Good afternoon, ladies and gentlemen. Welcome to Swisscom Full Year Results Presentation here in Zurich. Presentation addresses our achievements and performance of last year and our strategic framework, which leads us in our daily thinking and doing to deliver the best for our customers and as a result, also for our shareholders. Let me quickly introduce today's speakers and agenda on Slide number two, entitled The Best in the Connected World from the left top in the anticlockwise direction. On my left, your right, the first person in the row is our CEO, Urs Szeppe.
Urs will start today's presentation with twenty sixteen in a nutshell. This chapter dives into last year's highlights commercially, operationally and financially. Then in Chapter two, Urs will elaborate on trends, our strategic answers and twenty seventeen priorities to increase competitiveness and sustain value. Then Chapter three focuses on operational excellence, very key to us with updates on organizational changes and benefits, simplicity efforts, all IP and CapEx efficiency. On my right, your left is Heinz Herrn.
Heinz is our CTO. He will deliver an update on the Swiss infrastructure, talk about the latest technology developments and give an overview of our wholesale portfolio and the regulatory situation. Again, on my left, next to Mario is Dirk Wirtz Bitski. Dirk is our Chief Marketing Officer and in charge of all products and the marketing of our Swiss retail customers. In his part, Dirk will discuss the commercial performance and activities in our residential and SME segments.
Then next to Heinz, again on my right, Christian Butti, our Chief Business Officer, he will discuss the performance of our corporate segment and talk about enterprise customers' Unix market proposition to address all ICT needs of business customers and trends. After Christian's presentation has been completed, hopefully at around twenty five past three, we will have a twenty minutes break for coffee and tea and some cakes outside. Then we will continue at a quarter to four with the Fastweb presentation. Alberto Calcagno, again on my right, CEO of Fastweb, will dive into Fastweb's performance and its plans going forward. And finally, Mario Rossi, our CFO, will discuss in detail our financial results, including the outlook 'seventeen, and then we finally move into Q and A.
May I kindly ask you to keep questions until the end of the presentation for the Q and A session? With that, I would like to open the conference and hand over to Urs to start his part. Urs, the floor is yours.
Thank you, Louis, and welcome from my side. If I look to the 2016, I would say we have a solid result, a strong performance in the market. We were able to keep our market position. If you look to the market shares, we have stable market shares or even slightly increasing market shares. And we have a solid figure of KPIs if you look to turn to the ARPU, so solid financial performance and strong market performance.
Fastweb, we have growth with Fastweb. And if I look to 2017, 2018, we are in a strong competitive positioning. So in the world, we're becoming more and more converged. Swisscom is excellent positioned. We are in line with our guidance, and you will see later that our outlook is also we have a solid outlook for 2017.
The highlights of 2016, I don't want to touch them all. But what you can say is that we performed on our infrastructure projects. We are one of the first company in the world who implemented G. Fast, just as an example. So all the fiber to the street deployments we are doing now will be on the technology of g.
Fast. We are also on a good track to the All IP migration. Twothree of the customers are migrated to All IP. And if you have a look to the retail market, you can see also that we improved our project our TV product and brought some other innovations. Strong performance in the SME market.
If you go to the sector results, you will see that we had a good performance in the SME market And also in the enterprise market, which is a very competitive one where we had price pressure, we were able to keep our market shares and or even slightly increased also the subscription in the mobile market. And we had a lot of very nice wins in the ICT environment. Fastweb is on a good track. We are investing in our ultra broadband infrastructure, and we also strengthened our mobile offer with MVNO a full MVNO offering. So overall, solid 2016 where we were able to deliver what was our ambition.
Here, you see the market performance, only one or two remarks. You see stable market shares in mobile, stable market share in broadband and in TV, slightly increasing market shares. Revenue generating units are approximately stable at €12,500,000 and good momentum in the bundling business. So we were really able to grow our bundling business. On Fastweb, some remarks.
I think it's interesting to see once more what are our market share in the B2B market. Fastweb has a market share in the B2B market of 28%. So we are the clear number two behind Telecom Italia, and we were able to slightly increase it. And in the consumer market, you can see on the left side of the chart, we were able to increase our customer base by 7%. So we have a 7% increasement of our broadband customers.
And what is certainly very important also for us is that we were able to increase our Net Promoter Score. Alberto will come later to it, but you will see that we are really on the Net Promoter Score in a leading position, and this is important also for the future if you look to hold churn level in Italy, which is, let's say, quite a challenging one compared to Switzerland. Some figures or highlights to the 2017. You see revenue approximately flat. Also on an underlying or on a
comparable level, approximately flat revenue. The dynamic in Switzerland is a bit another one than the one in Italy. In Switzerland, we have pressure from roaming. We lost on a contribution level about EUR 100,000,000
in the roaming business because of our pricing, but also because we bundled in roaming in our Infinity tariffs. So this gives also a bit of pressure on our top line. And the enterprise business, we had price pressure in the IT area but also in the mobile area. Mobile is now a bit better. Christian will certainly talk about it.
So price pressure in Switzerland, improvements on the cost side, so we are on track to deliver our cost targets and Fastweb with a good momentum. EBITDA, you see 195,000,000 higher EBITDA. Important is to look it on a comparable base. There, you can see that we are EUR 54,000,000 below for previous year because of exceptionals, which Mario will explain later. CapEx on a level of approximately 2,400,000,000.0 The majority of these investments goes in our ultra broadband infrastructure and mobile network.
Our Vikram, so your airplane has also arrived, I guess. To our trends, so I don't want to explain all these trends. In the middle, for Swisscom is really the important trend. That's a digitalization. In a digital world, for a company for a converged company like Swisscom, this is important because everything is becoming connected, not only the objectives, but also the corporates and the volume of on our network is increasing.
So there is really a potential to increase our business through the digitalization of our industry. On this page, you see we in a connected world, we will invest. We have to invest because the volume is increasing. And the question is how can we monetize these investments? And on the right side of the chart, you see important, and that's not rocket science, but it's always important to have it behind your ears.
To keep market share in an industry like ours is extremely important because we are in a total fixed cost business. I will come later to it. So fighting for market shares is extremely important topic. On the other side, we have to develop and retain our customer base. We are in a saturated market.
Switzerland is saturated in the mobile market, in the fixed market, also in the TV market, so totally saturated market. So we have to work on our customer base. And the main objective here is to keep a price premium, that's one, but second, to increase your share
of
wallet. Dirk will come later to this topic. And then the third topic to monetize the investment, that's clear that's efficiency. Efficiency is becoming more and more important for Swisscom. Here, you see the exponential growth in our business.
That's a chart with the development of our data volumes. And it's clear, it's driven mainly by video application. But if you see how people are also looking today on their smartphone TV, so this leads to this exponential growth on our mobile network. We are able to digest this growth, so we will not come in quality problem. I'm quite convinced about this.
And it is extremely important that we really keep the quality of our network on an extreme high level. Heinz will talk about this a bit later. The chart here shows you actually that our CapEx remains approximately stable. And that's the chart for Switzerland. And we chose, and I think that's the important point on the bottom of this chart, We are coming in a more and more converged world.
Clearly, already converged is fixed mobile. IT is coming. And with five gs, we are even coming in a more converged world. And in this situation, Swisscom is extremely well positioned to keep a strong competitive position. And you see we are investing in our ultra broadband networks.
We are piloting now five gs with Ericsson. We introduced, as already mentioned, g. Fast with extremely good results. We are able to have a speed on the last on the copper network in a hybrid structure with fiber of 500 megabits per second, and this shows actually the potential. So we don't have to deploy the whole country with fiber to the home.
We have a hybrid strategy. We have in the cities fiber to the home, 30% footprint approximately. And then to have a fast rollout in more the rural areas, we are doing this with fiber to the street, and this will also keep our CapEx or will, let's say, have the ability to save a bit CapEx. Interesting is also to see just once the figure we have fiber networks in Switzerland of 42,000 kilometers. The world if you go around the world, it's 40,000 kilometers, so we have fiber networks around the world.
But they are in the ground of Switzerland. Some remarks to our cost structure. That's also that's not new for you. But it's important to know how we have to steer our company that we have good profitability figures. On the left side of this chart, you see that 75% of our costs are actually fixed costs.
And this shows it's all about scale. It's all about size. And that's why it is so important to fight for market share. And you see on the right side of the chart that our market shares are stable and that our strategy is to defend and continue to defend these market shares. So we were able to do it.
I'm quite convinced that we will also be able to do it in the future. I talked before about digitalization, and digitalization will bring us to a lot of opportunities. Through digitalization, we can differentiate our products, simplifying our products, increasing the usability of our products. That's what we are doing. Just as an example, we have a voice recognition feature now on our TV product.
So you can speak in Swiss German, just as an example, and then you will find the movie you are looking for. If you are talking in James Bond, you could do it also in English. The result would be the same. But you find the movie. So we were able to simplify our product and through digital to artificial intelligence.
So one part is differentiating your product. Second opportunity of digitalization is increasing the efficiency of the processes. There is a lot of potential. And we have to invest or bringing in technologies, artificial intelligence capabilities in our processes to serve faster our customers but also to increase the efficiency of our processes. So therefore, for us, is digitalization more an opportunity than a threat?
Also, you look to cloud products, where Swisscom is in an excellent position to get market share in this market. Here are some examples of innovation. Innovation for a positioning like Swisscom is extremely important, and I just want to pick out some of them. If you go to Caulfield, that sounds very simple, but it was incredible how big, let's say, the positive reaction of the customers were. A call filter is what?
It's actually a spam filter for your fixed telephony, where you can filter out all the calls from marketing, research agencies or selling companies. That was a big pain for the customer. We had a lot of customers who switched off the fixed telephony because of all these calls. And with this call filter, we are able to filter out these unwanted calls. Another topic is my service.
Jerk will also have some words on it. That's a special service for people who want to have a full service around our product portfolio, and he pays for it. So delivering service where you can charge for it is also an opportunity, and we have extremely high net promoter score on such services. It's a small market, that's clear, but it shows that you are able to sell customer services. Now it's a question how can we leverage our customer base.
I talked about the saturated market. And the question is now how can we keep our ARPU high or how can we increase our share of wallet. And this will be done through different actions. One of them is certainly the bundling business. There, we are very successful.
Quite all our TV products are sold in bundles. And we will be able to increase further our growth in the bundling business. Multi brand is a second topic, really to segment the market in different sub segments. Swisscom brand doesn't fit for all the segments. Or if we would have to serve with the Swisscom brand, all the subsegments, we would lose ARPU.
That's why we implemented the multi brand strategy. One of the examples, Wingo, that's a product for, let's say, digital natives for people who just want performance on the network without service, without customer service. And then we have other brands, multi brands and budget, more for a simple, very simple product segment for a specific target segment in Switzerland. And the main strategy on the Swisscom brand is actually to have a value differentiation. We don't want to be the cheapest.
That's not our strategy. We want to implement more value in our product offerings and keep the ARPU where it is or even increase slightly the ARPU. And if you look to Infinity, the last year of Infinities, we were able to keep actually the ARPU on the high level where it is, and we have still a good momentum and growth on Infinity. If we talk about digitalization transformation is actually the result of it. And we have to transform our company.
And this we do on, let's say, on three different pillars. The first one is technology. We transform our company to the new technologies. There, some remarks on all IP, but also on standardization and virtualization of our infrastructure. And we'll certainly have also some words on this transformation in the technology department.
But important and that's in the middle is simplification. If you look to a company like Swisscom with a lot of legacy infrastructure and also complex processes, a bit let's say, bit history, we have to simplify our product and processes. There is a mid and long term, I would say, the biggest potential to increase our efficiency. That's why we have there a lot of projects we are working on it, and we have much more focus on this topic, simplification. And Mario will come later to it.
And then in this world, on the right side of the chart, at the end, it's also a transformation of the leadership. We have to become more agile. We have to become more faster because our competition is actually not only the telecom providers. The competition in the future are much more OTTs, and they have a total utter, let's say, rhythm to launch products than the telecommunication industry. That means we have to become much more agile.
We must work on shorter time to market. Our strategy, I don't want to lose a lot of word on our strategy. We don't change it. It works. So we stick to our strategy, and there are three main pillars of this strategy.
First pillar is building the best infrastructure. Second pillar is creating the best customer experience. That means simply product, simplifying our product, but having an excellent customer service. In a saturated market where Swisscom is serving, I would say, everybody in Switzerland has in one direction a product of Swisscom. If we don't perform on our customer service, we will have quite fast a problem satisfaction and with our Net Promoter Score.
That's why it is so important to be excellent on our customer service side. And then we are very focused to invest in new opportunities to compensate the decline which we have in the fixed telephony environment as you have saw in the figures. What are our strategic priorities? There are five of them. You can read them the really important one.
And one of the very important one is maximizing our core business. If we are able to increase our share of wallet, if we are able to have a better price premium, That's really what is matter. So we have to work on the differentiation of our business, and that means network, that means product and that means customer service. Operational excellence is a second important pillar. I will come later to it.
Fastweb develop Fastweb, Alberto will talk about this, is also an important topic. And on the other two dimension, growth and transformation, I already gave some information. But coming now to the costs. Last year, we announced our ambition to develop our cost structure. And on the left side of the chart, you see that a road map of different actions will lead to this decrease of our costs or this cost savings of 300,000,000.
