Swisscom Ag · SIX:SCMN
Swisscom — Q3 2021 Earnings Presentation
42 slides from Swisscom's earnings presentation, Oct 28, 2021
Slide 1: Q3 2021 results
Analyst & investor presentation Q3 2021 results 28 October 2021
Slide 2: Agenda
Agenda Introduction Louis Schmid, IR 1. Highlights Urs Schaeppi, CEO 2. Business review Urs Schaeppi, CEO 3. Financial results Eugen Stermetz, CFO Questions & answers all Appendix 2
Slide 3: Highlights
1 Highlights 3
Slide 4: Highlights
1 Highlights Fibre rollout under review Ruling by Federal Administrative court prolongs regulatory uncertainty. Salt partnership rollout on hold The best service quality New CO2 ambitions 2025 in Switzerland Swisscom strives to be 1st net zero Telco Swisscom wins the connect Shop Test and save 1 mil
Slide 5: Market performance
1 Market performance Swisscom Switzerland robust, Fastweb positive with +168k RGUs in Q3 and +488k RGUs YTD Swisscom Switzerland (RGUs in k) Fastweb (RGUs in k) +355 +50 +70 +128 +112 +46 +21 +21 Reported net adds +3 +3 +2 Q3 and 9M 20211 -3 -6 -13 -30 -82 Broadband TV Fixed voice Postpaid Wholesale
Slide 6: Financial performance
1 Financial performance Q3 results with solid underlying performance Q3 EBITDA development in CHF mn and YOY changes in CHF Q3 2021 9M 2021 Underlying performance +29 Net 2'760mn 8'343mn +11 +16 +2 1'148 1'148 +0.0% revenue (+2mn, +0.1% YOY) (+142mn, +1.7% YOY) -29 Net 490mn 1'536mn (+60mn, +14.0% Y
Slide 7: Business Review
2 Business Review 7
Slide 8: 2021 business priorities
2 2021 business priorities Execution fully aligned with strategy Continuously invest in Deliver on leading Strong commitment to Push Fastweb infrastructure and market position in operational excellence to the next level sustainability Switzerland of growth Deliver maximum network Lever #1 market pos
Slide 9: Swisscom an industry front-runner in corporate sustainability
2 Swisscom an industry front-runner in corporate sustainability New ambition 2025: 1st net zero Telco Reduce CO2 emissions in scope 1 and 3 footprint (in kt) • Strong commitment to protect the environment since more than 20 years • Energy efficiency • Most sustainable Telco worldwide in 2020 • E-mob
Slide 10: Swisscom with best network experience
2 Swisscom with best network experience Continuous investments in speed, capacity and coverage Undisputed #1 in mobile Making Switzerland Gigabit-ready • Efficient fibre-optic rollout thanks to P2MP, a well-accepted FTTH rollout approach internationally FTTH (P2MP) FTTS push 2 push 95% 90% coverage
Slide 11: Pending COMCO investigation jeopardising FTTH rollout ambitions
2 Pending COMCO investigation jeopardising FTTH rollout ambitions FTTH as the long-term sustainable infrastructure Ongoing lack of clarity on outcome of COMCO investigation • In December 2020 COMCO opened an investigation into Swisscom's fibre- optic rollout in P2MP topology • COMCO ordered precauti
Slide 12: Customer-centric experiences key to lever Swisscom's B2C leadership
