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Segment results


In CHF million
  2. quarter
2021
  2. quarter
2020
 
Change
  1st half-year
2021
  1st half-year
2020
 
Change
                         
Net revenue
Residential Customers   1,124   1,101   2.1%   2,273   2,238   1.6%
Business Customers   759   778   –2.4%   1,537   1,557   –1.3%
Wholesale 1   230   224   2.7%   473   449   5.3%
Infrastructure & Support Functions   20   21   –4.8%   39   42   –7.1%
Intersegment elimination   (110)   (105)   4.8%   (219)   (202)   8.4%
Swisscom Switzerland   2,023   2,019   0.2%   4,103   4,084   0.5%
Fastweb   659   599   10.0%   1,293   1,179   9.7%
Other Operating Segments   265   246   7.7%   505   487   3.7%
Intersegment elimination   (167)   (158)   5.7%   (318)   (307)   3.6%
Revenue from external customers   2,780   2,706   2.7%   5,583   5,443   2.6%
                         
Operating income before depreciation and amortisation (EBITDA)
Residential Customers   706   683   3.4%   1,405   1,386   1.4%
Business Customers   327   339   –3.5%   665   676   –1.6%
Wholesale   124   125   –0.8%   262   257   1.9%
Infrastructure & Support Functions   (276)   (277)   –0.4%   (535)   (539)   –0.7%
Intersegment elimination     2   –100.0%     1   –100.0%
Swisscom Switzerland   881   872   1.0%   1,797   1,781   0.9%
Fastweb   225   208   8.2%   420   389   8.0%
Other Operating Segments   49   40   22.5%   83   82   1.2%
Reconciliation pension cost 2   49   (16)       36   (31)    
Intersegment elimination   (11)   (7)   57.1%   (19)   (13)   46.2%
Operating income before depreciation and amortisation (EBITDA)   1,193   1,097   8.8%   2,317   2,208   4.9%
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 2021, Swisscom amended its organisational structure in Switzerland and the segment formerly known as IT, Network & Infrastructure was renamed Infrastructure & Support Functions. The departments with overlapping functions were merged organisationally at Swisscom Switzerland. As a result, Group Headquarters is no longer reported separately in the segment reporting. In addition, Swisscom has transferred various areas among the segments of Swisscom Switzerland and the Other Operating Segments as of 1 January 2021. The prior year’s figures were restated accordingly. Further information can be found in Note 2 in the notes to the consolidated interim financial statements.

Reporting is divided into the segments Residential Customers, Business Customers, Wholesale, and Infrastructure & Support Functions, which are grouped under Swisscom Switzerland, as well as Fastweb and Other Operating Segments. The Infrastructure & Support Functions segment does not charge network costs or management fees to other segments. Any other services between the segments are charged at market prices. The results of the Residential Customers, Business Customers and Wholesale segments thus correspond to a contribution margin before network costs.

Swisscom Switzerland


In CHF million, except where indicated
  2. quarter
2021
  2. quarter
2020
 
Change
  1st half-year
2021
  1st half-year
2020
 
Change
                         
Net revenue and results                        
Telecom services   1,371   1,409   –2.7%   2,759   2,848   –3.1%
Solutions business   274   260   5.4%   547   527   3.8%
Merchandise   174   175   –0.6%   386   350   10.3%
Wholesale   159   158   0.6%   332   322   3.1%
Revenue other   33   1       54   6   800.0%
Revenue from external customers   2,011   2,003   0.4%   4,078   4,053   0.6%
Intersegment revenue   12   16   –25.0%   25   31   –19.4%
Net revenue   2,023   2,019   0.2%   4,103   4,084   0.5%
Direct costs   (420)   (407)   3.2%   (867)   (819)   5.9%
Indirect costs   (722)   (740)   –2.4%   (1,439)   (1,484)   –3.0%
Segment expenses   (1,142)   (1,147)   –0.4%   (2,306)   (2,303)   0.1%
Segment result before depreciation and amortisation (EBITDA)   881   872   1.0%   1,797   1,781   0.9%
Margin as % of net revenue   43.5   43.2       43.8   43.6    
Lease expense   (59)   (58)   1.7%   (117)   (117)   –%
Depreciation and amortisation   (383)   (389)   –1.5%   (757)   (766)   –1.2%
Segment result   439   425   3.3%   923   898   2.8%
                   
