Slide 1: FY 2016 analyst presentation
1 FY 2016 analyst presentation Analyst meeting in Zurich – 8 February 2017
Slide 2: The best in the connected world
The best in the connected world Well positioned as communications leader in Switzerland and attacker in Italy 2 2016 in a nutshell Shape Fastweb to stimulate further growth Trends and Maximise core strategic priorities through differentiation and innovation Accelerate cost focus Continue investing t
Slide 3: 2016 in a nutshell
2016 in a nutshell Urs Schaeppi
Slide 4: Highlights 2016
Highlights 2016 Group performance solid and satisfying in a dynamic market environment 4 Infrastructure Retail * Enterprise Fastweb Ultra broadband Residential Telco business Infrastructure > Fixed rollout successfully > Back to postpaid subs > Market share successfully > 30% UBB coverage continued,
Slide 5: Market performance 2016 – Switzerland
Market performance 2016 – Switzerland Successful bundle transformation, stable market shares in broadband and leading in TV 5 Solid RGU base* with shift towards bundles … ... while leading market shares remain stable in k Mobile RGUs Fixed RGUs in % Mobile Broadband TV 6'540 6'625 6'612 5'833 5'918
Slide 6: Market performance 2016 – Fastweb
Market performance 2016 – Fastweb Broadband customer base and corporate share further increased 6 Growth of broadband and mobile RGUs* continues … … driving wireline market shares further up in k in % Broadband RGUs Corporate Consumer +7% +6% 2'355 2'201 2'072 Mobile RGUs +4bps +27% +6bps +22% 658 5
Slide 7: Financial performance 2016
Financial performance 2016 Solid reported numbers - fully in line with guidance 7 Reported numbers Underlying numbers in CHF mn, YOY in CHF mn and % in CHF mn, YOY in CHF mn and % Net revenue 1) Net revenue 11'643 -35 -55 (-0.3%) -0.5% EBITDA 4'293 +195 11'649 11'594 (+4.8%) 2'148 +136 EBIT (+6.8%)
Slide 8: Trends and strategic priorities
8 Trends and strategic priorities Urs Schaeppi
Slide 9: Global megatrends
Global megatrends Impacting life and businesses fundamentally 9 Sustainability
Slide 10: The best in the connected world
The best in the connected world Swisscom is at the heart of the digital transformation and well positioned to benefit from it 10 Digitalisation impacts the world … We are investing … We are monetizing … More usage, High-performance networks Market-leader position speed and availability and cloud Inn
Slide 11: Digitalisation drives usage and data-growth in our networks
Digitalisation drives usage and data-growth in our networks We deliver the infrastructure to cope with increasing internet usage 11 Behavioral changes ... … lead to exponential data growth Every second in the internet … +78% Data volume domestic mobile Data volume fixed 727 7,241 124,792 +97% photos
Slide 12: We continue to invest in high-performance infrastructure
We continue to invest in high-performance infrastructure We deliver the backbone for increasing internet usage 12 Our network is future proof … … but requires a high CAPEX envelope in CHF mn Capital expenditures in Switzerland 42’000 km >80% low-power 1800 of fibre-optic network network 1500 coverag
Slide 13: Making money in a fixed cost business is about size
Making money in a fixed cost business is about size Critical mass crucial to generate significant free cash flows 13 Operating a network involves mainly fixed cash out Market share key to leverage required investments Breakdown of total 2016 cost at Swisscom Switzerland Strong FCF* generation thanks
Slide 14: Digitalisation enables different new ways of doing business
Digitalisation enables different new ways of doing business Global trends also impact Switzerland and Swisscom 14 Commerce Smart Artificial Services Intelligence More convenient, Relevant, personalized Smart more efficient & on Cloud experiences and automation Crowds Products demand services «Factor
Slide 15: We invest in product and customer service innovation
We invest in product and customer service innovation Swiss customers are used to high quality products and individual services 15 Voice My Service Search Rapid, tailored support on the phone, TV 2.0 remote control On-site customer Internet in store or online AppCloud understands «Swiss support by Bo
Slide 16: Leveraging subs base with differentiation in products and services
Leveraging subs base with differentiation in products and services Be smart in mature and dynamic markets to sustain value 16 Attractive bundles … … multi-brand … … value differentiation Value-driven connectivity … … scalable (cloud) solutions … … digitalisation > Modernisation of W+ > Extension of
Slide 17: Digitalisation requires transformation
Digitalisation requires transformation Technology evolution drives our organizational capabilities and our leadership culture 17 Technology transformation … … making things simple … … encourage leadership > All IP migration proceeding as planned Customer Innovation experience Customer Customer > Art
