Good morning, ladies and gentlemen, and welcome to the third quarter results 2017, presented by Urs Schaeppi, Mario Rossi, and Louis Schmid. Louis, the floor is yours.
Good morning, ladies and gentlemen, and welcome to Swisscom's third quarter results presentation 2017. My name is Louis Schmid, head of investor relations. With me are our CEO, Urs Schaeppi, and Mario Rossi, our Chief Financial Officer. The first part of today's presentation, hosted by our CEO, consists of three chapters: a quick overview of Q3 highlights, our market and financial performance, some explanations on Swisscom Switzerland, and finally, an update on Fastweb. In the second part of the presentation, Mario runs you through the financials and the unchanged guidance for the full year. With that, I would like to hand over to Urs to start his part of the presentation on slide four. Urs?
Good morning, ladies and gentlemen. If you go to slide four, you see the highlights of Q3. We have a financially solid Q3, and also operationally, we are well on track. You can see that we have a slightly increased EBITDA by CHF 47 million and slightly lower CapEx, but this is more a seasonal effect, a phasing effect on CapEx. Revenue-generating units. Overall good momentum on mobile postpaid and slightly growing TV customer base. Broadband, better momentum in Q3, and same dynamic on fixed voice lines. Cancellation of about 80,000 customers in Q3. Fastweb is well on track. Good momentum on mobile and slightly increasing broadband customer base. We launched successfully inOne. We have already today, after several months, more than 1 million customers. We have the new offers in our corporate business unit. We offer a decent cloud portfolio.
We are well-positioned in the cloud business B2B. Also we have news on blockchain activities where we see mid long-term certainly potential in it. Some words to our revision of the Telecommunications Act. There, we don't expect changes before 2020. Cost savings, we are on track, and the guidance is stable as Louis before mentioned. On slide five, you see the dynamic on our revenue-generating units. The market performance. Q3 is, I would say, overall from the performance, a better one than in the first half year. Strong momentum also on Fastweb in the mobile area, as you can see it on the chart. No big changes compared to the previous quarters. Financially, we have a solid quarter. If you go to the net revenue, you see that we have a stable revenue. Swisscom Switzerland is suffering a bit on the service revenue.
We will explain it later. In the same region as in the previous quarter. The growth on Fastweb with CHF 105 million growth on the net revenue side. The EBITDA, you see that Swisscom Switzerland is able to compensate the majority of the decline on voice lines and outbound roaming through cost measurements, through cost reductions, mainly in the area of indirect costs. The impact on the declining voice lines is CHF -58 million on an EBITDA level, and outbound roaming has an impact of CHF -42 million. This results in an overall slight increase of the EBITDA by CHF 47 million. Financially solid figures despite an intensive competition. On slide 8, I don't want to go deeper in it, but you see the main pillars of our strategy.
Unchanged quality to differentiate ourselves in the market, have a stronger focus on costs to compensate the impact of the service revenue in Switzerland. Slide 9 gives you some figures on our rollout strategy in the networks. You see the big increase of the ultra-broadband footprint on wireless networks. We have a coverage of 60%, which have a bandwidth up to 450 Mbps. 80% population coverage with speed up to 300 Mbps, more than 99% pop coverage, which speed up to 150 Mbps. We will continue to expand our footprint on fast mobile speeds. On wireline, 45% of our customers have a speed of more than 100 Mbps, and more than 3.8 million customers have more than 50 Mbps. Our goal for 2020 is to have 85% coverage with more than 100 Mbps.
On slide 10, some information to our market approach. We have a multi-brand approach. You see the different brands. The Swisscom brand is the value-based quality brand. To be pricing-wise much more competitive, we have our brand, Wingo, where we would react if aggressive offers also in the fixed market would enter in Switzerland. On the right side of the chart, inOne, that's our convergence flagship. We have a very successful launch after several months. Already more than 1 million customers. The development of inOne is in line with our expectations. Customers are benefiting from a certain discount on quadruple play, and Swisscom is benefiting from lower churn where we don't have actually a problem, but the churn will even be lower than it is today. Because we'll have a higher loyalty on this quadruple play bundle.