We are on track. We delivered our savings of CHF 50,000,000 in 2016, and we will deliver savings of CHF 75,000,000 in this year. And then you can see it goes with approximately EUR 60,000,000 additional savings year on year so that at 2020, we will have EUR 300,000,000 less costs. That's our plan. That's our ambition, and we are here on track.
Some information on 2016. This EUR 50,000,000 savings, which I highlighted out before. So how did we achieve them? One part is on a reduction of the headcount. We have a headcount reduction of approximately 700 employees in 2016, and that's the result of call center location harmonization.
So we reduced the call center locations. But we also put together, we made a merge of the different field forces as another example so that we were able to increase the efficiency in our company. We also reduced the overhead in Swisscom. And we have done this all the reduction, we have done it without an impact a negative impact at the customer front. And so I think that's a good achievement.
Efficiency increasement without impact on the customer side. On our ambition for 2017, cost ambition. We want to decrease our cost by 75,000,000. And you see that there are five four main actions to do it. So we will have a spillover from the decreasement or from the efficiency measure of 2016.
That's the benefit of organization efficiency improvement. Second, we boost we will boost simplicity. Third, we are on the track to do the all IP transformation. And then the fourth level is CapEx efficiency. Coming to these benefits from the organizational changes, I don't want to go much deeper in it, but it's call center, it's outsourcing things like this.
On the product side, No, it's still on the next slide. On the next slide, we are on simplicity. So what's the idea of simplicity? It's actually simple. It's reducing the complexity of the processes and reducing the complexity of our product structure.
And here, we have a lot of different actions. As an example, we are phasing out old platforms in our IT department, legacy phase out, we call it. But we are also reducing our offers in the mobile area. We our target is to reduce or to make a phase out of more than 40 retail mobile products until Q3 twenty eighteen as another example. So that's the main idea behind simplification.
And on the process side, you see it's actually also the idea to simplifying the projects the processes with the ambition. If you take the left side of the chart, sales to activation. Sales to activation process is one of the big process. There are a lot of costs in it. And our philosophy to redesign this process, there are two dimensions: one click for a sales order, a simplification for all the employees but also for the customer and going in a more personalized process design.
And this will and if we do this, we will be able to reduce our costs in the sales to activation process. On the process, which is another very heavy process with a lot of costs in Swisscom is the problem to solve process. There we have 10 initiatives to actually reduce the calls. The goal, the high level goal is to have zero calls. It's a bit an ambitious target, but the main target is to reduce the calls in your call center.
And there are a lot of different initiatives and the impact of these process initiatives will not be in 2017. They will come in 2018, 2019. On All IP, some information where we are, where we stand. We have now twothree migrated to All IP. And our target is or we stick to our target to our SU with the All IP migration in the consumer market at the end of twenty seventeen.
There will certainly be some customers still at the 2017 on All IP, but the big majority will be in the IP world. On TGM will be in the IP world, and there will be only very not a lot of customers on TDM networks. This will give us the opportunity to gradually decommission our TDM infrastructure, and then we will get the savings, what you see on the right side of the chart over the next year. So we will have some change and some savings of all IP coming from 2018 to 2020 and the full impact we plan to have in 2020 in the dimension of 100,000,000 as we already communicated. Efficiency, an important dimension to increase the efficiency is also the technology mix.
If we would only make a rollout of five to the home, the most expensive technology, we would have much higher CapEx and much higher costs. So with the hybrid technology of fiber to the home, fiber to the suite in combination with G. Fast And with g. Fast, we will have 500 megabit per second. We are able to be faster in the rollout and actually save costs.
That's why we picked this strategy, and then Heinz will explain a bit more about it. A second point to increase or improve our efficiency on the CapEx side is the bonding. So we have now a solution to bond the LTE network with the Internet network. And in areas where we have not enough speed on the network, we can do bonding and we can increase the speed for these customers on with not a lot of CapEx. So technology mix is also a lever to increase our CapEx efficiency.
Then
on CapEx efficiency, another topic is actually how we produce it. And we made a consolidation of our rollout partners. And so we are able to decrease the cost in a substantial matter because we have now only two strong partners for the network rollout, and this will lead to an additional efficiency in our rollout. Good. That was a bit my overview.
And now I would like to hand over to Heinz, which gives you a bit more information on our network and IT projects. Heinz?
Thank you, Urs. Good afternoon, everybody. Urs already went through a lot of topics. I tried to deep dive on some of them, which might be of interest to you. Let me also start, like Urs did, on a quick view on 2016.
Overall, I'm very happy with what has been achieved. There is some things which, of course, we need to increase or to improve. We talked about the necessity of being always on and how important, especially in a digitalized world, connectivity is. We're doing thousands of IT changes a week, and we had some which led to disruption of some of our services last year, which, of course, you don't want to have, but that's a bit the life we are in. Technology is not 100% proof, so we have to work on those.
Our aim, of course, is to really come close to a 100% availability, always on thinking culture in our organization because that's what our customers expect from us. The other thing, and I will come back to it later on, is the connect test, the mobile one of the mobile net tests we have seen in Switzerland where we increased and we made the network better than last year. We had some points which we left on the street, and we lost the first rank in that test. I'll come back on it later on, tell you what our plan here is. On the other hand, I think a very successful 2016.
Urs mentioned a lot already the GFAST move. It's a very important move for us because we've decided a few years ago on that hybrid fiber ultrabroadband strategy, which we confirm and which we stick to for several reasons, which I'm going to deep dive later on. So Gfast has developed for two or even two point five years together with our technology partner, Huawei. And we are very proud also to being able to launch, at least in Europe, not so much on the globe. There was one little carrier before us, I think, in Asia.
But in Europe, we were the first to be able to launch commercially in a real network GFAST technology. We've announced that last year at the Broadband Forum in London when BT had
to announce a delay in their own
GFAST plan. So it was cool for me to be able to announce that. But it's not cool just to announce it, it's cool for our customers because it will help a lot, of course, to increase our position over broadband. Worth mentioned DSLLT bonding. This is really the first bonding product.
This was an innovation done by Swisscom. We use multipath TCP protocol. But all the rest, the boxes you have seen, if I might go back, if I find it, this one to the right side, this little box was designed to be self-service. We send it out to the customer. They just plug it to their window.
It's a two sided box, one half inside, the other half outside. It's a very innovative way of doing the flex cable between, and we bump that to our home router, and we can add here bandwidth to very poor lines. The technology is open up to also grow. Today, we focus the product, as Urs mentioned, to very poor lines where we might not have 20 megabits today, and we help those customers to get 20 megabits, which helps them to get ultra high definition TV. So for us, it's an upsell opportunity.
But again, the technology per se is scalable to higher speeds. We have some plans, and we will offer some other products later on. Once you are sure that the usage of this bonding technology does not disrupt or make the experience of our mobile customers a bad one in those cells where these customers are. So we are going slightly on here. Partially.
We might increase here the usage of that product later on. We mentioned the five gs. We've launched last year five gs. It's more a research program for Switzerland. We want to show to the Swiss industries and politics that five gs is an important technology for Switzerland.
We've launched together with Ericsson with EpFL, that's the ETH of our French part of Switzerland. And we're running here some early trials with equipment from Ericsson in Switzerland where we show things like network slicing, where we also want to show first machine to machine or IoT applications together with industry partners, which we are able to or we are in the process of signing up now. One gigabit over the mobile network, not too far away. We've showed that last year on our live network. And we also, as we promised last year on that conference, we have launched an IoT network in parallel to the mobile network infrastructures in Switzerland.
It's a LoRa technology based IoT network. We started beginning last year. We have already achieved 80% of coverage in Switzerland, which allows us and mainly also the colleagues from Christian to go for the first industry applications on IoT based networks in Switzerland. We have plans to also open up IoT support on our licensed spectrum, which is the mobile network later on this year. We're going to launch narrowband IoT in the second half of this year and have some thinking also about LTE M.
For those who are familiar, these are the two standards on the mobile network, how to support also IoT based applications. So not a bad year. Let me go through five points. Fixed network first, mobile, what we do on the ICT infrastructures. These three points should show you a bit not only what we do to become more agile, more quicker, more able to demand on the requests we see in the market, but they also pay off into the efficiency programs Urs just mentioned.
Then it's about culture. It's about changing the way you work. What are we doing as main initiatives on the transformation of the company towards digital? And I end up with wholesales and some regulatory information at the end. For the fixed line part, ultra broadband, of course, is our main focus here.
And what we did last year is shown here on the left side. We increased the number of households or homes passed with ultra broadband, which in our terms is above 50 megabit by 20%. This is a lot because it really happens outside the cities. As Urs mentioned, our strategy for ultra broadband rollout stays as was declared. We have a hybrid way of putting fiber into our country.
In the cities, in the majority of the cities, we have done FTTH in collaboration with utilities. That's done. That's a done deal. So roughly one third of Switzerland homes in the cities are passed with FTTH. Already 50% of them are active using FTTH technology, so that's not bad.
We will not continue FTTH outside those cities because we don't believe in that we can do that cost effectively nor do we see any need for customers in the mid to longer term future that they would need more than 80, let's say, perhaps 100 megabits per second. There is not really those killer applications around. And hence, since we also can build FTTS, so our hybrid approach much, much at lower CapEx, we have focused now to build the rest of Switzerland when it comes to ultra broadband with a massive rollout of GFAST based FTTS or FTTD B technologies. And it pays off, as you can see on the right side, where we have built FTTx, so ultra broadband infrastructures, we are able to grow our broadband growth higher than in areas where we are not in. So it's good to know.
But it also helps, of course, to increase the penetration of our TV sales, whereas in areas where we weren't able before to offer these bandwidth, you now can get ultra high definition TV. So this also paid off in that circumstance. Again, just to have in mind how this FTTS thing looks like, the upper part of the left side picture shows you a bit the rough concept. You see on the left side, the blue box, this is the central office of Swisscom. We go through fiber, through the feeder part of the fiber to the manhole.
This is a duct part. So we have about 85,000 of those manholes in Switzerland. This is grant to our grandfathers who did a good investment here. We are one of the not only but sole countries in Europe at least which have such good infrastructures, so we want to use them. And we go into those manholes, we put that g.
Fast box in, which is the second little picture you see. There is a sixteen and forty eight port box, which then takes the signal from fiber, converts it to the existing copper network using the latest 200 meters of copper to ensure that we can bring a signal from 400 to 500 megabits to the household. Why is that interesting? I mentioned already speed. We can just do that very much quicker than if you would have to do a FTTH rollout because on the FTTH rollout, not only you have to do that fiber, that feeder part, sorry, which we do already, you also have to do the drop part, which really goes into the area and goes to the households.
That's very cost driver, and it needs a lot of time. From the cost point of view, it's difficult to have an average here. But if you would want to build FTTH outside the cities, you would end up probably in a cost or CapEx difference of Factor three between FTTH and FTTS. So we are three times more effective on the CapEx side and, of course, much quicker rolling out ultra broadband speeds to our customers. And we think that will last for a long time.
I mean don't ask me what's in ten, twenty years, right? So maybe there might be some additions we have to put in. They could happen all the on the existing hybrid strategy because already in the labs of our vendors, you see some next generation GFAST applications. It's lab only, but they already show how to go above gigabit speeds using a last tail of copper networks. We could also do if we would need to have to do that, we could also go on with FTTH because that first part we built on the feeder network is a point to multipoint fiber structure, so we could easily add more fibers on that drop part of the network towards the household.
We don't think we would need that, but let's see what happens in fifteen, twenty years. The end picture then in 2021 will be that's also what we promised you last year. 58% will at least have 100 megabits or even more by 2020. By 2021, we will have another slice going up to 90 with 80 megabits. And you can see the hybridity of that strategy.
So onethree today already done on FTTH, the big majority on FTTH with gFAST. The rest is done on FTTH using vectoring technologies, which allow you also to go up to 100 megabits speed. And the remaining roughly 10%, very rural areas, we will do a combination of vectorizing those but also using, as we've showed, the DSLLT bonding technology. So that's roughly the plan we have on our fixed line side. On the mobile side, we have a very strong mobile network.
And I want to repeat that even though you might have seen us being our number two position in the Connect test, we have won Connect seven years in a row. We have increased the points we made in Connect from last year from 15 to 16. So on an already very high level, we've increased the capability of our mobile networks, and we are proud of some things here even though there are some points we left on the street. By the way, we know exactly where we lost those points. We did some mistakes on our own, which you don't like to have as a CTO, but they might happen.
We had some misconfiguration in the network. And we have some other things where we clearly see why we lost those points. And I don't need to have to tell you that as an engineer and my engineering team behind me, we have just one ambition. Let's see what happens. Other than that, this is really a very strong network still, and you see that from both the coverage point of view, where we have 99 plus coverage in LTE.
By the end of this year, all mobile technologies will be above 99, LTE included. We have already increased by carrier aggregation the speeds of the network for a big part, two fifty megabits, and we're using three carrier aggregation to go up to 300 or four fifty megabits, and we will also put more capacity in the network to ensure that. There is also some rollouts planned in LTE and further LTE, I have to say. Just to give you an idea of what that means, today or end of twenty sixteen, we had roughly 6,800 LTE systems on air. An LTE system is counted per spectrum.
