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Segment results


In CHF million
  3. quarter
2022
  3. quarter
2021
 
Change
  1.1.–30.9.
2022
  1.1.–30.9.
2021
 
Change
                         
Net revenue 1
Residential Customers   1,131   1,139   –0.7%   3,370   3,388   –0.5%
Business Customers   764   742   3.0%   2,321   2,265   2.5%
Wholesale   163   165   –1.2%   459   494   –7.1%
Infrastructure & Support Functions   18   18   –%   54   57   –5.3%
Intersegment elimination   (18)   (17)   5.9%   (52)   (54)   –3.7%
Swisscom Switzerland   2,058   2,047   0.5%   6,152   6,150   –%
Fastweb   588   621   –5.3%   1,818   1,914   –5.0%
Other Operating Segments   259   265   –2.3%   759   770   –1.4%
Intersegment elimination   (174)   (173)   0.6%   (504)   (491)   2.6%
Revenue from external customers   2,731   2,760   –1.1%   8,225   8,343   –1.4%
                         
Operating income before depreciation and amortisation (EBITDA) 1
Residential Customers   756   758   –0.3%   2,230   2,222   0.4%
Business Customers   361   349   3.4%   1,054   1,057   –0.3%
Wholesale   54   56   –3.6%   210   220   –4.5%
Infrastructure & Support Functions   (254)   (283)   –10.2%   (830)   (822)   1.0%
Intersegment elimination     (1)   –100.0%   1   (1)    
Swisscom Switzerland   917   879   4.3%   2,665   2,676   –0.4%
Fastweb   220   236   –6.8%   633   656   –3.5%
Other Operating Segments   39   53   –26.4%   122   136   –10.3%
Reconciliation pension cost 2   (15)   (11)   36.4%   (45)   25    
Intersegment elimination   (11)   (9)   22.2%   (34)   (28)   21.4%
Operating income before depreciation and amortisation (EBITDA)   1,150   1,148   0.2%   3,341   3,465   –3.6%
1 Swisscom has made adjustments to its financial management as of 1 January
2022 and has restated the previous year’s figures accordingly. For further
information, see note 2 to the interim financial statements.
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.

Swisscom’s reporting focuses on the operating divisions Swisscom Switzerland and Fastweb. The other business divisions are grouped together under Other Operating Segments. Swisscom Switzerland comprises the customer segments Residential Customers, Business Customers and Wholesale, along with the Infrastructure & Support Functions business division. Fastweb is a telecommunications provider for residential and business customers in Italy. Other Operating Segments primarily comprises the Digital Business division, Swisscom Broadcast Ltd (radio transmitters) and cablex Ltd (network construction and maintenance).

The Infrastructure & Support Functions business division does not charge any network costs or management fees for its services to other segments. Any other services between the segments are charged at market prices. Network costs in Switzerland are budgeted, monitored and controlled by the Infrastructure & Support Functions segment, which is managed as a cost centre. For this reason, no revenue is credited to the Infrastructure & Support Functions segment within the segment reporting, with the exception of the rental and administration of buildings and vehicles. 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
  3. quarter
2022
  3. quarter
2021
 
Change
  1.1.–30.9.
2022
  1.1.–30.9.
2021
 
Change
                         
Net revenue and results
Telecom services   1,369   1,371   –0.1%   4,091   4,137   –1.1%
Solutions business   288   274   5.1%   877   821   6.8%
Merchandise   197   179   10.1%   589   564   4.4%
Wholesale   161   163   –1.2%   451   488   –7.6%
Revenue other   29   45   –35.6%   98   100   –2.0%
Revenue from external customers   2,044   2,032   0.6%   6,106   6,110   –0.1%
Intersegment revenue   14   15   –6.7%   46   40   15.0%
Net revenue   2,058   2,047   0.5%   6,152   6,150   –%
Direct costs   (464)   (454)   2.2%   (1,311)   (1,321)   –0.8%
Indirect costs   (677)   (714)   –5.2%   (2,176)   (2,153)   1.1%
Segment expenses   (1,141)   (1,168)   –2.3%   (3,487)   (3,474)   0.4%
Segment result before depreciation and amortisation (EBITDA)   917   879   4.3%   2,665   2,676   –0.4%
Margin as % of net revenue   44.6   42.9       43.3   43.5    
Lease expense   (56)   (57)   –1.8%   (167)   (174)   –4.0%
Depreciation and amortisation   (376)   (363)   3.6%   (1,123)   (1,120)   0.3%
Segment result   485   459   5.7%   1,375   1,382   –0.5%
                 
Operating free cash flow proxy
Segment result before depreciation and amortisation (EBITDA)   917   879   4.3%   2,665   2,676   –0.4%
Lease expense   (56)   (57)   –1.8%   (167)   (174)   –4.0%
EBITDA after lease expense (EBITDA AL)   861   822   4.7%   2,498   2,502   –0.2%
Capital expenditure   (406)   (372)   9.1%   (1,161)   (1,125)   3.2%
Operating free cash flow proxy   455   450   1.1%   1,337   1,377   –2.9%
                 
