Swisscom Ag · SIX:SCMN
Swisscom — Swisscom Ag Ittigen R/Shs — Q2 2024 Earnings Presentation
42 slides from Swisscom's earnings presentation, Jul 31, 2024
Slide 1: Q2 2024 results
Q2 2024 results Investor & analyst presentation 31 July 2024
Slide 2: Agenda
Agenda Introduction Louis Schmid, Head of Investor Relations Swisscom 1. Achievements Christoph Aeschlimann, CEO Swisscom 2. Business update - Switzerland and Italy Christoph Aeschlimann, CEO Swisscom 3. Transaction update - Vodafone Italia Eugen Stermetz, CFO Swisscom 4. Financial results Eugen Ste
Slide 3: Achievements
1 Achievements Christoph Aeschlimann CEO Swisscom 3
Slide 4: Highlights
Highlights Steady development in Switzerland and solid performance in Italy 1 2 3 4 Q2 financials Unchanged Successful Acquisition of on track business trends with Fastweb Vodafone Italia to achieve FY guidance in Switzerland in Italy and merging with Fastweb • Q2 top line up (+1.8% YOY), • Slightly
Slide 5: Operational performance
Operational performance Largely stable RGU base in Switzerland and continuously growing in Italy 1 Swisscom Switzerland Fastweb 2 +113 Fixed +33 3 Fixed -1 +102 4 +72 +22 +58 +10 +12 +8 Net adds in k Q1 24 Q2 24 Q1 24 Q2 24 -9 -11 -19 -25 -15 -15 -23 -22 Postpaid Broadband TV 1 Fixed voice Wholesale
Slide 6: Financial results
Financial results Satisfying Q2 financials, reaffirming FY guidance 1 Overview of key figures Q2 24 EBITDA development 2 in CHF mn, YOY in CHF mn, YOY Q2 24 H1 24 3 Underlying -8 (-0.7%) 2'751 5'454 1’139 +14 1’124 4 +2 (-1.3%) Revenue (+1.8%) (+0.1%) -24 -7 -15 EBITDA 1'124 2'279 EBITDA Swisscom (-
Slide 7: Business update - Switzerland and Italy
2 1 Business update - Switzerland and Italy Christoph Aeschlimann CEO Swisscom 7
Slide 8: Swisscom's strategic priorities for 2024 and beyond
Swisscom's strategic priorities for 2024 and beyond For Switzerland and Italy 1 2 3 Delight Innovate Achieve more Perform 4 customers for growth with less together Create unique Deliver digital products Achieve more Develop ourselves and customer experience and services of the future with less our c
Slide 9: B2C Telco - Ongoing strong value commitment key
B2C Telco - Ongoing strong value commitment key ARPU stabilisation measures kicking in Create unique customer experience every day … … to delight customers, stimulate loyalty and keep ARPUs stable 1 Value-oriented play with best-in-class 2 21 21 22 22 21 offerings key 25 • Even more attractive roami
Slide 10: B2C Telco - Defending customer base in a challenging Telco environment
B2C Telco - Defending customer base in a challenging Telco environment … and growing beyond core Boost smart promotions and innovate for new growth … … to stimulate RGUs and expand beyond core 1 Stimulate RGU performance with smart and visible promotions 2 • Stable RGU base in own brand, 2nd/3rd bra
Slide 11: B2B Telco and IT - Continuously execute value strategy
B2B Telco and IT - Continuously execute value strategy … to strengthen premium positioning and tap into new revenue streams Ongoing development of offerings and services essential … … to compete more effectively in Telco and achieve growth in IT 1 Enhance Telco offerings with additional services to
Slide 12: Networks and IT - Consistently enhance network leadership in Switzerland
Networks and IT - Consistently enhance network leadership in Switzerland Acceleration of FTTH rollout and further innovation in the mobile transport network Further drive the next generation connectivity… … to delight customers with best coverage and service quality 1 Ambition Mobile: further expans
Slide 13: Telco - Achieving more with less remains a top priority
Telco - Achieving more with less remains a top priority Continuously strive for Telco cost savings to balance out Telco service revenue erosion Implementing innovative tools … … to drive the digital push 1 2 Digital push for sales and service excellence • Launch of (Gen)AI-driven LLM-based1 chat +6%
Slide 14: Fastweb B2C - Ongoing quality orientation in Telco and push beyond core services