So if you have an LTE 800 plus an LTE 100, you count as two. So that is roughly 6,800 LT systems on there. We will add another one third this year. So end of twenty seventeen, we will roughly have close to 9,000 LT systems on there. And this really all over Switzerland, not just where a connect test car might measure, it's really providing this capability to the whole of Switzerland.
We are also not bad on the way when it comes to spectrum availability. As you can see, there is two fifty five megahertz which we own, including 40 megahertz of TDD spectrum in the 2,600 megahertz band, which we got in the spectrum auction basically for free because we kind of were clever to understand how this auction mechanism works, and we got that spectrum really nearly for free. We didn't use it so far other than for tests. Have an idea or a plan for this year in the second half of the year to offer a 1.6 gigahertz data product mainly to iPhone users because the iPhones already will support that during this year. That will also be opened up by other phone manufacturers.
There is also a spectrum auction ahead of us. As you might know, in 2018, this will happen in Switzerland. There, it's not clear yet on all the details on what will be in that auction, we think it will be the 700 megahertz band, pretty sure. There will be perhaps something between 3,000 megahertz, 1.4 gigahertz. There will be probably also three point four and three point eight gigahertz spectrum available to ensure that growth you need in the networks to support and to prepare for the big data volumes or showed or for five gs ahead of us in 2018, 2020.
Of course, we will participate at that auction in 2018 and trying to get most of that spectrum for us. Now I think I mentioned that left part, the LTTDD product. But again, it's not just that. We also increased a lot of carrier aggregation in Switzerland just to increase not only speed but also being able to ensure that we can handle the capacity in the network. I mentioned a bit on five gs.
What are we doing here? Again, it's early stage. Five gs standardization is not yet finished in all details. We expect to see first full standard based five gs implementations in 2018, probably 2020. The Asians will probably be first here.
There's the Olympics in Japan and the Olympics in Korea who drive that. We are preparing for it. We have test equipments here. We have our strong partner, Ericsson, behind of us. With the industry and with the academia partners, we are trying to find first useful use cases, which makes sense for Switzerland where we can prove and show what this capability what the technology is capable to do.
Five gs, just to remember, there is mainly two things in. One is, as with all the new mobile technologies, much, much more capacity and much more speed, which will happen here, too. But in addition to the normal evolutions we saw in mobile technologies, five gs will also offer very, very low latency applications, which will be the drivers for all what will happen in machine to machine and mainly in IoT. I mentioned LoRa. We launched last year.
We have already 9080%, sorry, coverage achieved last year, and we will be also adding some more sites. You don't need a lot of sites to do that LoRa network. It's roughly three fifty, three sixty sites we have in Switzerland on there where you can already have 80% coverage. It's a totally other application, of course, that runs over it, not to be compared with a mobile network, which allows you to push that very, very broad. Now what's happening on the ICT infrastructure other than mobile and fixed networks?
Just to start with a bit, what's the problem here? Why don't you see costs going very quickly down sometimes? It has to do with the fact that we are an asset heavy infrastructure player, of course. And if you look at the cost curve to the left over the life cycle of an infrastructure platform, you have to invest first, then you can start going into the market and monetize. That's the blue curve.
But that technology and by the way, these days, even quicker comes into the necessity to be renovated and put aside and put something new in. That's something new, the gray line, you have to put in place before you can switch off the old platforms. You have to prepare that. It takes time. It takes knowledge you have to build up.
And so your cost increases, and you don't necessarily have an additional revenue on your product side. So that's a bit of the challenge we're in. Having said that, there is some big initiatives trying to pay into that simplicity initiatives you have in place. Urs mentioned All IP and the TDM phase out. That's for sure the biggest one.
But it's not to be forgotten that there is around 140 migration projects in my department on our agenda, smaller ones, of course, but they sum up to 140, which we have on the agenda to get rid of to make sure that these legacy platforms can be switched off, which hopefully also will pay into the CHF three hundred million saving potential we have seen. On the ICT cloud infrastructures, I think I mentioned or we showed you that plan also already during the last conferences. Same plan, same strategy. We build our virtualization or cloudification strategy on the three pillars, on the three cloud systems. In the middle, an application cloud based on newest OpenStack and Cloud Foundry implementations.
So this is a very modern cloud where you mainly have an attractive place for developers, outside developers as well as our own developers to develop their services. That's launched in a private and in a public version. On the left hand side, you see the enterprise cloud. Here, we did a recheck on the strategy mid of last year. We had the plan originally to build a lot of the technology stacks by our own because we, at that time, when we decided so, thought this is the differentiating factor to our enterprise customers.
And honestly, this became very complex. If you have to handle different technology stack elements over that life cycle I showed, this can become very complex. And we saw in the meantime, the big players have ramped up and have also offered very good and very modern complete stacks, which you can buy and not have to build on your own. That's the redirection we did last year. So we choose on the enterprise stack of the future.
We choose a Dell EMC VMware solution, which we are now in the process of setting up. And all the existing enterprise cloud offers we have today in the portfolio, our aim is to migrate most of them, if not all of them, to that new cloud infrastructure on the left side. On the right hand side, also a very important and long lasting project, which will probably go for the next four to five years. The question is how do we virtualize what we do as a telco? Today, most of the telco functions, networking functions are on dedicated platforms.
So you have a service, a product on your own infrastructure. We will horizontalize all of that and try to put that into a telco cloud, also an open source based telco cloud environment, which we built together with Ericsson. The first virtual networking functions, which we will virtualize will be EPC, virtual EPC. We have shown that in December that you can run over the cloud based mobile core your calls, and we have now the plan to start putting all our networking function into that telco cloud. Again, four to five years ahead of us, I cannot tell you exactly what we think the cost savings will be.
There will be, but we have to do the first attempts now to put a networking functions onto that cloud, and we can be a bit more precise on that. I mentioned fourth point, you also need to work on the way you work. It's not just to put in place technology. We do a lot of efforts into transforming our skills, transforming our working methodologies. Urs mentioned agile.
The agile plan we have, you see here, we will live in a bimodal IT world. There is still the waterfall based project types for the big projects, for the platform projects, which are not close to the customer products or services. All the rest, close to customers, close to service developments, will happen in agile mode. We have started in 2015, and you see the plan how to ramp up that HR working in our company. I think by end of this year, we have already 25% of what we do in delivery in that HR mode.
Perhaps even more, this thing is really kind of self rolling. It's very motivating for the people to work in such mode so they jump on the train without even pushing them. So that's good news. We do a lot in standardization, in modularization, be it through APIs, it through standardizing our processes, be it by using artificial intelligence and big data technologies to also help us to standardize in light of time. I skipped that.
Let me finish with wholesale and the regulation side. We never talked a bit about wholesale here, so I just wanted to show you that we have a very complete portfolio covering all the elements of you would want to expect as a wholesale offer. Most of that is our proactive offer, so it's not a regulated offer besides voice fix where we are regulated. All the rest we do on our own intention. This also helps to have a good balance with the regulator, and we can also do steps proactively in order to avoid regulation ahead of us.
What we, for example, do in our access portfolios. So everything you saw on ultra broadband, we offer proactively to the wholesale customer base on the right in order to make them happy to use our infrastructure, which helps us again to have more scale on those expensive assets we have. Let me finish on the on a quick regulatory outlook. There is mainly three things that happened or still are on the agenda, of course. You know that or you may know that the Telecom Act is for revision.
You see the plan on the right side. It will take some time until that will be done. The first or the actual insight we have into what the thinking is of the regulatory bodies is something we are not really mainly concerned about. There is that question mark, is fiber going to be regulated or not? We have a clear opinion.
It should not be regulated. There is a lot of competition happening through operators, cable operators, through the utilities in cities, through our own proactive wholesale offer of fiber networks, why should that be regulated? And if you compare the position of Switzerland just published again today by OECD, we have a leading position when it comes to ultra broadband availability for your population. So why should that be regulated? We had a discussion on the Council of States on the radio emission limits.
Unfortunately, this was lost by one vote. One politician, unfortunately, went to holiday. He was pro, and he missed really on that vote. We will work on it. That would have helped us to have a higher emission power to be sent out to the network.
And so we have to find ways around how to do that. It will be an important topic, and I think politics have to engage on it because if you don't remove those burden for the five gs world, five gs will not really be able to happen in all its flexibility, which we're able to offer. And we had a discussion on the universal service obligation. This is already awarded to Swisscom. Just a few weeks ago, we got that award, and we will be the provider of service obligation also as of 2018 going into the future.
We were very happy and lucky that there were not too many burden into the new service obligation demand. There's a little increase in download speed. We have to offer from two to three mega. We have to offer some special services for handicapped people, but we think we can manage that. The most important gain for us was that we weren't given too many obligations when it comes to all IP phase outs.
So the analog TDM switch off is basically kind of approved by the regulators. So that's good news. And with that, let me finish and hand over to Dirk. Thank you.
All right. Thank you very much, Heinz. Good afternoon to everybody. Talking about the retail business, which actually is the mass market or that is consumers and residential and also smallmedium enterprises, which is in our definition little enterprises up to two fifty employees. Let's look back at 2016.
In a nutshell, 2016 has been an intense year, particularly also characterized by price moves from the competition and rather aggressive promotions from the competition. Nevertheless, as Urs said, we believe we did a solid job in light of that competitive environment, and the KPIs actually demonstrate that in our view. A quick reflection on our commercial strategies and policies here. The commercial strategy is clearly centered around offering attractive prices and products towards existing as well as to new customers under three brands. I'll explain later on a little bit further what that means.
And we have been working hard to develop the customer base further by providing attractive bundle offers and pushing them further into the base, by leveraging newly built network capacities and particularly in wireless, by developing our base further, be it within postpaid towards flat offers or be it in moving from prepaid offers towards postpaid offers. We maintained market leadership also with quite a distance on customer satisfaction, which is obviously key to our own brand proposition and to us as a company and valued by a customer equally. And finally, we develop our products and offerings further. You can see a couple of examples here on the right hand side on the chart. Some of that have been mentioned, so I don't dwell any further on to that and move on towards the numbers a bit, high level numbers first and then expand later on a bit more in towards the wireless and wireline segment, right?
Net revenue has come slightly down by €60,000,000 The biggest two effects on that is a reduction in metered roaming revenues and we have been talking about this other voice service losses in wireline. We could, therefore, not exactly maintain the RGUs. RGUs have come €84,000 down. And again, the biggest contribution, that is the RGU reduction in wireline voice services by roughly $230,000 Bundle revenue increased, which is very good. Obviously, bundled customers are much more loyal and the churn rates, which are substantially lower than products than customers with single products, actually pays off.
Mobile ARPU, we are pleased with the development there, thanks to good base management. ARPUs have been stable, slightly down on prepaid. But more importantly, as a KPI, the mobile ARPU level has maintained at the level where it was, which is a very good result in that market environment we find. We could be we could have been able to manage indirect costs down by roughly €23,000,000 However, we could not entirely maintain EBITDA margin. The additional effects here next to the reduction of service revenue were slightly higher SAC SSCs, but I'll explain later on what that means.
Mostly actually good effects on SACS SOCs as it also is related to the higher volume in retention, which we believe is good for the business. In wireline, on the next page here, you can see on the right hand side the actual underlying movements in RGU. Clearly, the market is more and more penetrated. I believe by now, we are on the beyond 90% of household penetration for broadband. So you see that growth is slowing down.
Nonetheless, we were able to add up to 34 ks broadband lines. Then the losses in voice, I mean, it is basically almost like a demographic effect. The new customers are then more in used towards their utilizing their mobile phones. So you have a big deal of fixed mobile substitution here plus also new, let's say, models of living together, which is not necessarily a family anymore, but people that work together in flats and so on, they don't find it necessary to have a voice service in their flats and therefore that decline that we have seen there. We are pleased, on the other hand, though, with the growth that we have seen in IPTV any further.
If you look at the KPI there, as a basis, TV residential towards broadband and residential, we are almost a bit above 80%. And on the right sorry, on the left hand side, you can see that we are managing to get more and more people into bundle packages. More than 90% of our new customers by now in wireline take a bundle, which is very good because, again, the customers are much more loyal and the churn rates, which are less lower than stand alone customers, demonstrates that. So a
good
development with respect to bundles and TV, the loss in voice. But overall, I think we are satisfied with how the wireline segment developed. On the wireless side of the business, you can see that we were able to and that is important to increase the infinity, so there's a flat rate, high value ARPU customers base even further by 69,000. Lost in prepaid, there's a lot of actually pre- to post migration here, but it's the underlying dynamic. Lost also on lower end postpaid tariffs, but also, again, there's a development towards the higher end there.
Altogether, we lost minus 30,000 RGUs. However, the important thing here, obviously, on the chart is we developed another new 34,000 postpaid subscribers. Clearly, also, you have the figures by the quarter here. The start into 2016 was a bit bumpy, but then we did a bit of an innovation push with readjusting our tariffs and our offering, also offering new possibilities like installment plans, SIM only, entry tariffs, to name a few. And that clearly provided then for the turnaround in 2016 and which probably then led to us maintaining the ARPU levels where it was and have a good participation in the market as it was demonstrated in the chart there.
