Swisscom Ag · SIX:SCMN
Swisscom — Swisscom Ag Ittigen R/Shs — Q3 2023 Earnings Presentation
42 slides from Swisscom's earnings presentation, Nov 2, 2023
Slide 1: Q3 2023 results
02 November 2023 1 Analyst & investor presentation Q3 2023 results 02 November 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: Q3 achievements
1 Q3 achievements Solid quarter - financially and commercially Sound financials. Strongest brand 1 Entertainment Q3 with increased top line (+1.5%), in Switzerland. on next level. EBITDA (+2.1%) and best margin Win of broadband, shop and Launch of new TV box (42.7%) over last 7 quarters service apps
Slide 5: Q3 market performance
1 Q3 market performance Operational trends confirmed. RGU base broadly stable in Switzerland and growing in Italy Swisscom Switzerland Fastweb Net adds reported in k Fixed +29 +144 +112 +40 +47 +32 +85 +40 +30 +34 +9 +1 Q1 23 Q2 Q3 -3 Q1 23 Q2 Q3 -5 -8 -6 -10 -13 -9 -18 -21 -22 -21 -30 -31 Postpaid
Slide 6: Q3 financial performance
1 Q3 financial performance Positive development with higher EBITDA and OpFCF proxy Overview of key financials Q3 EBITDA and OpFCF proxy development in CHF mn Q3 2023 9M 2023 in CHF mn Underlying +27 (+2.3%) 1’174 Revenue 2'752 8'202 1’150 +24 (+2.1%) +4 +5 (+1.5% YOY) (+0.3% YOY) -3 -6 EBITDA 1'174
Slide 7: Business review
2 Business review 7
Slide 8: Swisscom with consequent execution along strategic objectives
2 Swisscom with consequent execution along strategic objectives Strong focus on delivering and maximising value generation in Switzerland and Italy Stabilise Drive Grow Achieve Telco operational IT profitable business excellence business growth Lever leading market Simplification, digital Continuous
Slide 9: Swisscom Switzerland B2C - Continuously drive commercial competitiveness
2 Swisscom Switzerland B2C - Continuously drive commercial competitiveness Exciting brands, powerful products and excellent experience key to inspire customers Level up #1 position as premium Stimulate sales and value-oriented growth brand in Switzerland with 2nd brand wingo Unique own-brand service
Slide 10: Swisscom Switzerland B2C - Entertainment strategically key
2 Swisscom Switzerland B2C - Entertainment strategically key Leading proposition further enhanced to grow revenues and cement customer stickiness Constantly innovate entertainment blue TV with top quality and the largest to the next experience level offerings in Switzerland From attacker to #1 in ma
Slide 11: Swisscom Switzerland B2C - Focus on value base management
2 Swisscom Switzerland B2C - Focus on value base management Positive life-time value stimulation essential Low churn rates Unchanged trends thanks to high blue and FMC penetrations in RGU and ARPU blue with increasing share ARPU stabilisation key blue FMC Annualised 2nd/3rd brand RGU base ARPUs Q3 2
Slide 12: Swisscom Switzerland B2B - Business trends confirmed
2 Swisscom Switzerland B2B - Business trends confirmed Unchanged pricing pressure in Telco and top line growth in IT Excellent NPS results Telco mostly on track IT growing Personal support contributes significantly FY expectations intact Security portfolio for SMEs enhanced Q3 IT service revenue up
Slide 13: Swisscom Switzerland Networks and IT - Leading in Switzerland
2 Swisscom Switzerland Networks and IT - Leading in Switzerland Outstanding quality and coverage, underpinned by strong IT capabilities focus Wireless networks: Wireline networks: Strong and outstanding pop coverage #1 in Switzerland independent in IT 5G+ rollout progressing For another year Swissco
Slide 14: Swisscom Switzerland Telco cost savings - Ongoing delivery
2 Swisscom Switzerland Telco cost savings - Ongoing delivery Net Telco cost savings on track Operational excellence crucial Continuous execution a constant priority Numerous initiatives up and running 9M net savings of CHF 50mn Telco cost savings gross CHF ~75mn Networks Digitisation +10 delta net s
Slide 15: Swisscom Switzerland Financials
