Segment results
In CHF million |
3. quarter 2023 |
3. quarter 2022 |
Change |
1.01.–30.09. 2023 |
1.01.–30.09. 2022 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue 1 | ||||||||||||
| Residential Customers | 1,110 | 1,131 | –1.9% | 3,345 | 3,370 | –0.7% | ||||||
| Business Customers | 769 | 764 | 0.7% | 2,304 | 2,321 | –0.7% | ||||||
| Wholesale | 142 | 144 | –1.4% | 412 | 413 | –0.2% | ||||||
| Infrastructure & Support Functions | 19 | 18 | 5.6% | 57 | 54 | 5.6% | ||||||
| Intersegment elimination | (17) | (18) | –5.6% | (51) | (52) | –1.9% | ||||||
| Swisscom Switzerland | 2,023 | 2,039 | –0.8% | 6,067 | 6,106 | –0.6% | ||||||
| Fastweb | 637 | 588 | 8.3% | 1,873 | 1,818 | 3.0% | ||||||
| Other Operating Segments | 269 | 259 | 3.9% | 770 | 759 | 1.4% | ||||||
| Intersegment elimination | (177) | (174) | 1.7% | (508) | (504) | 0.8% | ||||||
| Total revenue | 2,752 | 2,712 | 1.5% | 8,202 | 8,179 | 0.3% | ||||||
| Operating income before depreciation and amortisation (EBITDA) 1 | ||||||||||||
| Residential Customers | 753 | 757 | –0.5% | 2,242 | 2,233 | 0.4% | ||||||
| Business Customers | 340 | 360 | –5.6% | 1,019 | 1,051 | –3.0% | ||||||
| Wholesale | 54 | 54 | –% | 220 | 209 | 5.3% | ||||||
| Infrastructure & Support Functions | (237) | (254) | –6.7% | (715) | (829) | –13.8% | ||||||
| Intersegment elimination | 1 | – | 1 | 1 | –% | |||||||
| Swisscom Switzerland | 911 | 917 | –0.7% | 2,767 | 2,665 | 3.8% | ||||||
| Fastweb | 221 | 220 | 0.5% | 614 | 633 | –3.0% | ||||||
| Other Operating Segments | 44 | 39 | 12.8% | 99 | 122 | –18.9% | ||||||
| Reconciliation pension cost 2 | 9 | (15) | 28 | (45) | ||||||||
| Intersegment elimination | (11) | (11) | –% | (31) | (34) | –8.8% | ||||||
| Total EBITDA | 1,174 | 1,150 | 2.1% | 3,477 | 3,341 | 4.1% | ||||||
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1 Swisscom has changed the revenue recognition for roaming contracts with minimum guarantees as of 1 January 2023 and made adjustments to the financial management. The previous year’s figures have been adjusted accordingly. For further information, see notes 1 and 2 to the interim financial statements.
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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.
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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 Swisscom Directories Ltd (localsearch), 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 to other segments for its services. The remaining 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 2023 |
3. quarter 2022 |
Change |
1.01.–30.09. 2023 |
1.01.–30.09. 2022 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue and operating income before depreciation and amortisation (EBITDA) | ||||||||||||
| Telecom services | 1,346 | 1,369 | –1.7% | 4,035 | 4,091 | –1.4% | ||||||
| IT services | 294 | 281 | 4.6% | 877 | 855 | 2.6% | ||||||
| Merchandise | 191 | 204 | –6.4% | 583 | 611 | –4.6% | ||||||
| Wholesale | 139 | 142 | –2.1% | 402 | 405 | –0.7% | ||||||
| Revenue other | 38 | 29 | 31.0% | 124 | 98 | 26.5% | ||||||
| External revenue | 2,008 | 2,025 | –0.8% | 6,021 | 6,060 | –0.6% | ||||||
| Intersegment revenue | 15 | 14 | 7.1% | 46 | 46 | –% | ||||||
| Revenue | 2,023 | 2,039 | –0.8% | 6,067 | 6,106 | –0.6% | ||||||
| Direct costs | (430) | (445) | –3.4% | (1,246) | (1,265) | –1.5% | ||||||
| Indirect costs | (682) | (677) | 0.7% | (2,054) | (2,176) | –5.6% | ||||||
| Operating expense | (1,112) | (1,122) | –0.9% | (3,300) | (3,441) | –4.1% | ||||||
| EBITDA | 911 | 917 | –0.7% | 2,767 | 2,665 | 3.8% | ||||||
| Margin as % of revenue | 45.0 | 45.0 | 45.6 | 43.6 | ||||||||