Page 11 gives you some flavors on the marketing activities which Swisscom made. We were able to keep our market share stable. We defended them successfully. On page 12, some information to inOne. On the left side of the chart, you see the revenue-generating units. Today we have 1.87 million ARPUs inOne. We have a penetration of inOne in the region of 21% to 24%. You see the strongly increasing penetration of inOne. The ARPU dynamic is the following. You see it on the lower part of the chart. Mobile, we have a slightly higher ARPU, an uplift in the ARPU. On broadband, we have a small rate degrading in the beginning of the launch. It's like normal case. It was bigger than now. Now it's a bit flattening out. It is an effect of rate degrading on broadband.
We have the converged smaller impact because of the convergence. Overall, as planned and the blended ARPU so far negligible. On slide 13, the wireless performance. You see a good performance on postpaid. We were able to have 47,000 additional customers on postpaid in the third quarter. Interesting is also to see that 27% of the postpaid customers are in bundles, in quadruple play bundles. The ARPU, overall blended ARPU is stable. The ARPU of Infinity inOne, the effect of it is actually an impact of dilution because the customer base of Infinity is always increasing or inOne, and so we have a dilution on the ARPU. That is the main impact. The second point is roaming.
Overall, the ARPU on wireless is stable, you can see it also as a result that the service revenue in mobile is stable. I think we have a good momentum and good performance in wireless. On wireline, the wireline performance on page 14. They are actually approximately the same dynamic as in the previous quarter. Declining voice line customers, increasing TV, increasing broadband subscription. The blended ARPU is stable. You see also that the fixed ARPU per household is slightly increasing. We are now at 2.18 ARPU per household, which shows the dynamics to more and more bundles. The service revenue on wireline is slightly going down, minus CHF 40 million on a year-on-year base, the main effect is the voice line business. Bundle revenues are increasing. On page 15, some information to our converged performance. An ongoing positive momentum on top line.
We have a growth of CHF 80 million with our bundles. The big growth is coming out of triple play and quadruple play bundles. You see that also the revenue-generating units are increasing in the bundles. The ARPU per bundle, you can see in the middle of the chart, it is approximately stable. The penetration of the fixed mobile bundles is increasing, we have a household penetration of 29%. On page 16, some information to our enterprise business. Overall, a good performance. On the subscription side, you see that we are able to grow on mobile still on the customer base. Broadband is approximately stable, we have also stable market share in broadband. The voice business is slightly decreasing because of cost optimization in the customer base. Overall, a stable situation on the subscription side, which also leads to approximately stable service revenue.
If you look to the price pressure which we have in some accounts, I think that is a good performance. The solution revenue is slightly going up. Interesting is also to see that the service revenue and the solution revenue are approximately on the same level. We have, let's say, a mix of 50% service revenue and approximately 50% solution revenue. Overall, good performance in the enterprise segment. On page 17, you see some innovation, which I wouldn't like to go deeper in it. Page 18, some information on our cost focus. We are on track to our goals. Our indirect costs are reduced by CHF 45 million on a year-on-year base, also the FTEs are as expected, lower. On page 20, some information on Fastweb. First, the wireline business. The customer base increased by 6%.
The ultra broadband customer base increased by +29%, and this shows our focus to migrate more customer on our ultra broadband network. Today we have a penetration of 40% ultra broadband in the broadband customer base of Fastweb. On the lower part of the chart, you see our new product portfolio from a single play to internet, voice, and mobile, kind of triple play offer. page 21, our performance in mobile Fastweb. We have now 1 million wireless customers. You see the strong growth of our wireless customer base. Interesting is to see that today the penetration of wireless in our wireline customer base is 22%, and we see a lower churn in this bundled offer. So 4 percentage points lower churn for converged customers. Also the Net Promoter Score is increasing on mobile, so good momentum on mobile. The corporate segment on page 22.
A good momentum on the corporate segment. The order book increased by 33%. We have a lot of nice new contracts. Interesting is to see the market share which we have in the enterprise business. Today, we have 29% market share in the B2B market, and that shows our strong position in this segment. Financially on page 23. Increased service revenue by 7%, increased EBITDA by 17%. If you take out exceptionals, it's +10%. So a good dynamic on the financial figures. CapEx approximately stable, which results in an increased operating free cash flow. Now I would like to hand over to Mario to give some more flavor on financials.