2 Customer-centric experiences key to lever Swisscom's B2C leadership Swisscom constantly enriches best services and products Another quarter with several refreshing news Good Q3 market performance underpinning our strong market proposition thanks to our elaborated multi-brand approach • Foster digi
Slide 13: B2C results
2 B2C results Q3 with overall solid trends across all operational metrics Wireline Q2 21 Q3 FM converged RGUs in k Churn rate p.a. ARPUs in CHF (YOY) broadband subs • Solid RGU base 9.0% 88 88 1'733 1'736 1'513 1'516 • BB share of 2nd/3rd 8.5% brands: 5% (+1pp YOY) 37 37 (+2) 46% • 81% inOne Home (+
Slide 14: Innovation and changing customer needs enable B2B business opportunities
2 Innovation and changing customer needs enable B2B business opportunities Swisscom well positioned in promising ICT market Project business through technology integration Increasing Security importance for enterprises • Successful project with Rhomberg Sersa Rail Group: • Increasing importance of m
Slide 15: B2B results
2 B2B results Q3 service revenue development as expected (on previous year's level) and Solutions growing (+5.8%) Wireless price pressure slightly accelerating in Q3 Service revenue YOY changes in CHF mn ARPU CHF 31 (CHF -2 YOY) Q1 20 Q2 Q3 Q4 Q1 21 Q2 Q3 in CHF mn Access -13 W- Traffic and VAS -1 -
Slide 16: Operational excellence and results
2 Operational excellence and results Cost control essential Clear focus, high discipline and transformation spirit • Efficiency increase • Digitalisation • Agility • Simplification • Automation • FTE management 2020 2021 Q1 -33 -27 Q2 -31 -40 -99 Q3 -24 -32 Q4 -41 ∑ CHF -129 mn CHF > -100 mn 16
Slide 17: Swisscom Switzerland: financial results
2 Swisscom Switzerland: financial results OpFCF proxy up thanks to lower CAPEX Net revenue in CHF mn (YOY) EBITDA in CHF mn (YOY) OpFCF proxy in CHF mn 6'150 Net revenue YOY +0.3% Q3 2021 Others1 498 (+8) Wholesale EBITDAaL4 822 -18 EBITDA2 567 (+41) Hardware 2'676 -0.1% (-1) Lease expense3 CAPEX -3
Slide 18: Fastweb: commercial update
2 Fastweb: commercial update Fastweb pushes focus on quality offerings for Consumer and Enterprise customers Consumer Enterprise and Wholesale Infrastructure Pursuing a distinctive proposition More value for customers Rollout on track • UBB subs with growth despite increasing • Fastweb further stren
Slide 19: Fastweb: Consumer performance
2 Fastweb: Consumer performance Solid UBB and Mobile growth, extracting value from bundling Fixed Mobile ARPU, churn, FMC penetration Broadband subs in k (YOY change) Mobile subs in k (YOY change) Churn benefit ARPU uplift (EUR/month, YOY) (YOY) +2% +23% 2’768 2’316 2’704 1’889 • Steady growth: +25%
Slide 20: Fastweb: Enterprise and Wholesale performance
2 Fastweb: Enterprise and Wholesale performance Growth confirmed Enterprise Wholesale Revenues in EUR mn (YOY) Revenues in EUR mn 1 (YOY) +2.2% flat • Core services: 61 61 YOY increase driven by growth 12 7 Other 231 of wholesale 226 • +2% YOY driven lines and IRU- +10% Core 49 54 services related r
Slide 21: Fastweb: financial results
2 Fastweb: financial results Continuous growth in line with guidance Net revenue in EUR mn (YOY) EBITDA in EUR mn (YOY) OpFCF proxy in EUR mn YOY 1’755 Net revenue Q3 2021 EBITDA2 (+5%) 602 (+6%) +15 187 (+18) Wholesale1 EBITDAaL4 205 218 40 (+1) Lease expense3 -4 (+7%) CAPEX -138 13 (+0) OpFCF prox
