   (1,324)   –10.4%
Operating free cash flow proxy   445   480   –7.3%   1,367   1,250   9.4%
                 
Operational data in thousand and headcount
Fixed telephony access lines               1,546   1,643   –5.9%
Broadband access lines retail               2,045   2,054   –0.4%
TV access lines               1,551   1,540   0.7%
Mobile access lines               6,253   6,358   –1.7%
Revenue generating units (RGU)               11,395   11,595   –1.7%
Broadband access lines wholesale               543   509   6.7%
Full-time equivalent employees               12,619   13,158   –4.1%

Net revenue for Swisscom Switzerland fell by CHF 226 million or 3.5% to CHF 6,148 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 73 million. Revenue from telecommunications services decreased by CHF 226 million or 5.0% to CHF 4,261 million. Of this decline, CHF 124 million (–4.0%) was attributable to the Residential Customers segment and CHF 102 million (–7.3%) to the Business Customers segment. By contrast, revenue from the solutions business with business customers rose by 1.9% to CHF 786 million. In the merchandise area, the high volume of the previous year was not matched, with revenue falling by 3.8% to CHF 526 million. The number of inOne customers continues to grow. At the end of September 2020, Swisscom recorded 2.42 million inOne customers in the Residential Customers segment. In this segment, inOne accounts for 68% of postpaid mobile lines and 74% 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 105,000 within a one-year period (–1.7%) to 6.25 million. The number of postpaid lines grew by 68,000. In the case of prepaid lines, it fell by 173,000. Broadband connections fell by 9,000 (–0.4%) to 2.05 million. The number of TV connections increased by 11,000 or 0.7% to 1.55 million. In fixed-line telephony, the downward trend is slowing down as the switch to IP technology has been completed. The number of fixed telephony access lines fell year on year by 97,000 or 5.9% to 1.55 million.

Segment expense fell by CHF 212 million or 5.8% to CHF 3,421 million. Direct costs decreased by CHF 124 million (–9.1%) to CHF 1,232 million. 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 3.9% or CHF 88 million to CHF 2,189 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 declined year on year as a result of efficiency measures by 539 FTEs or 4.1% to 12,619 FTEs. The segment result before depreciation and amortisation was CHF 14 million or 0.5% lower at CHF 2,727 million as a result of lower revenue, but this was largely offset by the ongoing measures to reduce costs. Capital expenditure fell by 10.4% to CHF 1,186 million. In the previous year, expenditure for mobile radio frequencies amounting to CHF 196 million was included. Adjusted for these expenses, capital expenditure rose by CHF 58 million or 5.1% on the back of an increase in capital expenditure in the expansion of the network infrastructure. As at end-September 2020, around 4.3 million or 80% of all households and businesses in Switzerland were connected with ultra-fast broadband exceeding 80 Mbps. Some 3.0 million or 56% of all homes and businesses benefit from fast connections with bandwidths of more than 200 Mbps. Of these, more than 1.7 million have been upgraded to FTTH. Swisscom wants to make ultra-fast broadband available in every Swiss municipality by the end of 2021 and thus give even remote locations access to the technology. In addition, compared with 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
  3. quarter
2020
  3. quarter
2019
 
Change
  1.1.–30.9.
2020
  1.1.–30.9.
2019
 
Change
                         
Net revenue and results
Residential Customers   282   277   1.8%   844   819   3.1%
Enterprise Customers   226   211   7.1%   661   627   5.4%
Wholesale   59   45   31.1%   164   132   24.2%
Revenue from external customers   567   533   6.4%   1,669   1,578   5.8%
Intersegment revenue   2   2   –%   5   6   –16.7%
Net revenue   569   535   6.4%   1,674   1,584   5.7%
Segment expenses   (366)   (341)   7.3%   (1,106)   (1,041)   6.2%
Segment result before depreciation and amortisation (EBITDA)   203   194   4.6%   568   543   4.6%
Margin as % of net revenue   35.7   36.3       33.9   34.3    
Lease expense   (13)   (13)   –%   (39)   (38)   2.6%
Depreciation and amortisation   (146)   (141)   3.5%   (432)   (415)   4.1%
Segment result   44   40   10.0%   97   90   7.8%
                 
