Swisscom Ag · SIX:SCMN
Swisscom — Swisscom Ag Ittigen R/Shs — Q2 2023 Earnings Presentation
40 slides from Swisscom's earnings presentation, Aug 3, 2023
Slide 1: Q2 2023 results
Analyst & investor presentation Q2 2023 results 03 August 2023
Slide 2: Agenda
Agenda Introduction Louis Schmid, Head of Investor Relations 1 Highlights Christoph Aeschlimann, CEO 2 Business review Christoph Aeschlimann, CEO 3 Financial results Eugen Stermetz, CFO Q&A Appendix 2
Slide 3: Highlights
1 Highlights 3
Slide 4: Q2 achievements
1 Q2 achievements Another successful quarter Positive EBITDA Telco service revenue Successful IT transaction. development. evolution as anticipated. Position as a leading IT service provider in Switzerland further strengthened FY 2023 guidance reiterated Focus on value The most sustainable Fastweb w
Slide 5: Q2 market performance
1 Q2 market performance Satisfying with growing mobile and broadly stable fixed RGU base in Switzerland and Italy Swisscom Switzerland Fastweb Net adds reported in k +40 +144 +112 Fixed +3 +30 +40 +34 +9 Q1 23 Q2 23 Q1 23 Q2 23 -5 -9 -6 -21 -10 -13 -31 -21 -30 Postpaid Broadband TV Fixed voice Whole
Slide 6: Q2 financial performance
1 Q2 financial performance Positive EBITDA development Overview of key financials EBITDA and OpFCF proxy development in CHF mn Q2 2023 H1 2023 in CHF mn 1’139 Underlying +14 (+1.2%) +71 (+8.1%) Revenue 2'703 5'450 1’054 +3 +5 +25 (-0.4% YOY) (-0.3% YOY) -19 EBITDA 1'139 2'303 (+8.1% YOY) (+5.1% YOY)
Slide 7: Business review
2 Business review 7
Slide 8: Swisscom's business priorities in a nutshell
2 Swisscom's business priorities in a nutshell Successful development thanks to consequent execution along strategic objectives Invest in NPS Deliver on leadership in Switzerland. Telco cost savings. Crucial to stabilise Telco service revenue development Key to maintain EBITDA margin of Swisscom Swi
Slide 9: Swisscom Switzerland B2C - Value matters and pays off
2 Swisscom Switzerland B2C - Value matters and pays off No general price increase1 until YE 2024 in favour of price/value perception Clear NPS market leader Constantly invest in Swisscom customers across most metrics product innovation with high loyalty #1 position extended Key for value perception
Slide 10: Swisscom Switzerland B2C - Maintain strong market position
2 Swisscom Switzerland B2C - Maintain strong market position Successful with flagship offering blue and 2nd brand wingo blue penetration FMC HH penetration 2nd/3rd brands share RGU base H1 23 Flagship share constantly increasing Reaching a plateau Successful multi-brand approach Satisfying developme
Slide 11: Swisscom Switzerland B2C - Continuously drive ARPU optimisation
2 Swisscom Switzerland B2C - Continuously drive ARPU optimisation Focus on value Defend ARPU levels Selective tuning Smart promotional Drive cross-/upselling sustainably of offerings behaviour opportunities further Brand shift impacts postpaid value Including price adjustments Only price follower if
Slide 12: Swisscom Switzerland B2B - Successful in dynamic environment
2 Swisscom Switzerland B2B - Successful in dynamic environment Swisscom's position as a leading IT service provider in Switzerland further strengthened Telco service business as anticipated IT business continuously growing Revenue Revenue in CHF mn in CHF mn -13 +7 • In line with Q1 (CHF -12mn), • G
Slide 13: Swisscom Switzerland Networks - Keep competitive edge
2 Swisscom Switzerland Networks - Keep competitive edge Coverage and service reliability of next generation networks increasing thanks to constant high investments Wireless Wireline Pop coverage HH coverage 1 99% 99% 99% 99% 89% 91% 77% 81% 65% 76% 39% 44% 30.06.2022 30.06.2022 30.06.2023 30.06.2023
Slide 14: Swisscom Switzerland Financials
