Ad hoc announcement pursuant to Art. 53 LR / Q3 2022 results

On track with stable revenue and operating income

+++ Strong operating income +++ Revenue and EBITDA stable, and slight increase in net income (adjusted for non-recurring items) +++ High investment in the infrastructure of the future +++ Business customers: growth in solutions business +++ Fastweb sees growth in revenue, EBITDA and customer base +++ New CTIO – Swisscom makes a few changes to Group structure +++ Slight adjustment of revenue forecast currency related to around CHF 11.1 billion (previously CHF 11.1 billion – CHF 11.2 billion) +++

By Sepp Huber
Portrait of Christoph Aeschlimann, CEO Swisscom

Key figures at a glance

‘Swisscom presents strong operating income,’ said CEO Christoph Aeschlimann, commenting on the first nine months of 2022. ‘We are continuing to forge ahead with our products and service in a difficult economic environment. We are operating at an extremely high level, as demonstrated by our victories in the connect tests for the best fixed network and the best shops. In the expansion of our fibre-optic network, we are now relying for the most part on point-to-point architecture for FTTH connections so that our customers can use the connections blocked by the ongoing Competition Commission proceedings. Fastweb is also performing well and posting growth in revenue and operating income.’

Stable revenue in Swiss core business, growth at Fastweb

Group revenue fell by 1.4% to CHF 8,225 million; at constant exchange rates, it would have risen slightly (+0.3%). At CHF 6,152 million, revenue in the Swiss core business remained stable. Continuing competition and price pressures caused revenue from telecoms services to decline by 1.1% to CHF 4,091 million. This decline is attributable to the business customer segment. By contrast, revenue in the IT solutions business with business customers increased by 6.8% to CHF 877 million. The Italian subsidiary Fastweb continued to develop positively, reporting year-on-year revenue growth of EUR 47 million (+2.7%).

Consolidated operating income before depreciation and amortisation (EBITDA) totalled CHF 3,341 million, which was 3.6% below the previous year. Excluding non-recurring items and at constant exchange rates, it increased by 0.5%. In the Swiss core business, the decline in revenue was offset by ongoing efficiency improvements, and EBITDA increased by 0.7% on a like-for-like basis. At Fastweb, EBITDA rose by 4.3% (in EUR).

Swisscom achieved net income of CHF 1,214 million, down 21%. Non-recurring items impacted EBITDA and, in the previous year, the financial result and tax expense as well. These include the transfer of a participation of Fastweb, the sale of Swisscom’s participation in Belgacom International Carrier Services and one-off effects in the tax expense in the previous year as well as provisions for legal proceedings in the current year and previous year. Without these non-recurring items, net income would have increased by 2.5%.

Network infrastructure: FTTH expansion continues, new FTTH expansion target for 2030

Swisscom continuously invests in the quality, coverage and performance of its network infrastructure, reinforcing its position at the cutting edge of technology. At CHF 1,601 million, Group-wide capital expenditure was on a par with the previous year (-0.2%).

Broadband expansion in the fixed network blocked in part by proceedings

Due to the ongoing proceedings of the Competition Commission, Swisscom cannot market nearly 400,000 fibre-to-the-home (FTTH) connections built using point-to-multipoint architecture (P2MP). In order to enable customers to use the high-speed FTTH connections, Swisscom has decided to employ the point-to-point (P2P) architecture for the majority of new connections in the network expansion and to convert some existing P2MP connections into P2P. The annual budget for fibre-optic investments of CHF 500 million to CHF 600 million remains unchanged, but the expansion is proceeding somewhat more slowly than originally planned. Specifically, this means that it will only be possible to connect 50%-55% of connections with FTTH by 2025. But Swisscom will continue to invest in FTTH expansion after 2025 and will increase FTTH coverage to 70%-80% by 2030.

Residential customers: demand for flexible and customisable subscriptions remains high

Since the launch of the new family of subscriptions known as blue, the subscriptions of the previous generation inOne have been migrated on an ongoing basis. In the residential customer segment, Swisscom recorded 1.86 million customers on blue as at the end of September 2022. blue accounts for 44% of all mobile subscriptions and 79% of fixed-line broadband connections in this segment; 42% use a combined offering. The markets for broadband and TV are heavily driven by promotional offerings. The number of fixed-network broadband connections remained virtually stable year-on-year at 2.03 million, while the number of TV connections decreased by 0.6% to 1.58 million.