Thank you, Urs, and also good morning from my side. We are on page 25. I can give you some additional information to the financials. On the revenue side, in the Swiss business, we have more or less unchanged dynamics on the top line on a quarterly basis, except for the retail segment. You see there in Q3, we had a higher decline on service revenue. That's a seasonal effect because of the roaming season in July and August. For Q4 in the retail business, I expect a slightly higher decline of the revenues because of the impact of the bundle discount related to the inOne introduction. We have a fairly stable business in the B2B segment. You see the decline of service revenue is around 3% per quarter. Two-thirds is related to mobile. That all is coming from roaming.
That shows that we have a very stable business there, and we can keep our market share. In the solution business, we had a weak start in Q1, and now you see a good growth in Q2 and Q3. Q3, we had quite good dynamics in the banking business, where the workplace business stayed under a certain price pressure. In the wholesale business, you have two different effects. First of all, we have the reduction of the MTR rates, which you are aware. Impact is on a cumulative basis, CHF 42 million. On the other side, we have higher revenues from inbound roaming. There is the effect, CHF 29 million. On Fastweb, on the top line, a strong performance in Q3. That's mainly coming from two reasons. One is in the consumer segment. We have increased revenues by CHF 31 million or 12%.
In the wholesale segment, we have higher revenues of CHF 25 million or 40%. The next page to the OpEx of Swisscom Switzerland. As it was mentioned, overall, we are on track to deliver our CHF 75 million savings in the indirect costs. If you go to different elements on the direct costs, SAC, SRC, there we have two different dynamics. First of all, we have higher subsidized cost for TV boxes and routers, CHF 36 million. Also a change in the commercial offering. In the last year, they were booked as CapEx. This year as OpEx. We have via less retention volume. We had very strong retention numbers last year. You see also a certain trend towards SIM-only customers. The impact of the retention volume is minus CHF 28 million. In the outpayment in Q3, there was no positive impact on that side.
That the reason is the lower MTR tariffs were compensated by higher outpayments for roaming costs. That's also a seasonal effect. As I mentioned, on the indirect costs, we are on track. We reduced the FTEs in Switzerland in the first nine months by around 570 FTEs or 3%. You see there an impact of CHF 24 million in indirect costs. There are some seasonal effects. That's not the run rate of savings, which you can take also for Q4. It's more or less one of this CHF 24 million. The EBITDA by segment, only a few remarks. You see that the impact on retail that's coming from roaming, that the higher negative EBITDA impact in Q3 compared to Q2 and Q1. On the enterprise segment, after the decline in Q1, we had a very stable business development in Q2 and Q3.
It was even possible to slightly increase the EBITDA. In the segment wholesale, we are benefiting from the inbound roaming and cost savings in IT, network, and the OpEx department. In Q3, the higher revenues at Fastweb were partially compensated by higher advertising costs, which we needed for the mobile offering. On the next page, 28. Below EBITDA, there are no exceptionals to comment. Net income increased in the first nine months by 5.9%. Coming to the CapEx. In Switzerland, we are still below our plans, which we already discussed after Q2. We had quite a slow start in the FTTH rollout because we changed the way we do the construction. We went in a total contracting model.
We are confident that we can meet our plans in the rollout, and I expect in the FTTH area CapEx of around CHF 600 million for this year. On the free cash flow, there are no new exceptionals except one item below the operating free cash flow. We are able to sell a minority stake of Awin Limited, which had a cash impact of CHF 71 million. This investment is coming from the takeover of the PubliGroupe in 2014. For us, it was always clear that we wanted to sell this. That brings me to the outlook. The outlook is unchanged: revenue around CHF 11.6 billion, the EBITDA around CHF 4.2 billion. There are the dynamics in the Swiss businesses. Fixed voice cancellation will have an impact of around -CHF 80 million, roaming around -CHF 50 million to CHF 60 million.
Other effects like convergence impact, promotions, bundle discounts, around -CHF 50 million and as mentioned, a positive impact from the cost savings of CHF 75 million. CapEx unchanged around CHF 2.4 billion. I would say I expect slightly lower CapEx in Switzerland because of some savings related to CapEx efficiency. With that, I will hand over back to the operator.
Thank you, ladies and gentlemen, and thank you for your attention. You have now the opportunity to ask questions by dialing star 14 on your telephone keypad. Once you are in the queue, at your turn, you will hear a short announcement saying, "Unmuted." I already have one first question coming up from Louis Porta from the company Morgan Stanley. Please go ahead.
