Q results presentation. Conference Call 02 May 2018

Transcription

1 Q results presentation Conference Call 02 May 2018

2 Agenda 2 Introduction In a nutshell Louis Schmid, IR Urs Schaeppi, CEO Swisscom Switzerland Fastweb Financials Q&A Mario Rossi, CFO All Backup

3 Agenda 3 Introduction In a nutshell Urs Schaeppi, CEO Swisscom Switzerland Fastweb Financials Q&A Backup

4 Highlights Operations Financials Q1 highlights 1st quarter results underline Swisscom's leading market positioning and drive for innovation 4 Q1 financials as expected. Revenue CHF 2.9bn (+2%); EBITDA CHF 1.1bn (-1%); Net income CHF 0.4bn (+2%); FCF proxy CHF 0.6bn (+2%) Quality and reliability matter in Switzerland; Swisscom winner of CHIP, Connect hotline and PCtipp service tests Strong Fastweb performance. Commercially strong with +120k mobile net adds and +32k BB net adds Underlying EBITDA in up by +5% YOY inone success continues: 3.27mn RGUs after only 12 months, penetration further up (42% of BB base, 37% of postpaid base) Innovation key to differentiate. wingo with a new converged offering. Swisscom TV with exclusive access to premium football offerings Effective cost management leads to permanent savings for Swisscom Switzerland. FTE reduction of 126 YTD. Indirect cost down CHF -23mn YOY Positive RGU momentum. BB and TV net adds positive in Q1 thanks to inone; Postpaid base flat YTD, Q1 with high retentions (5% of Retail subs base) 5G feels a lot more real. Promising industrial field tests. 5G rollout starts selectively by YE Supportive to B2B Solutions business 2018 guidance confirmed. Revenue CHF ~11.6bn EBITDA CHF ~4.2bn CAPEX CHF <2.4bn

5 Highlights Operations Financials Q1 operational performance Satisfying RGU trends in Switzerland and ongoing subs growth in Italy 5 Swisscom Switzerland (RGUs in k) Fastweb (RGUs in k) Broadband ' TV ' Broadband '483-4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Fixed voice Postpaid Mobile 1' ' ' Successful launch of inone stimulates RGU momentum in Switzerland positively

6 Highlights Operations Financials Q1 financials Sound results supporting FY guidance - IFRS15 with slightly higher seasonal effect in Q1 6 in CHF mn Net revenue YoY changes in CHF mn EBITDA YoY changes Group Q Swisscom Switzerland Fastweb 2) -39 2' Service revenue -74 t/o one-time 1) -11 Hardware Retail +15 Solutions Enterprise +7 All other +13 Swisscom Switzerland ' Fixed voice lines -18 Convergence discounts -21 Outbound roaming -4 B2B -5 Indirect cost +23 All other -2 Swisscom Switzerland -27 Other Exceptionals 3) Group Q '885 1'058 1) One-time customer-fidelity effects impacting Retail Customers with CHF -9mn and Enterprise Customers with CHF -2mn, 2) w/o currency impacts on revenue of CHF +47mn and EBITDA of CHF 13mn, 3) Net revenue with extra-ordinary effects from FX (CHF +47mn) and IFRS15 adjustments (CHF -4mn); EBITDA with extra-ordinary impacts from FX (CHF +13mn) and IFRS15 adjustments (CHF -20mn) Underlying dynamics as anticipated: Swisscom Switzerland YOY down and Fastweb YOY up

7 Agenda 7 Introduction In a nutshell Swisscom Switzerland Urs Schaeppi, CEO Fastweb Financials Q&A Backup

8 2018 focus Network Retail Customers Enterprise Customers Operational excellence Leading with solid market shares for many years Our strategic ambition of being 'best-in-class' pays off 8 Mobile Broadband TV 60% 66% incl. Wholesale 33% 53% 28% only Retail 26% other cable 22% 17% 1% 20% 14% other cable 8% 5% Satellite/ Terrestrial Source: Swisscom figures and internal elaborations / estimates based on public company data Our credo: it's all about customer base management with a clear value focus

9 2018 focus Network Retail Customers Enterprise Customers Operational excellence Swisscom Switzerland's priorities Effective execution key to keep Swiss leadership across all segments 9 > Upgrade network performance > Increase inone penetration Main areas of execution in 2018 > Drive innovation further > Shape B2B business opportunities > Realise cost ambitions Proven strategy in an attractive quality-oriented market