So in 2017, just to lay out briefly the key strategies and the push that we want to give, you wouldn't be surprised. They are mostly in line with also the directional errors that I laid out that kept us busy in 2016 already. So that is increasing the monetization from the customer base with bundled offers and also upselling into the base. It is further on executing the multi brand approach. Urs talked about that earlier on.
I'll expand a bit further later on, on that. Customer satisfaction is key to us. It is part of our DNA of our market position, so we put a lot of effort into cementing our lead in customer satisfaction and also leveraging our strong brand reputation, which is second to nobody else in the marketplace. And finally, we want to selectively innovate in existing as well as also in some new experiences that we want to bring about to our customers. If I go into these areas here, point number one, monetization of customer base, I think that is not too much.
You see a typical journey of a customer there from prepaid postpaid metered into postpaid flat and then eventually into quad play offers. We already have more than 600,000 people that are utilizing our Infinity offers and the Vivo offers, so the Dine Quad Play offers there. And as indicated here, the churn is 4x lower than the overall than churn with people that have stand alone products. So it pays off even if it gives them sometimes a bit of a price incentive to be in these types of packages, which clearly pays off. And we see further possibilities.
We actually see that as like the next level of the game there. You have seen that for a couple of years in wireline, where people consolidated from on the one hand, coming from TV and cable or, on the other hand, from traditional networks like ours from voice, converted into one customer relationship with one operator only. And we think the same is happening between wireline and wireless in the next couple of years. And clearly, with our high market share in both segments, there's opportunities for us to master that opportunity. And clearly, also, when we do market research and ask customers, customers are indeed overwhelmed by the complexities that sometimes the world holds for them.
One part of that complexity is that they need to manage separate customer relationships between the offerings that they have on wireline and wireless. They So would appreciate actually to have everything within one hand, and we see quite a potential to deliver on that expectation. Moving on. Here's an example of a success in the small and medium enterprise market. The name of the game there is also digitalization.
And from a telco service perspective, it's a cloudification of services. We have roughly 70,000 customers there that have small PBXs or telephony switches on-site. We launched a new product, a small business connect, last year, and we exceeded by far our expectations in terms uptake in sales. There not only was there high demand, but also we were able in the transition, which, by the way, also drives the All IP transition in that segment, we were able to increase the ARPU by almost 10%. So it's a good story there on which we want to expand further in 2017.
Strengthen RGU base with a multi brand approach. Yes, there's three brands or three mainly three brands for a longer term. Obviously, Swisscom and Budget and then recently also we brought Bingo to the marketplace there. And as Urs laid out earlier, also have a very distinctive purpose, yes? Swisscom is that rock solid brand that has high promise and hopefully also delivery on the best network, the best experiences and products and also the best customer service.
However, we do find out that there's some price sensitive segments that, for instance, are being addressed by the Amplitude brand, which we are offering together with MIGO. And by that, that is also a different route, a different channel to the market. So we are reaching customers that we might otherwise not reach or that would be harder to reach. And then Vingo, most importantly, is a gift towards more sophisticated customers that don't need that much, let's say, advice or support, that might not need a hotline. So you're more like into a delivery model that is online, be it for sales or customer service, which then in itself reflects also in comparatively lower prices than you would have some of the Swisscom owned brands.
However, there's also then a reduced service element that comes with it, but also actually strong ingredients into the product as such, be it on the mobile side or be it on the wireline side, yes? So clearly, we do believe, let's say, that is our strategy in order to maintain high market share. A lot of value within the Swisscom brand, more price sensitive or more customers are prone to online delivery model within the other brands. Taking a quick look at SAG Asses. I know you always have a bit of a focus on that, particularly also because they increased year on year.
Let me explain the underlying effects there. On a KPI level, actually, KPIs have been mainly constant, if not even going slightly down towards 2015. The biggest effect on Bayer last year is actually a higher retention volume in 2016, and that is mostly due to the launch of iPhone, as you all know. That was like a new generation, so not an S version. Like a new generation customers have been holding back their renewals for a little while.
And therefore, we had more retentions than in the year before, and that's actually driven in absolute numbers, as I see, up. SAE, so for acquisition, have come down a little bit. That is partially due to also some customers not taking devices but opting into a SIM only plan. The overall profitability and the overall economics are just right for us. I know some competitors are pursuing different strategies here.
We think it's the right strategy to offer the choice with or without a subsidized device. And actually, our customers demand that from us as we can clearly see the way they react to certain offers that we make in the marketplace. Then customer satisfaction, key important point for us. I mean that is what Swisscom is all about, highest in customer satisfactions. We have been all along, and we broadly have been able to manage on the same level as we were in the year before.
Clearly, there is competitive dynamics also in this space, and we have put particular programs in place to maintain that level or even actually to increase customer satisfaction even further. One important element in that is then the performance, and I have that here on the next chart, on networks, be it the quality of the connection or be it the speed of the connection there. And I brought an example, you can read that afterwards, if you wish, with me here, that just explains the effect on, for instance, speed increases or fixing quality problems. Home networks, particularly in the wireline business, are sometimes tricky to manage, and we put in as a proactive program here to help customers to overcome any issues there. Sometimes we pay for it.
Sometimes the customer pay for it depending upon what the right situation is. But what we can overall see is, in terms of before and after, after you address the customers' problem, your satisfaction increases tremendously. Okay. TV has been a great story in the last couple of years. TV is also, let's say, in very many terms, a pull for customers.
They want to have our TV product as it comes with the bundles. They get the old broadband access and everything else, too. We do expect, on the product and experience side, quite an intense competitive marketplace as other competitors are preparing for their launches. And so likewise, we see this opportunity here to also win further by also beefing up our proposition. It's been particularly also from a rights perspective an interesting space there.
But clearly, commitment remains to bring the breadth and the depth of content and easy and intuitive experiences to our customers. By way of example, for one cable customer, which is the biggest cable competitor, if we get customers in there and they experience our TV product, we get from those customers an NPS of 60, which is hardly seen in any other measurement in my experience. And summing up, these are a couple of key strategic areas in which we want to base our activities and in which we want to innovate. I talked about pushing fixed and mobile conversions further, key area. We see an opportunity in consumer multi device and wearables.
Yes, it's a very small plant that still needs to grow. However, we are all set and ready. I mean that also alludes to the manageability of multi device customers and easements and all these types of things. We are already there. We want to manifest TV leadership in user experience and content.
Alex talked about that. We want to selectively do something, explore the smart home opportunity, which is basically like something like consumer IoT, if you wish. We want to broadly leverage My Cloud. We are on a good track there that customers are storing their data, which they think they rather have it with us as a trustful provider in Switzerland than anywhere else. And also from a service standpoint, we want to massively push towards online and mobile service touch points.
On the small and medium segment, we want to broaden our cloudification offers, if I may call them like these, so that it's like cloud PBXs or business network services, which is a service in which you can manage several sites from the customers. And in the future, we'll also be able to manage the connectivity within the site, which greatly enhances efficiency and productivity for our enterprise customers there. And we want to augment connectivity and communication services, so let's say, the broadband access and then the virtualized PBXs and so on and so forth. This actually, it says computer services. What we mean is computing services.
Yes, it's cloud based computing capacity, which more and more are also converging. So as you used to have telco and you used to have somebody else providing maybe IT services, we see that more and more is in demand from SME customers to single source it. And with our high market share, there, we find us well positioned also to deliver these types of solutions next to connectivity and communication. And also, that's the last point here is more a bit of an internal efficiency point, and Christian might want to talk to that a little bit further, if he wishes. Christian and I have agreed that for some developments for the SME but also for enterprise customers, it makes sense to drive economies of scale and unleash synergies by combining our product development efforts, which in turn means lower cost internally but then also higher innovation power towards the customer.
All right. That concludes my little briefing for 2016 and 2017, and I hand over to Christian.
Thank you, Dirk. So after the straightforward mass market business, welcome to the more complicated professional markets. I know I am a little bit of pain in the ass for you because my business is difficult to put in your model. It's by far not only telco. I manage a lot of business.
We have hardware business. We have project business. We have vertical business. And all of these business have different levels. Therefore, I try every year to help you better understanding this complicated, but also, I have to say, fascinating business unit.
In terms of looking back to 2016, we can say that we had a very strong market performance. We are still at a very high level, but with the new setup where we brought together three years ago IT and telecommunication, we can really confirm that the market position we have is absolutely outstanding. Out of 100 deals where we compete last year, we won 80% of them. So you might say in the Teleconnection business, it's a normal performance because we have already 80% market share. But on the IT business, where the world is much more wild and where we have much more competitors to gain 80% of the deal, I think it's a very strong performance.
The good news is we don't leave a lot of business on the table. The bad news is we don't leave a lot of business on the table. So the potential of growth is not so big when you are already at this level. If we go in the free business, on the mobile space, on the telecommunication space, but basically on the mobile space, I am very happy with the market performance. As I said, we have already roughly 80% market share in this business.
And I'm proud to say that when we look at the balance of our performance with the other telco, we have been able, even if we have 80% market share, to one more SIM cards than we lose, to one more customer than we lost and even to one more TCV than we lost. So in all the KPI we can witness on this market, we have a net positive porting balance. On the Solutions business, we won important deals. And especially, we take new footprints in the outsourcing business, especially on the health market. We successfully put on air the outsourcing contract with Sanitas by mid of last year.
And since that time, we have no operational issue, and we can start now speaking with Sanitas about business process outsourcing. We also had strong traction in the Remandie market, the French speaking part of Switzerland. As you may remember, I told you last year and two years ago that it was a strong focus for me because traditionally, we have been weak in IT or almost non present in the French speaking part of Switzerland in the IT business. We acquired Velti Group two years ago. We acquired Open Web Technology last year and made a joint venture.
And now we start seeing new IT deals coming and basically stating that we have the right strategy here. We won, for example, with the Swiss Medical Network, our biggest IT outsourcing deal ever. We took over the business of IBM with Bancor tunnel of Vale of Vale's. And this kind of deals really show that we get a lot of traction in this region with roughly EUR 500,000,000.0 of new contract last year. This market performance has been able to be implemented with still a very strong customer satisfaction.
We have an NPS Net Promoter Score above 30, which I think is, in this market, also a very strong performance. Now if we look at the figures, I have a mixed feeling looking at these figures. In terms of revenue, a loss of roughly 1.6% overall in terms of revenue. I think also it's a good performance if I compare myself with other telecommunication companies. The order entries remained very strong, slightly below last year, but it was planned because we had in 2015 some major deals that we knew were not going to come back in 2016.
So the budget was 2.5, and we reached 2.5, a strong performance here, too. On the telecommunication business, we lost a significant amount of revenue, mainly in the wireless business due to a very strong competition situation and mainly on the roaming side. So if you look at the where we lost the revenue, it's mainly in the roaming side. We have not been helped by the regulation because we also lost roughly EUR 10,000,000, 12,000,000 due to new regulation on the value added services. In terms of solution business, we have here an increase of revenue basically due to the new contract we have been able to sign.
And this is a trend that we will continue to see in the next years. I will come back to that. The less satisfactory point is the loss of EBITDA. It's roughly the same amount of money as we can see on the mass market but for a basis of revenue, which is smaller. So this is not a good performance for me.
And the reasons are mainly, first of all, that we have this decrease on the telecommunication business, mainly due to this roaming and price competitiveness. So every time we lose revenue on the service, it is straight away also a review a loss in the EBITDA because it's very difficult to reduce cost in a fixed cost business like the Teleconnection business. Another reason for the loss, and this is really something that we have to consider as management performance, we had some important contracts on the cloud and on the IT outsourcing and also on the product development where we had to recognize either provisional or write off. These projects have not been on track. And I can say that roughly on the loss, you can see that above EUR €20,000,000 is to recognize on this topic.
It's a more complicated business than before. We have to we go for innovation. And when you do innovation, you have sometimes to accept this kind of mistakes. It was the case in the cloud and it was the case in some product development, especially on the banking side. The good news is that this loss is not recurring and that we might expect that it not occur every year, even if I believe when you manage more than 1,000 project every year that you will always have some of them going south.
The next point to explain this EBITDA performance is because we grow in solution business and we acquire some new outsourcing contract. It is the nature of this business that in the first year of this contract, these contracts are not making margin. So it's in a typical five to six years outsourcing contract. In the first one, two three years, it's a loss making business. And only in the last year, you have an okay stick because you have implemented processes and so on that enables you to make some money.
So the growth of the outsourcing revenue is not cash contributing in the next one to three years to two years. On the last point, Urs has mentioned that the Simplicity program, Swisscom Enterprise is fully embedded in the Simplicity program of Swisscom. But due to the fusion we had recently between ITS and the corporate unit of Swisscom, we are not so far as we are in the mass market to achieve savings, significant savings in terms of cost. We have a lot of legacy IT legacy, process legacy, and this takes more time to turn around. And therefore, the cost cutting for enterprise is late compared to mass market.
