Earnings call transcript: Swisscom Q1 2025 sees stable revenue amid market challenges

Swisscom AG, a $33.6 billion telecommunications giant, reported its Q1 2025 earnings, revealing a slight decline in group revenue and EBITDA compared to the previous year. Despite these setbacks, the company reaffirmed its full-year guidance, maintaining a steady outlook amid competitive pressures in Italy and a stable Swiss market. According to InvestingPro analysis, the stock appears slightly overvalued at current levels, though it has delivered a robust 12.77% return year-to-date. The stock remained unchanged following the announcement.

Key Takeaways

• Swisscom’s Q1 2025 group revenue decreased by 1% year-over-year to CHF 3,750 million.
• Group EBITDA declined 6.6% year-over-year to CHF 1,270 million.
• Full-year 2025 guidance was confirmed, with expected revenue between CHF 15,000 and CHF 15,200 million.
• The Swiss market showed stability, while Italy faced revenue challenges.
• Swisscom is focusing on value creation and network investments.

Company Performance

Swisscom’s performance in the first quarter of 2025 was marked by a slight decline in revenue and EBITDA. The Swiss market remained stable, but the company faced challenges in Italy, where service revenues were under pressure. InvestingPro data shows the company maintains a GOOD financial health score of 2.64, supported by strong profitability metrics and steady cash flows. Despite these hurdles, Swisscom continues to focus on value-based strategies and network infrastructure investments to strengthen its market position.

Financial Highlights

• Revenue: CHF 3,750 million, down 1% YoY
• EBITDA: CHF 1,270 million, down 6.6% YoY
• Full-year revenue guidance: CHF 15,000-15,200 million
• Full-year EBITDA guidance: Around CHF 5,000 million

Outlook & Guidance

Swisscom confirmed its full-year 2025 guidance, with revenue expected between CHF 15,000 and CHF 15,200 million and EBITDA around CHF 5,000 million. The company is preparing for a major B2B product launch and plans to expand its energy cross-selling opportunities. In Italy, a unified product portfolio is set for an autumn launch, aiming to stabilize service revenues by 2026.

Executive Commentary

CEO Christoph Eischlemann expressed confidence in Swisscom’s strategic direction, stating, "We are spot on and on track to achieve the full year guidance." He emphasized the benefits of a value-based market orientation, saying, "Moving the market into a value-based orientation is beneficial for all players." The company’s solid fundamentals are reflected in its attractive 4.03% dividend yield and reasonable P/E ratio of 17.9x. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top stocks with expert analysis and actionable intelligence.

Risks and Challenges

• Competitive pressures in the Italian telecom market could affect revenue growth.
• Economic uncertainties may impact consumer spending and demand for telecom services.
• The integration of network infrastructure in Italy poses operational challenges.
• Shifts in regulatory environments could affect business operations in key markets.

Q&A

During the earnings call, analysts inquired about the synergy extraction process and network migration strategies. Swisscom confirmed price increases in Italy and discussed its approach to competitive dynamics in both the Swiss and Italian markets.

Full transcript - Swisscom AG (SCMN) Q1 2025:

Louis Schmidt, Head of Investor Relations, Swisscom: Good morning, ladies and gentlemen, and welcome to Swisscom’s Q1 results presentation. My name is Louis Schmidt, head of investor relations, and with me are our CEO, Christoph Eischlemann and Ergen Stadmetz, our chief financial officer. Let’s now move to page number two with the agenda of today. As you can see, our CEO starts presentation with chapter one and a quick overview on the highlights, the operational, and financial performances of the first quarter. Then in chapter two, Christophe presents a business update for Switzerland and Italy.

In the second part of today’s results presentation, Ergen runs you through chapter three with the first quarter financials, including the confirmation of our full year guidance. On page three, some brief remarks in our financial communication this year explaining the focus of the presentation, which is a comparison of 2025 figures with pro form a 2024 figures as Igorofun Italia had been consolidated from first January twenty twenty four, adjusted based on Swisscom’s accounting and reporting policies and unaudited. This comparison ensures that we provide a meaningful comparison on a like for like basis.

Christoph Eischlemann, CEO, Swisscom: With that, I would like to hand over to Christoph to start his part. Christoph? Thank you, Louis, and welcome also from my side to this q one twenty twenty five call. I will start on page number five with some group achievements. Overall, I’m pleased with the financial results in the first quarter.

We are spot on and on track to achieve the full year guidance. And as you have seen, we are also confirming the full year 2024 guidance with revenue between 15,000,000,000 and CHF 15,200,000,000.0 Swiss francs and EBITDA of around 5,000,000,000 Swiss francs. I’m also very pleased that we have successfully started the integration in Italy with Faster and Vodafone. The execution is in full swing and progressing very well as we are executing our plan, and the new XCO is in place and executing all required and planned integration actions, and maybe some more words on this later on in the Italy section. In Switzerland, we have been awarded again, according to Brand Finance, the strongest telco brand award worldwide, being a testimony to the strength of the Swisscom brand in Switzerland, building on the best experience and the best network.

We also won again numerous awards for our network and the service we provide, especially on the b to c side. And we are have launched in q one a new multimobile offering we are calling We Are Family to build the next level of convergence not only between wireline and wireless, but especially increase the household penetration of mobile on the main brand Swisscom. In Italy, you will see that we are driving the value focus and taking first steps to drive differentiation in the Italian market and stabilize the telco business. Now moving to slide number six. Sorry.

I need to drink some water. Sorry. Sorry for that. I’m slightly it’s like Cold. Cold.

Our RGU base is overall broadly stable in Switzerland and Italy. If you look at postpaid, we had a slight growth of 51,000 net debt to 5,500,000.0 RGUs, While on the broadband side, we have a slight decline of 14,000 net debt in the first quarter, and correspondingly, a slight decrease also on the TV side as the new net broadband come more from the second brand with less TV attachments. On the wholesale, we were able to continue our growth. We have seen the during 2024, also in this year, by adding 11,000 net adds on the wholesale side nearly compensating the decline of 14,000 on the B2C side. In Italy, we have a stable r two development on mobile, albeit with very different trends in B2C and B2B.

As you will see later on, B2C RGU loss is around 400,000, compensated by an equivalent growth on the B2B side, mainly driven by a large government contract, leading to an overall exactly stable RGU base at company level. The broadband RGU base was declining by 70 67,000, mainly driven by our value approach, trying to keep ARPU high and focusing on high quality sales in this area, suffering slightly from still higher churn on the Vodafone side, which I will explain a bit later. But as in Switzerland, we are also continuing our wholesale growth in Italy with plus 63,000, bringing our wholesale r two base to nearly or close to 1,000,000. So hopefully, we can report in q two that we will overpass the 1,000,000 mark either next quarter or the third quarter of this year. So if you look at the overall group financials on slide number seven, you see that we are on track to achieve the full year guidance 2025.

Revenue of at the group is standing at CHF 3,750,000,000.00, slightly down by 1%, mainly driven by a decline in Switzerland and some strengthening of the Swiss franc against the euro, whereas in Italy, overall revenue has been roughly stable. On the EBITDA side, we have a decline of 6.6%, bringing it to 1,270,000,000.00, driven by a decline in Switzerland and the declining EBITDA in Italy based on integration costs and some weaker telecom service revenue performance. Eugen will dive into the details also of CapEx and operating free cash flow later in the financial section. So I will leave this to to Oiken later on and move on to the business update of Switzerland and Italy. On page number nine, we will start directly with p to c in sorry, with the overall priorities for both countries before we dive into the the details of each individual country.