10 2018 focus Network Retail Customers Enterprise Customers Operational excellence Network upgrades substantial for outstanding customer experiences The network for Switzerland's digital future 10 > Bandwidth expansion by efficient use of technologies 55% 27% FY % 29% Q W+ network update UBB coverage 90% 75% > 80 Mbps > 200 Mbps Target 2021 > Currently ~3.3mn fibre connections o/w 1.37mn FTTH, enabling strong HD (>95%) and UHD (>82%) coverage for Swisscom TV > Pop coverage: 99% 4G >80% 4.5G > Key cities/regions with>1 Gbps W- network update > Swisscom again CHIP test winner Mobile Internet 87.9% 85.2% 94.4% 97.0% 94.3% 94.1% Telephony shops cities/regions > Swiss parliament sees no need to ease non-ionizing radiation ordinance (ONIR) Maintain leadership through continuously investing into coverage, capacity and reliability

11 2018 focus Network Retail Customers Enterprise Customers Operational excellence 5G technology feels a lot more real and will shape the communications sector in years to come 11 5G with advantages and new connectivity opportunities New devices Speed Response time Capacity Up to 10 Gbit/s Just a few milliseconds Far more data transmission New apps New data Efficiency Less expensive Decentralised cloud Greater agility and flexibility Network slicing Dedicated, guaranteed network capacities New solutions Swisscom starts 5G rollout by YE 2018 and expects first 5G-ready phones early 2019

12 2018 focus Network Retail Customers Enterprise Customers Operational excellence In k In k 1.59 million customers with 3.27 million inone subscriptions Swisscom's convergence approach penetrates well within own customer base 12 1'014 Dec 17 1' Mar 18 inone Mobile t/o FM bundled in CHF 12 RGU base as of Q Penetration as per Q Dec Mar 18 inone BB t/o FM bundled Dec 17 Mar 18 inone TV 0 Dec 17 Mar 18 inone Voice Quarterly ARPU impacts 37% Q1 inone mobile RGUs within Retail postpaid base 0 30% Q4 34% Q4 42% Q1 inone broadband RGUs within Retail BB base in CHF Wireless Wireline Convergence in CHF Q3 Q4 Q1 Q3 Q4 Q1-12 Q3 Q4 Q1 Strong take-up since launch in April wireline ARPU trends further improving

13 2018 focus Network Retail Customers Enterprise Customers Operational excellence Retail Customers - Wireless performance Positive momentum in postpaid but convergence migration impacts ARPU 13 6'000 5'000 4'000 3'000 2'000 1'000 - Subscriptions (in k) YoY 250% 50 5'345 5'370 5' % '306 3'375 3' % % 75% 68% 100% 3'087 3'140 3'145 28% 31% 50% 21% % Q1 17 Q4 17 Q1 16 Q2 16 Q3 Q postpaid value postpaid volume* total o/w infinity/inone o/w bundled % 110% 90% 86% 86% 88% 70% 50% 30% 10% -10% Q1 17 Q4 17 Q1 18 blended ARPU (in CHF) non-metered share Q1 17 Q4 17 Q1 18 infinity/inone** postpaid Service Revenue (in CHF mn) Q1 17 Q4 17 Q1 18 w- revenue standalone w- revenue in FM bundles YoY Convergence benefit weigh on service revenue - revenue share from FM bundles further up * consists of data and multi SIM cards, ** w/o infinity entry and data subscriptions

14 2018 focus Network Retail Customers Enterprise Customers Operational excellence Retail Customers - Wireline performance Structural trend of voice line cancellations blended ARPU stable 14 6'000 5'000 80% 4'000 3'000 2'000 1'000-5'451 1'438 1' % 110% YoY 40 89% 89% 5'283 5' % 30 80% 680 1'467 1'976 1'988 2'063 1'840 1'779 89% 91% 90% 1' Q1 17 Q4 17 Q1 18 voice TV Subscriptions (in k) broadband o/w bundled 70% 50% % 10% % ARPU and ARPH (in CHF) Q1 17 Q4 17 Q1 18 blended non-metered share Q1 17 Q4 17 Q1 18 ARPH fixed RGUs per household * 30% -20% % Service Revenue (in CHF mn) % % Q1 17 Q4 17 Q1 18 w+ revenue standalone w+ revenue in fixed-only bundles w+ revenue in FM bundles bundle share YoY 120% % % % 40% 20% +37 0% ARPH slightly increasing - share of bundled subscriptions further up * HH = total broadband subscriptions + [total 1P voice subs total 1P broadband subs]