Slide 22: Financial results
3 Financial results 22
Slide 23: Group revenue and changes by segments
3 Group revenue and changes by segments Swisscom's top line with solid YOY development: Q3 flat and YTD +1.7% Q1 Q2 Q3 +9 +1 +1 +41 +40 +10 +13 +20 +66 +74 +25+11 +6 +2 +10 -1 -19 -9 -2 -3 -3 -3 -7 +2 in CHF mn Underlying +107 (+1.3%) +87 +35 +142 Swisscom Switzerland +20 (+0.3%) (+4.9%) +0 Q1: +15,
Slide 24: Swisscom Switzerland: revenue changes and service revenue dynamics
3 Swisscom Switzerland: revenue changes and service revenue dynamics Overall inline with previous quarters - Q3 with slightly higher RGU mix effects in B2C and price pressure in B2B 9M 21 revenue changes by business drivers Service revenue evolution and Q3 21 changes in CHF mn Q1 2020 Q2 Q3 Q4 Q1 20
Slide 25: Group EBITDA and changes by segments
3 Group EBITDA and changes by segments Another quarter with solid underlying EBITDA evolution Q1 Q2 Q3 +45 +6 +2 +21 +6 +10 +10 +16 +10 +2 +96 +23 +20 +1 +4 +4 -4 +13 -12 -17 -1 -8 +0 -29 in CHF mn Underlying +89 (+2.7%) Q1: +9, Q2: +51; Q3: +29 +109 Swisscom Switzerland +49 (+1.8%) +20 Q1: +7, Q2:
Slide 26: EBITDA Swisscom Switzerland with OPEX changes and dynamics
3 EBITDA Swisscom Switzerland with OPEX changes and dynamics Operational excellence initiatives to lower indirect cost on a recurring base by CHF -100mn on track +1 +13 +8 +2 +15 +4 +25 +25 +28 +7 +9 +15 +4 +1 -0 -9 -14 -8 -7 -18 -22 -30 Q1 Q2 Q3 -36 -19 in CHF mn Underlying +49 (+1.8%) direct cost
Slide 27: Capital expenditures
Capital expenditures 3 Invest in critical infrastructure of the future Swisscom Switzerland 9M 2021 in CHF mn Q3 21 9M 21 Copper access, back- Group 522 1'605 bone & transport infrastructure Fibre (FTTx) CAPEX (-35, -6.3% YOY) (-27, -1.7% YOY) 24% 33% Swisscom 372 1'125 Switzerland (-38, -9.3% YOY)
Slide 28: Free cash flow
3 Free cash flow Lower YOY primarily due to different tax payment schedule compared to last year in CHF mn 3’465 -226 3'239 -1'605 1 2 3 -283 -8 1'176 1'634 9M 21 -89 -22 -56 Δ +109 0 +109 +27 +136 -27 -68 +3 -109 -26 -91 3’356 -226 3'130 -1'632 -174 +18 1'267 9M 20 1'498 -62 +46 -59 Lease OpFCF Cha
Slide 29: Net income
3 Net income EPS +31% YOY thanks to positive EBIT evolution (+7.7%) and positive one-offs in CHF mn 1 2 tax rate 1 13.4% EPS 29.63 9M 21 3’465 -1'614 -211 1'640 -46 -33 217 -5 -237 1'536 -1 1'535 Δ +109 +2 +6 +117 +4 +1 +246 -9 +11 +370 -4 +366 tax rate 1 EPS 17.5% 9M 20 22.57 3’356 -1'616 -217 1'52
Slide 30: Guidance 2021 adjusted
3 Guidance 2021 adjusted Primarily reflecting effects from Salt partnership rollout reported sofar2 adjusted in CHF mn figures 2020 outlook 2021 outlook 20213 Splits into: CHF ~8.6bn for Swisscom w/o Fastweb + Revenue 11'100 ~11'300 ~11'200 EUR ~2.4bn for Fastweb CHF 3.5-3.6bn for Swisscom w/o Fastw
Slide 31: Questions & answers
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Slide 32: Appendix
Appendix 32
Slide 33: Key financials