Slide 18: Swisscom with proven strategy
Swisscom with proven strategy Network quality, customer experience and selective growth remain on focus 18
Slide 19: Focus 2017
Focus 2017 Our strategic priorities allow us to shape and master Swisscom’s digital future 19 Maximise Operational Develop Growth Trans- core excellence Fastweb focus formation business Through Be prepared for a convergence, Selectively enter digital future by Secure Utilise state of the quality and
Slide 20: Accelerating cost focus
Accelerating cost focus Urs Schaeppi
Slide 21: Operational Excellence
Operational Excellence By 2020 recurring (gross) cash savings of CHF >300mn p.a. 21 Roadmap of initiatives ... … leading to annual (gross) cash savings in CHF mn Increase focus on Shape efficiency simplicity of scale Enhance -50 -300 CAPEX efficiency -75 Increase -60 -60 Standard- -60 isation Boost
Slide 22: 2016 in a nutshell
2016 in a nutshell Benefit from organizational changes and efficiency improvements 22 > Reduction of -687 FTE (-4% YOY) 1 > First wave of headcount reduction completed: CHF 50mn savings of total target achieved -687 > Residential and SME Customers are supported by the same care centre Achievements >
Slide 23: Overview of 2017 ambitions
Overview of 2017 ambitions Increase efficiency further to maintain leadership in Switzerland 23 1. Benefit from organizational changes and efficiency improvements Cost focus key priority to 2. Boost simplicity maintain stable margins in Switzerland 3. Push All IP transformation 4. Reinforce CAPEX ef
Slide 24: 1. Benefit from organizational changes
1. Benefit from organizational changes Focus on cost, speed and quality to achieve material savings 24 Consolidate field service Extend partnering FTE management and call centre and outsourcing share > Reduction of management layer > Intensify collaboration with call > Further FTE reduction in 2017
Slide 25: 1. Benefit from efficiency improvements
1. Benefit from efficiency improvements Streamline SME and corporate business product development 25 Standardise and virtualise Expectations and savings > Efficiency savings due to organizational changes > Virtualisation of network functionalities > Cost savings due to virtualisation Less back off
Slide 26: 2. Boost simplicity
2. Boost simplicity Reduce number of products and tariffs 26 Scope Benefits for Swisscom > Phase-out of >40 retail mobile > Reduction of complexity tariffs till Q3-2018 on IT systems > Phase out of >60 wireless options customer touchpoints > ~200 k customers involved > Savings from 2018 onwards
Slide 27: 2. Boost simplicity
2. Boost simplicity Streamlined processes 27 Sales 2 activation Problem 2 solution Process and IT standardisation 16 initiatives in 2017 10 initiatives in 2017 3 initiatives in 2017 1 click Zero calls … Personalisation Sales to order Order! > Reduce to the minimum > Proactive identification of > E2E
Slide 28: 3. All IP transformation
3. All IP transformation 2016 with 440k customers migrated to All IP 28 Drive All IP transformation forward and … … earn All IP savings from 2018 onwards Evolution of customers migration (in %) Evolution of expected savings (%) in comparison to Y2015 ~100% target 2/3 ~ CHF 100mn ~70% ~20% 2013 2014
Slide 29: 4. Efficient use of technology for broadband rollout
4. Efficient use of technology for broadband rollout Innovative technologies and rollout techniques enhance speed and efficiency of infrastructure upgrades 29 Capitalize on G.fast success Leverage DSL-LTE Bonding Mbps FTTH- Gigabit Ethernet 1'000 800 600 G.fast is 2x faster to deploy and costs 1/3 4
Slide 30: 4. Enhance efficiency in network rollout and projects
4. Enhance efficiency in network rollout and projects New approach in management of rollout partners and use of other models in projects 30 Optimize Partner Management Optimise project CAPEX > The fluid delivery model is used to develop products with a long term mission Applies agile/lean methods
Slide 31: Building the best infrastructure
Building the best infrastructure Heinz Herren
Slide 32: 2016 in a nutshell
2016 in a nutshell A year of achievements in technology leadership and innovation through strategic partnerships 32 > "Swisscom claims world’s > G.fast is live: up to 500 Mbps on existing first G.fast broadband copper infrastructure service" - The Register, UK > Hybrid DSL-LTE access: getting even m
Slide 33: Overview of 2017 ambitions
Overview of 2017 ambitions Investment driven technology strategy to maintain leadership in Switzerland 33 1. Full steam ahead for fibre roll-out with the newest technologies 2. Build our mobile network for the best customer experience in Switzerland Pioneering new technologies to sustain 3. Simplify