Yes. Hello. It's Louis Porta from Morgan Stanley. I have two questions, if I may, please. The first one is on the guidance that you just reiterated for the full year. Looking into the third quarter, your full-year guidance is basically implying a big decline in the EBITDA in the fourth quarter. If my numbers are about right, like 4% on a reported basis, probably around 8% or 9% on a clean basis, stripping out the one-offs from the fourth quarter last year. What I would like to understand is the dynamics behind such a big deterioration in the fourth quarter, or whether your outlook for the year remains being a conservative one. The second question is on Fastweb and the impact from the 28 days billing, which Telecom Italia was providing some indication in terms of the absolute positive implications for 2017 and 2018.
I wonder whether you could give us something similar and your views on the regulatory concerns on the implementation of this new frame for billing. Thank you.
Mario, do you take these two questions? On Fastweb, we indicate the number on page 23. It's a four-week billing impact. Q3 is about EUR 15 million. Yes, there is some noise around this implementation of this four-week billing. I think that's a result of the ongoing price pressure in Italy, and all operators did that, and I think that's all what we have to comment on this noise. On the full year guidance. First of all, Q4 is always relatively weak. Your numbers are right. Of course, I mentioned that in the residential segment, we expect a higher impact, a negative impact on the revenue side on retail. Third, we have higher, let's say, discounts for bundles in 2018, I think 2017 compared to 2016. It was already the case in the first nine months. This impact is slightly increased.
We need to guide these around. It's not exactly, it's around. Normally you have higher also stocks in Q4.
Yeah. Okay. Thank you.
I have the next question coming up from Julio. Please go ahead.
Yes. Hello for taking my question. My question is regarding inbound revenue in the wholesale division. I see that basically it has increased almost 50% Q on Q. Also, if I see, for example, 2016, we haven't seen a change on this line from Q2 to Q3. Basically in this quarter, the positive impact has been relevant. Can you give me some color of what has basically make this increase in wholesale? My second question is regarding broadband. I see that the performance on broadband has increased versus previous quarters. Can you give me some color on what the company has done this quarter in order to have better KPIs in this business? Thank you.
I will take the broadband and Mario, the inbound roaming question. On broadband, there are different effects, but certainly one of it is also inOne. InOne, we are able to increase our performance on broadband some more marketing activities on broadband. These are the main reasons. If you look also to the current figures, we have a good and stable business in broadband. Mario? On the roaming. The roaming business, you have to look at it inbound roaming and out payments. These two numbers you have to analyze together. As I mentioned on page 26, in Q3, we had also higher out payments because of the seasonality. The higher inbound roaming has also something to do with the seasonality. More tourists coming to Switzerland in July, August and September.
The net effect is practically zero in Q3 if you add these two effects. Higher inbound roamings and higher out payments for our customers traveling abroad.
Okay. Thank you.
I have a next question coming up from Fabrice Boulo from the Bank of America Merrill Lynch.
Hi. Good morning. Just a quick question on Fastweb. If you could quantify for us, the impact of the retroactive pricing and of the scope of the agreement with TI on the ultrafast broadband. Just for us to try to understand where you see the underlying revenue and EBITDA trends for the business year to date. Thank you.
Fabrice, can you again repeat the question? It is hard to understand.
My question is, if you could help us quantify, if you look at the performance of Fastweb, from a financial perspective, you grew EBITDA underlying by 10% ex one-offs, and revenue 7%. Can you strip out within that, what has been You quantify the impact of four-week billing, but you also mentioned, the retroactive pricing and the agreement with TI, the ultrafast broadband. Can you help us quantify the impact of those two items so we can have a better grasp of the underlying revenue and EBITDA performance of the business?
You go to page 39, there you have the details of the segment Fastweb. You see consumer growth revenue was 12%. As we mentioned before, in Q3, you can take out EUR 15 million for the four-week billings. The business with TI, that's included in the wholesale revenue. You see there, we have in the first nine months, we have a growth of close to 40% in the wholesale business. In Q3, the impact of the overall wholesale business, and that is not only related to TI, is 40%, and we don't disclose the margin of a contract with a customer.
Is it fair to assume all the growth in that segment comes from this agreement with TI?
Sorry?
My question is, what is the underlying trend here? Ex this agreement, is it still growing or it's declining?