2 Swisscom Switzerland Financials Q3 with solid underlying EBITDA and higher OpFCF proxy Revenue EBITDA OpFCF proxy in CHF mn (YOY) in CHF mn (YOY) in CHF mn (YOY) 6'067 Revenue Underlying -0.6% 911 2'757 EBITDA (-3) -0.7% +0.4% Q3 23 402 583 (-28) Reported EBITDAaL 4 853 (-8) 2'767 877 (+22) +3.8%
Slide 16: Fastweb - Another quarter of solid market performance
2 Fastweb - Another quarter of solid market performance thanks to … … value focus in UBB Consumer and growth in Mobile, Enterprise and Wholesale Q3 with continuous growth. Consumer with increasing Enterprise orderbook: Solid market performance confirmed in Q3 UBB and mobile RGU base. +36% YOY. with
Slide 17: Fastweb Consumer - Mobile RGU base keeps growing
2 Fastweb Consumer - Mobile RGU base keeps growing … ... while focusing on value with increasing ultra-broadband share and FMC penetration Broadband Mobile FM convergence BB subs in k (YOY) Mobile subs in k (YOY) ARPU uplift Churn benefit in Q3 23 in Q3 23 -3% +17% 2’696 2’613 • Fastweb continues +2
Slide 18: Fastweb Enterprise and Wholesale - Q3 with strong top line momentum
2 Fastweb Enterprise and Wholesale - Q3 with strong top line momentum … … driven by Public Sector in Enterprise and growing UBB connections in Wholesale Enterprise Wholesale Revenue in EUR mn (YOY) Revenue in EUR mn 1 (YOY) +5% +20% 287 84 • Outstanding growth of +20% 80 4 239 Other • Core services:
Slide 19: Fastweb Financials
2 Fastweb Financials Growing: revenue stronger than expected and underlying EBITDA as expected Revenue EBITDA OpFCF proxy in EUR mn (YOY) in EUR mn (YOY) in EUR mn (YOY) 1’911 Underlying Q3 23 Revenue 229 640 (+6.0%) (+1.8%) (+1.9%) EBITDA EBITDAaL 3 215 (+4) 228 (+18) Wholesale Reported CAPEX -148
Slide 20: Financial results
3 Financial results 20
Slide 21: Group revenue
3 Group revenue Q3 revenue increase primarily driven by Fastweb growth in CHF mn Q1 Q2 Q3 +5 +1 +56 +7 +40 0 +1 0 +28 +25 +1 +5 -7 -9 -19 -1 -3 -1 -1 -24 -23 -18 -7 -10 Underlying +77 (+0.9%), Q1: +17, Q2: +13; Q3: +47 Swisscom Switzerland -39 (-0.6%) +109 (+6.0%) +7 Q1: -12, Q2: -11, Q3; -16 +23 0
Slide 22: Swisscom Switzerland revenue
3 Swisscom Switzerland revenue Telco service revenue decline: marginal in B2C, more pronounced in B2B 9M 23 revenue changes by business drivers Telco service revenue evolution in CHF mn Q1 22 Q2 Q3 Q4 Q1 23 Q2 Q3 in CHF mn 5 7 Swisscom Switzerland -39 (-0.6%) -4 -2 -7 -5 -3 -6 -10 -17 -12 -13 B2C -2
Slide 23: Group EBITDA
3 Group EBITDA Positive EBITDA development in CHF mn Q1 Q2 Q3 +19 +18 +5 +71 +85 +2 0 +3 +5 +4 +24 +25+24 +27 +24 +2 +11 -7 -5 -1 -5 -6 -19 -4 -20 -7 -3 Underlying +75 (+2.2%), Q1: +34, Q2: +14; Q3: +27 +61 +136 Swisscom Switzerland +10 (+0.4%) Q1: +13, Q2: +3, Q3: -6 +73 (+4.1%) +9 +32 +12 (+1.9%)
Slide 24: Swisscom Switzerland EBITDA
3 Swisscom Switzerland EBITDA Higher EBITDA thanks to ongoing delivery on operational excellence in CHF mn Q1 Q2 Q3 +27 +95 +1 +13 +10 +1 +92 0 0 +4 +3 +9 +10 +13 0 0 -12 -11 -16 -6 -2 -6 -15 -6 Swisscom Switzerland +10 (+0.4%) +92 +102 Direct cost +19 (-1.5%) Indirect cost +30 (-1.4%) (+3.8%) +50 -
Slide 25: Capital expenditures
3 Capital expenditures On track to achieve FY guidance of CHF 2.3bn CAPEX overview CAPEX Swisscom Switzerland 9M 23 in CHF mn Q3 23 9M 23 Wireless • Ongoing investments in 5G+ CHF 201mn coverage extension. CAPEX at prior's year level Group 517 1'630 (CHF +1mn YOY) CAPEX (-31, -5.7% YOY) (+29, +1.8%
Slide 26: Free cash flow
3 Free cash flow High tax payments in 2022 mostly explain FCF improvement this year in CHF mn 9M 23 3’477 -217 3'260 -1'630 1'630 -242 -25 -56 -271 1 1'037 Δ +136 +2 +138 -29 +109 -75 -66 -9 +81 +17 +57 1 2 3 9M 22 3’341 -219 3'122 -1'601 1'521 -167 +41 -47 -352 -16 980 EBITDA Lease EBITDAaL CAPEX O
Slide 27: Net income
3 Net income EPS increase (+8%) thanks to higher EBITDA overcompensating lower financial result in CHF mn tax rate 1 EPS 19.2% (+8%) 25.31 9M 23 3’477 -1'566 -197 1'714 -93 0 -311 1'310 +1 1'311 Δ +136 +17 +4 +157 -46 +2 -17 +96 +2 +98 1 tax rate 1 EPS 19.5% 23.42 9M 22 3’341 -1'583 -201 1'557 -47 -
