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2 Segment information

Changes in segment reporting

Swisscom has simplified its internal billing as of 1 January 2022. The costs for roaming calls and for termination on networks of other telecommunications providers are no longer charged to the Residential Customers and Business Customers segments, but remain in the Wholesale segment. In turn, proceeds from termination on Swisscom’s network are no longer credited to the Residential Customers and Business Customers segments, but likewise remain in the Wholesale segment. In addition, Swisscom has reassigned various areas within Swisscom Switzerland among the segments as of 1 January 2022. The prior year’s figures were restated as follows:

In CHF million   Reported   Adjustment   Restated
             
Net revenue financial year 2021
Residential Customers   4,592   (47)   4,545
Business Customers   3,058   (27)   3,031
Wholesale   971   (317)   654
Infrastructure & Support Functions   76     76
Elimination   (464)   391   (73)
Swisscom Switzerland   8,233     8,233
Fastweb   2,583     2,583
Other Operating Segments   1,033     1,033
Elimination   (666)     (666)
Total net revenue   11,183     11,183
             
Segment result 2021 financial year
Residential Customers   2,676   145   2,821
Business Customers   1,189   88   1,277
Wholesale   524   (227)   297
Infrastructure & Support Functions   (2,644)   (6)   (2,650)
Elimination   1     1
Swisscom Switzerland   1,746     1,746
Fastweb   197     197
Other Operating Segments   99     99
Elimination   (20)     (20)
Total segment result   2,022     2,022

General information

WSGE_DP_GR_Swisscom_Segmente

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 any network costs or management fees for its services 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.

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 2022, an expense of CHF 45 million is disclosed under ‘Eliminations’ as a pension cost reconciliation item in accordance with IAS 19 (prior year: income of CHF 25 million).

Leases between the segments are not recognised in the balance sheet in accordance with IFRS 16. The reported lease expense of the segments comprises depreciation and interest on right-of-use assets excluding depreciation on indefeasible rights of use (IRU) of CHF 15 million (prior year: CHF 18 million) as well as the accounting for the rental of buildings between segments. The lease expense of assets of low value is presented 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 2022 includes IRU payments of CHF 10 million (prior year: CHF 11 million).

Swisscom Switzerland sometimes sells mobile handsets at a subsidised rate as part of a bundled offering with a mobile 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 2022


1.1.–30.9.2021, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
 

Elimination
 

Total
Residential Customers   3,357   864       4,221
Enterprise Customers   2,298   742   307     3,347
Wholesale customers   451   206       657
Net revenue from external customers   6,106   1,812   307     8,225
Net revenue from other segments   46   6   452   (504)  
Net revenue   6,152   1,818   759   (504)   8,225
Direct costs   (1,311)   (638)   (53)   50   (1,952)
Indirect costs   (2,176)   (547)   (584)   375   (2,932)
Segment result before depreciation and amortisation   2,665   633   122   (79)   3,341
Lease expense   (167)   (43)   (8)   (1)   (219)
Depreciation and amortisation   (1,123)   (452)   (35)   12   (1,598)
Segment result   1,375   138   79   (68)   1,524
Interest expense on lease liabilities                   33
Operating income                   1,557
Financial income and financial expense, net                   (47)
Result of equity-accounted investees                   (2)
Income before income taxes                   1,508
Income tax expense                   (294)
Net income                   1,214
                     
Segment result before depreciation and amortisation   2,665   633   122   (79)   3,341
Lease expense   (167)   (43)   (8)   (1)   (219)
Capital expenditure   (1,161)   (453)   (22)   35   (1,601)
Operating free cash flow proxy   1,337   137   92   (45)   1,521

Segment information Swisscom Switzerland 2022


1.1.–30.9.2021, in CHF million
 
Residential
Customers
 
Business
Customers
 

Wholesale
  Infrastructure
& Support
Functions
 

Elimination
  Total
Swisscom
Switzerland
Fixed-line   1,506   631         2,137
Mobile   1,391   563         1,954
Telecom services   2,897   1,194         4,091
Solutions business     877         877
Merchandise   374   215         589
Wholesale       451       451
Revenue other   86   (1)     13     98
Net revenue from external customers   3,357   2,285   451   13     6,106
Net revenue from other segments   13   36   8   41   (52)   46
Net revenue   3,370   2,321   459   54   (52)   6,152
Direct costs   (639)   (551)   (236)   (7)   122   (1,311)
Indirect costs   (501)   (716)   (13)   (877)   (69)   (2,176)
Segment result before depreciation and amortisation   2,230   1,054   210   (830)   1   2,665
Lease expense   (29)   (22)     (115)   (1)   (167)
Depreciation and amortisation   (45)   (55)     (1,023)     (1,123)
Segment result   2,156   977   210   (1,968)     1,375
                         
Capital expenditure   (31)   (32)     (1,098)     (1,161)

Segment information 2021


1.1.–30.9.2021, in CHF million, restated
 
Swisscom
Switzerland
 

Fastweb
  Other
Operating
Segments
 

Elimination
 

Total
Residential Customers   3,376   934       4,310
Enterprise Customers   2,246   776   326     3,348
Wholesale customers   488   197       685
Net revenue from external customers   6,110   1,907   326     8,343
Net revenue from other segments   40   7   444   (491)  
Net revenue   6,150   1,914   770   (491)   8,343
Direct costs   (1,321)   (702)   (56)   48   (2,031)
Indirect costs   (2,153)   (556)   (578)   440   (2,847)
Segment result before depreciation and amortisation   2,676   656   136   (3)   3,465
Lease expense   (174)   (43)   (9)     (226)
Depreciation and amortisation   (1,120)   (480)   (40)   8   (1,632)
Segment result   1,382   133   87   5   1,607
Interest expense on lease liabilities                   33
Operating income                   1,640
Financial income and financial expense, net                   138
Result of equity-accounted investees                   (5)
Income before income taxes                   1,773
Income tax expense                   (237)
Net income                   1,536
                     
Segment result before depreciation and amortisation   2,676   656   136   (3)   3,465
Lease expense   (174)   (43)   (9)     (226)
Capital expenditure   (1,125)   (479)   (29)   28   (1,605)
Operating free cash flow proxy   1,377   134   98   25   1,634

Segment information Swisscom Switzerland 2021


1.1.–30.9.2021, in CHF million, restated
 
Residential
Customers
 
Business
Customers
 

Wholesale
  Infrastructure
& Support
Functions
 

Elimination
  Total
Swisscom
Switzerland
Fixed-line   1,502   652         2,154
Mobile   1,396   587         1,983
Telecom services   2,898   1,239         4,137
Solutions business     821         821
Merchandise   396   168         564
Wholesale       488       488
Revenue other   82   2     16     100
Net revenue from external customers   3,376   2,230   488   16     6,110
Net revenue from other segments   12   35   6   41   (54)   40
Net revenue   3,388   2,265   494   57   (54)   6,150
Direct costs   (671)   (514)   (260)   (5)   129   (1,321)
Indirect costs   (495)   (694)   (14)   (874)   (76)   (2,153)
Segment result before depreciation and amortisation   2,222   1,057   220   (822)   (1)   2,676
Lease expense   (30)   (24)     (120)     (174)
Depreciation and amortisation   (39)   (50)     (1,032)   1   (1,120)
Segment result   2,153   983   220   (1,974)     1,382
                         
Capital expenditure   (16)   (30)     (1,079)     (1,125)