Slide 34: 1. Boost UBB uplift with an efficient technology use
1. Boost UBB uplift with an efficient technology use Our investment into FTTx continues to bear fruit 34 Ultra broadband (>50 Mbps) footprint 1 Broadband & TV connections growth 2 3.5mn Broadband connection growth TV connections (in mn) 2.86mn 20% +0.60% 1.48 1.33 +11% At YE 2016 > 2.5mn connections
Slide 35: 1. Fixed high-speed expansion
1. Fixed high-speed expansion Swisscom is pushing ahead with the widespread expansion of ultra-broadband 35 Our fibre approach … … with using different technologies … 40% > Switzerland’s unique FTTS architecture 30% > Existing manholes offer Target 2021 approx. 20% potential to be equipped with 200m
Slide 36: 2. Mobile network assets and performance
2. Mobile network assets and performance Superior network assets provide best coverage and throughput today and in the future 36 Best coverage - especially indoors Superior fibre & spectrum assets Excellent network performance > Nationwide 4G and best area > Widest spectrum assets in all > One of th
Slide 37: 2. Mobile network outlook
2. Mobile network outlook Staying ahead as a technology leader on all turfs 37 Extend 4.5G further Drive 5G development Strengthen the best IoT network > Increasing 4.5G indoor coverage by > Powerful partnership with Ericsson > Complementing LoRa IoT coverage leveraging low band spectrum and EPFL1 t
Slide 38: 3. Foster legacy phase-outs
3. Foster legacy phase-outs We are progressing steadily towards our network & IT simplification targets 38 Phase-out legacy platforms & applications … …. and realise sustainable savings Migration of legacy systems (% completed) 65% Revenue Product/Platform Next-Gen 43% 25% Costs 2017 2018 2019 Stron
Slide 39: 3. Build and operate state-of-the art cloud infrastructure
3. Build and operate state-of-the art cloud infrastructure The three pillar cloud strategy helps us transform into an E2E ICT service provider 39 Enterprise Cloud Application Cloud Telco Cloud Drive traditional enterprise & Facilitate innovation through Virtualise dedicated network legacy workload m
Slide 40: 4. Introduce bimodal IT delivery models and DevOps
4. Introduce bimodal IT delivery models and DevOps Our evolution requires newer development approaches to improve efficiency & agility 40 Introducing bimodal IT delivery models Transforming into a digital company Waterfall 50% Core DevOps Squads Agile 50% Digital 2015 2016 2017 2018 2019 2020 Two co
Slide 41: 4. Support automation of operational processes
4. Support automation of operational processes We strive towards industrial production through standardisation & automation 41 Standardise Automate Virtualise > Standardised and modular > Build and utilize Big Data > Gain efficiencies through enabler portfolio to facilitate capabilities to automate
Slide 42: 5. Broad wholesale portfolio fit for growth
5. Broad wholesale portfolio fit for growth Swisscom with wholesale offerings on a national footprint 42 Our broad and attractive portfolio helps us to maintain … as a top wholesale provider for alternative service our position … providers in Switzerland Interconnection & MVNO Infrastructure OTT & I
Slide 43: 5. Positive regulatory outlook
5. Positive regulatory outlook Initial proposal of the revised Telecoms Act in line with our expectations 43 Optical fibre regulation > Ubiquities availability of cable, multi Telecom Acts revision not effective before 2020 stakeholder FTTH rollout and a broad wholesale portfolio facilitate competit
Slide 44: Offering best experiences in Retail business
Offering best experiences in Retail business Dirk Wierzbitzki
Slide 45: 2016 in a nutshell (1/2)
2016 in a nutshell (1/2) Outstanding product line and brand development reinforced our leading market position 45 Key levers Residential Customers > Strengthen product portfolio > Natel Infinity 2.0 – Higher speed and more > Push bundling further roaming included > Internet Booster – DSL/LTE bonding
Slide 46: 2016 in a nutshell (2/2)
2016 in a nutshell (2/2) Financials are still under pressure, mainly driven by lower service revenues 46 31.12.2015 31.12.2016 Net revenue (from external customers) decreased by -0.9%, mainly CHF 6.41bn CHF 6.35bn driven by roaming price decrease and fixed voice line losses Price pressure from roami
Slide 47: 2016 RGU development - Wireline
2016 RGU development - Wireline Move to bundles continues in Wireline, overall 77% bundle penetration 47 Wireline RGUs in bundles and penetration Net adds of wireline RGUs Retail*, in k Retail*, in k 77% 5′000 80% 65% IPTV 166 4′000 56% 145 1'211 60% 3′000 1′056 BB 68 938 40% 34 2′000 1'670 1′416 Vo
Slide 48: 2016 RGU development - Wireless