So as we outlined in February when we announced the full year 2024 results, we have a very clear roadmap for 2025 to drive the value creation. In Switzerland, it’s all about cementing our number one position in the country, managing the telco top line, making sure that service revenue erosion is as small as possible, and at the same time execute the cost transformation to achieve less and achieve more with less cost, and at the same time drive profitable IT growth. In Italy, the priorities are similar but slightly different. Of course, the main priority is to integrate the Vodafone and Fastweb business and capture the synergy potential, which leads to substantially lower cost base in the coming years. And at the same time, we are also very much focused on stabilizing the b to c service revenue, which I will talk a bit more in detail later on, and at the same time scale up new revenues in wholesale, in IT, and in the b to c energy business to create compensating revenues and EBITDA in in Italy.

Now moving on to b to c Switzerland on page number 10. You can see that overall the B2C evolution is actually very pleasing in Switzerland. We can also see some first signs in the market of easing tension on at least on the mobile side. So there is still, let’s say, some aggressive promotions in the market, but they are slightly less promotional instead of seeing minus 70, minus 75% discounts, we are now at around minus 50, minus 60, So tension is slightly decreasing. You’ve also seen that several brands have increased the prices.

We have followed this with on the Wingo side, we’ve also a plus one Swiss franc price increase, and we will now see how the mobile market evolves further in Switzerland over the the year. Overall, on the RGU base, we had a nice growth of plus 94,000 RGUs, bringing the SIM the RGU base to 3,470,000, and broadband was slightly down by 25,000 lines on the b two c side. I think one important priority this year is really to increase the multimobile convergence and household penetration. This is why we launched this new We Are Family offer, which offers up to or discounts for household penetration of up to five mobiles. We are very pleased with the start in the market in the first quarter, and we will continue to push this throughout the whole year to really accelerate the inflow on the main brand on the mobile side and make sure that our offerings are positioned on an affordable base in the markets.

At the same time, we are investing heavily in defending the customer base, customer value management, and at the same time pushing sales. So we are experimenting with different new store formats, pop up stores for the second brands like Wingo you see on the slide, but also strengthening other channels online or the mBusket and co mobile sales points, which is an important piece to defend and at the same time attack in the market to create enough inflow overall for the B2C business. On page number 11, you can see some other actions that we are taking to further enhance our B2C business. So we are very focused also on upselling the existing customer base into higher value tariffs, especially linked to the fiber rollout in FTTH turf where we are very successful in bringing our customers from the lower end subscription S or M level up to the L gigabit type speed subscriptions that leads to higher ARPUs. Behind the contractual migration, so we migrated roughly two thirds of the casero base from the MPLS product onto the new SD WAN product, and we aim to finalize the migration by end of next year, so by end of twenty twenty six.

And until then, we will still see structural revenue erosion due to the shift of technology from MPLS to the s t one product base. As by then, all the customers by end of twenty six, all the customers will be on the new products with a lower price point, and then we should see also some easing on the service revenue erosion on the wireline side in b to b to b. One product news I’m excessively excited about is what you see on the bottom left. So in two weeks time, we will launch a new fully modular four times convergent product offering. It’s the biggest product launch in b to b in the last decade, which will come over time replace most of the offerings we have today, which will really bring together connectivity and security as we believe that security is at the center of b to b connectivity in the future, and we really can bring a new very highly differentiated product offering to the market, and we will launch this and announce this to the press in exactly two weeks.

And I’m really excited to see the impact of this. Revenue wise, this will not create a big impact in 2025, but I do believe that it is a very important move going forward for the B2B business in ’26 and especially beyond ’27 to create a more differentiated positioning on the market and protect or differentiate against sort of the the regular pure plain connectivity business. And I think we will talk a bit more in detail about this offering at the Q2 call once we launch the offering in the market and also give you an outlook of how we evolve this in the coming years. On the IT side, we have some some revenue growth, 2.4%, still slightly below expectations on the organic side, but anyway up by two and a half percent. So it’s a it’s a good progress, and we are further looking how we can accelerate this this year.

We are facing some headwinds on the IT side due to macroevolvement on the, let’s say, economic outlook. As you obviously know, the Trump administration is creating some uncertainty with their approach to tariffs and and other aspects, which is also slowing down investments in Switzerland on the IT side. You have many companies that are currently holding back with investments or scaling back slightly on IT projects in to face or to deal with this uncertainty, and we can already see this slightly slowing down our IT business. So I’m happy that we are managed to continue to grow this in q one. And we also established a new dedicated unit for customized solutions to serve special customers which have special needs on critical infrastructures like the army or police first responders such as police forces, for example.

Okay. So I would move on to network on page number 13 and wholesale. We further invested heavily in our mobile and wireline network. Wireline five g plus coverage is up by 4% to 86%, whereas the wireline coverage is up by 6% moving or bringing us to 53% FTTH coverage overall. Another noteworthy news is the win of the chip award we won it for the tenth time in a row, And you can see the the chip performance measured the share.

Basically, what you can see on the the chart is the share of connections with over 100 megabits performance, whereas Swisscom achieved 93%, and Sunrise and Salt were at 7176%. So there is really a huge gap in performance of the network, and we I think we can say that our network is really performing in another league, distancing the other two networks in download speed very very clearly. And we will continue to invest in our mobile network to make sure that we keep this quality lead also going forward for our customers. The FTTH rollout is completely on track, as I said, up by 6%, we are on track to achieve our full year target of 57% coverage, and as you can see on the right hand side, this also drives our positioning in the wholesale market. So we are currently gaining market share with this extended FTTH footprint, and we can also monetize the technology advantage or the build out of the network.

You can see that our access service revenue has increased by 11% from 44 to 49,000,000 in Q1, and you can also see that already 45% of our wholesale access business is on fiber. So we have nearly half of the wholesale connections on fiber connectivity. It is up from 40% to 45%, and we expect this fiber share to continue to grow over time as we are now successively phasing out copper, and customers are moving more and more to the fiber connections as we continue to increase our footprint. And I think this is a very pleasing result to show that we can also monetize the FCT controller, not only in our own b to c business, but also on the wholesale side. So this brings me to the last slide concerning the SWISS business on page number 14.

You can see some examples of initiatives we have in place to reduce our cost base, but not only to reduce the cost base, but also to improve the customer experience. So for example, we are experimenting with different new formats in the shops, for example, self-service cabins to provide better experience or better support in shops on, let’s say, specialized topics where you don’t don’t always have an expert on-site in the shop. We have self-service screens sort of really combining also the physical elements of the digital elements and creating sort of what we call a phygital shop. It’s a bit strange word, but I think it it symbolizes well that we try to get the best out of both worlds and create a great customer experience in the store, at the same time reduce the cost of service by bringing in digital or centralized elements as it is called self-service cabins. At the same time, we are obviously also very focused on deploying automation and AI internally in our operations, not only in the call center but also in the IT rollout, in the IT operations, network construction, network operations to really improve customer experience, reduce meantime restore, fault detection, CapEx efficiency, and we have launched several several projects that are ongoing in this area.

You see that we have delivered 9,000,000 cost savings in q one, so we are on track to deliver our full year target of 50,000,000 for this year. Okay. Now I would close Switzerland and we move over to Italy on page number 15. So as I said in the introduction, the integration is on track and in full swing. We have built the connections between the Fastweb network and the Vodafone network.

