Slide 1: Same history But Shaping the future – Results Q2 2012
“Same history But Shaping the future” Results Q2 2012 Investor & Analyst Presentation 8 August 2012
Slide 2: Agenda
Agenda “Same history – But- Shaping the future” 2 1. Same history Carsten Schloter, CEO – Q2 results fully in-line with Q2 last year 2. But – Cannibalisation of rated voice and SMS continues 3. Shaping the future – Complete overhaul of pricing introduced to make cannibalisation irrelevant 4. Fastweb
Slide 3: 1. Same history - Summary
1. Same history - Summary 3 Change in CHF mm, total Swisscom Group, comparable * Q1/Q1 Q2/Q2 H1/H1 Δ% Net revenue -8 -10 -18 -0.3% EBITDA +10 +11 +21 +0.9% Comparable key results fully in line with last year * w/o FX, hubbing (Fastweb), extra termination & pension fund cost
Slide 4: 1. Same history - Group revenues
1. Same history - Group revenues Change YoY (1st HY 2011 versus 1st HY 2012) in CHF mm, total Swisscom Group 4 Fastweb: -82 Swisscom w/o Fastweb: -19 ∑ Q1: -36 -16 +0 +92 -17 -62 -15 -7 +1 -60 Q2: -17 -14 +1 +86 -33 -58 -10 +3 +1 -41 Sum of Bundles+1P revenue +8 -101 +1 +178 -50 -120 +2 -53 -30 -25
Slide 5: 1. Same history - Group EBITDA
1. Same history - Group EBITDA Change YoY (1st HY 2011 versus 1st HY 2012) in CHF mm, total Swisscom Group 5 Fastweb: -11 Swisscom w/o Fastweb: -23 ∑ Q1: -9 +1 - 23 +16 - 7 +0 - 22 Q2: -6 +3 - 17 - 6 +14 +0 - 12 Swisscom Switzerland, comparable - 34 +10 +7 +0 - 15 +4 2,270 -40 overall 2,236 Terminat
Slide 6: 2. But – Cannibalization of wireline voice volumes
2. But Cannibalization of rated volumes continues Wireline voice, volumes 6 Swisscom Switzerland change Q2/Q2 2'434 in Total - 3% 2'269 2'297 2'243 2'162 2'118 2'158 2'061 2'003 1'989 in Bundles mm min. 316 353 383 417 473 459 +30% 1P: -10% 2'434 2'269 2'297 2'162 1'927 1'708 1'620 1'701 1'685 1'530
Slide 7: 2. But – Wireless voice and SMS volumes
2. But Cannibalization of rated volumes continues 7 Wireless voice volumes Swisscom Switzerland change Q2/Q2 mm min. 1'700 in Total -3% 1'643 1'630 1'669 1'675 1'642 1'677 1'654 1'633 1'589 59 60 60 101 126 141 in Bundles +>100% 970 955 888 912 949 977 923 880 850 839 1P rated - 8% 640 673 653 745 7
Slide 8: 2. But – Cannibalization of rated revenues
2. But Cannibalization of rated revenues continues 8 … as a result, revenues 1p wireless SMS & voice traffic*) declining change Q2/Q2 CHF mm 477 491 451 460 453 441 105 424 99 404 - 15% SMS 97 100 95 373 92 369 93 82 71 68 378 386 Voice *) 354 360 331 349 358 322 298 305 Q1/10 Q2/10 Q3/10 Q4/10 Q1/1
Slide 9: Growth in bundle revenues compensates decline in traffic & access
2. But Growth in revenues from Bundles can still compensate decline in traffic & access 9 -5mm YoY 1st HY YoY Swisscom CHF mm +8mm +13mm YoY Switzerland 1‘650 1‘682 1‘648 1‘653 1‘682 1‘642 1‘648 1‘600 1‘614 1‘627 Relative Relative share share 712 724 669 632 631 773 803 826 776 696 38.3% 1P Traffic
Slide 10: Smartphone and tablet penetration change consumer behaviour
3. Shaping the future Smartphone and tablet penetration (i.e. Apps) massively change consumer behaviour 10 Smartphone share handset sales 69% 60% 61% 46% Now 1 out of 2 devices in use are 36% smartphones, capable of circumventing 32% the traditional core business of telco’s: classic rated text and (
Slide 11: 3. Shaping the future – customer needs
3. Shaping the future Customers increasingly desire 11 Value for money: Classic rated products no longer an alternative for free-to-use alternatives Predictability of bill: Cost of (rapidly growing) data consumption increasingly unpredictable as customer has no idea how much data is being used (also
Slide 12: Speed is the only price criterion
3. Shaping the future – speed is the only price criterion New mobile price plans from 25 June 2012: 12 -> Offering 5 plans with all-inclusive voice/SMS/data, designed for the following usage profiles infinity XS infinity S infinity M infinity L infinity XL Voice and SMS Mail w/o attachment + social
Slide 13: New price plans compared