2016 RGU development - Wireless Overall stable RGUs in Wireless - Growth in postpaid, opposed to continued loss in prepaid 48 Wireless RGU breakdown Net adds of wireless RGUs Retail*, in k -30 Retail*, in k 5′395 5'365 Prepaid -39 -64 +69 -64 Postpaid 67 34 -75 +40 Total 28 -30 Infinity Liberty, 3rd
Slide 49: Overview of 2017 ambitions
Overview of 2017 ambitions Differentiate by delivering best experiences 49 1. Increase monetization of strong customer base with bundling and upselling 2. Strengthen RGU base with a smart Maximize core business trough multi-brand approach and efficient differentiation and churn prevention innovation
Slide 50: 1. Monetisation of customer base with bundling and upselling
1. Monetisation of customer base with bundling and upselling Swisscom will expand its convergence approach to keep churn rates low and to maintain ARPUs high 50 Swisscom in a strong position … … for the next convergence move Customer journey – Realising growth opportunities Residential Own Brand – i
Slide 51: 1. Monetisation of customer base with bundling and upselling
1. Monetisation of customer base with bundling and upselling Smart Business Connect forces IP-Migration, increases managed services revenues & ensures BB shares 51 Swisscom on a successful way … … to increase SME revenues Smart Business Connect contracts & ARPU > Good market performance and 10,000 +
Slide 52: 2. Strengthen RGU base with a multi-brand approach
2. Strengthen RGU base with a multi-brand approach Next to its core brand, Swisscom covers the complete market with Wingo and M-Budget 52 Swisscom is well-prepared … … to address every customer group Swisscom multi-brand approach Residential > Swisscom maintains three powerful brands addressing diff
Slide 53: 2. Strengthen RGU base with churn prevention
2. Strengthen RGU base with churn prevention Swisscom continues to subsidize handsets for high-value customers to ensure loyalty & prevent churn 53 Swisscom in a top position … … to retain customers SAC/SRC W+ & W- Increasing fixed line SAC/SRC due to UHD boxes Retail customers, in CHF mn > Stable o
Slide 54: 3. Cement customer satisfaction and leverage brand reputation
3. Cement customer satisfaction and leverage brand reputation Swisscom can leverage on its superior customer service, huge gap compared to all other competitors 54 Swisscom maintains top NPS & brand reputation … … now and in the future Net promoter score benchmarking1 Residential 2016, average of tw
Slide 55: 3. Cement customer satisfaction and leverage brand reputation
3. Cement customer satisfaction and leverage brand reputation Swisscom will invest in BB speed & stability to enable best customer experience at home 55 Swisscom initiated important steps … … to improve network quality Broadband Internet – Speed and customer satisfaction Residential Q4 2016 > There
Slide 56: 4. Invest in innovation to realise the best TV proposition
4. Invest in innovation to realise the best TV proposition Continuous development of our TV proposition enables to sell BB bundles successfully 56 Swisscom is clear TV market leader … … and will expand its market share TV subscriber & market share evolution Retail*, in k > Leading TV platform (marke
Slide 57: 4. Invest in innovation to realise new business opportunities
4. Invest in innovation to realise new business opportunities Guarantee best experience for customers by delivering continuous innovations 57 Residential customers SME Push F/M convergence further Broaden Smart Business Connect and BNS* cloud offerings Lead consumer multi-device and wearables Manife
Slide 58: Maximising market share with Enterprise Customers
Maximising market share with Enterprise Customers Christian Petit
Slide 59: 2016 in a nutshell (1/2)
2016 in a nutshell (1/2) Enterprise customers strengthens its position in a competitive landscape 59 Key levers Telco business > Retention strategy in mobile pays off – > Ongoing strong market share in mobile (>80%) with market position improved further in 2016 27 win-backs and +2’000 SIM net balanc
Slide 60: 2016 in a nutshell (2/2)
2016 in a nutshell (2/2) Solution business with increasing topline weight 60 31.12.2015 31.12.2016 Order entries remained at a high level with 43% of CHF 2.65bn CHF 2.52bn extended scope Service revenue decreased by CHF -53mn (-4.4%) driven CHF 1.18bn CHF 1.13bn by increased price pressure in the co
Slide 61: Leading with unique portfolio proposition
Leading with unique portfolio proposition Unique portfolio addressing customers demands on all levels 61 Customer demands continue to shift Swisscom with broad offerings for corporates Competitive advantages Vertical Digitization Customer focus health Consulting and Vertical M2M, IoT partnerin
Slide 62: Trends of revenue dynamics
Trends of revenue dynamics IT and digital solution business have to compensate decreasing Telco revenues 62 Majority of revenue contribution from Telco business … Solutions business becomes more important … 47% 9% in CHF mn Telco Other business 1’071 44% 1’001 1’048 Solutions business 2014 2015 2016