We have completed this sort of all the technical work and have migrated the first thousand SIM cards. And starting mid May, new customer activations on on Fastweb will happen on the Vodafone network, and we will now pick up the migration speed which will happen to Q3 and Q3 until the end of the year. On the savings side, you will see most of these migrational savings in the second half essentially or very much back loaded into Q4. As the migration is slowly picking up speed, you will have not so big effect in Q2 obviously, and most of the financial impact will then come in Q3, mostly Q4. But I am happy that this is on track as this will deliver 200,000,000 of cost savings in 2026 or one third of the full synergies planned with our deal.

So it is very positive and good that we are completely on track to realize this important piece of cost synergy. Also another important piece of the integration is the design of the new organization. So we have completed the design up to the entry level and we are now finalizing the last layers of the organization until June. So we are completely on track there as well, so that we have a full and consolidated organization in place so everybody can really concentrate on their job instead of asking themselves who will be their boss next month. I think this is a really important and essential piece of our integration that we finalize this as quickly as possible.

And we have also or are doing a lot of work on cultural integration, making sure that people, behave in the way we want them to behave, that we can create this combined culture going forward, focusing on the the important elements that we want to keep from both cultures Vodafone and Fastweb. And as you will see later on, also synergy delivery is still small in q one, but it is completely on track, and we are confirming that we will deliver the planned synergies in 2025. Now moving on to b two c on page number 16, you have seen that we have had 35,000,000 of service revenue erosion in q one in b two c, mainly driven by b two c mobile. This is at the upper end of our expectations and clearly not where we want to remain in the long run, and we have taken a number of actions to start working on the stabilization of the telco top line in the first quarter. So some examples are we have increased the price on the Fastweb mobile subscriptions, we have increased the price of the Vodafone broadband subscriptions, we have stopped some telesales activity to improve the customer or the net add inflow, we have also stopped the repricing of the Vodafone customer base to get churn down in the customer base of Vodafone and improve the NPS.

We started working on improving the NPS, which we think is an important element going forward, working on reducing the churn and then getting high quality net adds in to stabilize the ARPU development over time, and then this will over time also stabilize obviously the service revenue. We have also launched a couple of new products like Fastweb Protect or Sempra Konezi, and we have started cross selling Fastweb Energia across the Vodafone base in in April, so you don’t see this yet in the q one numbers, but we can already say that FastSep Energy this year is performing very well above our expectations. And so we are excited about bringing this product also into the Vodafone customer base to make sure that all our customers can profit from this great product. And I think this will also already deliver some compensation of service service losses this year so we can compensate part of this with the new energy growth. But overall, if we look at the the telecom market in in Italy, it’s obviously still a a competitive market and the market has quite or historically has had a very high focus on on or was very volume focus driven.

We’ve targeted below the line offerings to gain customers and we believe that Vodafone, Fastweb and the market should more move into a value based approach and we are now taking the first steps to making these changes in our strategy to drive a change from volume back to value in across our whole customer base. And you can see on slide 17 what this means. So we have or want to position FasterVen Vodafone as premium multi product convergent brands and then clearly separated from HOUSE as a mobile only, no thrills sort of smart shopper brand. And we really want to reposition both the Fastweb and the the Vodafone well, not reposition, but reinforce the positioning of Fastweb and Vodafone as a quality leader with the best network and the best shops and the best service in Italy, and then focus on ARPU stabilization in these two brands. One other aspect which will be important going forward is really driving the convergence benefit, only on fixed and mobile, which is the obvious part of the convergence that we can drive now with the merger, but also the multi mobile convergence and really work as we do in Switzerland on the mobile or household penetration on the mobile side, and at the same time scale up new beyond core products such as the Fastweb energy.

And I think we will further refine this b to c strategy now going forward. The teams are working on this to make sure that we have a great plan in place, and we will for sure talk a bit more about this with the half year results. And we still plan to deliver a new completely integrated product portfolio in autumn this year, sort of to implement this new value based strategy going forward. Okay, moving to page number 18 on the B2B side. So you’ve seen we have quite high growth on the mobile side, up by 12% to 4,200,000 RGUs.

This is mainly driven by the TM nine contract, is basically delivering mobile connectivity to the federal government, and this is still ramping up in the course of this year, whereas the overall wireline side was roughly flat in RGU base. On the B2C side we’re also finalizing the organization, little pieces, and bringing sort of a combined product portfolio to our customer base so that we can really unlock the unique potential of faster than Vodafone as we are the only provider within network infrastructure in Italy for offering both mobile and wireline services. So we we believe we have a really unique product portfolio and opportunity, and we are now equipping our sales force across both Fastweb and Vodafone with all the tools they need to really accelerate sales on the b to c b to b side and bring all these great products to our customers. On the IT side in Italy, you see we had quite pleasing growth, plus 9.2%, bringing the revenue for the first time over 200,000,000 in Q1 twenty five. So we are very happy about this growth, driven mostly by cloud, cybersecurity and other IT products, but also the we are sort of wrapping up our AI pieces in Italy, which is I think an important an important offering going forward.

Also, sovereign cloud of everything that is going on currently in the world, sovereignty and local solutions take a bit more place in or a bit more space in the minds of our b to b customers. So the offering with fast cloud pushing really the sovereign cloud solutions is an important aspect going forward and will drive some of the revenue growth going forward. Now on page 19, a couple of words on network and wholesale. Also in Italy, we continue to invest in the best network of Italy, and we brought five g coverage up by 5% to now 78% of population, coverage on track to achieve our full year target of 2025, and also FTTH expansion is progressing well. We now stand at 52% FTTH coverage in Italy, so pretty similar to what we see in Switzerland, actually quite similar coverages of the country.

And in this footprint we have about a fifty fifty active passive fiber split share. We continue to drive our wholesale growth, so you’ve seen we had an amazing growth of another 34% of access line growth, bringing us to 968,000 access lines in the first quarter, and we expect it to continue pretty much at the same speed this year. Also increasing our wireline service revenue by 10,000,000. Overall, wholesale revenue was slightly down because we had some non core low margin revenues, which were some also linked to the InVID contract that we can explain a bit later, which were down by nineteen million. So overall, you’ve seen a small decline in wholesale, but the important pieces, the wireline and the mobile piece, are both continuing to to grow.

That was it from my side, and I will now hand over to Eugen.

Eugen Stadmetz, Chief Financial Officer, Swisscom: Thank you, Christoph. Good morning, everybody. So these are our first quarterly results, including our new segment Italy with Fastweb and Vodafone, which I’m happy to present today. As Thore pointed out at the start, the focus of the financial comparison will be compared to prior year pro form a numbers on all the main financial KPIs. So revenue, EBITDA, operating free cash flow for group, Switzerland, mostly Italy, obviously.

So this will be the focus, however, on free cash flow and net income, I will compare to prior year reported because we believe this is the more useful number in the end. Net income is net income and cash is cash. So I’ll start with the main financial KPIs on the group level. Revenue was down 47,000,000 in the group. Euro Swiss francs surprisingly stable year over year as Christoph already mentioned.

So that’s net of currency effect that’s a minus of 41,000,000. Switzerland was down 24,000,000 in combination of service revenue decline and lower hardware and software revenue. Service revenue decline was relatively benign this quarter as we shall see. Italy, almost stable at minus 8,000,000, a combination of service revenue decline in telco on the one hand, but also strong growth in the IT and the hardware revenues. EBITDA was down 90,000,000 reported, leaving aside some positive one offs in Switzerland last year that is an adjusted minus 57,000,000.