3. Shaping the future – new price plans compared Competitors already reacted with flat rates, however do not differentiate on speed. New Swisscom pricing is competitive (less premium than in past), while taking 13 pressure away from the historical ARPU erosion Low usage Medium usage High usage 200.-
Slide 14: First customer response
3. Shaping the future – first customer response 14 Status after 1 month of operation (per end of July 2012): Immediate pick up Growing customer base High response rate 275k 25-30k 22% 10-15% 7% ~1pp. infinity penetration new infinity increase in pen. infinity former customers within postpaid cust. /
Slide 15: First conclusions
3. Shaping the future - first conclusions Complete overhaul of (mobile) pricing 15 was necessary to make cannibalisation Thoughts going forward irrelevant • Price differentiation on speed only • Fine tune plans when necessary to − Tariff plans (all you can eat) meet (evolving) customer needs deliver
Slide 16: 4. Fastweb – results stable (revenues)
4. Fastweb – results stable FASTWEB quarterly revenues (in EUR mm) 16 Total revenues without - 6% +5% Hubbing stable YoY at 209 € 798 mm 191 194 196 186 187 182 182 183 186 182 183 -13% 61 60 58 52 55 52 22 21 23 21 31 24 +14% 39 39 31 32 27 28 -28% Q1 Q2 Q1 Q2 Q1 Q2 Q1 Q2 Q1 Q2 Q1 Q2 2011 2012 2011
Slide 17: 4. Fastweb – EBITDA, CAPEX, FCF
4. Fastweb – results stable € mm 17 450 123 124 In Q2 EBITDA growth 121 109 107 99 vs. PY is confirmed, EBITDA with margin increase from 28.0% to 28.8% 1) 1) Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 Q1 2012 Q2 2012 ./. 448 132 119 117 98 99 112 CAPEX Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011 Q1 2012 Q2 2012
Slide 18: 4. Fastweb – net adds and customer base
4. Fastweb – results stable 18 Net Adds BB excl. Sky Customer Base BB 1) (000) (000) 6 1 5 36 3 -7 1.536 1.544 1.560 1.595 1.654 1.673 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Net Adds Sky (excl. Migrators) • Broadband market slowdown confirmed
Slide 19: Agenda
Agenda “Same history – But- Shaping the future” 19 1. Same history Carsten Schloter, CEO – Q2 results fully in-line with Q2 last year 2. But – Cannibalisation of rated voice and SMS continues 3. Shaping the future – Complete overhaul of pricing introduced to make cannibalisation irrelevant 4. Fastwe
Slide 20: 5. Segmental results: residential customers
5. Segmental results: residential customers 20 Financials and operational data 6m 2012 30.06.2012 YOY • Net revenue on level prior year (-0.1%). 1) Voice line loss and ongoing price erosion is fully Net revenue in MCHF 2'499 -0.1% compensated by increasing number of bundles Direct costs in MCHF -561
Slide 21: 5. Segmental results: Small & Medium-sized Enterprises
5. Segmental results: Small & Medium-sized Enterprises 21 Financials and operational data 6m 2012 30.06.2012 YOY • Net revenue up by +1.8%. Net revenue in MCHF 1) 581 1.8% Ongoing growth of wireless and broadband subscribers as well as strong development of Direct costs in MCHF -68 -5.6% bundle prod
Slide 22: 5. Segmental results: corporate business
5. Segmental results: corporate business 22 Financials and operational data 6m 2012 30.06.2012 YOY • Revenue slightly down by -1.2%. 1) Net revenue in MCHF 906 -1.2% Direct costs in MCHF -198 -6.2% • Ongoing increase of wireless data is overcompensated by wireline business (price Indirect costs in M
Slide 23: 5. Segmental results: wholesale
5. Segmental results: wholesale 23 Financials and operational data 6m 2012 30.06.2012 YOY • Net revenue decreased by 28 MCHF Revenue from external customers in MCHF 300 -4.5% - lower roaming rates Intersegment revenue in MCHF 180 -7.2% - ongoing substitution towards full access Net revenue in MCHF 4
Slide 24: 5. Segmental results: network and support functions
5. Segmental results: network and support functions 24 Financials and operational data 6m 2012 30.06.2012 YOY • Indirect costs up by 19 MCHF mostly driven by Personnel expenses in MCHF -340 5.3% higher termination benefits and higher pension Rent in MCHF -92 4.5% cost. Higher costs for maintenance (
Slide 25: 5. Segmental results: Fastweb