15 2018 focus Network Retail Customers Enterprise Customers Operational excellence Retail Customers - Convergence performance Bundles with ongoing positive momentum and revenue growth 15 6'000 5'000 4'000 3'000 2'000 1'000 0 Subscriptions and Bundles (in k) 5'138 14% 1'733 1'036 5'705 5'795 17% 18% 1'898 1'925 1'167 1' Q1 Q Q2 Q Q1 Q YoY % % % % % 100 5% 50 0% - ARPB/U (in CHF) and FM penetration (in %) 27% 21% 30% 32% 28% % Q1 17 Q4 17 Q % 28% 23% 18% 13% 8% 3% -2% Service Revenue (in CHF mn) YoY fixed-only bundles FM bundles RGUs in bundles mobile share of total bundled RGUs blended ARPB ARPU per bundled RGU HH* in FM bundles Postpaid subs in FM bundles Q1 17 Q4 17 Q1 18 w+ revenue in fixed-only bundles w+ revenue in FM bundles w- revenue in FM bundles FM penetration steadily increasing one third of postpaid subs now being FM bundled * HH = total broadband subscriptions + [total 1P voice subs total 1P broadband subs]

16 2018 focus Network Retail Customers Enterprise Customers Operational excellence Drive innovation further to ensure best customer offerings and TV experiences in Switzerland 16 Don't pay twice > Online-only > Focus on need for digital natives > Good value for best price > No-frills offering Home of football > Swisscom's formula for its unique TV experience: largest variety of content combined with extreme user-friendly handling Wingo Mobile Unlimited mobile data and voice in CH CHF 25/m Wingo Broadband Highspeed internet CHF 69/m Don't pay twice Save up to CHF 30/m CHF 94/m 1) > Swisscom offers via Teleclub exclusive access and/or premium formats to football content No minimum contract term No needless extras Swisscom network Cement high customer loyality with innovative product releases 1) CHF 99/m including TV

17 2018 focus Network Retail Customers Enterprise Customers Operational excellence Enterprise Customers - Telco and Solutions performance Connectivity business declining - Solutions YOY up primarily thanks to cloud business 17 Subscriptions (in k) 1'528 1'512 1' '256 1'267 1'265 YoY Service Revenue (in CHF mn) 90% Solutions Revenue (in CHF mn) 77% 80% YoY 72% 75% YoY70% % 16 50% % % 20% Q1 17 Q4 17 Q Q1 17 Q4 17 Q % 0% Q1 17 Q4 17 Q1 18 Wireless Broadband Voice other wireless wireline non-metered share UCC and Workplace all other * * Consists of revenues from vertical businesses, digital solutions, cloud and network services and other solutions Service revenue YOY lower: wireless with unchanged pricing pressure, wireline with structural changes and slightly increased market intensity

18 2018 focus Network Retail Customers Enterprise Customers Operational excellence New technologies enabling new B2B business opportunities Leverage existing corporate customer base with new M2M applications 18 Swisscom with IoT Enabling Offerings Positioning and ambition Device & data management Connectivity management Device integration > Well positioned > Best-in-class network, infrastructure and capabilities > Established partner/supplier ecosystem > Clear position and focus on scalable business > to keep growing through monetisation of Value-Added- Resellers (VAR) ecosystem, 5G combination, research cooperation with EPFL, smart city solutions and IoT security & analytics Swisscom aims to be THE IoT ecosystem player in Switzerland

19 2018 focus Network Retail Customers Enterprise Customers Operational excellence Cost focus as a key management priority Further steps initialised to reduce Swisscom's indirect costs and to increase agility 19 Simplicity Digitalisation Reduce OPEX Workforce management CHF -23mn decrease of indirect cost base -126 FTEs of Swisscom Switzerland since YE FTEs of Swisscom Switzerland within 12 months Optimise OPEX >95% of All IP migration completed >2.0mn customers on ALL IP Virtualisation pushed to the next level Project efficiency Network rollout FTE situation as per for Switzerland (17'611 FTEs, -669 FTEs YoY) and for Swisscom Switzerland (15'031 FTEs, -688 FTEs YoY) On track to achieve targeted cost savings 2018 of CHF 100mn