Slide 63: Overview of 2017 ambitions
Overview of 2017 ambitions Solutions business with growth opportunities 63 1. Retain value of Telco business (in W- and W+) through differentiation and cost optimization Keep unique market position and benefit from 2. Foster cloud and ICT solution business digital to realise new sources of growth re
Slide 64: 1. Differentiation is key driver to retain value of Telco business
1. Differentiation is key driver to retain value of Telco business Stabilised mobile ARPU thanks to innovative services 64 Value focus through innovative wireless services ARPU level successfully maintained ARPU evolution - two-thirds of decline 2016 driven by roaming in CHF CHF -1 > Differentiation
Slide 65: 1. Differentiation is key driver to retain value of Telco business
1. Differentiation is key driver to retain value of Telco business New Telco cloud based services drive continuous portfolio innovation 65 New customer needs combined with new possibilities … … unlock a set of benefits and opportunities > Easy self-service or managed services > Broad traffic variabi
Slide 66: 2. Foster ICT solution business to realise new sources of growth
2. Foster ICT solution business to realise new sources of growth Further extension of broad portfolio 66 Security market is growing substantially Swisscom is market leader in managed security* > Extension of broad portfolio with advanced detection and intervention services Today Tomorrow Prevention
Slide 67: 2. Foster ICT solution business to realise new sources of growth
2. Foster ICT solution business to realise new sources of growth Spending shift from full scope outsourcing to XaaS 67 Growth in outsourcing services Implication > Expected growth in overall IT outsourcing market CH* > Outsourcing business continues to grow and fosters efficiency for customers, > Sh
Slide 68: 2. Driving cloud transformation
2. Driving cloud transformation Accelerate time to market for clients and Swisscom itself 68 The economic climate accelerates the move towards cloud Swisscom perfectly positioned > Cloud computing market and part of managed cloud services in > Data hosting in Switzerland & customer infrastructure sp
Slide 69: 3. Realise digital opportunities to expand value creation
3. Realise digital opportunities to expand value creation Digitalisation reaches agenda of the C-level 69 Digitalisation business gains momentum … … and drives growth momentum > Solution 4 One: consulting as key capability, successful JV with Open Web Technology 1 New business Improved customer Digi
Slide 70: 3. Realise chances from digitalisation to expand value creation
3. Realise chances from digitalisation to expand value creation Banking and Health industries are under cost and industrialization pressure 70 Banking: financial industry is changing Health: expansion of digitalisation expected > Cost pressure and digitalisation changes > Digitalisation in the healt
Slide 71: Realising the Italian opportunities
Realising the Italian opportunities Alberto Calcagno
Slide 72: Setting the scene (1/2)
Setting the scene (1/2) Fastweb has embraced several strategic initiatives in recent years … 72 Initiatives Current status Extension of wireline NGN infrastructure Roll out FTTS to reach 30% UBB coverage From ~7% to ~30% Completed (7.5mn HHs by 2016) (100 cities) Enhancement of VDSL performance V+ d
Slide 73: Setting the scene (2/2)
Setting the scene (2/2) … to unlock further value from business opportunities … 73 Initiatives Current status Full MVNO Service launched, customer base Implement Full MVNO architecture (TIM mobile network) migration ongoing (4G/4.5G national coverage) Digital transformation for Consumer experience >
Slide 74: 2016 in a nutshell (1/2)
2016 in a nutshell (1/2) … that are reflected in a strong operational performance in 2016 … 74 Consumer Enterprise and Wholesale 1 Net adds YoY Won top tenders for PA +19% > >150k net adds > Fixed voice (renewed) > Fleet management (new) +4% > +19% YoY > Security services (new) > SPC-QXN2 (renewed)
Slide 75: 2016 in a nutshell (2/2)
2016 in a nutshell (2/2) … and in a solid set of financial results 75 in EUR 31.12.2015 31.12.2016 +3% revenues growth, YoY € 1.7bn € 1.8bn +7% wireline customer growth, YoY 2.2mn 2.4mn +25% UBB customer growth o/w 30% UBB o/w 34% UBB +27% mobile customers growth, YoY 520,000 658,000 +15% EBITDA gro
Slide 76: Overview of 2017 ambitions
Overview of 2017 ambitions New initiatives have been launched to enhance Fastweb's positioning 76 1. Launch full MVNO and increase market share in wireless Speed up momentum to 2. Network extension and performance grow in all enhancement in wireline, deployment segments and of 5G-ready infrastructur