5. Segmental results: Fastweb 25 Financials and operational data 6m 2012 30.06.2012 YOY • Revenues decreased by 2.5% YoY Consumer revenue in MEUR 364 -5.5% – Shortfall in Consumer revenues driven by Enterprise revenue in MEUR 379 2.7% reduction in interconnection rates and by 1) competitive pressure
Slide 26: 5. Segmental results: Other
5. Segmental results: Other 26 Financials and operational data 6m 2012 30.06.2012 YOY • External revenue down by 4 MCHF (-0.9%): Swisscom IT Services in MCHF 268 -2.2% – IT Services down by 6 MCHF, mainly due to Swisscom Participations in MCHF 161 3.2% lower project business revenue Hospitality Serv
Slide 27: 6. Group results: CAPEX breakdown
6. Group results: CAPEX breakdown 27 Consolidated CAPEX increase YoY (+CHF 108mm) due to further broadband rollout at SCS (in CHF mm) 1st HY Further CAPEX increase for the 2012 666 275 76 1‘017 broadband infrastructure at Swisscom Switzerland 1st HY 603 249 57 909 2011 Swisscom Switzerland Fastweb O
Slide 28: 6. Group results: P&L breakdown
6. Group results: P&L breakdown 28 2‘236 -963 in CHF mm tax rate 19.3% EPS CHF 1‘273 -124 -13 17.78 +14 -222 928 -7 921 (prior (2‘270) (-944) (1‘326) (-109) (-27) (+9) (-237) (962) (-8) (954) (EPS CHF year) tax rate 18.42) 19.8% SCM net Other fin. EBITDA Minorities Net interest EBIT Net income incom
Slide 29: 6. Group results: operating free cash flow breakdown
6. Group results: operating free cash flow breakdown 29 -1'017 Increase in NWC of 214 CHF mm (more tied up capital) YTD June 2012 2'236 -50 -88 -6 -70 -26 0 0 0 0 0 0 979 o/w Δ pension obligations: -23 EBITDA CAPEX Receivables Payables Inventory Other NWC Others OpFCF -34 -108 +152 +31 -9 -103 +39 -
Slide 30: 7. Outlook 2012
7. Outlook 2012 FX assumption changed from 1.23 CHF/€ to 1.20 now, leading to 30 mildly lower revenue yet same EBITDA as originally targeted CHF bln 2011 actual 2012 target Exchange rate CHF/€ 1.232 1.20 Revenues 11.467 11.3 EBITDA 4.584 4.4 CAPEX 2.095 2.2 (excl. cost for mobile spectrum) Dividend
Slide 31: Q&A
31 Q&A
Slide 32: Attachment: Market volumes digital and analogue TV
Attachment, background information 32 Market volumes (000) digital and analogue TV 4‘262 Analogue + Digital TV 4‘159 3‘992 3‘755 3‘537 3‘373 Total Analogue TV * 2‘662 Market Total Digital TV * 2‘401 share: 1‘920 28 % Satellite/Terrestrial * 1) 1‘475 20 % CATV / Net Integrators * Market 1‘180 0.5 % S
Slide 33: Attachment: 1P access and bundle revenues
Attachment, background information 1P (single play) wireless access revenues increasing 33 CHF mm +26 mm YoY 259 262 261 276 285 223 250 197 210 215 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 1P wireline access revenues 1) declining + Swisscom Switzerland CHF mm 567 560 549 -36 mm Y
Slide 34: Attachment: RGU
Attachment, background information, RGU Access Lines/Subs/Products (000) 34 YTD, (Change to 31.06.2011 in brackets) Number of Fixed Voice products TV & Access Broadband Mobile in Bundle Sum Δ 1P Single Play 245 (+29) 2,465 (-279) 995 (-111) 5,885 (+59) 1 9,590 (-302) (-3.1%) 2Play 237 (+21) 2 474 (+
Slide 35: Attachment: ARPU
Attachment, background information, ARPU 35 YTD, (Change to 31.06.2011 in brackets) TV (incl. Number Weighted VOD and of average per 1,2) Pay per Fixed Voice Broad- 1) 2) products underlying in Bundle product View & Access band Mobile 1P Single Play 27 (+3) 53 (+0) 38 (-1) 43 (-2) 1 44 (-2) 2Play 11
Slide 36: Attachment: Revenues (RGU x ARPU)
Attachment, background information, Revenues (RGU x ARPU) Net revenues (CHF mm) 36 YTD, (Change to prior year in brackets) Fixed Voice TV & Access Broadband Mobile Sum Δ 1P Single Play 37 (+6) 801 (-92) 424 (-34) 1,488 (-50) 2,750 (-170) (-5.8%) 2Play 158 (+10) 158 (+178) (+51%) Bundles 3Play 270 (+
Slide 37: Attachment: Handsets & SACs
Attachment, background information, Handsets & SACs Smartphone share 69% 37 Handsets 61% in ‘000 425 468 368 322 307 359 328 312 300 285 SAC/SRC 147 CHF mm 132 113 109 113 111 117 95 102 101 Corporate Segments 111 127 93 92 94 94 98 85 Residential Segment 80 87 -7mm YoY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2