So overall, we can say a very strong performance of the market, a good performance at the revenue level and a less good performance on the EBITDA. In terms of positioning, I would like to mention to you three dynamics that are quite different but also at the same time related. On the connectivity business, on the telecommunication business, here, you can clearly see that more and more, the network is the backbone of all the Swiss economy and of all the Swiss enterprise. This means also that the acceptance for failure is decreasing. So we have more and more pressure, together with my colleague, Heinz, to assure a stable network because basically, we touch the core of most of the businesses in Switzerland.
On the IT side, we see that the attraction from outsourcing is strong. Why? Because the IT boss and the IT departments of most of customer are under strong pressure due to the cloudification and digitalization of the market. The business unit of our customer are requesting IT department that are more and more closer to them. And therefore, under this pressure, the IT department have to develop innovation and are more and more ready to get to give the traditional IT business out.
So the commodity IT business like workplace, data center management, network management will be given over to us. And the IT department try to concentrate much more on the application business, on the business that is bringing really value to the business unit. And this is leading to the third trend, which is digitalization, for sure, a big opportunity for us even if it's not well structured yet. And here, we see that we can have some other talks with our customer. We are developing our consulting business.
We are speaking at the CEO level more and more. And in the past, we were really seen as an infrastructure provider, and now we are much more seen as a business maker, and this opened up a lot of opportunities. Therefore, we have a very strong ICT portfolio. I think it is unique in Switzerland what we have. I used to say that we are the smallest of the biggest and the biggest of the smallest.
So we are compared to the worldwide competitor of the smallest and compared to the local competitor of the biggest. And this is a unique positioning because we can we have the strength to innovate and we have also the size to stay close to our customers. And this is a huge value proposition today for most of the customers. This slide is probably the most important for you if you want to understand the dynamic of our business. You see on the left side the trend we have on the telecommunication business.
A very strong market share as well on the wireless and on the wireline side. So it's difficult to grow because we can almost not acquire more customers. We have more chance to lose customer than to won even if it did not happen last year. A pressure on the price on the ARPU leading to a trend to decreasing revenues, putting pressure on the EBITDA. On the other side, an increase of the Solutions business because we are a strong ICT provider, knowing that this ICT Solutions business has less margin and is more of a direct cost business.
So when we sign an outsourcing contract, it's not rare that we have to take over staff from our customers. So we transfer staff to internalize, and then we try to increase the efficiency. So the IT business is a business which is coming with new cost, and the margin are lower. So basically, to replace €10,000,000 of revenue loss on the telco side, we have to generate roughly €40,000,000 of revenue on the IT side. So it's a very difficult situation.
And I have to say that I think this trend will continue to go on. So it will be possible for my department to secure the revenue. It will be more difficult to secure the bottom line due to this shift of margin profile. Now going a little bit more in detail of the various business. Here on the telco side, we focus on the wireless part, which is an important part of our revenue.
If you see the trend of the ARPU, you see a decline of the ARPU, a regular decline of the ARPU. But basically, if you compare it to our colleagues of the mass market, where the postpaid ARPU is at roughly 62, you see that we are at half of the level. So the room of decrease is going to be slow. I'm not only in charge of that. Our competitors are also in charge of the overall ARPU level in the market.
But I think the room for price decrease is less much less important than in the past. The good news is that we have been able to stabilize the ARPU, as you can see in the last quarter, with a stronger attention to the discount policy. And I think also, we start to feel a change on the competitive situation. As you have maybe seen in the report of SALT, SALT has practically recognized they will not continue to be present in the high end enterprise market. They have reduced their staff, and they're really focused on the smaller SME part.
So for me, in my position as Head of Enterprise, I do not consider SALT anymore as being a competitor in this market. So it remains Sunrise. And I cannot look into the plan of Sunrise. I can only say that we have a change of management in the corporate unit. And my feeling is that Sunrise is going to be more focused.
In the past, we have seen them in a lot of deals, bringing sometimes offering at a level of ARPU, which is much lower than 36%. And my guess is that they will be more focused in the future. They will continue to attack our customer, but they will attack less customers and maybe with more traction. The good news is we will probably have to grant less discount to most of the customers. So we will be able to give less discounts.
On the other side, it might be that we lose some few customers if they're really focused on some of them. So I would say I am rather optimistic that we will have some good news on the telco business this year, as you can see already in the last quarter. The answer for us is not only to be very restrictive in terms of granting discounts, but also, for sure, to differentiate. And the differentiation happens with some new product and services. One example for that is Mobility for Work.
If you look at the burden of administration to administrate telecommunication contract, in some organization, it is huge. And we try to take it as an opportunity. And Mobility for Work is a service where we try to replace the burden of the fleet managers, and we give also more power to the end users to administrate their lines themselves. And now we signed contract. For example, with UBS, we have today 10,000 SIM cards.
When we get besides the mobile contract, we get CHF 10 of additional revenue per SIM card because of Mobility for Work. And we sell it also to Credit Suisse, to VODWAS and other customers, and this is a strong differentiating factor. A second point of differentiation, which will be also, at the same time, a point of cost reduction is the virtualization of the network. Heinz already spoke about it, so I will not spend a lot of time on it. But just be aware that we have here the first customer that we have switched on this virtualized network by end of last year.
We will produce our network configuration much quicker for much less cost. One part of this cost saving will certainly go to the customer, and we have to retain the other part of these savings. In terms of IT, we grow in the IT, as I said, and we have some area where we grow even more. One of it is, for sure, the security market. As you can see here, the security market is a growing market.
It's an important market. And as you can guess, with all the digitalization, the cyber attacks, the Internet of Things, the customer are more and more willing to pay for security. We grow, as you can see on the right side, and we believe we can reach, in the course of the planning period, roughly CHF 100,000,000 revenue. And also, the observers of the market recognize that we have an outstanding portfolio here. We will move from today prevention product more to detection and intervention product, which is a new growth potential.
On the outsourcing market, I already spoke about it. I already spoke about the trends. We believe we will continue to gain some new contract. We are in negotiation with further companies. We see tractions in some branches like banking, like insurance, like health, and therefore, we are optimistic.
A part of this contract is also a migration from traditional outsourcing to cloud outsourcing. So sometimes, it's also substitution. The cloud strategy is underway. Heinz mentioned it already. Maybe one word here more on the market side.
You see as we can see, you can witness the evolution of the public cloud of Amazon, Microsoft and others. And we believe that it's an opportunity for us because we are not very strong on the public cloud offering. We are more going to the virtual private or private offering. And it is obvious today that customers are looking for hybrid cloud environment. Some workloads will be on the public cloud to have maximal scalability, minimum cost, but some confidential workload will stay in Switzerland in our infrastructure.
And also the interconnection of public and virtual private and private cloud will open integration, migration and administration opportunities for us. Last but not least, we see also opportunities on the digital business. It's basically a software based business. Here, we want to grow. We want to be more and more recognized as a software company.
We see the software in two extension. One is the Software for One, so basically a solution business. It's a custom development business. So here, we develop application for one customer only. The second market is solution for many.
Here, we develop digital product for several customers. On the solution for one, this is the market that is growing the most today because digitalization is not yet a mature and standardized market, and so customers are growing more for individual solutions. Here, we are very happy with our joint venture with Open Web Technology. Open Web Technology has been able to double almost its revenue last year, and we will continue to grow. And here, same statement as for security, I believe we can reach quite rapidly €100,000,000 business on the software side.
One word on to conclude on the verticals. As you know, we are acting in two verticals. On the banking side, it remains a very important leg for my business. We do not only the industrialization for the outsourcing for banks, but we also do more and more consulting and digital projects, especially on the cross channel where we do more and more cross channel business with banks. And on the health side, we had last year a strong traction in a lot of Canton with a new outsourcing contract, and now we have to implement this project, and this will lead also to a growing revenue profile.
So overall, a fascinating business with a lot of small and medium sized opportunities, a business with a very strong market footprint for Swisscom, an outstanding position on the market, but some challenging on the margin part and on the cost saving parts. And now I would like to hand over to Italian guys. No, to break. I'm sorry. Break.
Now it's time for Well, as already said by Christian, thank you to everybody so far contributed. Let's have a break for around fifteen minutes and restart at twenty to four sharp. So it's a little bit more than fifteen minutes, but please restart twenty to four. Thank you very much. Let me now open the second part of today's conference and hand over to Alberto for his presentation.
Alberto, the floor is yours.
Thank you. Ciao to everybody. Let's go for a fifteen minute journey to Italy, and then I will leave the floor for, I guess, one of your most favorite topics, which is, I guess, maybe dividend. But, you know, before that, let's go to the industrial part of Italy. First of all, in Italy, there's been a lot of announcement.
In Italy, the most fashionable trend is to announce something. The difference at Fastweb, the receipt of Fastweb, and we agree very much here with our shareholders and with Swisscom that we don't announce that much, but we deliver. So here, the first two slides, we just list a bit of the project that we delivered in the last years. First of all, is at the end of the day, we are already covering 30% of population with the ultrabroadband network. And we are by far the largest, let's say, attacker in Europe with such ultra broadband network.
Actually, we have much more fiber than a lot of incumbents, which is which gives you the importance of the project that we are delivering in Italy. Urs before was talking about 42,000 kilometers. We have over 44,000 kilometers. And Swisscom is one of the most of the incumbent that is investing the most. So it's a very good challenge reference point for us.
Second, we are executing our upgrade of the connection. So it's not just a matter of rolling out, but we want to increase the speed of our ultra broadband connection. We are now, for the moment at 200 megabit, but differently from some competitors, we are not just selecting one city, one street, two core, two areas or two blocks of selected cities, but we are doing it for the 30% of Italian population. So we are not interesting spot to have some flagship speed. We want to have a solid, robust average speed, which is much more powerful than anybody else in Italy.
Third, we are executing our plan to rolling out our Wi Fi coverage. Sometimes, it's very difficult to explain this project because it's largely undervalued. But at the end of the day, our idea of developing a Wi Fi community was to, let's say, export the power of our fiber, not only in to exploit sorry, the power of our fiber not only at home but also outside. And with the Wi Fi, basically, we now we have over 1,000,000 hotspot Wi Fi and we are serving over 900 cities. So basically, all the cities where we have the network, our customers can always be covered with Wi Fi even if they are outside their home linked to the powerful, fiber without limit of time, without limit of price.
And that has been a huge success for our customers because they can deliver freedom in exploiting video services without any price increase in their mobile subscription. Then, related to the full MVNO, we will talk about mobile expectation in a second. But, I would say that partnering with TIM, now we are able to we have actually already launched the four gs services, which is extremely important for us because we now have the same type of quality. We have aligned the quality, the best quality that we are used to deliver on the fixed now also on our mobile services. Just to give you an example, we launched to the public mid January, but the redemption on sales like 50% higher compared with last year.
That means that Fastweb has a really strong reputation on quality and also its brand can be exploit in the mobile services. Fifth point is digital transformation. Digital transformation, for us, it's something that is a project that is not new because we started to digitally transform four years ago, three years ago actually. And for us, transform means to become like digital native. So we need to be fast and we need to be to talk the same language of our customers.
We need to really be on the spot of this digital, let's say, evolution. And here, I believe that we'll be and we can build one of the most the strongest competitive advantage because all the companies, all the tel cos will need to go through the digital transformation. But faster than having no legacy on net or having no legacy on IT can do it much faster than all the others' competitor in Italy that are much bigger, much more complicated. And I bet that this is one of the key also of our, let's say, of the perception of the quality perception that our customers have of our services. Finally, Fastweb, as you know, invested in data center and cloud since five years.
We have basically the first data center Tier four in Italy. We have already gained 10% market share in this sector, which is extremely crucial for us because we have huge opportunity to upsell our existing enterprise customer base with new cloud solutions. And therefore, it will be a growth driver also for the future. These were some of the projects, the most important projects that again have not been announced, but have just been delivered. And I hope you appreciate the difference.
In a nutshell, if I look at the consumer space, we have done very strong performances, roughly 20%. We are co leading the market with some other competitors. But the good thing is that the vast majority of these lines for us and differently from competitors are definitely ultra broadband. Second, it's not just a matter of connection in Fastweb and also we share it with Swisscom. We are very much convinced that it's not just the connection, but it's also the quality at three sixty degrees.
That's why the digital transformation will help us to differentiate ourselves. But also looking at this NPS, let's say, gap, it's pretty much clear that Fastweb is also dominating and leading the perception of quality in Italy. The numbers in terms of consumers are less or lower if compared with Switzerland. But what is important, you need to evaluate the gap between the second, the third and the fourth operator. It's a gap that is increasing.
As I said, I do expect that in the future, this will increase even more. Third, just something that is fashionable on average in the year, we are always classified by Netflix as the best spot. It's just a fashionable info and we want to give it to you. If I look to the enterprise and the wholesale market, remember that 50% roughly 50% of our revenues are coming from the business side. I think that we have a very, very strong, let's say, market positioning because if I look at the public administration, now we have basically all the offer that the public administration is looking at, so not only voice, not only data, we have security.