Operational data in thousand and headcount
Fixed telephony access lines               1,351   1,441   –6.2%
Broadband access lines retail               2,027   2,030   –0.1%
TV access lines               1,576   1,585   –0.6%
Mobile access lines               6,166   6,190   –0.4%
Revenue generating units (RGU)               11,120   11,246   –1.1%
Access lines wholesale               691   692   –0.1%
Full-time equivalent employees               12,870   12,963   –0.7%

Swisscom Switzerland’s net revenue remained stable at CHF 6,152 million. Ongoing competitive and price pressure continued to drive down revenue from telecoms services, which fell by 1.1% or CHF 46 million to CHF 4,091 million. This decline is attributable to the Business Customers segment. By contrast, revenue from the solutions business rose by 6.8% or CHF 56 million to CHF 877 million. Part of this increase is attributable to the acquisition of the MTF Group companies operating in German-speaking Switzerland and the Principality of Liechtenstein. The decline in Wholesale revenue is partially attributable to the loss of revenue where there is no longer any demand from UPC following the acquisition of Sunrise, and partially attributable to a price-related decline in inbound roaming revenue.

The market is still showing signs of saturation and competitive pressure in the area of mobile communications and fixed-network services. The subscriber base in mobile communications shrank by 0.4% or 24,000 year-on-year to 6.17 million. The number of postpaid lines increased by 178,000 year-on-year, while the number of prepaid lines decreased by 202,000. The number of broadband connections remained almost unchanged year-on-year, at 2.03 million (–0.1%). Demand for flexible and customisable subscriptions remains high. At the beginning of May 2022, Swisscom digitised the subscription with the launch of Swisscom blue. Options for speed, TV, telephone, roaming, security and entertainment can be customised to meet individual needs. At the end of Septem­ber 2022, Swisscom recorded 1.86 million customers on blue in the Residential Customers segment. blue accounts for 44% of all mobile subscriptions and 79% of fixed-line broadband connections in this segment; 42% use a combined offering. The number of TV connections decreased year-on-year by 0.6% or 9,000 to 1.58 million, while the number of fixed telephony access lines fell year-on-year by 6.2% or 90,000 to 1.35 million.

Segment expense increased by 0.4% or CHF 13 million to CHF 3,487 million. Direct costs fell by 0.8% or CHF 10 million to CHF 1,311 million. In addition to the decline in subscriber acquisition and retention costs, costs for roaming calls also fell. By contrast, the cost of purchasing merchandise increased. Indirect costs rose by 1.1% or CHF 23 million to CHF 2,176 million. In the first nine months of 2022, indirect costs were impacted by an CHF 82 million increase in provisions for litigation. Provisions for this were also increased in the previous year, by CHF 52 million. Adjusted for these provisions, indirect costs remained almost stable (–0.3%). The reduction in costs resulting from efficiency improvements was offset by additional costs arising from the acquisition of companies in the MTF Group. Headcount declined by 0.7% or 93 FTEs to 12,870 FTEs. Efficiency gains more than offset the increase resulting from the acquisition of companies in the MTF Group. The segment result before depreciation and amortisation decreased by 0.4% or CHF 11 million to CHF 2,665 million. Adjusted for the above-mentioned provisions, the result was an increase of 0.7%. The decline in revenue from telecoms services was offset by growth in the solutions business and ongoing efficiency improvement measures.

Capital expenditure rose by 3.2% or CHF 36 million to CHF 1,161 million. Capital expenditure on the expansion of broadband and mobile networks decreased, while capital expenditure on other infrastructure increased. As at the end of September 2022, 90% of all Swiss homes and offices were connected with ultra-fast broadband exceeding 80 Mbps. 78% of all homes and offices benefited from fast connections at over 200 Mbps. Due to the ongoing proceedings of the Competition Commission, Swisscom cannot market nearly 400,000 fibre-to-the-home (FTTH) connections built using point-to-multipoint architecture (P2MP). In order to enable customers to use the high-speed FTTH connections, Swisscom has decided to employ the point-to-point (P2P) architecture for the majority of new connections in the network expansion and to convert some existing P2MP connections into P2P. The annual budget for fibre-optic investments of CHF 500 million to CHF 600 million remains unchanged, but the expansion is proceeding somewhat more slowly than originally planned. Specifically, this means that it will only be possible to connect 50% to 55% of connections with FTTH by 2025. But Swisscom will continue to invest in FTTH expansion after 2025 and will increase FTTH coverage to 70% to 80% by 2030.