2 Swisscom Switzerland Financials Underlying EBITDA improved and OpFCF proxy up despite higher investments Revenue EBITDA OpFCF proxy in CHF mn (YOY) in CHF mn (YOY) in CHF mn (YOY) 4'044 Revenue Underlying Q2 23 -0.6% 903 1'846 263 (0) +0.3% +0.9% EBITDA EBITDAaL 4 858 (+95) 392 (-15) 1'856 Reporte
Slide 15: Fastweb - Successful Q2
2 Fastweb - Successful Q2 Enhancing value in UBB Consumer and growing in Mobile, Enterprise and Wholesale 10 years Consumer UBB and mobile Strong Enterprise of continued growth. customer base growing. orderbook: +6% YOY. Top line increasing thanks to attractive Q2 growing across all metrics: +115k R
Slide 16: Fastweb Consumer - Grow mobile base with attractive offerings
2 Fastweb Consumer - Grow mobile base with attractive offerings Continuous value maximisation within broadband customer base Broadband Mobile FM convergence BB subs in k (YOY) Mobile subs in k (YOY) ARPU uplift Churn benefit in Q2 23 in Q2 23 -3% +19% • Focus on value 2’712 2’631 strategy: pricing +
Slide 17: Fastweb B2B and Wholesale - Keep on growing
2 Fastweb B2B and Wholesale - Keep on growing Successful execution of recent customer deals Enterprise Wholesale Revenue in EUR mn (YOY) Revenue in EUR mn 1 (YOY) +6% +6% • Core services: growth 266 • Growth of +6% YOY driven by 71 of +13% YOY driven by 250 large accounts and PA sector 67 1 Other in
Slide 18: Fastweb Financials
2 Fastweb Financials Underlying results as expected Revenue EBITDA OpFCF proxy in EUR mn (YOY) in EUR mn (YOY) in EUR mn (YOY) 223 Underlying Q2 23 411 1’251 Revenue +2% +2% EBITDA EBITDAaL 3 196 (-7) (+4%) 144 (+14) Wholesale CAPEX -144 (-2) 398 Reported (-1%) EBITDA 1 OpFCF proxy 52 (-9) 628 (+4%)
Slide 19: Financial results
3 Financial results 19
Slide 20: Group revenue
3 Group revenue Underlying top line positive thanks to growing Fastweb in CHF mn Q1 Q2 0 +1 0 -1 +28 +25 +1 +5 -9 -1 -1 -24 -23 -7 -10 -18 Underlying +30 (+0.5%) Swisscom Switzerland -23 (-0.6%) +53 Q1: -12, Q2: -11 (+4.3%) 0 0 -17 (-0.3%) -4 -47 -18 -1 5'467 5'450 1 2 3 H1 22 B2C Fastweb Currency H
Slide 21: Swisscom Switzerland revenue
3 Swisscom Switzerland revenue Flattish top line development. Telco service revenue evolution as anticipated H1 23 revenue changes by business drivers Telco service revenue evolution in CHF mn in CHF mn Q1 22 Q2 Q3 Q4 Q1 23 Q2 Swisscom Switzerland -23 (-0.6%) 5 7 -4 -2 -7 -5 -3 -10 B2C -17 -2 -12 -1
Slide 22: Group EBITDA
3 Group EBITDA Swisscom Switzerland and Fastweb with higher underlying contributions +2 +11 +19 in CHF mn +2 +24 +25 +71 +85 +3 +5 -6 -19 +27 Q1 Q2 -7 -5 -1 -5 -7 Underlying +48 (+2.1%), Q1: +34, Q2: +14 +64 +112 Swisscom Switzerland +16 (+0.9%) (+5.1%) Q1: +13, Q2: +3 +49 +13 -12 +14 +8 (+2.0%) +1
Slide 23: Swisscom Switzerland EBITDA
3 Swisscom Switzerland EBITDA Indirect cost base further reduced thanks to operational excellence in CHF mn Q1 Q2 +9 +27 +13 +1 +92 +95 0 0 +3 0 +13 -12 -11 -6 -2 -6 Direct cost +4 (-0.5%) Indirect cost +35 (-2.5%) +92 +108 (+6.2%) +40 -5 0 +12 -23 -8 1'856 1'748 1 2 H1 22 Goods Telco H1 23 Revenue
Slide 24: Capital expenditures
3 Capital expenditures Continued high investments in the next generation networks and digitalisation of Switzerland CAPEX overview CAPEX Swisscom Switzerland H1 23 in CHF mn Q2 23 H1 23 Wireless • Due to ongoing 5G+ coverage CHF 137mn extension CAPEX at prior's year level Group 568 1'113 (CHF +3mn Y
Slide 25: Free cash flow
3 Free cash flow High tax payments in 2022 primarily explain FCF improvement this year in CHF mn H1 23 2’303 -143 2'160 -1'113 1'047 -346 -17 -23 -201 2 462 Δ +112 +3 +115 -60 +55 +8 -50 -6 +143 +19 +169 1 2 3 H1 22 2’191 -146 2'045 -1'053 992 -354 +33 -17 -344 -17 293 EBITDA Lease EBITDAaL CAPEX Op
Slide 26: Net income