| Operating free cash flow proxy | ||||||||||||
| EBITDA | 911 | 917 | –0.7% | 2,767 | 2,665 | 3.8% | ||||||
| Lease expense | (58) | (56) | –% | (169) | (167) | 1.2% | ||||||
| EBITDA after lease expense (EBITDAaL) | 853 | 861 | –0.9% | 2,598 | 2,498 | 4.0% | ||||||
| Capital expenditure | (376) | (406) | –7.4% | (1,197) | (1,161) | 3.1% | ||||||
| Operating free cash flow proxy | 477 | 455 | 4.8% | 1,401 | 1,337 | 4.8% | ||||||
| Operational data in thousand and headcount | ||||||||||||
| Fixed telephony access lines | 1,249 | 1,351 | –7.5% | |||||||||
| Broadband access lines retail | 2,009 | 2,027 | –0.9% | |||||||||
| TV access lines | 1,541 | 1,576 | –2.2% | |||||||||
| Mobile access lines | 6,197 | 6,166 | 0.5% | |||||||||
| Access lines wholesale | 683 | 691 | –1.2% | |||||||||
| Full-time equivalent employees | 13,211 | 12,870 | 2.6% | |||||||||
Swisscom Switzerland’s revenue decreased slightly by 0.6% or CHF 39 million to CHF 6,067 million. Revenue from telecoms services decreased by 1.4% or CHF 56 million to CHF 4,035 million. Of the decrease, CHF 42 million (–3.5%) is attributable to the Business Customers segment; revenue from telecoms services in the Residential Customers segment remained almost stable at CHF 2,883 million (–0.5%). In contrast, revenue from IT services with business customers rose by 2.6% to CHF 877 million. Market saturation is reflected in fewer connections and declining subscriber bases for broadband retail (–0.9%) and TV (–2.2%). Fixed network telephony (–7.5%) is significantly affected by its substitution with mobile telephony. In mobile telephony, the number of subscribers increased slightly (+0.5%), while the customer structure changed due to an increase in postpaid lines (+148,000) and a similarly strong decrease in prepaid connections (–117,000). The share of secondary and third-party brands in the Residential Customers segment rose from 26% to 30%.
The operating expense decreased by 4.1% or CHF 141 million. Direct costs fell by 1.5% to CHF 1,246 million. The costs for purchasing services and merchandise decreased, while subscriber acquisition and customer loyalty costs increased. Indirect costs fell by CHF 122 million (–5.6%) and were influenced primarily by non-recurring items in connection with provisions for legal proceedings. In the first nine months of 2023, provisions for legal proceedings of CHF 10 million (net) were reversed with an effect on EBITDA. In the same period of the previous year, provisions of CHF 82 million were recognised with an effect on EBITDA. Adjusted for these items, indirect costs fell by CHF 30 million (–1.4%). In telecommunications, cost savings of CHF 50 million were realised through efficiency improvement measures and optimised network maintenance. In the area of IT services, indirect costs rose by CHF 20 million. Headcount increased year-on-year by 2.6% to 13,211 FTEs. The increase is attributable primarily to the increased resources required for IT system development and upgrading, and to the acquisition of Axept Business Software AG in the current financial year. Operating income before depreciation and amortisation (EBITDA) was up by 3.8% or CHF 102 million to CHF 2,767 million. Adjusted for non-recurring items mentioned, it increased by 0.4% or CHF 10 million. The decline in revenue from telecoms services was compensated for thanks to ongoing cost-cutting measures. Capital expenditure increased by 3.1% or CHF 36 million to CHF 1,197 million mainly due to the expansion and upgrading of transport networks. Swisscom plans to increase fibre-optic coverage (FTTH) to around 55% by the end of 2025, and to 70–80% by 2030.