The number of postpaid lines in mobile communications rose by 178,000 compared with the previous year, while the number of prepaid lines fell year-on-year by 202,000. Swisscom had a total of 6.17 million mobile access lines as at the end of September 2022.

While revenue from telecommunications services in the residential customer segment has declined in each of the past few years, it remained stable at CHF 2,897 million.

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 3.6% year-on-year to CHF 1,194 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. Revenue in the solutions business was up by 6.8% in the first nine months of 2022 to CHF 877 million.

Fastweb sees growth in customers, revenue and EBITDA

Fastweb increased revenue in the first nine months by 2.7% in local currency terms. In the mobile communications market, the number of connections increased by 26.8% year-on-year to 2.94 million. Due to the challenging market environment, the customer base in the broadband business fell slightly by 2.6% to 2.70 million, though the share of ultra-fast broadband connections of customer base grew by 6 percentage points compared to the previous year to 85%. Bundled offers continue to play an important role, with 40% of customers using a package combining fixed network and mobile services. Residential customers revenues were stable at EUR 856 million, while revenues in the business customer segment grew by 3.4% to EUR 736 million. Wholesale revenues also increased, by 12.3% to EUR 210 million. The number of ultra-fast broadband lines provided by Fastweb to other operators now reaches 418,000 (+76%).

Fastweb’s overall revenue increased to EUR 1,802 million (+2.7%). Operating income before depreciation and amortisation (EBITDA) rose by 4.3% to EUR 628 million.

Additional measures taken to save energy

In order to avert the energy crisis that is looming this coming winter, Swisscom has joined the Energy Saving Alliance set up by the Department of the Environment, Transport, Energy and Communications (DETEC) and taken initial measures. In the evening and at night, indoor and outdoor lighting in shops and office buildings is being reduced as much as possible. In addition, the room temperature in all buildings has been lowered to a maximum of 20 degrees Celsius, and employees and customers are being informed about simple and efficient electricity-saving measures. Discussions are also underway with the relevant authorities as to whether and in what form Swisscom can support power generation in winter with its emergency generators.

New CTIO – Swisscom makes a few changes to Group structure

Gerd Niehage (52) is to be the new Head of the IT, Network & Infrastructure Group division and a member of the Swisscom Group Executive Board. On 1 March 2023, he will succeed Christoph Aeschlimann, who has been the CEO of Swisscom since 1 June 2022 and is currently heading the IT, Network & Infrastructure division on an interim basis. Gerd Niehage is presently employed by the automotive supplier ZF Group, where he is the CIO for the Asia & Pacific Region and globally responsible for digital innovations and enterprise architecture management. ‘Gerd Niehage has extensive digitisation and automation know-how as well as broad technical knowledge, but also a very comprehensive understanding of business,’ says CEO Christoph Aeschlimann. Niehage also holds an MBA from Mannheim Business School and a Doctorate in Business Administration from Middlesex University, London.

In addition, Swisscom will adjust its Group structure as of 1 January 2023. Group Strategy & Development will be responsible for identifying and developing new growth areas in Switzerland and abroad. All the Group’s assurance functions will be bundled and further developed in the likewise new division Group Security & Corporate Affairs.

Financial outlook: slightly adjusted revenue for 2022

Due to the strong Swiss franc, Swisscom is slightly adjusting its revenue forecast for 2022 and now expects net revenue of around CHF 11.1 billion (previously CHF 11.1 billion to CHF 11.2 billion). The expectations for EBITDA of around CHF 4.4 billion and capital expenditure of around CHF 2.3 billion remain unchanged. Subject to achieving its targets, Swisscom will propose to pay a consistently attractive dividend of CHF 22 per share for the 2022 financial year at the 2023 Annual General Meeting.