Switzerland was basically stable with minus 3,000,000 adjusted in Italy, minus 50,000,000 EBITDA decline, very much revenue driven and telco service revenue driven as we shall see in a minute. I move on to Page 22. CapEx was lower by DKK 118,000,000. We put the chart upside down here, so in order to show the impact of CapEx on operating free cash flow, so positive impact of 118,000,000 on operating free cash flow. On an adjusted basis, that’s plus 84,000,000.

So CapEx down by 84,000,000 both in in Switzerland and in Italy. In both cases, driven by an exceptionally high CapEx in q one twenty twenty four rather than some extra low numbers in this quarter in 2025. In Switzerland, this accounted for 22,000,000. In Italy, the effect was more pronounced, as I I’ll explain in a minute, with eight plus on operating free cash flow of 58,000,000. The end result operating free cash flow reported up 28,000,000, both from Switzerland up 19,000,000 and Italy up 8,000,000, basically stable.

So in Switzerland, it’s a stable EBITDA combined with a somewhat lower CapEx. And in Italy, it’s a combination of clearly lower EBITDA, but also clearly lower CapEx. That’s the overview over the group. I now dive into the individual segments starting with Switzerland on page 23. So revenue in Switzerland down 24,000,000.

If we go into in the into the individual segments, b to c was almost stable on the back of a quite moderate service revenue decline this this quarter, so with minus 6,000,000 in revenue overall. B to B was down 25,000,000, also a combination of lower service revenue, but also lower hardware revenues, which were only partially compensated by higher IT business revenue. Wholesale was marginally up, but that’s mostly due that was mostly due to roaming in this first quarter. On EBITDA, EBITDA in Switzerland down 21,000,000 reported, but on an adjusted level, stable at minus 3,000,000. Going into the segments, b to c minus 6,000,000, basically reflecting the lower revenue.

B to p minus 13,000,000. So compared to minus 25,000,000 on the revenue side, you see that we had some cost savings, both direct and indirect costs that softened the service revenue impact, and there was also a small contribution positive from the IT business year over year. In in the segment ISF, the infrastructure and support functions are plus 11,000,000, so this is where the cost savings typically show up, and they also did so in this first quarter twenty twenty five. I move on to page 24, a deep dive into Switzerland. I’ll just highlight a couple of things here.

On the top left, you see the service revenue broken down into b two c and b two b. So b two c was down just 10,000,000 this quarter. B two b down 16,000,000. So we are exactly with total of 26,000,000 in the quarter, we are exactly on track towards the guidance service revenue decline of about a hundred million for the full year. On the same chart on the top left, you see the change in indirect costs, which is which shows a plus of 9,000,000 year over year, so a positive effect of 9,000,000 year over year.

This is a bit below the quarterly run rate that we need for 50,000,000 cost savings for the full year. But as you know, and as I never stop to repeat, there are lots of quarterly fluctuations that go into these numbers. So we are fully on track for the 50,000,000 cost savings and confirm this guidance also this quarter. On the top right, for the first time, we split out the IT business in in Switzerland. We hope that provides some additional transparency on that topic.

The p and a shows that, yes, the IT business is indeed a source of growth in this quarter, 7,000,000 plus, driven both organically and inorganically, and a source of profitable growth, but obviously the profit margins are quite different from the telco margins, which will not come as a surprise to you. On the bottom of the chart, as usual, bottom left, the service revenue evolution over the last couple of quarters, as I mentioned, q one relatively benign with minus 26,000,000, in particular from b to c, just minus 10,000,000. However, to be fair, if you look at the time series here, bear in mind that last year, we had a positive effect on the b to c numbers of about 4,000,000 per quarter out of this VAT effect. We always said last year that this is just an effect that impacts 2024 and will be gone 2025, and this is obviously part of the quarter over quarter improvement that we see here. I move on to page 25.

Capex in Switzerland, down 22,000,000. We had some nonrecurring CapEx in q one twenty twenty four. So the end result on operating free cash flow is very, very important. Reported plus one stable free cash flows from Switzerland and on an adjusted basis, EVMAP. So this is obviously a major KPI that we are very much focused on to deliver stable operating free cash flows from the Swiss business, and we were successful at that in q one.

I now move on to Italy, page twenty twenty six. Revenue, we heard it essentially stable at minus 8,000,000 year over year in the quarter. Let’s look at the individual segments. So b to c revenue was down 23,000,000. Behind this number, there is a surge revenue decline of minus 35,000,000, which was partly compensated by growth in the energy business.

B to B revenue was up. There was a data service revenue decline of 12,000,000, but the IT business grew, as Christoph already pointed out, by 17,000,000 and also hardware revenues grew. So in total, b two c in Italy is still a source of revenue growth. Wholesale revenues were down 7,000,000. However, the core business, both in wireline and in wireless, is growing very nicely.

So this minus 7,000,000 year over year is sort of an artifact because in the prior year in q one, we had some significant and very low margin noncore noncore business in the wholesale segment on the Vodafone side, so this gives us year over year a negative effect, but by no means an indication of the growth potential of the core business in wholesale in Italy. I’ll move on to EBITDA on the same page. So EBITDA reported down minus 58,000,000. We did not have significant integration costs yet, so just 6,000,000 that we showed in adjustments. There is more to come, as you know, from our guidance.

So the adjusted number in q one is minus 52,000,000, all very much driven by b two c and here very much driven by the service revenue decline. It’s not the only effect, but it’s the major effect. There is one second effect in there. Just to remind you, we show here contribution margins of the individual segments and indirect costs that add up to EBITDA. So we’re talking about contribution margin b two c in that column with minus 35,000,000.

So it’s driven by service revenue decline mostly, but there is also an increase still in mobile COGS because the Fastweb brand is still growing on the mobile side. So we have a higher number of subscribers from on the Fastweb brand. And with these Fastweb mobile customers, we still have higher COGS associated to that because these customers so far are on the Telecom Italia and WinFrey network, and we are paying COGS for these customers. So that’s the second effect that affects the contribution margin here. Obviously, as Christoph pointed out, towards the end of the year, all these customers will be migrated, and we will see the major part of the positive impact of this migration next year and also a bit this year as I’ve explained when I talk about the synergies.

B to B contribution margin down minus 5,000,000 against an increase in revenue of plus 22,000,000. This is an effect that you already know from the fast track times. So despite growth on revenue, we have a lower contribution margin. This is due to the revenue mix because tempo service revenue that drops out in particular on the wireline side of fast track is obviously very high margin. And at the same time, the IT revenue that comes in is at lower margin, so we have a negative impact year over year.

On the other hand, the wholesale and indirect cost negative impact that you see on this page of minus one and minus 11 is mostly driven by one offs in the prior year, and it’s not an indication of any trend. So we certainly do not plan to have higher costs in the first year of operation. So this is more an artifact of one offs in the previous year on the Vodafone side. Deep dive on page 27, deep dive on Italy. I’ll just comment on the lower part of the chart, the service revenue, because this is obviously a a KPI that we track very closely and we report on on quarterly basis as we do in Switzerland.

So it’s 47,000,000 in total in the first quarter, ’30 ’5 million b two c, 12,000,000 b two b. If you take a look at the b two c side, it’s again most driven by b two c mobile, as Christophe already explained. So it’s a common at the moment, it’s still a combination of brand evolutions. Obviously, this will change over time. But for the moment, it’s a combination of brand evolutions.