And therefore, we are the only operator today in Italy that can manage all the needs of the public administration that by the way are also in a digital transformation mood in the future. And this gives us an enormous advantage, competitive advantage versus all other competitors. Most importantly, because we can leverage on a huge NPS. 60% once in a while here we are better than Switzerland in terms of appreciation, but I think that this 60% is something that you cannot see in many companies all around the world. Apple had 60% for sometimes, but now is below well below this ratio.
So it gives you the flavor that both in consumer and also in enterprise we are very well positioned as a quality provider. Finally, also this is an information that maybe sometimes is not really coming through, but basically we are also very solid and credible provider in the wholesale market. There are just two operators. One is TIM that's clear as an incumbent. The other is Fastweb.
If I look at the overall market share, LICS looks a little bit not that much 12%. But if I look at specific strategic growth drivers in the future like the fiber of the choline, we have already a market share of 40%. So it gives you also in this perspective our ability to, let's say, cash the investment that we did on fiber. Always these operational, let's say, performances have led to strong financial performances. So revenues grow 3% in every segment.
So we are leading every segment. There are no, let's say, balance. All the markets are driving growth. If I look at the consumer growth, we already talked about that. We almost reached 2,500,000.0 as family.
The good thing is that the growth is not only coming from ultra broadband, which is our core, but it's coming also on mobile customers, where after we increase our customer base by, 30%. On mobile, we will talk in a second, but our ambition will increase over year. 2017, we will push much more because we think that now having four gs, we can really push the same concept of quality where, as in the past, we had a bit of this alignment between mobile and fixed. EBITDA growth, very solid regardless if you look it included the extraordinary, which is 15% growth, but also even, with extraordinary, we reached almost double digit, 8%. And the good thing is that for the fourteen three master in a row, we are growing our EBITDA.
And also this is something that, you will not see certainly in Italy for our competitors. And this is the 8% is pure industrial without repricing, without four weeks billings. It's a real, real growth. If it comes then to profitability also at free cash flow level, it's pretty much clear that we want to contribute to the overall free cash flow growth of Swisscom. I would say that our performance is very, very strong because basically we doubled the performances of 2015.
For the ambitions, clearly, we will accelerate on mobile to two steps. One, first with four gs, but then we will move rapidly to the five gs. And third, we will always try to invest in the network because our investment network at the end are resulting in growth for customers and so it's important for us to continue to invest. It's also important to increase scale because we want clearly to that our investments are becoming or generating profitability as soon as possible. Now we deep dive in each of these four pillars.
We start with the MVNO or the mobile services. We don't have to go through in details. But the concept is that Fastweb has a very strong reputation in quality. In the past, our mobile operations suffered about the difference in quality between fixed and mobile because in the past, we were, let's say, offering just three gs services that compared with fiber, it's something disaligned. But now with the possibility to launch four gs, I think that we can extremely powerful and extremely appealing for our customers.
As I anticipated to you before, the fact that in the weeks after the launch of the four gs services, the sales were increasing by 50% shows the potential that is in front of us. And the ambition is to basically triple our sales that we did in 2016 that we are already I think very, very good. But on mobile, I think that in 2017, we can talk about a launch of the real mobile of fast food. And we will also push commercially with advertising. In the past, all our results were done without pushing too much in above the line.
Here, we will do a proper push, commercial push, in order to maximize our case. For what it concerns the infrastructure, definitely we want to be always the best infrastructure, of course, with the technology that are possible. And in terms of FTTS and ultrabroadband, we will continue to increase our footprint from the existing 30%. We will move to 50%, which gives again which will be we are already now sorry by far the first attacker in Italy sorry in Europe in terms of Ultrabroaden definitely we will be by far by when we will complete our 50% coverage. Also in terms of speed, as I told you before, homogeneously, we will increase very, very soon everything, all the network in FTTS at 200 megabit that today is the most, let's say, advanced speed that you can have on this technology and on this such spread market.
When it comes to fiber to their own because FTTS is one technology, but, we are also developing our fiber to the home network. Here, we were able to, make a very strong agreement with TIM whereby basically we have the target to develop fiber to their home on roughly 30 main Italian cities. Here, I think we have a very good and strong opportunity because in those cities and starting rapidly from 2017, we will increase the speed to one gig. So again, it's a very strong, let's say, move of fast work that is not again interested in one or two cities. When we do a network rollout when we do a network upgrade, we want to really do it in a more extended way.
That's extremely important because it gives you also the flavor that this network will be deployed very, very soon. And basically, three quarter of the network will be done in the next twenty months, nineteen months. And that's extremely important because we don't have to build a fiber to the home network from scratch. We need just to develop the last miles from the cabinet until the customer premises. And this is a huge competitive advantage versus others, let's say, fiber to the home plants that envisage a complete rebuild or buildup of a fiber to the home network.
So not just the last mile, but everything. And on this, I think, as I told you, we have a very strong advantage and we are extremely firm in get it done. And on this, the partnership with TIM is doing very well. And since we have the same interest, all the operations are progressively developing nicely. This is one of the most important slide because as I told you, we want to increase our ambitions in the mobile.
And actually here, our aim is to become the first converged player, but real one. And I think that five gs is gives us a very strong opportunities because five gs is a technology that is between fixed and mobile. And five gs needs at the end three ingredients and one is fiber. And on fiber, I think, as we were discussing before, we have all the fiber that is necessary. Then you need some places where you can store the equipment to manage the small cell, places that needs to be secure, that needs to be electricity, powered.
And we have it because we have already 20,000 cabinets available and in a couple of years we will have 50,000 cabinets available. And each of them can manage from five to 10 small cell. So we are talking about potentially 500,000 small cell available for five gs. And if you look at competitors' rollout, they are just talking about 4,000 small cell pilot in the next two, three years. So here we are moving to this five gs challenge to the next level, but it's pretty much clear that we have now all the ingredients because the third thing that was missing was the frequencies, but we have done an agreement and we got basically 40 megahertz at three point gs of three point g, let's say, speed that are frequency, sorry, that are perfect for the development of the five gs network.
So now we are completely independent. It is just a matter of rolling out. And here, we have a strong competitive advantage because our competitor will first try to monetize the four gs network. But basically, we will try to push as much as possible. All these investment will not change the CapEx profile of will not change the CapEx profile of Swisscom because we'll be all managed in our, let's say, ordinary CapEx envelope and with our cash flow.
But this is a very strong, let's say, positioning or faster that even a convergent world can really make the difference. In terms of with all the investment, it's also key for us to increase the scale and so the profitability. It's pretty much clear that the vast majority of our customers are already coming from ultra broadband where a lot of competitors are still also concentrated on the normal broadband. And for us, this is key because the ultrabroadband customers are much more valuable and more loyal than anybody else. So we will continue to push on ultra broadband.
We will continue also to leverage on partnership like the one that we had with Sky, which is the most successful partnership ever launched in Italy because we were able to do over 600 already thousand customers, but more and more we will do in the future as we have just renewed for other five years. So it gives us all the time to roll out and to increase our customer base. And for us, it's important also there to challenge ourselves and we need to continue to lead the market. We need to continue to increase our customers' acquisition. But honestly, it's just a matter of execution because if you look at the recent year's performance, it clearly shows that our trend of growth is accelerating.
If I go to the corporate segment, also here I think we have ambitious target because also with the agreement that we were able to strike with Tiscali now, as I was anticipating, we have all the big framework contract in our hands and so we can offer and we are the only one to do that to the public administration, voice, data, security, switching, management of equipment and that is a very strong competitive advantage. That is reflected in our plans because we want to continue to increase our market share even if it's the seventh, eighth year in a row, but we will we are confident that we will be able to get to such increase. The good thing is that our growth will not just come from traditional services, but also it will come from cloud data type of services. Our ambition is to get to the 50% of total order coming from ICT, but already in 2016 we are close to 30. So I think that, as I said, these are ambitious targets.
But if you look at the trends that we have been able to exploit in the next years, I think that we are more than in line with expectation. That was all for my presentation. And then I leave the floor to Mario.
Thank you, Alberto. I still haven't found out why Louis has chosen this picture for me. I'm getting old, but maybe you maybe you will tell it to me later. So I give you some additional explanations to the numbers. I think the good thing is that we once again delivered our guidance.
My colleagues gave you already some insights, so I will not repeat all the details. When we talk about 2016 numbers, I think we have to take out some exceptionals when you compare 2016 with 2015. On revenue, we have practically no exceptionals to reconcile. On EBITDA level, you remember last year, we had the sanction for the ADSL case. We had to book 189,000,000 rather €160,000,000 €86,000,000 and €70,000,000 provision for restructuring in Q4.
In 2016, the exceptional items nearly compensate for each other. We have on the one hand side, we have the litigation at Fastweb. In Q2, we cashed the litigation from a competitor of CHF55 million or CHF60 million. In Q4, we booked two provisions in Switzerland, 120,000,000 for restructuring costs and €120,000,000 for regulatory risks. So that means on an underlying basis, EBITDA declined by 1.2%.
If I look at the revenue and I just compare now the underlying numbers. If I look at the revenue, service revenue decreased in Switzerland by CHF 126. And here, the main impact is roaming, 83,000,000 comes from roaming and then CHF 47,000,000 comes from the fixed line loss. These are the two main negative impacts we have on the Swiss business. And if you divide the roaming impact into mass market and the enterprise customers in the mass market, that mass market was impacted by €49,000,000 and the enterprise market for €34,000,000 And I think the remaining effect has been explained by my colleagues during their presentation.
Fastweb revenue increased by 3.4% to €1,800,000 Consumer segment increased by 3.2% Enterprise was flat, but the important thing on Enterprise is the recurring revenue is increasing. And as Alberto mentioned, very successful on the wholesale business. We increased the wholesale business the revenue in wholesale business by CHF 32,000,000. A few words on the OpEx in Switzerland. The direct costs increased in Switzerland by CHF 22,000,000.
The left hand side, you see Falk Essosee explained by DIOQ, 5,000,000. We had to spend more 14,000,000 due to higher retention volumes. You see that mainly in Q3 and Q4, iPhone launch and €25,000,000 subsidized HD TV boxes also there, the main impact in Q3 and Q4. Looking at the goods purchased, you see this negative impact, the blue column, minus 49,000,000 in Q4 in Switzerland that was in Q4 twenty fifteen, we had very high hardware sales in the Enterprise segment. On the indirect costs, the €50,000,000 savings, they come from the different projects which Jules explained in his presentation.
Then we have lower repair and maintenance costs in the Network division. We saw that already in the first half. Then we have some elements of increasing costs, mainly volume increase in the solution business. Christian explained that additional revenue in the solution business comes only with additional indirect costs. On EBITDA, the breakdown by segment, we lost in Switzerland 3.3% of EBITDA, CHF125 million.
That's more or less equal in the residential business and in the enterprise business in terms of CHF80 million and CHF72 million or 2.1% in the residential business of decline. Fastweb, without extraordinary items, we increased the EBITDA by 8%. That's excluding the positive impact from the litigations. And also here, the positive thing is we had margin increase in all segments because of higher recurring revenues, not one offs, higher recurring revenue. That brings us a good basis for further growth in 2017.
If you look at the quarters, I think we see the net the dynamic we had in 2016. Q3 was heavily impacted by roaming. We had this €53,000,000 decline of service revenue. At that time, I think we also had some doubt outside whether we would make our guidance. We were always confident that it was just a temporary seasonal trend in Q3.
And you saw and you see in Q4, we have, let's say, let's say we came back to normality like we had the in Q3. On the right hand side, again, to repeat on service revenue, roaming, fixed voice line loss. These are the two main reasons for this decline. A few words on roaming. On roaming, the strategy was and is a value strategy we give our customers more for the same.
Already 1,600,000 of our Infinity customers are on price plans where the EU roaming is included. And this has different impact. So first of all, we have lower revenues because these customers don't buy data packages anymore. Secondly, we have higher outpayments because these clients are using this package that these free volumes they have in the EU. And the third effect is we have higher inbound roaming because you negotiate with your operator volumes.
And that if you have more outbound roaming, that helps you to bring more inbound volume to your network. And the net effect of these three dynamics is €80,000,000 in 2016, and we expect a further negative impact in 2017 of €70,000,000 Below EBITDA and EBIT, just a few remarks. Net interest amounts only to CHF 155,000,000, so we benefit from the low interest environment. The other result improved by CHF eighty million. Here, we have included the benefit of the sale of MetroWeb.
In December, we were able to sell our minority stake in MetroWeb for EUR 80,000,000 and that contributed to a profit of EUR 40,000,000. Net income for the group went up by 18% mainly because of the extraordinary items we had in 2015. A few words on the pension plans. We made some plan amendments, some important plan amendments last year and we applied also a modified valuation method under IFRS 19 that's in fully compliance with IFRS, agreed with our auditors. So on the plan side, we had important decisions of the trustees.
You see that on the left hand side, we reduced the technical interest rate of the plan, we reduced future benefits and we increased contribution in the future for employees and employers for the employee and the employers. The financial impact of that is in the balance sheet. So these plan amendments had a positive impact on the liability of million. Then applying of the risk sharing method under IFRS 19 has a positive impact of €850,000,000 On the other side, we have a negative impact of the interest rate decrease in 2016. Overall, you see it on the right hand side at the bottom.
