Strong result in a challenging environment

‘Swisscom delivered a pleasing performance in the first quarter of 2022, once again reporting strong operating income,’ said CEO Urs Schaeppi. ‘We’re not letting up. In a highly competitive market, we are achieving success with our products, service and infrastructure. Our bedrock is our network. This has received several awards in recent weeks, including winning CHIP’s mobile network test for the seventh time in a row. Swisscom is committed to sustainability. Since the end of February, anyone who makes a phone call, watches TV, streams or browses with Swisscom has been doing so in a climate-neutral manner. The situation regarding the expansion of our fibre-optic network remains challenging. We are interested in a rapid solution; to this end, we are holding in-depth discussions with the Competition Commission. Our subsidiary Fastweb in Italy impressed with higher revenue and good operating income.’

Price-related decline in revenue from Swiss telecommunications business, growth at Fastweb

Group revenue fell by 1.2% to CHF 2,768 million. In the saturated Swiss core business, revenue declined slightly by 0.5% to CHF 2,070 million. Ongoing competition and price pressures led to a further decline in revenue from telecoms services. This decreased by 1.8% to CHF 1,365 million. By contrast, revenue in the IT solutions business with business customers increased by 8.8% to CHF 297 million. Business in Italy continued to develop positively, with Fastweb reporting year-on-year revenue growth of EUR 14 million (+2.4%).

The decline in the core business with telecoms services was offset by growth in the IT solutions business and ongoing cost-cutting measures. Consolidated operating income before depreciation and amortisation (EBITDA) was up slightly on the previous year by +1.2% at CHF 1,137 million. EBITDA rose by 1.5% in the core Swiss market, and that of Fastweb increased by 3.4% (in EUR).

Swisscom achieved net income of CHF 447 million, down 29.9%. This decline was due to non-recurring items in the previous year’s financial result: the transfer of a shareholding of Fastweb and the sale of Swisscom’s shareholding in Belgacom International Carrier Services. Without these non-recurring items, net income would have increased.

Network infrastructure: high investments – expansion challenging

Swisscom continuously invests in the quality, coverage and performance of its network infrastructure, reinforcing its position at the cutting edge of technology. At CHF 522 million, Group-wide capital expenditure was lower than the previous year (-3.3%).

Broadband expansion in the fixed network blocked in part by proceedings

As at the end of March 2022, Swisscom had connected more than 4.8 million or around 90% of homes and businesses to its ultra-fast broadband service (speeds in excess of 80 Mbps). Meanwhile, over 4 million or 74% of homes and businesses enjoy fast connections with speeds of more than 200 Mbps.

Swisscom aims to double the rolling out of the fibre-optic network to homes and offices (FTTH) to around 60% in Switzerland by 2025 using P2MP (point-to-multipoint) architecture. The Competition Commission questioned the network architecture and imposed precautionary measures in December 2020, which the Federal Administrative Court confirmed in 2021. Swisscom is interested in a rapid solution; to this end, it is holding in-depth discussions with the Competition Commission.

Swisscom has renewed the existing Sunrise UPC network access agreement. This will give Sunrise UPC continued and long-term access to all of Swisscom’s fixed-network technologies throughout Switzerland, including the new optical fibres that will be built in the future.

Expansion of the mobile communications network – demand growing strongly

In the first quarter of 2022, Swisscom’s mobile network has already won several awards as the best in Switzerland, including from CHIP and Ookla. Swisscom is constantly developing its network and making it ready for the future. 3G technology will continue to operate until the end of 2025, after which it will make way for 4G and 5G. As at the end of March 2022, the nationwide coverage of Swisscom’s 4G/LTE network was over 99%. Swisscom currently covers 99% of the Swiss population with a basic version of 5G. As at the end of March 2022, Swisscom had 2,075 antennas in 924 locations with full 5G+.

To ensure high network quality while demand continues to grow rapidly, the fifth generation of mobile communications needs to be rolled out quickly; 5G is more powerful, more efficient and more sustainable than its predecessor technologies. However, due to objections, the expansion of the mobile network is faltering in many places and the creation of urgently needed capacities for both 4G and 5G is being delayed.