Slide 77: 1. Leverage MVNO access
1. Leverage MVNO access Scaling up wireless business in the short-term thanks to 4G 77 Rationale Expectations Fastweb’s short term priority is to protect its wireline Aligning Fastweb capabilities to market best practice business from the likely increase of competitive to become a credible mobile pl
Slide 78: 2. Further develop Fastweb as leading 360° infrastructure player (1/3)
2. Further develop Fastweb as leading 360° infrastructure player (1/3) Extending and upgrading the best wireline infrastructure available in the country … 78 Rationale Expectations EoY 2016 EoY 2020 Extend FTTx footprint to 50% coverage (HHs+ Businesses, mn)1 (HHs + Businesses, mn)1 Footprint > FTTH
Slide 79: 2. Further develop Fastweb as leading 360° infrastructure player (2/3)
2. Further develop Fastweb as leading 360° infrastructure player (2/3) … leveraging FlashFiber for a rapid and flawless FTTH deployment … 79 Rationale Expectations FlashFiber (JV with TIM) is the vehicle to timely upgrade Upgrade 23 cities from FTTS to FTTH and complete current FTTS architecture int
Slide 80: 2. Further develop Fastweb as leading 360° infrastructure player (3/3)
2. Further develop Fastweb as leading 360° infrastructure player (3/3) … and getting ready to deploy a 5G-ready mobile network 80 Rationale Expectations Fastweb installed asset base is instrumental to the Expected deployment roadmap potential deployment of a mobile infrastructure based 5G Small cell
Slide 81: 3. Increase scale in Consumer segment
3. Increase scale in Consumer segment Exploiting UBB market momentum 81 Rationale Expectations > Scale up strong UBB monetization … also in new footprint > 2.6x life time value UBB customers Current FTTx KPIs vs. > Approx. 5% to 10% ARPU uplift other technologies > Churn –30% CAGR 2017-2021 = +19% >
Slide 82: 4. Increase scale in Corporate segment
4. Increase scale in Corporate segment Taking steps to consolidate position as the best alternative for top customers 82 Rationale Expectations Leverage Tiscali business branch to secure Fastweb Target: +2 p.p. market share in PA segment leadership in Public Administrations > Yearly incremental of €
Slide 83: Financial results 2016 and outlook
Financial results 2016 and outlook Mario Rossi
Slide 84: Reconciliation of key financials
Reconciliation of key financials Revenue and EBITDA impacted by exceptional items 84 11'678 11'649 +49 11'594 11'643 Revenue -29 (-0.3%) -55 (-0.5%) M&A +22 Sale of Exchange rate +27 Hospitality and Alphapay in CHF mn - 9 Lower gain sale of real estate -12 Change in pension reconciliation -20 Provis
Slide 85: Revenue breakdown by segments
Revenue breakdown by segments Swisscom Switzerland with price pressure in wireless business, Fastweb up 85 in CHF mn Q1 Q2 Q3 Q4 +5 +15 +29 +1 0 -10 -19 -19 -5 -3 +11 +6+13 -2 -26 -28 -17 -34 -20 -24 -71 -55 +0 -53 +59 +9 (-0.5%) -7 +8 Swisscom Switzerland -123 11'649 1 2 3 4 11'594 Service Hardware
Slide 86: OPEX of Swisscom Switzerland
OPEX of Swisscom Switzerland Operational excellence initiatives lead to lower indirect cost 86 in CHF mn Q1 Q2 Q3 Q4 +27 +19 +19 +20 +11 -49 +3 +5 +6 +7 +2 +9 -4 -15 -13 -3 -3 -12 -18 -13 -2 +34 (-0.0%) +45 -23 -50 -8 5'688 * +22 direct costs 5'686 ** -24 indirect costs 1 2 3 4 12m 2015 SAC/SRC Good
Slide 87: EBITDA breakdown by segments
EBITDA breakdown by segments Cost saving initiatives partly compensate margin decline 87 in CHF mn +30 Q1 Q2 Q3 Q4 +26 +1 +13 +8 +11+19 -17 -8 -21 -10 -33 -28 -15 -60 -71 -54 -72 +51 +20 (-1.2%) +27 -80 4'337 Swisscom Switzerland -125 4,017 4'283 1 2 3 FY 2015 Residential Enterprise Wholesale, Fastw
Slide 88: Breakdown of underlying domestic margin changes
Breakdown of underlying domestic margin changes Mixed 2016 dynamics within Swisscom Switzerland 88 in CHF mn Q1/Q1 Q2/Q2 Q3/Q3 Q4/Q4 YoY Service revenue -10 -36 -53 -25 -124 o/w roaming with CHF -83mn, Solutions revenue 1 net loss of fixed 16 13 8 -6 31 voice lines with CHF -47mn and Outpayments 2 1
Slide 89: Roaming dynamics
Roaming dynamics Roaming including tariffs lead to higher roaming costs 89 Innovative products … … lead to lower top-line and higher outpayments > Increased customer experience thanks to lower roaming > Value strategy with "More for the same" price plans lead tariffs for Swisscom customers to a decr
Slide 90: Net income
Net income Bottom-line increase by 18% with EPS of CHF 31 90 in CHF mn tax rate 19.4% EPS 12m 2016 30.97 4'293 -2'145 2'148 -155 0 -3 -386 1'604 0 1'604 EBITDA EBIT Net Net Other financial Tax expenses income income Depreciation reported Net interest companies Minorities SC Share- Affiliated holders
Slide 91: Pension plan deficit