The wholesale business is still growing. We are delivering a lot of BTS to the mobile operators. The TI business is also included in that. The overall business is the underlying. TI is also underlying because in the wholesale business, you always have some fluctuations. This year, we knew that we will have a strong wholesale business.
All right. Thank you.
I have the next question from Jakob Bluestone, from the Credit Suisse.
Hi. Good morning. It's staying on the Fastweb question as well, please. I appreciate the terms of the TI contract are not public, can you maybe just give us a little bit of a sense of how sustainable will that wholesale revenue growth actually be? This year it's grown by sort of EUR 40 million-EUR 50 million year-to-date. Should we be plugging in a similar number for next year? Also, I had a little bit of trouble hearing in the previous questions. Did you say there was a very high margin on that TI contract? Was that correct? Thank you.
No, I did not say it's a high margin on the TI contract. I said the wholesale business at Fastweb is a high margin business. For next year, we don't disclose now numbers for the next year. In the wholesale business, you always have some seasonal effect, because if you're able to conclude the contract, then usually you have a high impact in month one. Below that, we have a sustainable ongoing wholesale business, mainly coming from BTS.
With these mobile operators. That has been since year a strong and profitable business for Fastweb.
Just in terms of understanding this sort of sustainability, if TI keeps migrating customers to fiber, will your wholesale revenues essentially keep growing at a similar pace? Is that basically the mechanics?
No. The main effect on the wholesale business is the BTS business and some wholesale business for corporate customers.
Got it. Thanks.
My next question is coming from Joshua Mills from Goldman Sachs.
Thanks for taking the question. It's just a couple from me. Firstly, just if you could give a bit more color about your B2B business. We're seeing slightly better overall trends being driven by the IT growth, but that's lower margin. My question is, what kind of dynamic are you seeing in the traditional telco businesses where service revenues are still down about 3%? Is that pricing pressure, or is there any incremental competition? The second question would just be on cost cutting. Clearly from the presentation, you're doing a good job on this with the benefits of headcount reduction. Are there any limits or any kind of difficult conversations you're having with the unions about that at the moment, or do we think that this level of FTE reduction is sustainable longer term? Thank you.
I will take the B2B question more than the cost question. On the B2B business, you are right. The IT business, or we call it the solution business, will have potential to grow, but that's right. That's on a lower marginality. It depends very strong on which side. Cloud has a higher marginality than a system integration business. There we will have some growth. On the connectivity side, let's say that the telecommunication business in mobile, we will be able to keep our market share. We have, in some accounts, price competition, mainly from Sunrise. On the other side, the customer base or the R2 base is still growing. This is at the end, let's say, stable mobile business. The broadband business, let's say that the MPLS business in the corporate market is also approximately stable.
Overall, we don't see too many changes on the connectivity business in the corporate market. Slight price decrease, also a slightly increased volume.
Can I just ask one question on that? You're basically saying that you're not losing share. It's just basically that you're having to reprice customers downwards in order to maintain the share you have in B2B.
Yeah. It's very selected. Maybe you have in one customer a very competitive RFP process, you have some margin decline. On the other side, we are able to increase our share of wallet. Some customers, we can also win back. Overall, at the end, it stay approximately stable. On our cost plans and our cost programs, we are confident that we are on the way to deliver our announced CHF 300 million savings. The FTE reduction this year, of course, we have to consultation with the unions. We had no noise around that. That has two reasons. We are doing a good job in the FTE management, natural turnover, et cetera. We have, let's say, a very fair social plan in place. This plan has been in place since years, and that's well accepted with the unions.
We will also in the future be able, because by nature, part of these cost reductions come from lower number of FTEs, and we will be able to manage that in a good and orderly way as we did in the past.
Thank you.
I have a next question from Abhishek from the company Redburn.
Hi. Thanks for the opportunity. I have two set of questions, and I'm sorry I couldn't hear your answer to Louis' question very clearly. The question first is on EBITDA. If I look at your full year guidance, it kind of implies that quarter four EBITDA will be about CHF 946 million, which is more than 13% decline versus Q3. I know that your fourth quarter tends to be a bit weaker, but typical sequential decline tends to be more like 8% and not 13%-14%, which is implied by your guidance. I wanted to understand what is it that is going to be hitting the EBITDA particularly this year. The second question I had was with regard to Fastweb, where I think you have about 2.4 million customers, out of which 22% also take mobile. Let's say 500,000 odd customers take mobile.