So we have year over year subscriber loss on the brand, and this year over year subscriber loss translates also into a service revenue loss combined with still some ARPU dilution as churners on the Vodafone brand churn at a higher ARPU than those that came in over the last twelve months into the customer base, balanced to some degree by growth on the Fastweb brand and also some growth on the whole brand. So this is basically what is going on on the wireless side. On the wireline side, we are mainly suffering from subscriber losses. Also here on the Vodafone side, still suffering from the last repricings that were done in in 2024 and also a change in the invoicing cycle in 2024 that still generates some churn and re reduces the subscriber numbers, which then obviously year over year show up in the service revenue numbers. On b two b, just one comment on the wireless column, minus 6,000,000.

We talked about the subscriber growth due to TMI. At the same time, we have a negative year over year effect on telco service revenue in that segment. This is because of the very low prices on this historic t m nine contract, which adds customers up at a very low price, thereby also impacting the ARPU. Quickly on page 28, CapEx and operating free cash flow. As I said it at the beginning, CapEx was much lower in q one twenty twenty five than q one twenty twenty four.

Has a lot to do with q one twenty twenty four, mainly three effects there that increased CapEx in q one twenty twenty four. On the fast website, we had the strategy change on fixed wireless access, so we stopped the rollout of the dedicated network, which shows up as a positive effect year over year. On the Vodafone side, a major IT project was completed. The whole B 2 C stack was renovated, and that project was finished over the course of the year, shows up as a positive effect, and there were also onetime investments for a b 2 b euro business. So all of this adds up to quite a significant number and shows much lower CapEx in q one twenty twenty five than in q one twenty twenty four.

And results on an operating free cash flow basis. Operating free cash flow in Italy up on an adjusted basis by 8,000,000, combination of EBITDA decline, 52,000,000, and lower adjusted CapEx of 60,000,000, balancing balancing out in the first quarter. I move on to page 29. Just a quick update on on on synergies and integration costs even if obviously in q one, there is not much to be seen. This is just to stress that we are going to report obviously on a quarterly basis on our synergy performance and on the integration cost ramp up in q one at night on integration costs nor on the synergy side.

There is much there is much to be seen. So most of this is going to come. Christoph mentioned the synergy target for 2025, which we confirm at which we confirm at 60,000,000. So a large part of this is obviously the start of the migration of the mobile customers of Fastweb, which will take place in the second half of the year and will show up in the numbers in terms of cost savings in q four. And we confirm also the integration cost piece for this year of about 200,000,000.

So now I move on back to the group level to free cash flow bridge and net income bridge. As I mentioned at the start, we compare here against reported figures prior year rather than a pro form a number. So operating free cash flow is 498,000,000 in the first quarter, and the free cash flow at 471,000,000 was only marginally below and quite strong in the first quarter. What’s going on in the bridge between the two? So we had a small positive impact from change in net working capital of plus 54,000,000, and we had practically no net interest paid.

So that might seem a bit awkward given that we bought the company for 8,000,000,000. So let me explain briefly. It’s a combination of two effects. We had in the fourth quarter still the investments of the funds raised for the Vodafone transaction, and they delivered still some cash interest that we received in general this year. So that’s one part of the effect.

The other part of the effect is simply that the financing for the Vodafone acquisition started in May, so most of the coupons are only due in q two, q ’3, q ’4, and not in ’1 this year. So that gave us this very small cash net interest paid in the free cash flow bridge. We obviously see that on an accrual basis in the net income bridge, the interest expense is is very much is very much there. So q one in terms of free cash flow bridge, bit of an exceptional situation. If we compare the free cash flow to prior year, free cash flow is up at 273,000,000.

This is this is essentially driven by a rather sizable negative net working capital effect that we had in q one twenty twenty four and has not much to do with the performance of the business this year. I move on to page 31, the net income bridge, an incredibly busy slide. So I tried to clarify a little bit. Most of the year over year changes on this slide are simply due to the fact that we consolidate Vodafone Italy for the first time. I mentioned we compare here to prior year reported, so the simple fact that Vodafone is in the numbers now shows up in the year over year deviation.

So you see a higher lease expense, which is obviously due to the Vodafone inclusion into the consolidation. You see higher depreciation also here in particular on lease assets. So I would suggest to leave all of this aside. And in order to understand the numbers, it’s actually easier to start with EBIT, which was $5,519,000,000 and was 49,000,000 down compared to prior year, which is which is which is essentially because of the depreciation of intangible assets that we recognized as part of the purchase price allocation, which accounted for six minus 63,000,000. So this is really what is driving the year over year deviation.

Apart from this, there is a positive effect as we put into the notes from Italy of plus 52,000,000. Small negative effect from Switzerland of minus 30,000,000. And as I said, so a small positive effect overall, but then there is the purchase price allocation depreciations, which which dominate the year over year effect. If we go further down the bridge, there is a minus 63,000,000 compared to last year on the net financial result. This is obviously the additional interest expense.

It’s only partly from the added debt due to the Vodafone acquisition. It’s also due to the added lease liabilities we have because, obviously, also interest on lease is included in here, but the major part is additional lease interest expense on the added debt for the Vodafone acquisition. So all in, net income is 367,000,000, down 88,000,000, and this 88,000,000 are driven by PPA depreciations and the additional interest expense for the Vodafone acquisition. So I come finally to page 32, the guidance. You remember on February 13, we presented a preliminary twenty twenty four pro form a numbers, rounded then to 800,000,000, and also issued a preliminary guidance.

In the meantime, we published definitive twenty twenty four pro form a numbers, which we show on the left hand of this page. You received them a couple of weeks ago. And except for minor rounding topics and the finalization of the accounting harmonization, these numbers fully confirm what we published on February 13. And today, we also confirm the guidance that we issued on February 13. So we do confirm the guidance on Switzerland.

We do confirm the guidance on Italy. I would like to make one comment on Italy revenue. We confirm the guidance of 7,300,000,000.0 revenues revenue in in Italy. However, we talked about the service revenue decline on February 13 of about 100 to 200,000,000 compensated by about 100 to 200,000,000 of revenue from other sources. We confirm this equation.

However, as you saw in the first quarter, service revenue declined at minus 40 7 million. We are rather on a run rate power the upper end of that range of 100 to 200,000,000, But also on the compensating revenue components, we are on the upper end of this 100 to 200,000,000. So we do confirm the 7,300,000,000.0. As we confirm Switzerland and Italy guidance, we confirm the guidance for the group, and in particular, the guidance for the dividend of 26 Swiss franc per share, as always subject to Swisscom achieving the financial objectives set out on this page. And with this, I hand back to the operator.

Conference Operator: Thank you, Eugen. To ask questions, please press 14 on your keypad. I repeat, 14. If you wish to withdraw your request to speak, please press 15. Thank you.

I will now open the lines one by one. As soon as your line is open, you will hear a corresponding text on your own line. Please introduce yourself by name and company before asking your question. Thank you. First question.

Ged Moriss, Analyst, Barclays: Yeah. Morning. It’s Ged Moriss here from Barclays. Thanks for the presentation and taking the the questions. I mean, I’d I’d love to sort of start off just to dive into your first thoughts on the Italian business.