The pension plan deficit declined from EUR 2,900,000,000.0 down to EUR 1,850,000,000.00. And all these corrections were booked directly in the equity. This is no impact on the P and L. That helped us also to increase the equity ratio up to our targeted 30%. Two other important things.
The estimated pension cash expense in the future has only a slight increase. You see that it will increase from CHF $338,000,000 to CHF $350,000,000, it's more or less stable. And then we agreed amongst the trustees that we have a special employer contribution of €50,000,000 paid out in 2017 to the pension plan. Only a few words on CapEx. Switzerland CapEx went down by CHF 50,000,000 despite higher CapEx into the infrastructure.
So for example, in fiber, we increased our investments by 9% to CHF476 million. On the other side, we reduced CapEx in IT systems in all IP, in projects by more than 12% or CHF50 million. On the cash flow, I think no surprises. We all know that we had to pay this sanction without in Q1, euros 186,000,000. This case is now pending at the Federal Court in Lausanne.
We don't know when we can expect a decision. We will see what the outcome of this case will be. On the refinancing side, we did three transactions. We refinanced CHF300 million in the Swiss bond market, duration between nine and twelve years. And you see at very low interest rates, the coupon were very low.
And if you look at the maturity profile of our debt, I think it's a smooth one. We have to refinance 2017 and 2018. These were huge bonds, which were taken in 2009 during the financial crisis. We have to refinance now these two bonds that will help to further reduce the interest expenses. The coupon, for example, for the 2017 bond is 3.75% and the one for the 2018 bond is 3.25%.
So we expect to further reduce the cash out for our financing costs. 80% of our debt is fixed, so we are well protected for a potential interest rate hike. And we will tap in 2017 most probably both markets, the euro bond market but also the Swiss bond market. Dividend policy. I think and you all know that we as management are clearly commitment to an attractive and also a reliable dividend to our shareholders.
So since 2011, on a reliable basis, we pay out '22. But we also committed to a single A rating. That's clear for us as management. We have to keep these two elements in balance. You see that in out of the 2016 cash flow, we pay 87% as dividend.
And you might argue that's quite a high amount, a high payout ratio. We feel comfortable with this payout ratio because we have a solid business in Switzerland, and I think my colleagues proved that to you during this afternoon. And we have a growing business in Italy. And on the financing side, we will have lower cash out in the future. Dividend hike is, of course, limited and that's out of question for the time being because of the high CapEx needs, which also Heinz explained before.
That brings me to the last slide, the outlook 2017. First, Italy. I think Alberto showed you that we can be positive for our Italian business. We will see growing revenues and growing EBITDA also in 2017. CapEx will remain stable.
We will further invest in fiber to the street. We will further invest into the digitalization. The Swiss business, I think the EBITDA of the Swiss business will remain under pressure. I mentioned already the €70,000,000 expected impact from roaming. We expect €50,000,000 impact negative impact from the line loss, voice line loss, fixed line.
And in general, pressure also in the B2B segment of €50,000,000 that brings us to €170,000,000 the three main items, euros 170,000,000 negative impact and that will be partially compensated by our cost saving programs by operational excellence. Where we expect savings of CHF75 million. Free cash flow proxy, billion, not much different compared to the guidance we had a year ago. And if we met these targets, we will again propose a dividend to the in 2018 of CHF 22. With that, I hand over to Louis for the Q and A.
All right. Thank you, Mario and Alberto for your presentations. And as Mario already said, it's Q and A time. May I kindly ask you to use the microphones because there are also some people on the webcast so they can follow our conversation and discussion? And it looks like the first question is here coming from Fred.
So please also mention your name and bank you're representing. Thanks.
Hi. Thanks for taking the question. It's Fred Boulogne from Bank of America Merrill Lynch. Firstly, on the enterprise business, was just trying to understand a little bit the outlook for that business. You talked about growth in Solutions.
Do you see enough growth there overall in terms of wallet to grow that business? And do you see any particular competitive dynamics here that you can flag from larger multinationals? Or you still can control that business with your solutions? And second point on Fastweb. When you look at the free cash flow generation in 2016, still pretty limited.
So can you discuss a little bit your ambition for this business in the long run as shareholders of that business? There's a very strong focus on the network, which is impressive. But what's the target over there in terms of long term free cash flow generation? Thank you.
Thank you, Fred. So I think first question might be answered by Christian.
Well, on the short term side, we have had an extraordinary December with €05,000,000,000 of new orders, new contract. And despite of that, we had a funnel of opportunity that is in January €300,000,000 above last year at the same time. So I think the first outlook for this year are not bad in terms of business. On a long term basis, as I said, I think the outsourcing trend, the cloud trend, the security trends, the digital trends are things are area of growth. And this will be partly compensated by price renegotiation on existing IT business.
But in the balance, we should grow continue to grow on the IT business.
Thank you. Christian? Alberto?
I don't know if from the second it's an ambition of shareholders because I can be maybe bullish. I don't know.
Okay. I will give you the perspective of the shareholder. No, it's clear Fastweb should create a good free cash flow. On the other side, Swisscom had always a long term perspective for Fastweb. So we invested in the ultra broadband network.
This pays out. The market is becoming more converged. So we have to get a stronger proposition in the mobile. But as a shareholder, we are looking for a good free cash flow. That's clear.
And then we look back at the time when we acquired Fastweb back in 02/2007. That was exactly the idea that Fastweb can compensate for risks and the declining cash flows in Switzerland. And as was mentioned, now it's finding out the balance between short term optimizing cash flows out of Fastweb and giving a long term future in the network quality. But I think we are happy that we reached now this level. I think two, three years ago, nobody believed that faster can produce cash flow.
We had a lot of headwind at that time, and now we are happy that we reached that stage. And I think there are further steps to be taken.
Okay. Next question, well, from Joshua.
Hi there. Thanks very much. It's Joshua Melzer from Goldman Sachs. Just a few follow-up questions on B2B. So Slide 62, think, is very useful on this.
But you made the point that you're gaining subscribers in the mobile segment, but your connectivity revenues are down more than 4%. So what kind of discount are you offering to existing tariffs when you do retain those customers? That's the first question. And the second question on margins. I think you're indicating that the margins in the IT service business is about four times lower than in your legacy business.
Where do you think that can get to longer term? It sounds like there's bit of a ramp up and then they do become more profitable. But is that a 10% EBITDA margin, 20% EBITDA margin? Would be good to know. And then finally, third question would just be who do you think is really the biggest telco competitor going forward?
Is it Sunrise who is clearly being more active on the mobile side? Or is it potentially Liberty Global, which I think only have about 5% B2B market share at the moment and clearly want to increase that? Thank you.
All right. Thank you, Joshua. Christian?
JOSE Yes. On the discount policy, as you can imagine, it's very, very individual. So I cannot give you a rule. We pilot this by every deal and every month. It's very depending from the competitive situation.
But it happens that we renegotiate mobile deals with discount with 20, 30%. This may happen. What we know is that we always at the end of the day, we have always prices that are higher than our competitor. And nevertheless, we can keep the customer. So the premium is still possible.
In terms of IT margin, it's also very depending from the deal. Usually, we are at EBIT below 10% in the outsourcing deal, but we charge every time for sure a contribution to cover our general cost and expenses. And as I said, you have at the beginning more cost. You have the project cost to amortize. And usually, the last year of the contract are more profitable. FRANCOIS
BOUVIGNIES:]
In terms of competition, I don't know if it was a B2B question or a general question. I think it was more a general question.
B2B. B2B. It was B2B.
Okay. So basically, the telecommunications side, for sure, on the mobile side, it's sunrise, clearly. On the fixed business, it's UPC, Cablecom, that is trying to get some major network deals that will enable them to develop also a dual net. We have been able to avoid these kind of big deals losses in the last year. We won back we prolonged the important deal with Raiffeisen for several years.
We also extended the network deal with MiGro for several years. But you have always knew RFQ coming to the market like now with Post. So we can imagine that by all major network deals, UPC will try to step in and to win one big.
Okay. Thank you. Perhaps, Urs, Yes. You would like to
the B2B market, you shouldn't look only to the traditional competition like UPC or Sunrise. There is also competition from IT companies because the business is becoming more and more converged. The competitive landscape is much broader in this area. That's why it is important to have the solution business to keep the margins in the connectivity business.
Thank you. I think next is Vikram then
Vikram Kurnani from UBS.
I've got two questions. Firstly, in terms of your fiber rollout plans, I wanted to check-in terms of how your relationship with Swiss Fiber Net is going over here. So if you look in terms of their ambition, they want to increase from 20% to 40% in the medium term, but you have clearly kept your ambition in terms of fiber to the home rollout at the current level of around 30%. So I wanted to understand why is it not like cost efficient for you to continue that partnership going forward? And secondly, in terms of your own CapEx outlook with focus more in terms of fiber to the street and G.
Fast, this envelope of €500,000,000 that you are spending on fiber in the medium term from 2017 to 2021, should we expect this €500,000,000 to go down gradually? What's the kind of outlook over there? Thanks.
Okay. Maybe on your question, why don't we push hard to fiber to the home and why we push fiber to the street? And that's the root of your question. From the whole competitive dynamic in Switzerland, we have a much better payback if we are now pushing fiber to the street. And with fiber to the street, we will be able to have 500 megabits per second, and that's far enough.
Average household with ultra high definition TV, with Internet, let's say, an intensive broadband, intensive household will use maybe 60 to 80 megabit per second in twenty twenty. So there is enough space, and it's more important to have a fast rollout in the broad with a good coverage than just to have a slower rollout with fiber to the home. And at the end, if you look long, long, long term, but that will be really maybe we're not working there. There, you will have fiber to the home, yes. But there you have also synergy because you have already built beyond 200 meter before the house.
So that's for us, it's a more efficient strategy like this. And speed. Speed is the main time to market is the main goal behind it.
I'll comment on the CapEx outlook. Today, in this EUR 500,000,000, there is a part of FTTH, for example, the verticals. So whenever you have new customers, you have to build the vertical. And secondly, if you have new building in a city like Zurich, then you use also the FTTH technology. So a part of this €500,000,000 is FTTH and the rest FTTH.
Overall, this CHF 500,000,000 will not decrease. They will increase because of speed, as was said. So the overall CapEx envelope will remain, let's say, for the two next two, three years stable at 1.75, 1.8, but the part of FTTx will increase. And also in the future, we will have a part of FTTH because what I explained and the rest will be invested in FTTH.
If I may follow-up just in terms of one point on the fixed line competition on you clearly talked about multi brand approach and you have Wingo as this product for quite some time. Can you elaborate further in terms of what sort of traction you're getting in this market with this low end offer and with potential solid fixed line entry sometime, I don't know when, this year? But do you think that product at that particular price point, similar to Wingo, would cause a lot of disruption in the market? The
Swiss market is a very triple play driven market. So you can see that in our acquisition figures that it's primarily triple play driven. Vingo is a niche product up to now, still a niche product. So I think there will be not really a big disruption in the market because you need a good TV product to get traction. And the Wingo the figures of Wingo are still quite low.
Next question, Jacob.
Jacob Bluestone from Credit Suisse. I've got a few shorter questions on the outlook. Just, I guess, a few points of clarification. I mean, first of all, on the fixed line side, I think you're guiding for 50,000,000 headwind, and I think it was €47,000,000 in 2016. So it sounds like you're not expecting anything incremental from SALT, just if you can confirm if that's kind of correct?
Secondly, also on the guidance, you're guiding for roaming headwind of €70,000,000 and I think that was 87,000,000 in 2016. So there's not a big improvement in the roaming headwind. I guess that's a little bit surprising given that you introduced the new roaming tariffs in 2016, I think, in April. So maybe if can just explain why you don't expect the roaming headwind to reduce to a greater extent. And then just a final point on the guidance.
Can you confirm if the €50,000,000 pension cost or I think it's called an employer pension cost, is that included in the EBITDA guidance of €4,200,000,000 then finally, just one question, not on guidance. I'd just be interested to hear in Italian mobile, what sort of market share you think you might be able to achieve with your new mobile platform? Okay.
Mario is going to answer the guidance questions and then Alberto on the mobile.
On the €50,000,000 fixed, that's the impact on the fixed voice line losses. I think we will see the same losses in 2017 as in 2016, roughly 250,000 overall. The €70,000,000 roaming, you know that we see week by week, but still new customers are moving to the tariff plans where roaming is included. So that's our best guess from today, the CHF 70,000,000. Then the pension costs, this special contribution has no impact on EBITDA.
That goes directly against the pension liability. There's a cash impact, but no EBITDA impact.
And on this fixed impact or fixed business impact, we don't see a big impact from Salt. That's mainly, as Mario mentioned it, that's the impact of the losses of the voice connections.
Thank you. Alberto? I think the target should
be to stay in the region 4%, 5%.
Thank you.
Thank you. Next question. You are the first. Or can you please well, Georgios perhaps or it doesn't matter at the end. Yes.
Well, thank you very much. It's Siyi He from Berenberg. I have three questions, two, Finance and one, Operations. The first one is on your CapEx guidance. You said that in the next couple of years, you expect the CapEx to be CHF1.75 million in Switzerland.