Your total customers in mobile are million, which means there are 500,000 or so customers who don't take your fixed line, but who are taking your mobile in Italy, which is a bit unusual because I thought you were focusing mostly on selling mobile to your fixed customers. Just wanted to understand whether Fastweb is emerging as an independent mobile kind of business, which is not just selling to the existing customers, but also attracting new customers. Thank you.
I will take the Fastweb question on mobile, and Mario, the guidance question on EBITDA. On mobile, our strategy is to have a converged office broadband mobile. On the new contract we are doing, the majority of them are really converged. It's an upselling on the broadband customer base. On the other side, we have also some history in the mobile business. In mobile, we have already for a long time some mobile business. That's why we have some standalone mobile customers. It's not our strategy to build up a huge standalone mobile business. On the guidance, I mentioned that we will see some more pressure in Q4 in the residential segment. Higher negative impact as we had in Q3, mainly because of bundle discounts. The guidance is around, it's not exactly CHF 4.3 billion.
Got it. Thank you.
I have the next question from Georgios from Citi.
Hi. Good morning. I've got a couple of questions also. The first one is, if we perhaps go to the inOne tariff and the progress you had so far. It looks like the KPIs are getting better, but I sense from the tone of your comments that you are worried a bit about optimization and perhaps ARPU dilution as more and more customers go in. Do you mind just explaining to us what you've seen so far, whether it's in line with what you are expecting? Also what you're expecting from now, because if I'm not mistaken, you expect a significant dilution initially, but perhaps later it's less of a drag, the migration into this tariff plan. My second question is around the wholesale and situation of Fastweb. Sorry to keep coming back to this.
I believe you mentioned this as well in the previous quarter, actually the increase last quarter was much higher. Do you mind just explaining to us, I know you can't talk about necessarily the margins and stuff, but what exactly this wholesale contract with Telecom Italia entails? Thank you.
Good. On inOne, I will take the question, Mario will take the question on Fastweb. On inOne, it is normal if you introduce the new bundles, that in the beginning you have the strong optimizer. What we see is actually that on mobile, we are able to have an uplift on ARPU. On the fixed proposition we had, let's say, a kind of optimization on broadband, it is becoming smaller and smaller now. You have the conversion rate. Overall, that means we have a bit better sales figures, but a slightly lower ARPU on broadband and TV. These are the main effects, but I think the effects on ARPU will be flattening out now in the next months because you have the right changes in the beginning. We are convinced that we will continue to have a good momentum on inOne.
In the wholesale business, we always had wholesale business. You see that in the first nine months the growth was 37%, in Q3 was 41%. The margin is a contract with a customer of ours, we really do not disclose.
Can I ask another question? Sorry, it is not a follow-up, but I just realized I had a third question, which I did not ask. You mentioned earlier, during your comments, Mario, that CapEx may end up being slightly lower because of some efficiencies. Do you mind explaining to us whether these efficiencies are sustainable? I know it is not going to be a massive difference from CHF 2.4, but whether it is something that could be recurring beyond this year. Thanks.
On CapEx, the message of Mario was the following: we have a seasonal effect on the CapEx because the ultra broadband rollout in the beginning of the year was slower than planned because we made some changes on the construction site. Now we will ramp up there. We will have a better momentum on the rollout in the second half of the year. That was one point. The other point is, we are doing like normal. We try to increase our CapEx efficiency. That was his remark. Overall, we have not changed our rollout strategy on CapEx. There is no change. Thank you.
Okay, I have the next question from David Lopez, from the company New Street Research.
Hi. Good morning, and thank you for taking my questions. I've got two on Italy, please. The first one is on the broadband net adds. You have added 10,000 new customers this quarter. It's slower than last year, and I was wondering why is it slower given the whole market is picking up? My second question, sorry, still on Fastweb EBITDA. I was just wondering, I'm not sure I've understood well the question before, why the EBITDA of Fastweb did not pick up more given the revenue uplift? Thank you.
On the broadband acquisition side, I will take the question. Mario will take the EBITDA question. The Q3 for Fastweb was a weak one because there were really a lot of very aggressive promotion, more bundled promotion of our competitors. That's the main reason why we had a bit weaker figures in Q3 on broadband. If you take the whole broadband on Fastweb, you see that there is not so big changes to previous year. I think it was a very promotion-oriented quarter in Italy. That is the main reason.