20 Agenda 20 Introduction In a nutshell Swisscom Switzerland Fastweb Urs Schaeppi, CEO Financial performance Q&A Backup

21 Wireline Mobile Commercial update Financial results Fastweb - Wireline performance Solid operational momentum thanks to flawless execution of UBB and commercial strategy 21 Consumer Business - order book +3% +26% +65% 2,400 2, ,124 FASTWEB BB CUSTOMER BASE (k) 1Q Q 2018 FASTWEB UBB CUSTOMER BASE (k) AND PENETRATON 47% 37% 1Q Q 2018 CORPORATE 1Q Q % CUSTOMERS MIGRATION TO NGN EOP 2018 TARGET 1Q 2018 TARGET 1Q 2018 ACTUAL 15% 20% 270k > 56% OF 1Q 2018 NEW CUSTOMERS GROSS ADDS ACQUIRED ON NGN WHOLESALE 1Q Q 2018 > Customer migrations over target > + 18 p.p. vs. 1Q 2017 Growing in all market segments

22 Wireline Mobile Commercial update Financial results Fastweb - Mobile performance On the right track to build a fully convergent customer base 22 Fastweb mobile and covergence KPIs MOBILE ACTIVE CB +55% 1.185k 763k 1Q Q 2018 PENETRATION ON WIRELINE CB 1Q % MOBILE+WIRELINE 1Q % SIM PER CUSTOMER: +13% CUSTOMERS KPIs COCKPIT 1Q 18 VS 1Q17 CHURN -5% % OF CUSTOMERS WITH 2+ SIM: +10 p.p. > ~1.2mn customers > Convergent customer base: +5 p.p. penetration vs. one year ago > Virtuous circle of improving customers KPIs Italian Mobile Market FY 2017 NET ADDS ANALYSIS 1 Total Market -2.3Mn MNOs -2.9Mn 14k 170k MVNO 1 MVNO 2 389k > Overall market decrease mainly due to Wind/3 consolidation of former subs bases > Fastweb recording the best performance in 2017 thanks to Transparency of commercial proposition Migration to 4G services Achieving a prominent market position in the mobile market 1 Source: analyst data

23 Wireline Mobile Commercial update Financial results Fastweb - Commercial proposition further evolving Enhancing distinctive positioning, leveraging new partnerships 23 New Energy/Telco bundle MAY 2017 NOV 2017 JAN 2018 MAR 2018 > Market launch of a joint offer with Eni TRUST START No hidden charges on mobile CHANGE Free Offer change on mobile End of wireline promos TRY Sim card + 1st month for free #NCP4 (WIRELINE) > ACTIVATION FEE: from 1.95 /m (48 months) to 0.0 /m > ULTRABROADBAND: from 5 /m (after 12 months) to 0.0 /m 1 > NO MORE BOUNDARIES OR EXIT FEES EUR/month FOR EVER 2 FASTENERGY Type of bundle Discount UP TO 10 /M UP TO 7.5 /M UP TO 7.5 /M The only player with a unique, transparent and all-inclusive proposition 1 UBB connections up to 1 Gigabit/s, according to customers technological coverage 2 Monthly fee for internet-only offer (no voice service). If customers want to add unlimited F-F calls, the price will be /m

24 Wireline Mobile Commercial update Financial results Fastweb - Financial summary The 19 th consecutive quarter of growth 24 in EUR mn Net revenues 1 EBITDA 2 CAPEX Operating FCF 3 +9% Wholesale % +6% mn Consumer Enterprise Q Q Q 2018* comparable 2 reported 1Q Q Q 2018* 1Q Q Q 2018* 1Q Q 1Q Q 1Q 2018* comparable 2 reported comparable 2 reported comparable 2 reported > Revenue increase of 9% driven by all segments (Consumer +12%) > Fastweb reverted to monthly billing in April (stable prices coupled to significantly higher value for customers) > 5% EBITDA growth (w/o extraordinary items) > 6% higher CAPEX mainly due to customer-driven costs (incl. customer migrations) > Positive operating FCF On track to reach 2018 targets 1 4 weeks billing impact in Q1 2018: EUR +16mn figures reported with new IFRS 15 standard. In order to compare them with previous year, 2018 figures are also reported with the old accounting standard 3 Operating FCF (excluding financial impact related to Tiscali business branch acquisition and FlashFiber)