Fastweb B2C - Ongoing quality orientation in Telco and push beyond core services Focus on growing convergency economics and tailoring services to HHs through AI Boost customer value through unique products and sales ... … leading to improved FMC economics and higher customer loyalty 1 Further value
Slide 15: Fastweb B2B and Wholesale - Good market momentum
Fastweb B2B and Wholesale - Good market momentum … thanks to innovative IT services, reliable connectivity and high-quality access services IT services and UBB business drive to… … growing top line of B2B and wholesale core services 1 B2B with strong market performance 2 Revenue New contracts • Top
Slide 16: Transaction update - Vodafone Italia
3 Transaction update - Vodafone Italia Eugen Stermetz CFO Swisscom 16
Slide 17: A unique opportunity to create a leading converged challenger in Italy
A unique opportunity to create a leading converged challenger in Italy Completion of transaction on track Transaction strengthens Swisscom's profile in Italy 1 2 Acquisition of Vodafone Italia Compelling strategic rationale Substantial value creation Highly Clear 3 EUR 8.0bn Scale Convergence Infras
Slide 18: Final financing structure fully secured
Final financing structure fully secured Well ahead of closing Financing details … … and implications for the financial profile (as per 30 June 2024)4 1 New debt of EUR 8.1bn raised in CHF mn 2 • Syndicated bank term loan of EUR 3bn1 2053 50 o 3y maturity 3 o 5y maturity 2044 847 • Swiss Domestic bon
Slide 19: Financial results
4 Financial results Eugen Stermetz CFO Swisscom 19
Slide 20: Group revenue and EBITDA
Group revenue and EBITDA Underlying development slightly improved in Q2, both top line and EBITDA Revenue 1 in CHF mn Q1 Q2 +53 +35 -4 +4 +6 -7 2 -52 -31 Q2 almost flat thanks to higher IT service 1 Underlying +42 (+0.8%) revenue and hard- and software sales 3 Q1: -13, Q2: +55 +10 +4 mostly compensa
Slide 21: Group CAPEX and OpFCF
Group CAPEX and OpFCF Q2 with improved underlying OpFCF, Q1 impacted by seasonally higher CAPEX CAPEX 1 in CHF mn Q1 Q2 +4 +6 +1 2 +51 -7 -2 -7 -2 Underlying +53 (+4.8%) 1 Q2 with normal spend, Q1 higher because 3 Q1: +56, Q2: -2 +44 of extra investments in mobile core +44 +10 (+4.0%) network and pr
Slide 22: Swisscom Switzerland revenue and EBITDA changes by segments
Swisscom Switzerland revenue and EBITDA changes by segments Q2 with flat revenue contribution and unchanged development of underlying EBITDA Revenue 1 in CHF mn Q1 Q2 +24 +4 +3 0 0 -19 2 -59 -9 -52 -4 1 Decrease in Q2 slowed down to CHF -19mn consisting of lower Telco service revenue 3 +28 -56 (CHF
Slide 23: Swisscom Switzerland revenue and underlying EBITDA changes by business drivers
Swisscom Switzerland revenue and underlying EBITDA changes by business drivers Q2 with better Telco service revenue evolution but light Telco cost savings, and with unchanged FY outlook Revenue and EBITDA 1 H1 YOY, in CHF mn 1 Weaker YOY primarily due to 2nd/3rd brand shift (CHF -13mn), higher VAT (
Slide 24: Swisscom Switzerland CAPEX and OpFCF
Swisscom Switzerland CAPEX and OpFCF Lower OpFCF contribution in H1, driven by higher investments in Q1 and softer EBITDA in Q2 CAPEX 1 in CHF mn Q1 Q2 2 +51 -7 1 Higher investments in mobile core network 245 51 3 865 154 353 62 2 FTTH CAPEX up to ordinary level, previous 4 year affected by P2P swit
Slide 25: Fastweb revenue and EBITDA changes by segments
Fastweb revenue and EBITDA changes by segments EBITDA increase thanks to growing Wholesale contributions Revenue 1 in EUR mn Q1 Q2 +23 +29 +35 +54 +13 +27 1 Competitive pressure in wireline mostly offset 2 -1 -1 by mobile growth (with +381k subs YOY) +40 +89 +52 (+7.1%) 3 -2 (+9.9%) (+28.4%) 2 Top l
Slide 26: Fastweb CAPEX and OpFCF
Fastweb CAPEX and OpFCF OpFCF evolution in line with expectations CAPEX 1 in EUR mn Q1 Q2 +4 +6 190 2 307 3 35 55 9 18 1 Lower expenditure due to changed FWA 4 strategy, stopping rollout of a dedicated Wireless Wireline Backbone & IT Other H1 24 FWA network outside FTTH reach network access network
Slide 27: Group free cash flow
Group free cash flow Free cash flow affected by softer OpFCF contribution and weaker NWC development in CHF mn 1 -386 2 977 -6 -9 3 -189 -34 H1 24 4 353 1 Δ -70 -40 +11 +14 +12 -36 -109 -346 -17 -23 -201 1'047 +2 H1 23 462 Change in Change in Net interest Income Other OpFCF defined benefit FCF NWC p