Operating free cash flow proxy
Segment result before depreciation and amortisation (EBITDA)   203   194   4.6%   568   543   4.6%
Lease expense   (13)   (13)   –%   (39)   (38)   2.6%
EBITDA after lease expense (EBITDA AL)   190   181   5.0%   529   505   4.8%
Capital expenditure   (134)   (146)   –8.2%   (410)   (443)   –7.4%
Operating free cash flow proxy   56   35   60.0%   119   62   91.9%
           
Operational data in thousand and headcount
Broadband access lines               2,704   2,610   3.6%
Mobile access lines               1,889   1,663   13.6%
Full-time equivalent employees               2,634   2,467   6.8%

Fastweb’s net revenue rose by EUR 90 million or 5.7% year on year to EUR 1,674 million. Despite a challenging market environment, the customer base in the broadband business grew by 94,000 or 3.6% to 2.70 million within the space of a year. The number of mobile lines rose by 226,000 or 13.6% to 1.89 million despite market saturation and strong competition. The focus is still on bundled offerings. 34% of subscribers use a bundled offering combining fixed network and mobile. Residential customer revenue rose by EUR 25 million or 3.1% to EUR 844 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 34 million or 5.4% to EUR 661 million as a result of higher revenue with p­rivate companies and public administrations. Revenue from wholesale business increased by EUR 32 million or 24.2% to EUR 164 million.

The segment result before depreciation and amortisation rose EUR 25 million or 4.6% to EUR 568 million owing to the growth in revenue. Capital expenditure decreased by EUR 33 million or 7.4% year on year to EUR 410 million, in the previous year customer-driven investment was above average. Fastweb’s headcount increased by 167 FTEs or 6.8% to 2,634 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
  3. quarter
2020
  3. quarter
2019
 
Change
  1.1.–30.9.
2020
  1.1.–30.9.
2019
 
Change
                         
Net revenue and results
Revenue from external customers   114   117   –2.6%   329   383   –14.1%
Intersegment revenue   155   145   6.9%   430   419   2.6%
Net revenue   269   262   2.7%   759   802   –5.4%
Segment expenses   (213)   (216)   –1.4%   (621)   (658)   –5.6%
Segment result before depreciation and amortisation (EBITDA)   56   46   21.7%   138   144   –4.2%
Margin as % of net revenue   20.8   17.6       18.2   18.0    
Lease expense   (3)   (2)   50.0%   (9)   (9)   –%
Depreciation and amortisation   (16)   (15)   6.7%   (45)   (50)   –10.0%
Segment result   37   29   27.6%   84   85   –1.2%
                 
Operating free cash flow proxy
Segment result before depreciation and amortisation (EBITDA)   56   46   21.7%   138   144   –4.2%
Lease expense   (3)   (2)   50.0%   (9)   (9)   –%
EBITDA after lease expense (EBITDA AL)   53   44   20.5%   129   135   –4.4%
Capital expenditure   (12)   (13)   –7.7%   (30)   (32)   –6.3%
Operating free cash flow proxy   41   31   32.3%   99   103   –3.9%
           
Headcount
Full-time equivalent employees               3,560   3,668   –2.9%

The net revenue of the Other Operating Segments decreased year on year by CHF 43 million or 5.4% to CHF 759 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. The segment result before depreciation and amortisation decreased by CHF 6 million or 4.2% to CHF 138 million, while the profit margin remained nearly unchanged at 18.2% (prior year: 18.0%). Headcount fell by 108 FTEs or 2.9% to 3,560 FTEs, driven primarily by lower headcounts at both cablex and Swisscom Directories Ltd (localsearch).

Group Headquarters and reconciliation


In CHF million, except where indicated
  3. quarter
2020
  3. quarter
2019
 
Change
  1.1.–30.9.
2020
  1.1.–30.9.
2019
 
Change
Group Headquarters   (15)   (18)   –16.7%   (48)   (55)   –12.7%
Reconciliation pension cost   (16)   (15)   6.7%   (47)   (44)   6.8%
Elimination   (9)   (11)   –18.2%   (22)   (32)   –31.3%
Operating income before depreciation and amortisation (EBITDA)   (40)   (44)   –9.1%   (117)   (131)   –10.7%

The net costs not assigned to the operating segments, which comprise Group Headquarters, pension cost reconciliation and inter-segment eliminations, declined by CHF 14 million to CHF 117 million.