You’ve now owned it now for four months having closed the transaction. In your presentation, you you clearly talk about how the b two c business is maybe tracking a bit worse than you thought in terms of the service revenues, and you’ve talked about your plan as to to refresh that. You know, you’ve you’ve showed much higher CapEx, although you say it’s phasing. If I I guess if I sort of stand back, mean, Sego and I bought Vodafone Spain business, and they said that CapEx will be materially lower due to sort of lower vanity projects, I guess they would say.

On the on the on the mobile side, I’m curious as to understand how quickly you expect to see a recovery in the b two c series revenues. I mean, seems like maybe it’s gonna be more secondhand weighted than the first half. And I guess just as a small point, post a the MVNO contract, you had, I think, spoken about a confidence of keeping that. It seems to have changed bit now given the state they’ve taken TI. Your thoughts on that would be helpful.

Thank you.

Christoph Eischlemann, CEO, Swisscom: Great. Thank you. So just on the the second question, it’s, I think, straightforward. So the post MVNO contract, I think, was largely also debated in the press. So then both Poste and TIM announced that they will move the MVNO contract to the TIM network in 2026.

The exact timing is still ongoing discussion, so there’s no impact this year. And impact 2012 so the impact will be in 2026. How much it will impact ’26, we will see depends a bit on migration schedules, and we will talk about this with the guidance in in ’26. Now first off on the Italian business, I think overall we are pleased with the Italian business. I think many things are going exactly as planned.

The integration is going very well and I’m very happy with the integration progress. So I think on that side no negative surprises and actually very good progress. As you pointed out that the mobile service revenue b to c is is slightly above our expectation or not above expectation, it’s above so at the upper end of what we guided for. So this is something we are working on right now with the new b two c strategy with implementing sort of this value focus. But as Eugen pointed out in guidance, we expect the service revenue erosion for the full year to be at the upper end, so the recovery will mainly happen in the next year as influencing service revenue is not something you can change within one month or one quarter.

So although you will probably see improving trends over this year already on some aspects, translating it into improving service revenue trends will probably bring us into 2026. But at the same time, we have also very positive news on, like, generating new growth, like the IT piece on b to b, but also the the energy piece on the on the b to c side, which are actually ahead of our expectations. So we are also that’s why we also confirm compensating revenues at the higher end of the the guidance, bringing us to sort of a net zero revenue evolution overall into full year. And we will push now we we started the cross selling into the Vodafone customer base on energy, which is looking quite quite promising. So I think we just need to continue to work on both generating new revenues and at the same time stabilizing the service revenue on the B2C set.

But we are confident that we can we can improve the trends. It just takes a bit of patience. I think there was

Eugen Stadmetz, Chief Financial Officer, Swisscom: a piece on CapEx in in in the question at the beginning. I’m not sure I got it 100%, so let me just briefly reiterate the guidance on CapEx. So we confirm the full year CapEx guidance of on an adjusted level of 1,400,000,000.0. The q one CapEx is is quite high compared to that number. So you should not, you know, be tempted to forecast the full year CapEx based on the q one number.

Although it was significantly below prior year, it’s still very strong seasonally compared to the rest of the quarters, which is driven, among others, by

Christoph Eischlemann, CEO, Swisscom: the fact

Eugen Stadmetz, Chief Financial Officer, Swisscom: that Vodafone in the past had a different fiscal year ending March and always had, in the first calendar quarter of the year, very strong CapEx. So you should neither take the CapEx of q one and multiply by four. You will not end up at the right number. It will be too high. Nor should you take the year over year decline in CapEx and multiply it by four, you will end up too low.

So I I recommend to stick to our full year guidance of adjusted CapEx of 1,400,000,000 and work backwards in a sense.

Polo Tang, Analyst, UBS: Thank you.

Conference Operator: Next question.

Andrew Lee, Analyst, Goldman Sachs: Hi. It’s Polo Tang from UBS. I just have three quick questions, two on Switzerland, One on Italy. So first question on Switzerland. Can you talk through what you’re seeing in terms of competitive dynamics in both mobile and broadband April and May.

So in your opening remarks, you hinted at some signs of easing tensions, but just wondering if you could expand on those comments. And could you also comment on the customer reaction to the announced price increases at Wingo? Second question on Switzerland is just on Swiss service revenue declines. So you’ve guided towards $100,000,000 decline for Swiss service revenues for 2025. From memory, half of that decline is B2B, the other half is B2C.

However, in your presentation, you sounded quite upbeat about easing B2B declines as you complete the SD WAN migration, but also as you launch new B2B products. Given that you’re also bidding through price rises on B2C, are there any scenarios where Swiss service revenues could be closer to stable? Or could Swiss service revenue declines materially improve midterm? Third question is just on Italy. From memory, I think you put three price rises in March and April.

So can you remind us what the quantum of price rises was? Or another way of asking the question is much of an impact could this have in terms of helping to improve B2C declines? Thanks.

Christoph Eischlemann, CEO, Swisscom: Thanks, Polo. So on the competitive dynamics, wireline, wireless on the b to c side, so I would say on the mobile side, we see a slight, like, relaxation, but I would emphasize slight. So as I pointed out, you know, we still have discounts of like around 5060% in the market, not anymore the levels of seventy seventy five, so it has improved slightly, but the market is still highly promotional and aggressive, and also we see new brands coming in really at the lower end, like sub 20 or sometimes even around 10 Swiss francs enabled as MVNOs on on the SALT and Sunrise networks. So so this is sort of so there is still a lot of pressure in the market, and I wouldn’t say that we are out of the woods, but at least there are, let’s say, encouraging signs, and and that’s why I said we will see how it evolves throughout the the full year to really judge sort of if there is now if the market is sort of shifting a bit in a in a in a in a less aggressive mode or or not. And so and with regards to the window price increase, so we increased prices by 1 Swiss franc only on the mobile side for all customers, front book and back book.

And so far, the reaction I think has been very positive. I mean, of of course, some customers are not happy about it, but the the reaction overall is is I think is is in line with expectations. And we did a more for more moves, and we included 5 g in in the in the offering now. So customers also get more value for the increased price. And and we will and I think we still have a very competitive offer now on on Vingo even with one Swiss franc higher prices.

On the wireline side, I would say competitive dynamics are unchanged. The market is very aggressive in the wireline space, And as we are continuing to roll out fiber, we have increased competition from salt at a very low price point and then subsequently also very aggressive offers from Yallo, the second brand of Sunrise. And then this week expect to continue in this way. So I think whereas on mobile we see a slight relaxation on the wireline side, we we don’t see any any change in in the market. So bringing me to your question on service revenue, so we still stick to the guidance of 100,000,000 full year.

We said fiftyfifty b to b b to c, at the moment it looks more a bit like a fortysixty split, so b to c is running at around sort of 40,000,000 full year, b to b slightly more around 60, but still confirming the overall $1,100. What I was mentioning regarding b to b was mostly is concerning more the midterm, so the, you know, the ongoing MPLS SD WAN migration actually does impact the B2B revenue this year because the price points are lower on the SD WAN products as they used to be on the MPLS product base, and this effect will continue into ’26 until we have completed the technical migration of the MPLS product base. So you will we will hopefully improving trends on b to b ’27 onwards, so this is really sort of a midterm outlook, but obviously we I mean this is an ambition we have and I don’t really know precisely what will happen to service revenue b to b in ’27 now. So it’s like a but at least this effect, which we are currently seeing in the erosion this year, should be gone by 2027. And at the same time, we are working on this new product offering, which will increase our differentiation, which will offer us a new upselling opportunities, but first also we will need to bring the product into market and we will see in the course of ’26 how, you know, the uptake is on this new product offering.