25 Agenda 25 Introduction In a nutshell Swisscom Switzerland Fastweb Financials Mario Rossi, CFO Q&A Backup

26 P+L Cash flow B/S Outlook 2018 Revenue breakdown by segments Divergent top-line evolutions with Switzerland down and Italy up - in line with expectations 26 in CHF mn (+1.9%) 2'831 Q reported 1 2 Service revenue Retail Customers Swisscom Switzerland -39 Hardware and other Service revenue Enterprise Customers Solutions and other Wholesale and other Fastweb 8,624 Other Exceptionals 1) 2'885 Q reported 1 Decrease of voice access lines 3 Growth in the cloud business supports revenues TV, BB and wireless RGUs affected by market saturation increase of Solutions business W- revenue impacted by roaming and convergence 4 Increase primarily driven by higher (broadband) connectivity services 2 Price pressure in wireless Wireline with structural changes due to All IP and increased market intensity 5 Increase supported by growing customer base in Consumer segment as well as 4-weeks billing 1) Consists of currency impacts (CHF +47mn) and IFRS15 adjustments in 2018 (CHF -4mn)

27 P+L Cash flow B/S Outlook 2018 OPEX of Swisscom Switzerland Operational excellence initiatives with expected impacts to lower OPEX on a recurring basis 27 in CHF mn (-0.3%) ' direct costs -23 indirect costs 1' Q reported SAC/SRC Outpayments Goods purch. Workforce Other & Other Exceptionals 1) Q reported 1 YOY down primarily due to lower subsidies for TV boxes and routers in Q Increase driven by higher hardware sales and solution business 2 Lower outpayments for termination and roaming 4 Operational excellence leads to a FTE reduction at Swisscom Switzerland of -688 YoY (o/w -126 in Q1 2018) 1) Consists of IFRS15 adjustments in 2018 (CHF +8mn)

28 P+L Cash flow B/S Outlook 2018 EBITDA breakdown by segments Cost saving initiatives partly compensate top-line erosion in Switzerland Fastweb up YOY 28 in CHF mn 1' Swisscom Switzerland (-1.4%) '058 Q reported Retail Customers Enterprise Customers Wholesale, IT & Network Fastweb Other Exceptionals 1) Q reported 1 Lower costs partly compensate lower service revenue 3 Increase is supported by lower cost for support functions and higher revenue for wholesale services 2 4 Price pressure and structural effects in the connectivity business mostly compensated by growing margin contributions from Solutions business Revenue up thanks to volume growth and price changes, despite Q was positively impacted by a retroactive change in regulated bitstream prices 1) Consists of currency impacts (CHF +13mn) and IFRS15 adjustments in 2018 (CHF -20mn)

29 P+L Cash flow B/S Outlook 2018 Q Depreciation Net interest Other financial result Affiliated companies Tax expenses Minorities Net income Bottom-line up (+1.6% YOY) thanks to lower tax expenses 29 in CHF mn tax rate 20.2% EPS , EBITDA reported EBIT Net income Net income SC Shareholders Prior Year 1,073 1, > Better other financial result due to fair value adjustments of interest rate swaps > Lower tax expenses mainly due to lower EBT and final tax assessments related to prior years in Q1/2017 (tax rate 25.4%)

30 P+L Cash flow B/S Outlook 2018 in CHF mn Capital expenditures YOY decrease primarily driven by time lags in investment activities in Switzerland 30 CAPEX Q CAPEX split Swisscom Switzerland Q % Other** 682 Fastweb* Wireless network, 18% IT systems, All-IP & other, 14% CP equipment, 5% 357 Swisscom Switzerland 311 Fibre (FTTx), 32% Fixed network & copper access, backbone & transport infrastructure, 31% Q Q % Capex/Sales Ratio 17.4% > Swisscom Switzerland with delay in its investment activities to be compensated in the following months > In local currency Fastweb up by 2.6% due to higher customer-driven CAPEX * In local currency in Q1 2018: EUR 159mn, in Q1 2017: EUR 155mn, ** in Q CHF 5mn, in Q CHF 7mn

31 P+L Cash flow B/S Outlook 2018 Q Q Operating free cash flow OpFCF down by 22.5% due to higher net working capital compared to YE in CHF mn 1, Δ , EBITDA CAPEX OpFCF proxy Change in NWC Proceeds from sale of assets Change in pension obligations Dividends to minorities OpFCF > Higher net working capital compared to YE 2017 mainly as a result of prepayments