Operating free cash flow proxy                
Segment result before depreciation and amortisation (EBITDA)   881   872   1.0%   1,797   1,781   0.9%
Lease expense   (59)   (58)   1.7%   (117)   (117)   –%
EBITDA after lease expense (EBITDA AL)   822   814   1.0%   1,680   1,664   1.0%
Capital expenditure   (382)   (409)   –6.6%   (753)   (776)   –3.0%
Operating free cash flow proxy   440   405   8.6%   927   888   4.4%
                   
Operational data in thousand and headcount                  
Fixed telephony access lines               1,471   1,564   –5.9%
Broadband access lines retail               2,027   2,048   –1.0%
TV access lines               1,582   1,584   –0.1%
Mobile access lines               6,169   6,264   –1.5%
Revenue generating units (RGU)               11,249   11,460   –1.8%
Broadband access lines wholesale               581   533   9.0%
Full-time equivalent employees               12,867   12,857   0.1%

Swisscom Switzerland’s net revenue increased by 0.5% or CHF 19 million to CHF 4,103 million. The increase resulted primarily from higher sales of smartphones and growth in the solutions business with business customers. However, ongoing competitive and price pressure continued to cause a decline in revenue from telecom services. This decreased by 3.1% or CHF 89 million to CHF 2,759 million. Of this decline, CHF 51 million (–2.6%) was attributable to the Residential Customers segment and CHF 38 million (–4.4%) to the Business Customers segment. On the other hand, sales from the solutions business rose by 3.8% or CHF 20 million to CHF 547 million. The increase in sales of merchandise by 10.3% or CHF 36 million to CHF 386 million is attributable to the rise in sales of smartphones. The market is showing signs of saturation and competitive pressure in the area of mobile communications and fixed-network services. The subscriber base in mobile communications declined by 1.5% or 95,000 year-on-year to 6.17 million. The number of postpaid lines increased by 89,000 year-on-year, while the number of prepaid lines decreased by 184,000. The number of broadband connections fell by 1.0% or 21,000 to 2.03 million within the space of a year. However, the number of inOne customers continues to increase. At the end of June 2021, the Residential Customers segment recorded 2.48 million inOne customers. In this segment, inOne accounts for 68% of postpaid mobile lines and 80% of broadband connections. The number of TV connections remained stable at 1.58 million (–0.1%). The number of fixed telephony access lines fell year-on-year by 5.9% or 93,000 to 1.47 million.

Segment expense remained more or less unchanged at CHF 2,306 million (+0.1%). Direct costs increased by 5.9% or CHF 48 million to CHF 867 million. In addition to higher costs for merchandise, costs for acquiring and retaining customers also rose. Indirect costs decreased by 3.0% or CHF 45 million to CHF 1,439 million. In the first half of 2021, indirect costs are impacted by a CHF 22 million increase in provisions for litigation. On a like-for-like basis, indirect costs fell by 4.5% or CHF 67 million. This was chiefly due to ongoing efficiency improvements. In addition, capitalised costs increased due to a higher share of self-constructed assets in capital expenditure. Headcount remained more or less stable at 12,867 full-time equivalents (+0.1%). The increase due to the acquisitions of Webtiser and JLS Digital was offset by the reduction resulting from efficiency measures. The segment result before depreciation and amortisation increased by 0.9% or CHF 16 million to CHF 1,797 million, or by 2.1% on an a like-for-like basis. The decline in revenue from telecom services and the higher costs of subscriber acquisition and retention were offset thanks to ongoing efficiency improvements. Capital expenditure fell slightly by 3.0% or CHF 23 million to CHF 753 million. Capital expenditure in the expansion of broadband networks and mobile communications networks increased, while capital expenditure in other infrastructure declined. As at the end of June 2021, 86% of all Swiss homes and offices were connected with ultra-fast broadband exceeding 80 Mbps. 68% of all homes and offices benefited from fast connections at over 200 Mbps. Swisscom intends to make ultra-fast broadband available in every Swiss municipality by the end of 2021, even in remote locations. Swisscom also plans to increase fibre-optic coverage with FTTH to up to 60% by the end of 2025.