Key figures at a glance

  1.1.–
30.09.2022		 1.1.–
30.09.2021		 Change
adjusted*
Net revenue (in CHF million) 8,225 8,343 -1.4%
-0.3%
Operating income before depreciation and amortisation, EBITDA (in CHF million) 3,341 3,465 -3.6%
-0.5%
Operating income, EBIT (in CHF million) 1,557 1,640 -5.1%
Net income (in CHF million) 1,214 1,536 -21.0%
Retail broadband connections in Switzerland (as at 30 September, in thousands) 2,027 2,030 -0.1%
blue TV connections in Switzerland (as at 30 September, in thousands) 1,576 1,585 -0.6%
Mobile access lines in Switzerland (as at 30 September, in thousands) 6,166 6,190 -0.4%
Fastweb broadband connections (as at 30 September, in thousands) 2,696 2,768 -2.6%
Fastweb mobile access lines (as at 30 September, in thousands) 2,937 2,316 26.8%
Capital expenditure (in CHF million) 1,601 1,605 -0.2%
Of which capital expenditure in Switzerland (in CHF million) 1,147 1,124 2.0%
Group employees (FTEs as at 30 September) 19,033 19,172 -0.7%
Of which employees in Switzerland (FTEs as at 30 September) 15,786 16,006 -1.4%
  Net revenue (in CHF million)
1.1.–
30.09.2022		 8,225
1.1.–
30.09.2021		 8,343
Change
adjusted*		 -1.4%
-0.3%
  Operating income before depreciation and amortisation, EBITDA (in CHF million)
1.1.–
30.09.2022		 3,341
1.1.–
30.09.2021		 3,465
Change
adjusted*		 -3.6%
-0.5%
  Operating income, EBIT (in CHF million)
1.1.–
30.09.2022		 1,557
1.1.–
30.09.2021		 1,640
Change
adjusted*		 -5.1%
  Net income (in CHF million)
1.1.–
30.09.2022		 1,214
1.1.–
30.09.2021		 1,536
Change
adjusted*		 -21.0%
  Retail broadband connections in Switzerland (as at 30 September, in thousands)
1.1.–
30.09.2022		 2,027
1.1.–
30.09.2021		 2,030
Change
adjusted*		 -0.1%
  blue TV connections in Switzerland (as at 30 September, in thousands)
1.1.–
30.09.2022		 1,576
1.1.–
30.09.2021		 1,585
Change
adjusted*		 -0.6%
  Mobile access lines in Switzerland (as at 30 September, in thousands)
1.1.–
30.09.2022		 6,166
1.1.–
30.09.2021		 6,190
Change
adjusted*		 -0.4%
  Fastweb broadband connections (as at 30 September, in thousands)
1.1.–
30.09.2022		 2,696
1.1.–
30.09.2021		 2,768
Change
adjusted*		 -2.6%
  Fastweb mobile access lines (as at 30 September, in thousands)
1.1.–
30.09.2022		 2,937
1.1.–
30.09.2021		 2,316
Change
adjusted*		 26.8%
  Capital expenditure (in CHF million)
1.1.–
30.09.2022		 1,601
1.1.–
30.09.2021		 1,605
Change
adjusted*		 -0.2%
  Of which capital expenditure in Switzerland (in CHF million)
1.1.–
30.09.2022		 1,147
1.1.–
30.09.2021		 1,124
Change
adjusted*		 2.0%
  Group employees (FTEs as at 30 September)
1.1.–
30.09.2022		 19,033
1.1.–
30.09.2021		 19,172
Change
adjusted*		 -0.7%
  Of which employees in Switzerland (FTEs as at 30 September)
1.1.–
30.09.2022		 15,786
1.1.–
30.09.2021		 16,006
Change
adjusted*		 -1.4%

*On a like-for-like basis and at constant exchange rates

Swisscom uses various alternative performance indicators. The definition and reconciliation of values in accordance with IFRS are set out in the interim report as at 30 September 2022.

Swisscom AG
SCMN / Valor 874251 / ISIN CH0008742519
Group Media Relations
CH-3050 Bern
Phone +41 58 221 98 04
Fax +41 58 221 81 53
E-Mail media@swisscom.com
www.swisscom.ch

Disclaimer

This press release contains forward-looking statements. In this press release, such forward-looking statements may include, but are not limited to, statements relating to our financial position, operating results and certain 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 or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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