Slide 28: FY 2023 guidance for EBITDA and CAPEX unchanged
3 FY 2023 guidance for EBITDA and CAPEX unchanged Revenue outlook adjusted to reflect primarily stronger Swiss franc and lower HW sales in Switzerland so far 4 new in CHF bn 2022 Splits into: 2023 outlook 2023 outlook 5 Splits into: 1 CHF 8.6bn for Switzerland 3 CHF ~8.5bn for Switzerland Revenue 11
Slide 29: Q&A
Q&A 29
Slide 30: Appendix
Appendix 30
Slide 31: Key financials
Key financials Underlying revenue and EBITDA in CHF mn 2022 2023 Change Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 FY FY Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Revenue Revenue 2'754 2'754 2'713 2'713 2'712 2'712 2'872 2'872 11'051 11'051 2'747 2'747 2'703 2'703 2'752 -7 -7 -10 -10 +40 Currency Currencyeffect
Slide 32: Residential Customers
Residential Customers Segment reporting as per 30.09.2023 in MCHF Q3 2023 Q3/Q3 30.09.2023 YOY Revenue 1) 1'110 -1.9% 3'345 -0.7% Direct costs -199 -7.9% -628 -1.7% Revenue decreased (-0.7%) Indirect costs 2) -158 0.0% -475 -4.6% driven by hardware sales due EBITDA 753 -0.5% 2'242 0.4% to lower volu
Slide 33: Residential Customers
Residential Customers Overview of Q3 operational KPIs Wireless Wireline Q3 22 Q3 23 Q3 22 Q3 23 RGUs in k Penetration rates RGUs in k Penetration rates (broadband) (postpaid value) 3'226 3'343 1'734 1'722 81% 49% 49% 1'508 1'475 65% 30% 8% 2 Postpaid 2nd/3rd blue FMC HHs Broadband TV 2nd/3rd blue FM
Slide 34: Business Customers
Business Customers Segment reporting as per 30.09.2023 in MCHF Q3 2023 Q3/Q3 30.09.2023 YOY Revenue 1) 769 0.7% 2'304 -0.7% Direct costs -184 2.2% -542 -1.6% Revenue decreased (-0.7%), Indirect costs 2) -245 9.4% -743 3.3% driven by Telco service revenue EBITDA 340 -5.6% 1'019 -3.0% (CHF -42mn, prim
Slide 35: Wholesale
Wholesale Segment reporting as per 30.09.2023 in MCHF Q3 2023 Q3/Q3 30.09.2023 YOY Revenue flattish (-0.2%). Revenue 1) 142 -1.4% 412 -0.2% Lower revenue from Direct costs -84 -2.3% -188 -1.1% termination was partly Indirect costs 2) -4 n.m. -4 -71.4% compensated by slightly higher EBITDA 54 0.0% 22
Slide 36: Infrastructure & Support Functions
Infrastructure & Support Functions Segment reporting as per 30.09.2023 in MCHF Q3 2023 Q3/Q3 30.09.2023 YOY Indirect costs and EBITDA Revenue 1) 19 5.6% 57 5.6% improved substantially due Direct costs -2 -33.3% -6 -14.3% to an increase of regulatory Indirect costs 2) -254 -5.6% -766 -12.6% provision
Slide 37: Fastweb
Fastweb Segment reporting as per 30.09.2023 in MEUR Q3 2023 Q3/Q3 30.09.2023 YOY Consumer 289 1.8% 869 1.5% Enterprise 287 20.1% 814 10.6% Consumer revenue grew by +1.5% Wholesale 1) 84 5.0% 228 8.6% YOY, driven by increasing mobile Revenue 1) 660 9.5% 1'911 6.0% RGUs. Direct costs -266 22.6% -740 1
Slide 38: Other
Other Segment reporting as per 30.09.2023 in MCHF Q3 2023 Q3/Q3 30.09.2023 YOY External revenue 108 6.9% 312 1.6% Net revenue almost Revenue 1) 269 3.9% 770 1.4% on prior year's level. Direct costs -21 10.5% -61 15.1% 2) Indirect costs -204 1.5% -610 4.5% EBITDA 44 12.8% 99 -18.9% EBITDA down -33.7%
Slide 39: 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 9M 22 9M 23 YOY FY 22 FY 23 YOY Segments' pension cost 206 205 -1 273 273 0 Pension reconciliation 45 -28 -73 53 -37 -90 Operating pension c
Slide 40: Well balanced and diversified maturity profile
Well balanced and diversified maturity profile Low interest rate thanks to high fixed share and long duration setup Debt maturity profile as per Q3 2023 1) 2023 • Portfolio facts as per 30.09.2023 • 81% fixed (19% floating) 2024 500 145 645 • Ø interest rate of 1.1% 2025 546 546 • Ø duration of 4.8
Slide 41: Investor contact
Investor contact Louis Schmid Anastasia Henkel Head Investor Relations Investor Relations Manager louis.schmid@swisscom.com anastasia.henkel@swisscom.com +41 58 221 62 79 +41 58 221 40 80 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
Swisscom Ag Ittigen R/Shs — Q3 2023 Earnings Presentation on 6ix