Fastweb


In EUR million, except where indicated
  3. quarter
2022
  3. quarter
2021
 
Change
  1.1.–30.9.
2022
  1.1.–30.9.
2021
 
Change
                         
Net revenue and results
Residential Customers   284   282   0.7%   856   856   –%
Enterprise Customers   239   231   3.5%   736   712   3.4%
Wholesale   78   60   30.0%   204   182   12.1%
Revenue from external customers   601   573   4.9%   1,796   1,750   2.6%
Intersegment revenue   2   1   100.0%   6   5   20.0%
Net revenue   603   574   5.1%   1,802   1,755   2.7%
Segment expenses   (378)   (356)   6.2%   (1,174)   (1,153)   1.8%
Segment result before depreciation and amortisation (EBITDA)   225   218   3.2%   628   602   4.3%
Margin as % of net revenue   37.3   38.0       34.9   34.3    
Lease expense   (14)   (13)   7.7%   (43)   (40)   7.5%
Depreciation and amortisation   (150)   (147)   2.0%   (449)   (440)   2.0%
Segment result   61   58   5.2%   136   122   11.5%
                 
Operating free cash flow proxy
Segment result before depreciation and amortisation (EBITDA)   225   218   3.2%   628   602   4.3%
Lease expense   (14)   (13)   7.7%   (43)   (40)   7.5%
EBITDA after lease expense (EBITDA AL)   211   205   2.9%   585   562   4.1%
Capital expenditure   (150)   (138)   8.7%   (449)   (439)   2.3%
Operating free cash flow proxy   61   67   –9.0%   136   123   10.6%
           
Operational data in thousand and headcount
Broadband access lines retail               2,696   2,768   –2.6%
Broadband access lines wholesale               418   237   76.4%
Mobile access lines               2,937   2,316   26.8%
Full-time equivalent employees               2,915   2,741   6.3%

Fastweb’s net revenue rose year-on-year by 2.7% or EUR 47 million to EUR 1,802 million. Competitive dynamics remain high. Due to the very challenging market environment, the broadband customer base decreased by 2.6% or 72,000 to 2.70 million within the year. However, the share of ultra-fast broadband connections grew by 6 percentage points year-on-year to 85%. The number of mobile lines increased by 26.8% or 621,000 year-on-year to 2.94 million. Bundled offerings continue to play an important role. 40% of subscribers use a bundled offering combining fixed network and mobile. Revenue from Residential Customers subsequently remained stable at EUR 856 million, whereas revenue from Business Customers was up by 3.4% or EUR 24 million to EUR 736 million due to higher revenue from public administrations. Revenue from Wholesale business increased by 12.1% or EUR 22 million to EUR 204 million, while the number of Wholesale broadband connections rose year-on-year by 76.4% or 181,000 to 418,000.

Segment expenses decreased by 1.8% or EUR 21 million to EUR 1,174 million compared to the previous year. The segment result before depreciation and amortisation increased by 4.3% or EUR 26 million to EUR 628 million as a result of the growth in revenue. Capital expenditure was up year-on-year by 2.3% or EUR 10 million to EUR 449 million, fuelled by higher customer-driven capital expenditure. Fastweb’s headcount increased by 6.3% or 174 FTEs to 2,915 FTEs, mainly as a result of the hiring of external staff.

Other Operating Segments


In CHF million, except where indicated
  3. quarter
2022
  3. quarter
2021
 
Change
  1.1.–30.9.
2022
  1.1.–30.9.
2021
 
Change
                         
Net revenue and results
Revenue from external customers   101   110   –8.2%   307   326   –5.8%
Intersegment revenue   158   155   1.9%   452   444   1.8%
Net revenue   259   265   –2.3%   759   770   –1.4%
Segment expenses   (220)   (212)   3.8%   (637)   (634)   0.5%
Segment result before depreciation and amortisation (EBITDA)   39   53   –26.4%   122   136   –10.3%
Margin as % of net revenue   15.1   20.0       16.1   17.7    
Lease expense   (3)   (3)   –%   (8)   (9)   –11.1%
Depreciation and amortisation   (12)   (13)   –7.7%   (35)   (40)   –12.5%
Segment result   24   37   –35.1%   79   87   –9.2%
                 
Operating free cash flow proxy
Segment result before depreciation and amortisation (EBITDA)   39   53   –26.4%   122   136   –10.3%
Lease expense   (3)   (3)   –%   (8)   (9)   –11.1%
EBITDA after lease expense (EBITDA AL)   36   50   –28.0%   114   127   –10.2%
Capital expenditure   (8)   (10)   –20.0%   (22)   (29)   –24.1%
Operating free cash flow proxy   28   40   –30.0%   92   98   –6.1%
           
Headcount
Full-time equivalent employees               3,248   3,468   –6.3%

The net revenue of the Other Operating Segments decreased by 1.4% or CHF 11 million year-on-year to CHF 759 million mainly as a result of the sale of the French subsidiary local.fr at the end of 2021. The segment result before depreciation and amortisation declined by 10.3% or CHF 14 million to CHF 122 million due to lower profitability at cablex. Accordingly, the profit margin fell to 16.1% (prior year: 17.7%). The headcount decreased by 6.3% or 220 FTEs to 3,248 FTEs, due to the sale of the French subsidiary local.fr.