On the EBITDA in Q3, we are not able to translate all the revenue increase to EBITDA increase. Two reasons. One is subscriber acquisition cost for the mobile business. Still a strong growth. Secondly, what I mentioned is the higher advertising costs also related to the mobile business. These are the two main reasons.
Okay. Thank you very much.
I have one question from Matthias von Leresche from the company Kepler Cheuvreux.
Yes. Two questions from my side. First one, on the B2B, if I look at the press release, you're saying that the incoming orders were approximately down 60% year-on-year. Can you give some color on that? What should we expect? Should we see a negativity from this next year or I do not fully understand what is meant with this comment. Next to that, is part of the reason of your cautious full year guidance related to the fact that you expect Salt will enter in Q4 the market?
Okay. Mario will take the guidance question, I take the order intake question in the B2B business. It's a bit normal that Q4 is a much stronger quarter than the previous quarter in the business. There is a seasonality in it, and we are optimistic that we will have a strong Q4 and can catch up a bit the lower order intake in the first three quarters. I think we don't have really an order intake trend dynamic there. This will be in a good dimension in the fourth quarter. There are some big, let's say, accounts where we will have a good contract.
Can you tell us more-
That nothing to do with Salt and the expected market entrance on 6th. Now it's November, we don't have any signals that they will come before Christmas. We expect them to come into the fixed line business in the first half 2018.
Okay. Thank you.
I have one more question coming up from Jakob Bluestone from the Credit Suisse.
Hi. Sorry for the follow-up, and apologies for having one more question on Italy. It's actually an accounting question. Can you maybe just explain why the JV with TI, where you have a 20% stake, is getting booked in consolidated revenues? Wouldn't it normally go through your associate line? Or perhaps I'm misunderstanding the accounting, so any clarification you can provide on that would be really helpful. Thank you.
There's nothing included from the JV that you mentioned. That's below EBITDA or below EBIT. It is wholesale contract we are talking all the time. That's a separate business. That's from the ordinary wholesale business, which Fastweb has been done since years. That's nothing to do with the JV.
Okay
created for the rollout in big cities, FTTH, the Flash Fiber. We have a minority stake, and as you mentioned correctly, this one is booked as equity, under equity accounting below the EBIT.
Great. Thank you very much for that.
Welcome.
I have one more question, from Nick Delfas from Jefferies.
Hi, thanks for taking the questions. I had a couple questions on OpEx, if I may. First, it was just to follow up on Josh's question on headcount. You mentioned a degree of natural turnover, and I think during 2016 you said around half of the headcount reduction was achieved in this way. I was just wondering, when we look at the 570 FTEs reduced during 2017, has it been roughly 50% as well? Also on headcount, I appreciate it's a bit sensitive, but I was wondering if you could give any color on what type of roles these staff were doing. Has the reduction primarily come from sort of admin or sales or network engineering roles? Finally, I just wondering if you could give us any more color on the seasonal or one-off effects that you mentioned in the run rate OpEx.
If you could just give some color on what that was, that'd be great. Thank you very much.
On the OpEx side FTE. We were able in 2017 to really use the natural fluctuation and redeployment, so that at the end we had not so much people who had to leave part the company. I think we were very careful in reducing our headcount in Switzerland. If we reduce the people, we don't do them in areas where we would have a big impact on the business. We haven't reduced salespeople, network engineering people, which are, let's say, volume driven businesses. We were more in the area of supporting functions and making the organization a bit leaner. That was certainly one point. Then we have some businesses which are declining, like in the voice telephony business. We can reduce the headcount in such areas. On the one-off in Q3, I think there are two, three effects.
One, we had this year lower marketing expenses than last year. Secondly, last year we had higher bad debt losses in Switzerland, and the third reason is we had higher costs for real estate in Switzerland also in the last year. They're more related to higher costs in the last.
Great. Thank you very much.
Three effects.
Sorry, this was the last question. There are no more questions in the queue.
Okay. Thank you, operator. With that, I would like to conclude today's call and thank you for your participation. If you should have any further questions, please don't hesitate to contact us from the IR team. Thank you again and goodbye.