Pension plan deficit Plan amendments and applying modified valuation method 91 Developments 2016 Financial impact > Decision of trustees in Q4 16 to stabilise financial position > Pension plan deficit reduced in Q4 16 to CHF 1.85bn due to > Reduction of technical interest rate to 2.00% (-75 %pts) >
Slide 92: Capital expenditures
Capital expenditures CAPEX remain on a high level driven by further UBB extension 92 +0.3% CAPEX split – Swisscom Switzerland 2016 2,409 2,416 Other** 682 581 581 Fastweb* Wireless network, 633 13% (CHF 231mn) 13% 11% IT systems, All-IP Fixed network & and other, 20% 25% 26% copper access, (CHF 347m
Slide 93: Operating free cash flow
Operating free cash flow OpFCF down by 3% due to the change in NWC 93 in CHF mn 4'293 -2,416 12m 2016 -174 +28 +68 -8 1'877 1'791 Δ +195 -7 +188 -219 -33 +12 -1 -53 4'098 -2’409 12m 2015 +45 +61 +56 -7 1'689 1'844 EBITDA CAPEX OpFCF Change in Proceeds from Change in pension Dividends to OpFCF proxy
Slide 94: Successful refinancing transactions in 2016
Successful refinancing transactions in 2016 … … underline once again Swisscom’s excellent market access 94 Instrument Rating A2 by Moody’s, A by S&P A2 by Moody’s, A by S&P A2 by Moody’s, A by S&P Status Senior unsecured debt Senior unsecured debt Senior unsecured debt Amount CHF 200mn CHF 300mn CHF
Slide 95: Swisscom's smooth maturity profile
Swisscom's smooth maturity profile Actively managed with a duration of 4.8 years 95 Maturity profile after bond settlements as per 31.12.2016 * > Total outstanding amount of CHF 7.4bn > 1.9% average interest rate in CHF mn of portfolio (incl. 1'561 derivatives) > Two unused committed 1'261 backstop-
Slide 96: Dividend policy
Dividend policy Sustainable approach – well defined financial policy 96 Shareholder distribution > Swisscom targets a solid > Dividend amounts to 87% of FCF remuneration aligned with > Comfortable with current pay-out ratio as cash flow generation and primarily high CAPEX limits excess cash capital
Slide 97: Outlook 2017
Outlook 2017 Net revenue of CHF ~11.6bn, EBITDA of CHF ~4.2bn and CAPEX of CHF ~2.4bn 97 Change 2017 Change 2016 2016 Swisscom 2017 in CHF mn Adjustments 2017 reported pro forma w/o outlook Fastweb Fastweb Revenue 11'643 <0 >0 ~ 11'600 EBITDA 4'293 -20 1 4'273 ~ -100 >0 ~ 4'200 CAPEX 2'416 0 0 ~ 2'4
Slide 98: Questions & answers
Questions & answers
Slide 99: Backup
Backup
Slide 100: Reported vs. comparable revenue and EBITDA
Reported vs. comparable revenue and EBITDA 100 in CHF mn 2015 2016 Change Q/Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue, reported 2’893 2’865 2’893 3’027 2’885 2'884 2’874 3’000 -8 +19 -19 -27 o/w M&A impact -8 -4 +2 +3 -8 -4 +2 +3 Currency effect 2 22 5 -2 +2 +22 +5 -2 Revenue, comparable change
Slide 101: Segment 'Residential'
Segment ‘Residential’ 101 Q4 2016 Q4/Q4 31.12.2016 YoY Net revenue decreased Net revenue in MCHF 1) 1'314 -2.4% 5'160 -1.2% driven by a lower service revenue. Direct costs in MCHF -382 -2.1% -1'314 2.3% Indirect costs in MCHF 2) -256 1.6% -976 -3.1% Service revenue decreased Contribution margin 2 in
Slide 102: Segment 'Small & Medium Enterprises'
Segment ‘Small & Medium Enterprises’ 102 Q4 2016 Q4/Q4 31.12.2016 YoY Net revenue nearly on prior Net revenue in MCHF 1) 347 -0.9% 1'367 -0.2% year level, lower service revenue (-2.0%) mostly Direct costs in MCHF -51 2.0% -180 1.1% compensated due to the Indirect costs in MCHF 2) -81 0.0% -295 3.5%
Slide 103: Segment 'Enterprise Customers'
Segment ‘Enterprise Customers’ 103 Q4 2016 Q4/Q4 31.12.2016 YoY Net revenue down -1.6%, Net revenue in MCHF 1) 676 -4.0% 2'611 -1.6% decrease in service revenue partly compensated by higher Direct costs in MCHF -163 -10.4% -591 -1.0% solutions revenue. Indirect costs in MCHF 2) -300 2.0% -1'181 3.0%
Slide 104: Segment 'Wholesale'
Segment ‘Wholesale’ 104 Q4 2016 Q4/Q4 31.12.2016 YoY Revenue from external customers in MCHF 155 6.2% 591 2.1% Intersegment revenue in MCHF 96 0.0% 398 5.6% Net revenue in MCHF 251 3.7% 989 3.5% Revenue from external customers up 2.1%. Higher Direct costs in MCHF -135 -3.6% -562 3.1% inbound roaming
Slide 105: Segment 'IT, Network and Innovation'
Segment ‘IT, Network and Innovation’ 105 Q4 2016 Q4/Q4 31.12.2016 YoY Net revenue in MCHF 31 -6.1% 129 -0.8% Direct costs in MCHF - - - - Indirect cost prior year level (-2.7%), cost for Personnel expenses in MCHF -215 -24.6% -843 -8.7% restructuring impacted 2016 Rent in MCHF -51 0.0% -204 3.0% and
Slide 106: Segment 'Fastweb'
Segment ‘Fastweb’ 106 Q4 2016 Q4/Q4 31.12.2016 YoY Consumer up by 3.2%. ARPU Consumer revenue in MEUR 231 2.7% 906 3.2% decrease of -3% Enterprise revenue in MEUR 189 -3.1% 706 -0.7% overcompensated by an 1) Wholesale revenue in MEUR 57 90.0% 183 24.5% increase in customer base. 1) Net revenue in ME
Slide 107: Segment 'Other'
