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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 (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 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”. In addition, “Group Headquarters”, which includes non-allocated costs, is disclosed 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 costs less capitalised costs of 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 “Eliminations”. In the first nine months of 2020, an expense of CHF 47 million is disclosed under “Eliminations” as a pension cost reconciliation item in accordance with IAS 19 (prior year: CHF 44 million).

Leases between the segments are not accounted for 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 18 million (prior year: CHF 23 million), impairment losses on rights-of-use assets of CHF 7 million (prior year: none) 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 nine months of 2020 includes IRU payments of CHF 11 million (prior year: CHF 42 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   3,320   903         4,223
Enterprise Customers   2,276   707   329       3,312
Wholesale customers   490   176         666
Net revenue from external customers   6,086   1,786   329       8,201
Net revenue from other segments   62   6   430     (498)  
Net revenue   6,148   1,792   759     (498)   8,201
Direct costs   (1,232)   (648)   (51)     25   (1,906)
Indirect costs   (2,189)   (536)   (570)   (48)   404   (2,939)
Segment result before depreciation and amortisation   2,727   608   138   (48)   (69)   3,356
Lease expense   (174)   (42)   (9)   (1)     (226)
Depreciation, amortisation and impairment losses   (1,140)   (462)   (45)     6   (1,641)
Segment result   1,413   104   84   (49)   (63)   1,489
Interest expense on lease liabilities                       34
Operating income                       1,523
Financial income and financial expense, net                       (113)
Result of equity-accounted investees                       4
Income before income taxes                       1,414
Income tax expense                       (248)
Net income                       1,166
                         
Segment result before depreciation and amortisation   2,727   608   138   (48)   (69)   3,356
Lease expense   (174)   (42)   (9)   (1)     (226)
Capital expenditure   (1,186)   (439)   (30)     23   (1,632)
Operating free cash flow proxy   1,367   127   99   (49)   (46)   1,498

Segment information Swisscom Switzerland 2020


2020, in CHF million
 
Residential
Customers
 
Business
Customers
 

Wholesale
  IT,
Network &
Infrastructure
 

Elimination
  Total
Swisscom
Switzerland
Fixed-line   1,505   676         2,181
Mobile   1,460   575           2,035
Revenue other     45         45
Telecom services   2,965   1,296         4,261
Solutions business     786         786
Merchandise   356   170         526
Wholesale       490       490
Revenue other   (1)   7     17     23
Net revenue from external customers   3,320   2,259   490   17     6,086
Net revenue from other segments   58   55   237   47   (335)   62
Net revenue   3,378   2,314   727   64   (335)   6,148
Direct costs   (750)   (598)   (324)   (9)   449   (1,232)
Indirect costs   (557)   (702)   (12)   (804)   (114)   (2,189)
Segment result before depreciation and amortisation   2,071   1,014   391   (749)     2,727
Lease expense   (33)   (25)     (116)     (174)
Depreciation, amortisation and impairment losses   (55)   (57)     (1,028)     (1,140)
Segment result   1,983   932   391   (1,893)     1,413
                         
Capital expenditure   (19)   (27)     (1,140)     (1,186)

Segment information 2019


2019, in CHF million, restated
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
 
Group
Headquarters
 

Elimination
 

Total
Residential Customers   3,440   915         4,355
Enterprise Customers   2,380   701   383       3,464
Wholesale customers   489   148         637
Net revenue from external customers   6,309   1,764   383       8,456
Net revenue from other segments   65   6   419     (490)  
Net revenue   6,374   1,770   802     (490)   8,456
Direct costs   (1,356)   (629)   (44)     6   (2,023)
Indirect costs   (2,277)   (535)   (614)   (55)   408   (3,073)
Segment result before depreciation and amortisation   2,741   606   144   (55)   (76)   3,360
Lease expense   (167)   (41)   (9)   (2)   13   (206)
Depreciation, amortisation and impairment losses   (1,142)   (464)   (50)     7   (1,649)
Segment result   1,432   101   85   (57)   (56)   1,505
Interest expense on lease liabilities                       24
Operating income                       1,529
Financial income and financial expense, net                       (119)
Result of equity-accounted investees                       1
Income before income taxes                       1,411
Income tax expense                       (230)
Net income                       1,181
                         
Segment result before depreciation and amortisation   2,741   606   144   (55)   (76)   3,360
Lease expense   (167)   (41)   (9)   (2)   13   (206)
Capital expenditure   (1,324)   (495)   (32)     18   (1,833)
Operating free cash flow proxy   1,250   70   103   (57)   (45)   1,321

Segment information Swisscom Switzerland 2019


2019, in CHF million, restated
 
Residential
Customers
 
Business
Customers
 

Wholesale
  IT,
Network &
Infrastructure
 

Elimination
  Total
Swisscom
Switzerland
Fixed-line   1,540   712         2,252
Mobile   1,549   641         2,190
Revenue other     45         45
Telecom services   3,089   1,398         4,487
Solutions business     771         771
Merchandise   357   190         547
Wholesale       489       489
Revenue other   (6)   3     18     15
Net revenue from external customers   3,440   2,362   489   18     6,309
Net revenue from other segments   56   64   260   47   (362)   65
Net revenue   3,496   2,426   749   65   (362)   6,374
Direct costs   (820)   (653)   (345)   (8)   470   (1,356)
Indirect costs   (571)   (719)   (11)   (868)   (108)   (2,277)
Segment result before depreciation and amortisation   2,105   1,054   393   (811)     2,741
Lease expense   (37)   (22)     (108)     (167)
Depreciation, amortisation and impairment losses   (70)   (62)     (1,009)   (1)   (1,142)
Segment result   1,998   970   393   (1,928)   (1)   1,432
                         
Capital expenditure   (16)   (34)     (1,274)     (1,324)