So we probably can discuss a bit more in ’26 if and how this allows us to stabilize b two p service revenue ’27, like, maybe sort of second half twenty six or towards ’27. But I think the good news is, although we don’t know, you know, exactly what will happen, is we have clear initiatives in place and opportunities to actually improve things. It’s like so that makes me slightly optimistic for the midterm. In Italy, we executed two price increases. One is the bringing the the Fastweb mobile tariffs up by €1, sort of to the idea it would bring it closer to the Vodafone portfolio prices and at the same time increasing sort of the ARPU inflow.

And we also changed the or we did an equivalent change on the wireline side and actually increased the Vodafone broadband offer and aligned it with the Fastweb entry price. I think that the impact there is like €2 or to Mhmm. Rough around €2. Also, again, aligning the inflow ARPUs on both brands to sort of help us move in the direction of the new product portfolio, which will then come in autumn, which will be one unified portfolio for both for both brands. So this should increase or improve now inflow ARPUs in the coming months.

You will start seeing this in the service revenue probably only next year because as you know the service revenue year on year also still declines based on the effect we had last year and all the, let’s say, the churn coming in from prior quarters. But it is an important piece of our stabilization strategy to align and to increase inflow ARPU to, let’s say, limit the dilution we have or the delta between the outflow ARPU based on churn and the inflow ARPU from the net adds.

Andrew Lee, Analyst, Goldman Sachs: Thanks.

Conference Operator: Next question.

Andrew Lee, Analyst, Goldman Sachs: Yeah. Good morning. It’s Andrew Lee from Goldman Sachs. I had a couple of questions. Just first question, you have mentioned in the past the potential to renegotiate tower fees with Inwit.

Wondered if you could give any updates on your confidence on that front. And then just secondly, when you talk about the recovery in Italy and the impetus to shift from volume to value, what gives you the confidence that you can achieve that in with the market in its current state as, you know, four player commoditized market? What are you seeing in the market that, makes you believe that that’s, you know, possible where, you know, I guess, we see limited evidence of that in other kind of competitive ballplayer markets in Europe? Thank you.

Christoph Eischlemann, CEO, Swisscom: So on the first question, the tower InWit, we are in contact with InWit, so we don’t want to comment this topic any further. I think we will update you as soon as there is tangible news, but it is a topic we are working on internally with with our teams. On the the second piece, you’re right. I mean, this is a there is let’s say, it’s not a straightforward move to make this change in the Italian market, but we are convinced that moving the market into a value based orientation is beneficial for all players in the market. It’s as you can see or have we have seen in the past, like this volume based RGU strategy basically continuously drives down ARPU and inflow for all brands in the market.

So we believe that moving the market more in the value based approach will be actually beneficial for all players, but somebody needs to start the move. So and and to to test if it works, and we decided that we will move in this direction to really focus on our strength, best network, high quality service, high quality products, and then really sort of focus on getting churn down, making sure the customer base is happy, NPS is high, so automatically we’re reducing our churn, we will remove or let’s say have less high ARPU flow out, and at the same time we will work on the inflow ARPU by adjusting the price packages and making sure that we have the right price points in the market, so that overall we can generate a positive impact. And we will see how the market reacts, and so this would be, let’s say, a midterm play, not something that we will observe in one quarter. Also, the next important step is the launch of the new portfolio in autumn, and then we will see and take it from there and see how the market reacts in the course of 2026. But we do believe this would be beneficial for the whole Italian market.

Andrew Lee, Analyst, Goldman Sachs: Okay. Thank you.

Conference Operator: Next question.

Joshua Mills, Analyst, BNP Exant: Hi there. It’s, Joshua Mills here from BNP Exant. The first question I had was just on the sub brand penetration that you’re seeing in in the Swiss market in particular. I see that continuing to grow two, three percentage points a year. Perhaps you could give us a bit of detail about what the customer inflow looks like relative to the current sub brand penetrations on both the fixed and mobile networks.

So if, for example, on the mobile side, 35% of your base today is coming from sub brands, where are the net adds coming from, with that ratio? And then secondly, a follow-up to Tomasz’s question earlier on the MVNO contract in Italy.

Christoph Eischlemann, CEO, Swisscom: Could you just, give us a

Joshua Mills, Analyst, BNP Exant: rough estimate of how much revenue the Poste Italiani MVNO is contributing to your Italian business on an annual basis at the moment? Thank you.

Christoph Eischlemann, CEO, Swisscom: Okay. So on the the on your first question, sub brand penetration, we don’t publish splits between the individual sub brands and net ads movements between all those brands. I think what you what you can do is the the current growth rate you’ve seen or mentioned of 3%, we expect something similar to happen this year as we still have sort of a mix change between the main brand and the sub brands, and we expect it to continue roughly at the same speed. But at the same time, as I pointed out, we are also working on measures to increase the inflow on the main brand such as We Are Family. I think which is an important element to increase this, like, multimobile and household penetration to to support the main brand and sort of over time slow down the the second brand growth.

On the end, you

Eugen Stadmetz, Chief Financial Officer, Swisscom: know, in Italy, we cannot disclose any precise numbers because of confidentiality, but there are some quite a number of estimates for some of you guys out there, and they are not way off the mark. That’s what I could say on the topic today.

Joshua Mills, Analyst, BNP Exant: Got it. Thanks.

Conference Operator: Next question.

Luigi Minerva, Analyst, HSBC: Yes. Good morning. It’s Luigi Minerva from HSBC. Thanks for taking my questions. I have a couple on Italy.

Christophe, in your prepared remarks, you mentioned that in Italy, are now the only operator with network infrastructure. And I was just wondering if you can elaborate on how that can make a difference in in practice as you as you think through your your your commercial strategy. And then when you say 52% FTTH coverage, can you remind us the mix there? So how much is left on the faster Vodafone owned network, and how much is just reselling access of a fiber cup and open fiber? And and finally, so in in autumn in Italy, you will launch the new product offer.

When will you begin phasing out the Vodafone brand? Thank you.

Christoph Eischlemann, CEO, Swisscom: Hey. Thank you, Luigi. So I think there are two in regards to your first question, what can we do with it or what difference does it make that we own the network infrastructure? I think we need to look at the different markets. So obviously, it allows us on the b to b side, think, really be in a new unique position and offer unique services to our b to b customers in terms of wireline infrastructure, dedicated offers, and high quality service.

We are obviously resetting also the wireline infrastructure through our wholesale arm, which allows us to generate wholesale revenues, which we couldn’t do without our own infrastructure. And on the b to c side, I think it probably makes a bit less of a difference on on in the b to c markets. But there as well, I mean, you own the infrastructure, you have more control over service quality SLAs and can really drive also the the full network experience, mobile and fixed in a in a in a different in a different way. So we believe it’s an important cornerstone of our quality positioning in Italy, really associating the faster Vodafone brand with the best network experience, both on mobile but also on the on the fixed side. In terms of 52% coverage, I’m not sure if Eugen has the exact numbers, but most of this coverage is actually Open Fiber and FiberCop footprints that we are reselling, and part of it is also in our own infrastructure for the, let’s say, the last mile.