32 P+L Cash flow B/S Outlook 2018 CHF 1'385mn at 3.25% with maturity in Sept Swisscom's smooth maturity profile Debt portfolio actively managed and with a duration of 4.6 years 32 in CHF mn Maturity profile as per * > Successful domestic and Eurobond transactions YTD 1' CHF 150mn bond EUR 500mn bond 1' > CHF 150mn with a coupon of 1% and maturity in 2035 > EUR 500mn with a coupon of 1.125% and maturity in >2027 Domestic bonds Eurobonds Swiss private placement Foreign private placement Bank loans > 1.5% average interest rate of debt portfolio > Active management of interest rate risk within well defined risk limits > 86% fix > 14% floating * excl. short-term money market borrowings

33 P+L Cash flow B/S Outlook 2018 Underlying EBITDA trends 2018 of Swisscom Switzerland YOY tendencies unchanged but with different quarterly contributions 33 YOY change in CHF mn Quarterly evolution indicative Expected FY change approx. in CHF mn Fixed voice lines Q1-18 Q2 Q3 Q4-60 Outbound roaming Convergence discounts Q1-4 Q1-21 Q1 B2B Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q Expected FY change Swisscom Switzerland (approx. in CHF mn) -100 Indirect cost savings +23 Q1 Q2 Q3 Q Q1 margin evolution of Swisscom Switzerland in line with FY guidance

34 P+L Cash flow B/S Outlook 2018 Guidance confirmed Net revenue of CHF ~11.6bn, EBITDA ~4.2bn and CAPEX <2.4bn 34 in CHF mn 2017 reported Adjustments 2017 pro forma Expected YOY change Swisscom w/o Fastweb Expected YOY change Fastweb IFRS 15 impact 2018 outlook ** Splits into: Revenue 11'662 < 0 > 0-10 ~ 11'600 EBITDA 4' * 4'254 < 0 > 0-50 ~ 4'200 CAPEX 2'378 < 0 > 0 - < 2'400 ~ CHF 9.2bn for Swisscom w/o Fastweb + > 2.0bn for Fastweb ~ CHF 3.4bn for Swisscom w/o Fastweb + ~ 0.7bn for Fastweb > CHF 1.6bn for Swisscom w/o Fastweb + ~ 0.6bn for Fastweb Fixed voice lines - Outbound roaming - Convergence discounts -- B2B - Operational excellence ++ Industrial performance + FX effect + * Consists of income from litigations at Fastweb (CHF 102mn) and provisions for restructuring (CHF -61mn) ** For consolidation purposes, CHF/EUR of 1.16 has been used (vs for fiscal year 2017) Upon meeting its 2018 targets, Swisscom plans to propose again a dividend of CHF 22/share

35 Agenda 35 Introduction In a nutshell Swisscom Switzerland Fastweb Financials Q&A All Backup

36 Agenda 36 Introduction In a nutshell Swisscom Switzerland Fastweb Financials Q&A Backup

37 Backup Key financials - reported vs. underlying 37 in CHF mn Change Q/Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue, reported o/w currency effect IFRS 15 reconciliation -4-4 Revenue, underlying change +11 EBITDA, reported ' o/w Gain from sale of real estate 4 Restructuring -61 Other income from litigations (Fastweb) 102 Currency effect IFRS 15 reconciliation EBITDA, underlying change -8

38 Backup IFRS15 - P&L adjustments reported 2018 IFRS15 adj. in CHF million Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Retail Customers 1'497 1'481 1'478 1'515 1'456 1'457 Enterprise Customers Wholesale IT, Network & Infrastructure Swisscom Switzerland 2'227 2'222 2'227 2'301 2'186 2'187 Fastweb Other operating segments Group Headquarters Net revenue from external customers 2'831 2'859 2'914 3'058 2'885 2'889 t/o Net revenue IFRS15 impact Swisscom Switzerland (1) t/o Net revenue IFRS15 impact Fastweb (3) Direct costs (606) (599) (678) (783) (704) (688) Personnel expenses (753) (738) (695) (816) (723) (723) Other operating expenses (490) (525) (533) (659) (503) (503) Capitalized costs and other income Operating income (EBITDA) 1'073 1'187 1' '058 1'078 t/o EBITDA IFRS15 impact Swisscom Switzerland (9) t/o EBITDA IFRS15 impact Fastweb (11)