Fastweb
In EUR million, except where indicated |
3. quarter 2023 |
3. quarter 2022 |
Change |
1.01.–30.09. 2023 |
1.01.–30.09. 2022 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue and operating income before depreciation and amortisation (EBITDA) | ||||||||||||
| Residential Customers | 289 | 284 | 1.8% | 869 | 856 | 1.5% | ||||||
| Enterprise Customers | 287 | 239 | 20.1% | 814 | 736 | 10.6% | ||||||
| Wholesale | 83 | 78 | 6.4% | 224 | 204 | 9.8% | ||||||
| External revenue | 659 | 601 | 9.7% | 1,907 | 1,796 | 6.2% | ||||||
| Intersegment revenue | 1 | 2 | –50.0% | 4 | 6 | –33.3% | ||||||
| Revenue | 660 | 603 | 9.5% | 1,911 | 1,802 | 6.0% | ||||||
| Operating expense | (431) | (378) | 14.0% | (1,284) | (1,174) | 9.4% | ||||||
| EBITDA | 229 | 225 | 1.8% | 627 | 628 | –0.2% | ||||||
| Margin as % of revenue | 34.7 | 37.3 | 32.8 | 34.9 | ||||||||
| Operating free cash flow proxy | ||||||||||||
| EBITDA | 229 | 225 | 1.8% | 627 | 628 | –0.2% | ||||||
| Lease expense | (14) | (14) | –% | (41) | (43) | –4.7% | ||||||
| EBITDA after lease expense (EBITDAaL) | 215 | 211 | 1.9% | 586 | 585 | 0.2% | ||||||
| Capital expenditure | (148) | (150) | –1.3% | (445) | (449) | –0.9% | ||||||
| Operating free cash flow proxy | 67 | 61 | 9.8% | 141 | 136 | 3.7% | ||||||
| Operational data in thousand and headcount | ||||||||||||
| Broadband access lines retail | 2,613 | 2,696 | –3.1% | |||||||||
| Broadband access lines wholesale | 579 | 418 | 38.5% | |||||||||
| Mobile access lines | 3,428 | 2,937 | 16.7% | |||||||||
| Full-time equivalent employees | 3,146 | 2,915 | 7.9% | |||||||||
Fastweb’s revenue rose year-on-year by 6.0% or EUR 109 million to EUR 1,911 million. Competition remained fierce. The customer base in the fixed-network business (end-customer and wholesale) grew by 2.5% overall to 3.19 million. Although this fell by 3.1% to 2.61 million in the end-customer business due to the challenging market environment, the number of ultra-fast broadband connections provided by Fastweb to other operators rose to 579,000 (+38.5%). Among end customers, the share of ultra-fast broadband connections increased by 4 percentage points to 89%. The number of mobile access lines increased by 491,000 (+16.7%) to 3.43 million, with bundled offerings continuing to play an important role. 42% of broadband customers used a bundled offering combining fixed network and mobile. Revenue from residential customers increased by 1.5% or EUR 13 million to EUR 869 million as a result of the higher mobile customer base. Revenue from business customers increased by 10.6% or EUR 78 million to EUR 814 million, driven by the strong market position in the area of public administration. Revenue from wholesale business increased by 9.8% or EUR 20 million to EUR 224 million due to the higher number of subscribers.
Operating expense and operating income before depreciation and amortisation (EBITDA) increased due to revenue growth and were influenced by the recognition of provisions for legal proceedings in the amount of EUR 13 million in the first half of 2023. Adjusted for this effect, operating expense rose by EUR 97 million (+8.3%) and EBITDA by 1.9% or EUR 12 million to EUR 640 million. Capital expenditure of EUR 445 million was almost on a par with the previous year (–0.9%). Headcount increased by 7.9% or 231 FTEs to 3,146 FTEs as Fastweb took on external staff and the growth created a need for more personnel.
Other Operating Segments
In CHF million, except where indicated |
3. quarter 2023 |
3. quarter 2022 |
Change |
1.01.–30.09. 2023 |
1.01.–30.09. 2022 |
Change |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue and operating income before depreciation and amortisation (EBITDA) | ||||||||||||
| External revenue | 108 | 101 | 6.9% | 312 | 307 | 1.6% | ||||||
| Intersegment revenue | 161 | 158 | 1.9% | 458 | 452 | 1.3% | ||||||
| Revenue | 269 | 259 | 3.9% | 770 | 759 | 1.4% | ||||||
| Operating expense | (225) | (220) | 2.3% | (671) | (637) | 5.3% | ||||||
| EBITDA | 44 | 39 | 12.8% | 99 | 122 | –18.9% | ||||||
| Margin as % of revenue | 16.4 | 15.1 | 12.9 | 16.1 | ||||||||
| Operating free cash flow proxy | ||||||||||||
| EBITDA | 44 | 39 | 12.8% | 99 | 122 | –18.9% | ||||||
| Lease expense | (3) | (3) | –% | (8) | (8) | –% | ||||||
| EBITDA after lease expense (EBITDAaL) | 41 | 36 | 13.9% | 91 | 114 | –20.2% | ||||||
| Capital expenditure | (10) | (8) | 25.0% | (28) | (22) | 27.3% | ||||||
| Operating free cash flow proxy | 31 | 28 | 10.7% | 63 | 92 | –31.5% | ||||||
| Headcount | ||||||||||||
| Full-time equivalent employees | 3,329 | 3,248 | 2.5% | |||||||||
Revenue in Other Operating Segments rose by 1.4% or CHF 11 million year-on-year to CHF 770 million. The increase was due primarily to a business acquisition in the previous year. Also due to one-off charges in connection with customer projects, the operating result before depreciation and amortisation (EBIDTA) decreased by 18.9% or CHF 23 million to CHF 99 million, and the profit margin shrank accordingly to 12.9% (prior year: 16.1%). Headcount increased by 2.5% or 81 FTEs to 3,329 FTEs, partly as the result of the acquisition in the previous year.