Everything else from the street cabinet on, like transport and backhauling is anyway our own infrastructure as we own a very extensive fiber net throughout Italy. So at the end, it’s sort of a mix. I don’t know, Eugen, if you have the

Eugen Stadmetz, Chief Financial Officer, Swisscom: Yeah. In the full year presentation of March 13, you can look at page 13 where we give the split between the passive access and the active access we have. Active access obviously means that we do not own the infrastructure and passive access in the sense that Christoph just described means that we do have the primary network. We never have the secondary network to the end customer. And in 2024, the split was 50 out of the 55 percentage points that we showed there for the full market, it was passive FTTH 15% and active FTTH 14%.

Obviously, with the split changing going forward as we want to move our customers more to the passive service where we have a better margin and more control over the customer experience.

Christoph Eischlemann, CEO, Swisscom: And then the third question Motorphone brand. Phasing out Vodafone brands. So there is no decision that we have taken yet on the on this topic. We are currently or we have a separate project ongoing on the whole branding positioning in the market, and we will communicate more on this once we we are ready. But I I expect this to take another couple of months, and we are not in a particular hurry to phase out the Vodafone brand as we can use it in five years.

So we want to take, you know, the time to really think it through, build the sort of the new brand, and then also have a very diligent plan of migration from the Vodafone brand into the new brand because this is something especially in the b two c market that I believe we need to be quite careful about so that we can make sure that we can transfer some of the brand equity and the awareness of the Vodafone brand into the fast web or to be defined brand. So this is something that requires a lot of work and and diligent planning. So but more to come on this topic as soon as we are ready.

Luigi Minerva, Analyst, HSBC: Thank you so much.

Conference Operator: Next question.

Polo Tang, Analyst, UBS: Yeah. Yeah. Hi there. It’s Steve Falcon from Redburn Atlantic. Thanks for taking the question, guys.

I’m I’m gonna ask three, although one’s in two parts. You could argue it’s four, but one’s very easy. Just just they’re all in Italy. First on on the price in Italy, sir, can you just confirm, it’s just the front book prices you’re rise you’re raising from from what you’re saying. I wasn’t quite sure, but just wanted to confirm that.

And then related to that, just just sort of I’m trying to understand the the sort of short and midterm outlook for service revenues in Italy. It feels like things might get a little worse in the short term if you lose the the current benefit from the t m nine contract. Is that right before recovering? And and do you have any sort of sense as to when you might be able to get back to service revenue stability in Italy? Is that is that a midterm goal?

Can you give us any color on that? And then just looking sort of further down the revenue lines in Italy, it looks like all the growth comes from hardware and other. Is other where energy is booked? And maybe just sort of give us a sense as to how those you know, we should expect those to move over time. And then, sorry, finally, just on the synergies.

As we try and track them going forward, I guess, you know, the the the immediate benefits from the MVNO move are gonna come in direct costs, and we can kind of look at those. Any other cost lines? Is there other indirect where we should be looking for savings to come through? Just help us sort of get a sense as to as we model out, know, where where those synergies drop into the cost line would be too would be very, very helpful. Thanks very much.

Christoph Eischlemann, CEO, Swisscom: Thank you, Steve. So your first question, I confirm it’s front book price only that we increased. So that’s that’s correct. On the service revenue in Italy, we we don’t expect the service revenue to become worse, but we expect the current trend to be roughly similar in the in the ongoing quarter. So that’s why we also said it’s at the higher end of the 100 to 200 bracket that we guided for at the beginning of the year.

So if you look at, you know, the 47,000,000 we had in Q1, if you have a similar trend, you’re at the high end or towards more than the 200. The stability we are working on right now and all the measures we are taking, we should see first signs of improvement in 2026 on the service revenue. Until we get to really stable, like maybe a zero erosion, this will is really a midterm goal we have. Exactly how much time it takes, we it’s difficult to tell. It depends also how the measures really work, the impact of the new product portfolio.

So we will probably be able to talk a bit more in detail about this early twenty six for the full year guidance ’26 when we see how the different measures are actually taking effect in our customer base and we will and we’ll have a bit more insight into into the the dynamics on that side. So I will leave the third and

Eugen Stadmetz, Chief Financial Officer, Swisscom: the fourth question to to Eugen. Yes. Steve, I can confirm that the energy revenue is booked under other revenue in the b two c segment. So that’s question number three. Question number four, in 2025, you will see most of the synergies drop into the direct costs.

However, a word of caution, the direct costs are obviously a mix of Cox mobile and of Cox wireline and and other direct costs. So that is there is not only Cox mobile in there. And only Cox mobile in particular, they will go up before they go down. As I mentioned, we saw this in q one As long as we are growing on the Fastweb brand and the bulk of the Fastweb customers is still on on Thiem and Winpre, this will first go up. And then eventually, once the migration gets into full swing, will go down.

There will be a small impact also in indirect costs this year. You know, we have other synergy buckets that we’re already working on with with a lot of energy, like the disentanglement from Vodafone. So some of this will show up in indirect cost, but the bulk this year, certainly indirect costs. For the outer years, I I refer to the respective page we showed in the full year presentation where we give an indication of what is direct and indirect costs, which I’m sure you know and already have in your model.

Polo Tang, Analyst, UBS: That’s great. Thank you very much. Welcome.

Conference Operator: Our last question for today.

Steve Falcon, Analyst, Redburn Atlantic: Yeah. Hi there. It’s Robert Grindel from Deutsche Bank. Synergy extraction seems to be going well in Italy. Were there puts and takes or discoveries for additional savings in due course?

I note you’ve been quite quick to close down some legacy services such as the Vodafone TV platform, and you mentioned spending on cultural integration in Italy. Is there anything unusual to call out there or just making Vodafone Italy a bit more Swiss Fastweb like? Thanks.

Christoph Eischlemann, CEO, Swisscom: Thank you. Yeah, I mean, you know, synergy extraction is going well and according to plan, and of course we are constantly looking for additional cost savings that we can find and anything we we find we immediately, you know, add to our list and execute. So I would say this is built into our DNA of Swisscom and Fastweb to continuously work on our cost base, we are obviously also doing this in the combined entity in Italy. And it’s also one way of compensating a bit higher service revenue erosion to make sure that overall in the coming years we can still make sure that the synergies drop down into the bottom line. On the culture side, we didn’t discover anything, you know, unusual or noteworthy on the Vodafone side.

I think Vodafone has a very good culture as well. Know, as every company there are pluses and minuses, but has very strong also, you know, network and quality culture on the on the network that we really want to keep. And we are sort of more focused on now combining sort of the entrepreneurial spirit of Fastweb together with the technology leadership and service orientation of of Vodafone, and really create like a combined strong culture. And I think so far this is going very well, and we have actually just run another culture survey across the whole employee base, Vodafone and Fastweb, and the excitement about the merger is very very high on both sides of companies, which is for me very encouraging. And now Valter, the CEO, is very much focused on transforming this excitement into performance and then making sure that going forward we can really deliver all our results and promises.

And I think so far, you know, we have management team in place that has a track record of on delivering on the promises, and I’m confident that we will also deliver going forward on what we intend or announce.

Louis Schmidt, Head of Investor Relations, Swisscom: Alright. Thank you, Christoph and Duergen. Thank you, everyone. And with that, I would like to conclude today’s conference call. If you should have any further questions, please do not hesitate to contact us from the IR team.

Thank you. Speak to you soon, and have

Eugen Stadmetz, Chief Financial Officer, Swisscom: a nice day. Bye bye.

Conference Operator: Dear participant, the conference call has come to an end. Thank you for your participation. Goodbye.

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