Fastweb


In EUR million, except where indicated
  2. quarter
2021
  2. quarter
2020
 
Change
  1st half-year
2021
  1st half-year
2020
 
Change
                         
Net revenue and results                        
Residential customers   288   282   2.1%   574   562   2.1%
Corporate customers   244   224   8.9%   481   435   10.6%
Wholesale   66   55   20.0%   122   105   16.2%
Revenue from external customers   598   561   6.6%   1,177   1,102   6.8%
Intersegment revenue   2   1   100.0%   4   3   33.3%
Net revenue   600   562   6.8%   1,181   1,105   6.9%
Segment expenses   (395)   (367)   7.6%   (797)   (740)   7.7%
Segment result before depreciation and amortisation (EBITDA)   205   195   5.1%   384   365   5.2%
Margin as % of net revenue   34.2   34.7       32.5   33.0    
Lease expense   (13)   (13)   –%   (27)   (26)   3.8%
Depreciation and amortisation   (147)   (142)   3.5%   (293)   (286)   2.4%
Segment result   45   40   12.5%   64   53   20.8%
                   
Operating free cash flow proxy                
Segment result before depreciation and amortisation (EBITDA)   205   195   5.1%   384   365   5.2%
Lease expense   (13)   (13)   –%   (27)   (26)   3.8%
EBITDA after lease expense (EBITDA AL)   192   182   5.5%   357   339   5.3%
Capital expenditure   (147)   (138)   6.5%   (301)   (276)   9.1%
Operating free cash flow proxy   45   44   2.3%   56   63   –11.1%
                   
Operational data in thousand and headcount                  
Broadband access lines               2,774   2,692   3.0%
Mobile access lines               2,188   1,830   19.6%
Full-time equivalent employees               2,750   2,605   5.6%

Fastweb’s net revenue rose year-on-year by 6.9% or EUR 76 million to EUR 1,181 million. Despite persistently challenging market conditions, Fastweb’s broadband customer base grew by 3.0% or 82,000 year-on-year to 2.77 million. Fastweb is also growing in the fiercely competitive mobile telephony market. The number of mobile access lines increased by 19.6% or 358,000 year-on-year to 2.19 million. Bundled offers continue to play an important role. 36% of subscribers use a bundled offering combining fixed network and mobile. Residential customer revenue rose by 2.1% or EUR 12 million to EUR 574 million as a result of customer growth. Fastweb is also growing in the business customer market. Revenue from business customers was up by 10.6% or EUR 46 million to EUR 481 million driven by higher revenue from public administrations. Revenue from wholesale business increased by 16.2% or EUR 17 million to EUR 122 million.

The segment result before depreciation and amortisation was 5.2% or EUR 19 million higher at EUR 384 million on the back of the growth in revenue. Capital expenditure increased by 9.1% or EUR 25 million year-on-year to EUR 301 million due to higher customer-driven investments and increased investments in network infra­structure. Fastweb’s headcount increased by 5.6% or 145 FTEs year-on-year to 2,750 FTEs, mainly as a result of acquisitions and the hiring of external staff.

Other Operating Segments


In CHF million, except where indicated
  2. quarter
2021
  2. quarter
2020
 
Change
  1st half-year
2021
  1st half-year
2020
 
Change
                         
Net revenue and results                        
Revenue from external customers   112   106   5.7%   216   215   0.5%
Intersegment revenue   153   140   9.3%   289   272   6.3%
Net revenue   265   246   7.7%   505   487   3.7%
Segment expenses   (216)   (206)   4.9%   (422)   (405)   4.2%
Segment result before depreciation and amortisation (EBITDA)   49   40   22.5%   83   82   1.2%
Margin as % of net revenue   18.5   16.3       16.4   16.8    
Lease expense   (3)   (3)   –%   (6)   (6)   –%
Depreciation and amortisation   (14)   (15)   –6.7%   (27)   (30)   –10.0%
Segment result   32   22   45.5%   50   46   8.7%
                   
Operating free cash flow proxy                
Segment result before depreciation and amortisation (EBITDA)   49   40   22.5%   83   82   1.2%
Lease expense   (3)   (3)   –%   (6)   (6)   –%
EBITDA after lease expense (EBITDA AL)   46   37   24.3%   77   76   1.3%
Capital expenditure   (10)   (11)   –9.1%   (19)   (18)   5.6%
Operating free cash flow proxy   36   26   38.5%   58   58   –%
                   
Headcount                  
Full-time equivalent employees               3,493   3,522   –0.8%

The net revenue of the Other Operating Segments rose year-on-year by 3.7% or CHF 18 million to CHF 505 million. This was due to higher sales from construction services provided by cablex. The segment result before depreciation and amortisation remained almost stable at CHF 83 million (+1.2%). The profit margin declined slightly to 16.4% (prior year: 16.8%). Headcount declined by 0.8% or 29 FTEs to 3,493 FTEs.