Slide 28: Group net income
Group net income Net income slightly softer driven by lower EBITDA partly compensated by income tax expense in CHF mn 1 2 2'279 tax rate 1 EPS 18.4% (-1.4%) 3 16.14 H1 24 1'088 4 -1'061 -130 -63 -1 -188 836 0 836 Δ -24 -5 +2 -27 +1 -1 +15 -12 0 -12 2’303 tax rate 1 EPS 19.3% 16.37 H1 23 1'115 -1'056
Slide 29: Group guidance FY 2024
Group guidance FY 2024 Confirmed 1 2 2023 2024 3 in CHF bn reported splits into: outlook splits into: 3 CHF 8.5bn for Switzerland 2 CHF ~8.5bn for Switzerland 4 Revenue 11.072 EUR 2.6bn for Fastweb ~11.0 EUR ~2.6-2.7bn for Fastweb CHF 3.8bn for Switzerland 4 EBITDA1 4.622 EUR 0.8bn for Fastweb 5 4.5
Slide 30: Questions & Answers
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Slide 31: Appendix
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Slide 32: Key financials
Key financials Underlying revenue and EBITDA in CHF mn 2023 2024 YOY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue 2'747 2'703 2'752 2'870 11'072 2'703 2'751 -44 +48 1 Currency effect 31 7 +31 +7 Underlying -13 +55 EBITDA 1'164 1'139 1'174 1'145 4'622 1'155 1'124 -9 -15 Regulatory litigations 3 -54
Slide 33: Swisscom Switzerland - Residential Customers
Swisscom Switzerland - Residential Customers Segment reporting as per 30.06.2024 in MCHF Q2 2024 Q2/Q2 30.06.2024 YOY Revenue 1) 1'079 -1.8% 2'157 -3.5% Revenue decreased due to Direct costs -186 -6.1% -374 -12.6% softer Telco service revenue Indirect costs 2) -149 -2.6% -291 -4.9% and lower hardwar
Slide 34: Residential Customers
Residential Customers Q2 2024 operational KPIs Wireless Wireline Q2 23 Q2 24 RGUs in k Penetration rates RGUs in k Penetration rates Postpaid value (YOY, pp) Broadband (YOY, pp) 3'322 3'396 80% 67% 50% 49% 1'724 1'703 1'483 1'448 (+0) 32% (+1) (+1) (+3) (-1) 10% (0) (+3) (+2) (-0) (+3) (+2) (+2) 1 2
Slide 35: Swisscom Switzerland - Business Customers
Swisscom Switzerland - Business Customers Segment reporting as per 30.06.2024 in MCHF Q2 2024 Q2/Q2 30.06.2024 YOY Revenue 1) 785 3.3% 1'558 2.0% Direct costs -189 11.2% -367 7.3% Indirect costs 2) -276 6.2% -546 6.2% Revenue increased (+2.0%). EBITDA 320 -3.0% 645 -4.0% Lower Telco service revenue
Slide 36: Swisscom Switzerland - Wholesale
Swisscom Switzerland - Wholesale Segment reporting as per 30.06.2024 in MCHF Q2 2024 Q2/Q2 30.06.2024 YOY Revenue weaker Revenue 1) 126 -6.7% 262 -2.6% (-2.6%). Lower revenue from Direct costs -56 1.8% -100 -3.8% inbound roaming and Indirect costs 2) -5 n.m. -4 n.m. wholesale services. EBITDA 65 -24
Slide 37: Swisscom Switzerland - Infrastructure & Support Functions
Swisscom Switzerland - Infrastructure & Support Functions Segment reporting as per 30.06.2024 in MCHF Q2 2024 Q2/Q2 30.06.2024 YOY Reported EBITDA Revenue 1) 19 0.0% 38 0.0% decreased by 0.6% Direct costs - - - - primarily thanks exceptional Indirect costs 2) -275 3.0% -515 -0.6% items (regulatory l
Slide 38: Fastweb
Fastweb Segment reporting as per 30.06.2024 in MEUR Q2 2024 Q2/Q2 30.06.2024 YOY Residential customers revenue Residential customers 290 -0.3% 578 -0.3% almost on prior year level (-0.3%). Business customers 295 10.9% 579 9.9% 1) Decrease in wireline compensated Wholesale 97 36.6% 183 27.1% by incre
Slide 39: Other
Other Segment reporting as per 30.06.2024 in MCHF Q2 2024 Q2/Q2 30.06.2024 YOY External revenue 109 4.8% 213 4.9% Revenue 1) 285 11.8% 537 8.5% Direct costs -19 -5.0% -37 -5.1% Revenue up by +8.5% Indirect costs 2) -228 5.6% -429 5.9% thanks to higher revenue EBITDA 38 100.0% 71 39.2% at cablex. EBI
Slide 40: Pension cost and cash payments
Pension cost and cash payments Net pension cost impacted by discount rate, but company contributions (cash) stable reported estimate estimate in CHF mn H1 23 H1 24 YOY FY 23 FY 24 YOY Segments' pension cost 137 139 2 273 279 6 Pension reconciliation -19 -9 10 -37 -22 15 Operating pension cost (EBITD
Slide 41: 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 42: 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 42
Swisscom Ag Ittigen R/Shs — Q2 2024 Earnings Presentation on 6ix