39 in CHF in CHF in CHF in CHF Backup IFRS15 - wireless ARPU adjustments 39 Swisscom Switzerland Swisscom Switzerland Q1 17 Q2 Q3 Q4 Q1 18 Blended (reported) Blended (IFRS15) Q1 17 Q2 Q3 Q4 Q1 18 Postpaid (reported) Postpaid (IFRS15) Retail Customers Retail Customers Q1 17 Q2 Q3 Q4 Q1 18 Blended (reported) Blended (IFRS15) Q1 17 Q2 Q3 Q4 Q1 18 Postpaid (reported) Postpaid (IFRS15)

40 Backup Retail Customers - segment reporting 40 Net revenue decreased driven by a lower service revenue, increase in hardware sales partly compensate. Service revenue decreased (-4.1%) due to lower access lines, higher discount volumes (inone) and lower roaming revenue. Contribution margin 2 decreased by 4.7%. Lower Service revenue partly compensated by lower cost for SAC (IP-router, TV-Box) and lower indirect cost (mainly workforce) YoY Net revenue in MCHF 1) 1' % Direct costs in MCHF % Indirect costs in MCHF 2) % Contribution margin 2 in MCHF % Contribution margin 2 in % 59.6% CAPEX in MCHF % FTE's 5' % Broadband lines in '000 3) 1' % Voice lines in '000 3) 1' % Wireless customers Prepaid in '000 1' % Wireless customers Postpaid in '000 3) 3' % Blended wireless ARPU in CHF % TV subs in '000 3) 1' % 1) incl. intersegment revenues 2) incl. capitalised costs and other income 3) sum of single play and bundles

41 Backup Retail Customers - RGUs and 1P-4P bundle subscriptions 41 Retail Customers in k, change to (in brackets) TV Voice Broadband Postpaid Prepaid Sum of RGUs per subscriptions Avg. # of RGUs per subscriptions 1P subscriptions 0 (-55) 435 (-374) 63 (-154) 2'293 (-246) 1'986 (-53) 4'777 (-882) 1.0 2P bundle subscriptions 434 (+131) 920 (+321) 2.2 3P bundle subscriptions 3'314 (+407) 3.1 1'100 (+79) 4P bundle subscriptions 391 (-18) 1'615 (-16) 4.1 Sum of RGUs per product 1'492 1'779 1'988 3'381 (+54) (-284) (+38) (+75) 1'986 (-53) 10'626 (-170)

42 Backup Retail Customers - ARPUs 42 Retail Customers in CHF YTD, change to (in brackets) TV Voice Broadband Postpaid Prepaid 1P subscriptions 0 (+0) 49 (+0) 36 (+5) 34 (-2) ARPU standalone blended: 36 (-2) 2P bundle subscriptions 90 (-8) 3P bundle subscriptions 129 (+1) ARPB: 133 (+1) ARPU per bundled RGU: 44 (-0) 4P bundle subscriptions 192 (+24) Blended ARPU: 62 (-3) Blended W+ ARPU: 41 (-1) Blended W- ARPU: 41 (-1) Total weighted ARPU: 41 (-1) U = RGU, H = Household, B = Bundles

43 Backup Retail Customers - service revenue 43 Retail Customers in CHF mn YTD, change to (in brackets) TV Voice Broadband Postpaid Prepaid 1P subscriptions 0 (-10) 69 (-59) 20 (-21) 445 (-56) Standalone SR: 535 (-146) t/o Wireline 90 t/o Wireless 445 2P bundle subscriptions 115 (+24) 3P bundle subscriptions 424 (+41) Bundle SR: 764 (+91) t/o FM bundles: 439 t/o fixed only bundles: 325 4P bundle subscriptions 225 (+26) W+ SR: 643 (-37) t/o W+ revenue standalone: 89 (-90) t/o W+ revenue in fixed-only bundles: 325 (+16) t/o W+ revenue in FM bundles: 229 (+37) W- SR: 655 (-18) t/o W- revenue standalone: 445 (-56) t/o W- revenue in FM bundles: 210 (+38) Total service revenue: 1'298 (-55) SR = Service Revenue

44 Backup Enterprise Customers - segment reporting 44 Net revenue down -0.3%, decrease in service revenue (-6.8%) due to price erosion and lower volume, solutions revenue and hardware sales partly compensate. Solutions revenue up 2.7%, driven by higher revenue for Cloud services. Contribution margin 2 decreased by 2.5%, driven by the change in revenue mix YoY Net revenue in MCHF 1) % Direct costs in MCHF % Indirect costs in MCHF 2) % Contribution margin 2 in MCHF % Contribution margin 2 in % 31.8% CAPEX in MCHF % FTE's 4' % Broadband lines in ' % Voice lines in ' % Wireless customers in '000 1' % Blended wireless ARPU MO in CHF % 1) incl. intersegment revenues 2) incl. capitalised costs and other income