3 Net income EPS increase (+8%) thanks to EBITDA growth overcompensating lower financial result in CHF mn tax rate 1 19.3% EPS 16.37 H1 23 2’303 -1'056 -132 1'115 -64 0 -203 848 0 848 Δ +112 +2 +2 +116 -51 +1 -3 +63 +1 +64 1 tax rate 1 20.3% EPS 15.13 H1 22 2’191 -1'058 -134 999 -13 -1 -200 785 -1 7
Slide 27: FY 2023 guidance
3 FY 2023 guidance Confirmed 2023 4 in CHF bn 2022 Splits into: outlook Splits into: 1 CHF 8.6bn for Switzerland 3 CHF ~8.6bn for Switzerland Revenue 11.051 EUR 2.5bn for Fastweb 11.1-11.2 EUR 2.5-2.6bn for Fastweb CHF 3.5bn for Switzerland EBITDA2 4.406 EUR 0.9bn for Fastweb 4.6-4.7 CHF 3.7-3.8bn f
Slide 28: Q&A
Q&A 28
Slide 29: Appendix
Appendix 29
Slide 30: Key financials
Key financials Underlying revenue and EBITDA in CHF mn 2022 2023 Change Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue 2'754 2'713 2'712 2'872 11'051 2'747 2'703 -7 -10 Currency effect 24 23 +24 +23 Underlying +17 +13 EBITDA 1'137 1'054 1'150 1'065 4'406 1'164 1'139 +27 +85 Provisions for regulatory
Slide 31: Residential Customers
Residential Customers Segment reporting as per 30.06.2023 in MCHF Q2 2023 Q2/Q2 30.06.2023 YOY Revenue 1) 1'099 -0.8% 2'235 -0.2% Direct costs -199 -2.0% -429 1.4% Flattish H1 revenue (-0.2%). 2) Indirect costs -159 -9.1% -317 -6.8% Nearly stable Telco service EBITDA 741 1.5% 1'489 0.9% revenue and
Slide 32: Residential Customers
Residential Customers Overview of Q2 operational KPIs Wireless Wireline Q2 22 Q2 23 Q2 22 Q2 23 RGUs in k Penetration rates RGUs in k Penetration rates 3'169 3'313 1'733 1'724 1'513 1'483 80% 48% 49% 65% 30% 8% Postpaid 2nd/3rd blue FMC HHs 2 2nd/3rd blue FMC HHs 4 Broadband TV brands 1 brands 3 Chu
Slide 33: Business Customers
Business Customers Segment reporting as per 30.06.2023 in MCHF Q2 2023 Q2/Q2 30.06.2023 YOY Revenue 1) 763 -0.4% 1'535 -1.4% H1 revenue decreased (-1.4%), Direct costs -177 -1.1% -358 -3.5% driven by Telco service revenue Indirect costs 2) -252 1.6% -498 0.6% (CHF -25mn, primarily price EBITDA 334 -
Slide 34: Wholesale
Wholesale Segment reporting as per 30.06.2023 in MCHF Q2 2023 Q2/Q2 30.06.2023 YOY H1 revenue nearly stable Revenue 1) 136 0.0% 270 0.4% (+0.4%). Higher revenue Direct costs -55 -1.8% -104 0.0% from wholesale services Indirect costs 2) 5 n.m. - -100.0% compensated by lower EBITDA 86 16.2% 166 7.1% r
Slide 35: Infrastructure & Support Functions
Infrastructure & Support Functions Segment reporting as per 30.06.2023 in MCHF Q2 2023 Q2/Q2 30.06.2023 YOY H1 indirect costs and Revenue 1) 19 5.6% 38 5.6% H1 EBITDA improved Direct costs -2 0.0% -4 0.0% substantially due to an Indirect costs 2) -264 -22.8% -512 -15.7% increase of regulatory EBITDA
Slide 36: Fastweb
Fastweb Segment reporting as per 30.06.2023 in MEUR Q2 2023 Q2/Q2 30.06.2023 YOY Consumer 291 1.4% 580 1.4% Consumer revenue up in H1 by Enterprise 266 6.4% 527 6.0% 1) +1.4%, mainly as a result of the Wholesale 71 6.0% 144 10.8% 1) increasing wireless customer base. Revenue 628 4.0% 1'251 4.3% Dire
Slide 37: Other
Other Segment reporting as per 30.06.2023 in MCHF Q2 2023 Q2/Q2 30.06.2023 YOY External revenue 104 -1.9% 204 -1.0% H1 net revenue on level 1) Revenue 258 -0.4% 501 0.2% of prior year. Direct costs -21 10.5% -40 17.6% 2) Indirect costs -216 8.5% -406 6.0% EBITDA 21 -48.8% 55 -33.7% H1 EBITDA down (-
Slide 38: Pension cost and cash payments
Pension cost and cash payments Higher discount rate for IFRS pension liabilities impacts EBITDA 2023 but not cash payments reported estimate estimate in CHF mn H1 22 H1 23 YOY FY 22 FY 23 YOY Segments' pension cost 138 137 -1 273 273 0 Pension reconciliation 30 -19 -49 53 -37 -90 Operating pension c
Slide 39: 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
Slide 40: Investor contact
Investor contact Louis Schmid, Head of Investor Relations louis.schmid@swisscom.com +41 58 221 62 79 www.swisscom.ch/ir 40
Swisscom Ag Ittigen R/Shs — Q2 2023 Earnings Presentation on 6ix