Segment ‘Other’ 107 Q4 2016 Q4/Q4 31.12.2016 YoY External revenue in MCHF 85 2.4% 320 -5.9% Net revenue in MCHF 1) 170 10.4% 594 -1.5% Net revenue down by 1.5% OPEX in MCHF 2) -152 5.6% -500 -6.4% YoY due to the sale in 2015 of Hospitality and Alphapay EBITDA in MCHF 18 80.0% 94 36.2% partly compens
Slide 108: New segment reporting as from Q1 2017
New segment reporting as from Q1 2017 Prior to Q1 2017 reporting, restated figures for 2016 Q1..Q4 will be published 108 New structure Swisscom Schweiz Cake slices indicate IT, Network Other shift in: Mass Retail Enterprise and Infra- operating Group Head- Customers > Revenue Market Customers Wholes
Slide 109: Pension plan situation as per 31.12.2016
Pension plan situation as per 31.12.2016 109 Valuation differences between Reconciliation IFRS deficit 2015 2016 Swiss pension law and IFRS difference of CHF 2.1bn due to different actuarial … decrease of CHF 1.1 bn due to risk sharing profit equity / other 101% … assumptions … valuation method ca
Slide 110: Reported pension plan costs and outlook
Reported pension plan costs and outlook 110 2015 2016 Change 2017 in CHF mn reported reported 17/16 estimated Operating pension cost (EBITDA) 320 338 10 348 Net interest (financial result) 26 25 1 26 Total pension cost (P&L) 346 363 11 374 Company contributions (cash payments) 265 271 65 336 Operati
Slide 111: RGU dynamics
RGU dynamics 111 Net adds of RGUs by products (in k) +39 +37 +40 +54 -11 -13 -23 -49 220 228 185 163 154 150 151 137 2 4 4 -16 -6 -29 -38 -55 -126 -121 -114 -115 -133 -144 -188 -239 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 1P Wireless 1P Wireline Bundles
Slide 112: RGUs
©) RGUs 12 Swisscom Switzerland YTD, (Change to 31.12.2015 in brackets) ap Single Play 2Play Bundles 3Play 1) 4Play Revenue Generating Units Access Lines/Subs/Products (in k) Number Fixed Voice products 3) Ww Be Access Broadband Mobile inBundle = Sum A 84 (-64) 1155 (-418) 320 (-222) 57901 (128) | 1
Slide 113: ARPU
ARPU 113 YTD, (Change to 31.12.2015 in brackets) 1,2) Number Weighted of average per Fixed Voice products underlying 1) 2) 3) TV & Access Broadband Mobile in Bundle product 1P Single Play 12 (-1) 54 (+2) 34 (-1) 37 (-1) 1 39 (-1) 2Play 99 (-6) 2 49 (-3) Bundles 3Play 130 (-11) 3 43 (-4) 4Play 191 (-
Slide 114: Revenues (RGU x ARPU)
Revenues (RGU x ARPU) 14 Net revenues (CHF mn) YTD, (Change to 31.12.2015 in brackets) 1p Single Play 2Play Bundles 3Play Play Net Revenue 1P + Bundles Fixed Voice &Access Broadband Mobile sum A 40 (-11) 871 (-161) 555 (-82)0 2’614 (-115) 4080 (-380) (-8.5%) (48) 322 ° oO ° oO 5 (+268) (+11.8%) 1444
Slide 115: Handsets and SAC/SRC
Handsets and SAC/SRC 115 Smartphone share active user postpaid 80% 73% 76% Handsets (in k) 491 484 332 346 369 337 283 303 356 285 301 365 SAC/SRC in CHF mn * Swisscom (mobile and wireline products together) Switzerland 158 165 145 122 129 121 Enterprise 112 109 103 107 106 112 Customers 149 138 156
Slide 116: TV market of Switzerland
TV market of Switzerland 116 Market volumes (in k) Market 4’455 4’489 4’515 share: 4’324 4’161 512 474 11 % Satellite/Terrestrial 1) 4’033 540 557 134 165 4% Sunrise 582 107 74 38 analogue TV 26 % CATV / Net Integrators 1) 1'256 1'210 1'165 1'276 1'301 Market share: 2’275 579 13 % UPC 698 620 27 % 6
Slide 117: Broadband needs
Broadband needs 80-100 Mbps fulfil the service needs of an average household in 2020 117 Bandwidth drivers at an average household Household distribution 1 > 2x4K TV (2x30 Mbps) > 2x 3D Telepresence (2x5 Mbps) 140 > Concurrent Internet usage (10 Mbps) 5P+ 6% & More 120 Service Bandwidths in Mbps 4P
Slide 118: Wholesale access prices and portfolio
Wholesale access prices and portfolio More speed for the same price 118 Swisscom's wholesale prices …. … highly correlating to relative street prices Overview of 2017 prices Indexed prices per Mbps in comparison Price development of BBCS and Residential offering for 100 Mbps Unbundled Access Line CH
Slide 119: Regulatory proceedings
Regulatory proceedings Tedious and complex procedures 119 > On 6 October 2015 the Federal Administrative Court issued a decree with a sanction of CHF 186mn* ADSL > The decree was contested by Swisscom (Swiss Federal Court) > Swisscom remains convinced of its arguments > Final decision is expected in
Slide 120: Wireline architecture in Switzerland
Wireline architecture in Switzerland Up to 500 Mbps with G.fast 120 Bandwidths Exchange Fibre-to-the-Home > Since 2008 with 100 Mbps > Since 2013 with 1 Gbps 1Gbps Fibre-to-the-Street up to 500 Mbps approx. > Since 2013 with VDSL2 200m > Since 2016 with G.fast with G.fast DPU in Manhole Fibre-to
Slide 121: Wireless spectrums in Switzerland
Wireless spectrums in Switzerland Spectrums allocated until 2028 – Swisscom with frequencies across all spectrums 121
Slide 122: Cautionary statement
Cautionary statement Regarding forward-looking statements 122 > “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 operati