Convergence: inOne bundled offering remains popular

The number of TV and broadband connections remains high, and demand for bundled offerings continues. Residential customers in particular appreciate the modular and flexible inOne subscription. In the fight against unwanted phishing SMS messages, Swisscom has activated a filter for all mobile customers of its own proprietary brands as well as secondary and third-party brands. Since its introduction in mid-March, an average of 50,000 to 80,000 fraudulent SMS messages have been blocked per week. At peak times for a phishing attack, such as at the end of March, there may be as many as 7 million blocked SMS messages within a matter of days.

At the end of March 2022, Swisscom had 2.51 million inOne customers in the residential customer segment. inOne accounts for 66% of all mobile subscriptions and 82% of fixed network broadband connections in the residential customer segment, while 45% use a combined offer.

The markets for broadband and TV are heavily driven by promotional offerings. The number of fixed-line broadband connections and TV connections remained virtually stable year-on-year, at 2.03 million connections for broadband and 1.59 million connections for TV.

The number of postpaid lines in mobile communications rose by 162,000 compared with the previous year, while the number of prepaid lines fell year-on-year by 188,000. Swisscom had a total of 6.15 million mobile access lines as at the end of March 2022.

Business customers: fierce competition and increasing demand for ICT solutions

The market for business customers is still dominated by price pressure and new technologies. Revenue from telecommunications services fell by 5.0% year-on-year to CHF 400 million due to price erosion. Swisscom has a strong position as a full service provider and customer satisfaction remains high. Demand for cloud, security, IoT and SAP solutions as well as business applications continued to grow. In addition, the acquisition of the MTF Group companies operating in German-speaking Switzerland and the Principality of Liechtenstein brought additional growth. Revenue in the solutions business was up by 8.8% in the first quarter of 2022 to CHF 297 million.

Fastweb sees growth in revenue, EBITDA and mobile and wholesale customers

The market in Italy is highly competitive but Fastweb. Sales revenues in the first quarter increased by 2.4% in local currency terms. In the mobile communications market, the number of mobile connections increased by 28.2% year-on-year to 2.65 million. Due to the challenging market environment, the customer base in the broadband business fell by 1.2% to 2.73 million, with the number of ultra-fast broadband lines growing by 9.2%. Bundled offers continue to play an important role, with 39% of customers using a package combining fixes network and mobile services. Residential customer revenues slightly decreased by 0.3% to EUR 285 million, while revenues in the business customer segment grew by 4.2% to EUR 247 million. Wholesale revenues also increased by 8.6% to EUR 63 million. The number of ultrabroadband lines provided to other operators now reaches 363,000 (+137%).

Fastweb’s overall revenue increased to EUR 595 million (+2.4%). Operating income before depreciation and amortisation (EBITDA) rose by 3.4% to EUR 185 million.

Sustainability: first provider with climate-neutral subscriptions

Swisscom has been a pioneer in climate protection and energy efficiency for over 20 years and has been operating its entire network with 100% renewable energy from water, wind and sun for over ten years. Now the subscriptions and the terminal devices are also climate-neutral: Emissions generated in the manufacture of network components or the use of terminal equipment, for example, are offset via high-quality projects at no extra cost to end customers. The focus remains on reducing CO2. Since February, Swisscom shops have no longer been printing till receipts; this measure will save around 4 million paper receipts per year. Swisscom has also expanded its range of refreshed smartphones – buying a second-hand smartphone reduces the device’s CO2 emissions by around 80%. Swisscom is continuing to work on reducing emissions and will be completely climate-neutral across the entire value chain by 2025, additionally saving over one million tons of CO2 more than it causes thanks to Work Smart services, IoT and other future-oriented customer solutions.

With Mobile Aid, Swisscom collects old mobiles and smartphones and either prepares them for resale on the used mobile phone market or disposes of and recycles them professionally. In March, the proceeds of the collection campaign went entirely to the SOS Kinderdorf (Children’s Village) in Ukraine. Some 20,000 devices were donated, which is about twice the monthly volume in 2021. In addition, Swisscom is currently waiving the costs of calls from Switzerland to Ukraine and the roaming costs incurred in Ukraine, and donated CHF 250,000 to Swiss Solidarity together with its employees on the national fundraising day.

Confirmation of financial outlook

For the 2022 financial year, Swisscom expects net revenue of CHF 11.1-11.2 billion, EBITDA of around CHF 4.4 billion and capital expenditure of around CHF 2.3 billion. Subject to achieving its targets, Swisscom will propose to pay an unchanged, attractive dividend of CHF 22 per share for the 2022 financial year at the 2023 Annual General Meeting.

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