Key financials Reported and underlying revenue and EBITDA in CHF mn 2020 2021 Change Q/Q Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue, reported 2'737 2'706 2'758 2'899 11'100 2'803 2'780 2'760 +66 +74 +2 Currency effect -13 -20 -2 -13 -20 -2 Underlying change +53 +54 +0 EBITDA, reported 1'111 1'09
Slide 34: Swisscom Switzerland
Swisscom Switzerland Wireless ARPU and IFRS15 adjustments Swisscom Switzerland Swisscom Switzerland 47 44 45 43 45 43 44 43 43 42 43 42 42 42 36 35 35 34 36 35 35 34 35 34 34 34 34 34 in CHF in CHF Q1 20 Q2 Q3 Q4 Q1 21 Q2 Q3 Q1 20 Q2 Q3 Q4 Q1 21 Q2 Q3 Blended (reported) Blended (IFRS15) Postpaid (re
Slide 35: Residential Customers (B2C)
Residential Customers (B2C) Segment reporting as per 30.09.2021 Q3 2021 Q3/Q3 30.09.2021 YoY Net revenue in MCHF 1) 1'150 1.1% 3'423 1.4% Net revenue increased Direct costs in MCHF -287 7.5% -821 9.5% driven by higher handset Indirect costs in MCHF 2) -160 -14.9% -494 -11.3% sales, however service C
Slide 36: Business Customers (B2B)
Business Customers (B2B) Segment reporting as per 30.09.2021 Q3 2021 Q3/Q3 30.09.2021 YoY Net revenue in MCHF 1) 748 -1.3% 2'285 -1.3% Net revenue decreased (-1.3%), Direct costs in MCHF -199 1.5% -599 0.8% the decrease in service revenue Indirect costs in MCHF 2) -226 1.8% -698 -1.0% (-4.7%) due to
Slide 37: Wholesale
Wholesale Segment reporting as per 30.09.2021 Q3 2021 Q3/Q3 30.09.2021 YoY External revenue in MCHF 166 -1.2% 498 1.6% Intersegment revenue in MCHF 100 -9.1% 241 1.7% Net revenue in MCHF 266 -4.3% 739 1.7% Revenue from external Direct costs in MCHF -126 -10.0% -326 0.6% customers up by +1.6% due to
Slide 38: Infrastructure & Support Functions
Infrastructure & Support Functions Segment reporting as per 30.09.2021 Q3 2021 Q3/Q3 30.09.2021 YoY Net revenue in MCHF 18 -14.3% 57 -9.5% Contribution margin 2 Direct costs in MCHF -2 -33.3% -5 -28.6% deteriorated by -2.5% as it Workforce expenses in MCHF -202 2.0% -635 0.6% was affected by Mainten
Slide 39: Fastweb
Fastweb Segment reporting as per 30.09.2021 Q3 2021 Q3/Q3 30.09.2021 YoY Consumer revenue in MEUR 282 0.0% 856 1.4% Enterprise revenue in MEUR 231 2.2% 712 7.7% All customer segments Wholesale revenue in MEUR 1) 61 0.0% 187 10.7% report year-to-date a Net revenue in MEUR 1) 574 0.9% 1'755 4.8% reven
Slide 40: Other
Other Segment reporting as per 30.09.2021 Q3 2021 Q3/Q3 30.09.2021 YoY External revenue in MCHF 110 -3.5% 326 -0.9% Net revenue in MCHF 1) 265 -1.1% 770 2.0% OPEX in MCHF 2) -212 0.0% -634 2.8% Net revenue up by +2.0% EBITDA in MCHF 53 -5.4% 136 -1.4% mainly due to higher EBITDA margin in % 20.0% 17
Slide 41: Investor contact
Investor contact Bild Louis Schmid Tamara Hackl Head Investor Relations Investor Relations Manager louis.schmid@swisscom.com tamara.andenmatten@swisscom.com +41 58 221 62 79 +41 58 221 12 79 41
Slide 42: Cautionary statement
Cautionary statement Regarding forward looking statements • "This communication contains statements that constitute "forward-looking statements". In this communication, such forward-looking statements include, without limitation, statements relating to our financial condition, results of operations