45 Backup Wholesale - segment reporting 45 Revenue from external customers up 2.2% driven by higher volume of wholesale connectivity services. Intersegment revenue down as lower outpayments (lower roaming cost and lower termination fees) are invoiced to the customer units. Increase of Contribution margin 2 driven by change in revenue mix YoY External revenue in MCHF % Intersegment revenue in MCHF % Net revenue in MCHF % Direct costs in MCHF % Indirect costs in MCHF 1) -4 n.m. Contribution margin 2 in MCHF % Contribution margin 2 in % 53.7% CAPEX in MCHF - FTE's % Full access lines in ' % BB (wholesale) lines in ' % 1) incl. capitalised costs and other income

46 Backup IT, Network and Infrastructure - segment reporting 46 Indirect costs below prior year level (-2.4%) driven by lower costs for internal and external workforce. Headcount decreased by 5% YoY Net revenue in MCHF % Direct costs in MCHF -3 - Workforce expenses in MCHF % Rent in MCHF % Maintenance in MCHF % IT expenses in MCHF % Other OPEX in MCHF % Indirect costs in MCHF % Capitalised costs and other income in MCHF % Contribution margin 2 in MCHF % Depreciation, amortisation and impairment in MCHF % Segment result in MCHF % CAPEX in MCHF % FTE's 4' %

47 Backup Swisscom Switzerland - overview of Swiss TV market 47 Market volumes (in k) Market share: 13 % 2 % 29 % '256 1'210 1'180 1'170 1'175 1'276 Market share: 8 % 5 % 26 % Satellite/Terrestrial Sunrise 1) 1) CATV / Net Integrators 1) 33 % 1'417 1'387 1'302 1'252 1'201 1' % upc 1) 23 % 1'000 1'165 1'331 1'418 1'467 1' % 2) Swisscom TV Q1 1) Estimates for Q ) Figures (2016, 2017 and Q1) and Market share exclude non-active TV light customers

48 Backup Swisscom Switzerland - overview of sold handsets and SAC / SRC 48 Handsets (in k) SAC/SRC in CHF mn* (mobile and wireline products together) Swisscom Switzerland Enterprise Customers Retail Customers Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 *excluding intercompany SAC/SRC

49 Backup Fastweb - segment reporting 49 Consumer revenue up by 10.8% YOY driven by the increase in customer base. ARPU stabilised on previous year level. EBITDA down by 0.7% YOY as a result of a positive one-off effect in the prior year (retroactive lower prices for purchased wholesale products) as well as higher subscriber acquisition costs YoY Consumer revenue in MEUR % Enterprise revenue in MEUR % Wholesale revenue in MEUR 1) % Net revenue in MEUR 1) % OPEX in MEUR 2) % EBITDA in MEUR % EBITDA margin in % 29.3% CAPEX in MEUR % FTE's 2' % BB customers in '000 2' % Wireless customers in '000 1' % In consolidated Swisscom accounts EBITDA in MCHF % CAPEX in MCHF % 1) incl. revenues to Swisscom companies 2) incl. capitalised costs and other income

50 Backup Other - segment reporting 50 Net revenue up by 5.3% YoY due to higher revenue at Cablex with external customers as well as for construction services for Swisscom Switzerland. EBITDA on previous year level YoY External revenue in MCHF % Net revenue in MCHF 1) % OPEX in MCHF 2) % EBITDA in MCHF % EBITDA margin in % 19.8% CAPEX in MCHF % FTE's 2' % 1) incl. intersegment revenues 2) incl. capitalised costs and other income

51 Cautionary statement Regarding forward-looking statements 51 > 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 and business and certain of our strategic plans and objectives. > Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors which are beyond Swisscom s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors detailed in Swisscom s and Fastweb s past and future filings and reports, including those filed with the U.S. Securities and Exchange Commission and in past and future filings, press releases, reports and other information posted on Swisscom Group Companies websites. > Readers are cautioned not to put undue reliance on forward-looking statements, which speak only of the date of this communication. > Swisscom disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise. For further information, please contact: phone: or investor.relations@swisscom.com