And I was wondering for the overall CapEx envelope, do you expect the CHF2.4 million to stay stable over the next couple of years, especially given that you're going to invest in five gs? And the second question linked to the CapEx guidance is that if I look at your EBITDA, if it's continued to decline by CHF 50,000,000, and that will actually put a squeeze on your free cash flow. I understand that you're happy with the payout ratio of 88%, but I was wondering whether that could mean that the absolute CHF 22 will could have a downside risk? The final question on operations is that in your consumer mobile, do you expect that the more for more strategy should carry on? Thank you very much.
Thank you. I think the first two questions are for our CFO and then probably Dirk.
Okay. For the next two, three years, as I mentioned, we see a CapEx envelope for the Swiss business of 1,750,000,000.00 to €1,800,000,000 And there included is the fiber rollout as we discussed with Vikram, increasing FTTS CapEx and the rest will be managed with CapEx efficiency, as Uz explained, that we will remain in this envelope. And also, maybe Heinz can there a little bit elaborate, but five gs investments, they will come in 2019, 2020.
Yes. I mean exactly, if you look at the time plan, I have said the standards are not yet done. Yes, there is POC. Yes, there is a lot of marketing hype around five gs. There is no one really having five gs available.
You can expect standards being stable in 2018, which means another year at least before the big vendors start to implement that into their products. So you won't going to see big rollouts in not just in Switzerland, that's a global phenomenon, before, I would say, 2019, 2020 at the earliest. And the rollout normally takes you one, two, even three years. So and having said that, the way we manage CapEx is, of course, we can reshuffle a bit around, but the normal envelope we have around mobile CapEx will not have to increase because of rolling out five gs for different reasons because you always have kind of a new technology invention or implementation where you put those CapEx in, then you do some normal maintenance and capacity increase, then there comes the next increase of new technology. So we were able in the past also to manage that in the existing mobile CapEx envelope.
So we can steer that.
Thank you, Heinz. And perhaps
And on the midterm dividend question, as I mentioned, we see a stable business in Switzerland. We set up a couple of initiatives to further improve our cost basis. And this part must in the future must compensate potential pressure on the top line. And looking three or four years ahead, I think it's difficult and then you can discuss at that time. But for the time being, we feel comfortable with the dividend coverage.
So free cash flow proxy minus taxes and interest, you reach €1,300,000,000 €1,350,000,000 The payout is €1,140,000,000 So we still think we have a good dividend coverage.
Thank you, Mario. And then on the last point, more for Morten.
Yes. We're going to continue to pursue a more for more strategy: a, because we think it has worked well to us. We reported our figures in terms of development of customers through that life cycle that I have shown and b, there is almost no other strategy than to reduce prices possibly, which is not the way that we want to see the market. So we're going to continue to put more for more. If you look at the scaling dimensions of our subscriptions, then it is about speed.
And people, the more they utilize their mobile, the more they have a demand for speed. It's the roaming allowance that is in there. People want to have more roaming. We have been able to partially, let's say, move metered revenue into the subscription fees, and we want to continue that. There's still potential within the customer base, be it they are already on postpaid but not on flat tariffs, to develop these further.
And then also, particularly, there's a momentum from prepaid to postpaid, first maybe immediate and then into flat tariffs. And I think the underlying driver here really is people want to be connected all the time. So it's the whole thing around data and Internet everywhere. Prepay is not, let's say, the right tool for that. People need to eventually have contracts, and there is momentum that we want to utilize and to drive.
And then I also mentioned the dimension of second, if not third, ZIMs with wearables. I know you all know that has been off to a slow start, but we still believe that this will kick in. And of course, we see it also as an opportunity to sell more to customers with multiple devices and multiple ZIMs.
Thank you, Dirk. Next question, we start here.
It's Georgios from Citi. I've got three questions. The first one is on enterprise. And I was wondering if you could share with us the kind of margins you could have on a cloud product. You mentioned earlier the plain outsourcing is around 10%.
Would that be much higher? And if you could clarify, I think you mentioned earlier there were some delays executing some of these projects that impacted profitability in 2016. I believe there were like five major projects you mentioned last year that you are planning. If you could give us an idea of how much profitability this could contribute in the medium term once you're fully rolled out? My second question is around upselling in the consumer segment.
When I go through the Vivo offers, there's a 20 increase as you go from one split tier to the next. I was wondering if that's the difference between a fiber customer and an ADSL customer, VDSL customer typically or if the gap is even bigger because they go two steps rather than one step up. And if that could fully compensate for people disconnecting the voice connection, which I think is 15 the saving from that. And then finally, on Fastweb, whether you'd be interested in entering the C and D areas now that InfraTele is, well, in the next few years could develop a fiber product in the in the rural areas of Italy, whether it will be something that you'd be interested to explore? Thank
you, Georgios. I think the first question on cloud is for Urs.
Yes. We don't close the margins of the cloud business. But what you can take in account is that the margins in the cloud business will be higher one than in the system integration business. In the enterprise market, you have different kind of businesses. You have the connectivity businesses with the highest margin.
Then with the lowest margin, you have the system integrated business. And this is in the region of 10%, as Christian mentioned. And then you have the cloud business, and that's in the middle of this, but we don't disclose these margins. And on the time to market or the ramp up, what is interesting is that big deals in the cloud market, it goes slower than expected because it's always a migration project for a customer. Customer has to decide does he go in the cloud or not, and then it takes a long time.
So the cloud business will not explode. It's a slow ramp up of this business.
Okay. Then on the upselling.
Yes. Maybe just quickly to get to your question. You were asking whether the opting out of voice services would be compensated, if not overcompensated, by an upsell in broadband? Is that what your question was?
If you would do enough upsell in terms
Sorry?
If you can do enough upsell in of speeds to offset for the voice disconnection?
Yes. No, I mean, overall, if you factor everything in, then yes, there is upselling, particularly, let's say, where we have built new infrastructure, either out of broadband, be it FTTH or FTTH. And we see, in general, a better ARPU than where we have just pure copper implemented, but that can, in itself, not overcompensate the loss of revenue that we are facing with the decline in voice services.
Okay. Then on the last point, Alberto? Yes.
I think that on the white areas, those are beats that, at the end of the day, will be either telecom Italia or either Enel Open Fiber that will win for us. It's a fantastic opportunity in a sense that we will have anyhow possibilities as customers to get to exploit such technologies that are fantastic for us because we would never invest in such wide areas. Now we have the opportunity in the future because then someone will need to develop all these, let's say, fiber network in such areas. Once that they will be available, we will be customers. But for us, I mean, our focus of infrastructure is in the black areas.
The white areas is not our priorities.
Okay. Thank you, Alberto. Next question?
Yes, good afternoon. It's Luigi Minerva from HSBC. First question on the Enterprise segment. In your release, you reported 5.1% decline in the volumes of incoming orders, which translates only into a 1.6% fall in revenues. So logic would suggest that maybe the revenue decline will follow the volumes decline.
If that's not the case, why? Second question is on the Italian market. In other markets in Europe, we have seen that going from triple play to quad play comes with ARPU dilution. What's your expectation in Italy? And maybe on the side, whether content exclusivity will become important also in the Italian market?
And finally, big picture question on five gs, whether you think it will bring new pockets of revenues with it.
Thank you, Luigi. So the first part, Urs, for On the order intake, order
intake is not one to one correlated with the service revenue in the enterprise business. Because if you have a contract renegotiation, it's not new business at the end. So sometimes, it's even better to have a lower order intake. It's better for your top line and bottom line. So it's not one to one correlated.
And but overall, we can say, as Christian already mentioned in his speech, we have a very good win ratio in the corporate market. So the deals which were really on the market, we get them. So we don't have a performance problem in the market.
Thank you, Urs. Christa, do you want to add something or is
it No, I think it's a very fair explanation.
Okay. Then Alberto? Okay.
I think that in convergency, I'm talking wireless and wireline, I think that fast tube has a very good opportunity and it's not a matter of ARPU dilution because if you think that prices in the fixed, we are already, I think, at a very competitive prices. So we don't expect to have any dilution there. And in mobile, we can be much more aggressive than anybody else because we don't have huge customer base to defend. So in this respect, I think in convergence, we can be extremely, extremely, let's say, aggressive and competitive while all the others will have more difficulties. Second, on the content, clearly, it's a really delicate argument because some competitors want to enter in the content, let's say, business.
Some others are moving away. I think that for what concerns Fastenal, but first of all, we have a very strong partnership with Sky. So it gives us the possibility anyhow to address such convergence without complicated things. In the future, we'll see. I think that the content world is very, very, let's say, delicate.
And there are content owner, content player that are have a very strong position. So it's a debate whether we will be, let's say, or telco will be to have will be have the possibility to be competitive in this spot. Are cases where they are like Swisscom. But for FastUB, I think it's, you know, we are more than satisfied with the partnership with Sky for the moment.
Let me follow-up on the first part of your answer. So if I understand well, would it be fair to assume that currently, if you the triple play ARPU plus the mobile, the current situation will be higher number than the moment you launch a Ford Play product.
Let's put it before, as I said, we believe to the convergence in wireline and wireless. That's clear. I think that if you look also at the ARPU dilution, it's relatively stable in the fixed. So in the also in the future, in our product at least, we have a different position in the tenant than other people. We are at premium.
And also I do expect expect to to have have the the same same type type of, of you know, ARPU in the future because, you know, we are increasing also the the the quality. We are increasing the speed. So there are, you know, let's say, good argument to have a ARPU that is stable. And on the mobile, I think we can do a lot of there is a huge possibilities for us. So I think it will be possible to be aggressive, but on the volumes to increase our revenues.
Thank you. Alberto, perhaps on five gs business potential? A good five gs, you have
to look to the customer segments. The development will be quite different. On the one side, there is it will be an upside by the IoT Internet of Things business. There is a small market, I would say, additional new market. On the residential consumer market, we should be able to get better ARPUs for more speed.
That will be the main dynamic. How much is a question. Five gs will come in 2020, so it's still a long way to go. But that must be the intention to monetize the speed on five gs, the consumer market. And then the architecture of five gs will bring you new opportunities also on the product side.
You can make much more segmented solutions also in the enterprise market. I think there is also an upside. So overall, five gs should help the mobile business.
Thank you, Urs. Next question.
Andreas Willo from Zurcher Continental Bank. One question is or the first question is how much revenues do we have with roaming in 2016? And what share of that is going away in the next couple of years? And what is probably recurring from that roaming revenue? Then for 2018, have you already earmarked some amounts for this spectrum license?
What kind of amounts should we expect there? And then as well on five gs, is this hybrid strategy you have currently in place with four gs, is this equipment or these investments or these also can you use that also then for five gs going forward?
Thank you, Andreas. I think the first two questions are financial questions. So Mario?
Don't I take the frequency there so they can coordinate themselves? So frequencies, we don't know yet what will be the conditions of this auction. So it's hard to say what would be the price for these frequencies.
So
I can't give and I wouldn't give an estimate here.
So the overall roaming revenues, outbound and inbound, and you have to look at this business together, is approximately €400,000,000 And but we have more shift to inbound roaming because of the inclusion of the free roaming in Europe. And the margins, we don't disclose. But I would say, midterm, in Europe, we will not make any margin. That's clear. But it's already today, it's very low in Europe.
And then some business will always remain in roaming North America. It's a second important market for us. And in all other countries, in some countries, there's just one operator. There we have out payments. That we will charge also in the future to our customers.
And I think the long term, we will see a roaming revenue of approximately 100,000,000 to €150,000,000 not more anymore.
Then on spectrum
license I mentioned it. So we don't know the conditions. And even if you would know the conditions, I wouldn't give an estimate because there are also competitors in the call.
Thanks. Okay. Sarah?
It's Sareep from Redburn. I've got a couple of questions and then just one follow-up from Jacobs. So the first one was just on your fiber to the street. How helpful is that in your five gs rollout? If you could kind of quantify or qualitative.
And then secondly, how easy is it for players like SALT? You've said that the market is increasingly converged to deliver a kind of scale TB product in Switzerland. Is that if you could just educate me in how that they might plan a route to that and how quick they could do that? And then the third one was just on your ambitions in mobile in Italy. Sorry, I think that you said something about market share and I didn't quite catch it.
So it's just a follow-up.
So let's begin with the market share in Italy.
Yes. As I said, 4%, 5%.
Sorry, in one year?
No, the long run. Maybe if we are lucky, but then I should ask for a
over what period? In the midterm?
Yes.
On the possibility of salt in the TV business. So Elliott, they know how to do a TV product. So they have also a TV platform. So they will be able to bring a TV product to the market. On the other side, we are quite confident that we have a differentiated TV product from Swisscom, so we will be able to compete in the market.
So as mentioned before, I don't think that there will be a disruption through the entrance of SALT in the fixed market.
Thank you, Urs. And then perhaps the first part of your three questions.
So your question was, does it help what we do in FTTS to, in future, also use that for five gs backbone or rollouts? Yes, of course, because first of all, in the cities, we have enough fiber already. And now we do the rollout of FTTS more on the rural areas. We pull fiber up to, as we said, mostly 200 meters in front of buildings. That's where in future, if there might be a necessity to place five gs antennas, be it macros or small cells, that's where they are.
So fiber is there. So the investment we do today in FTTH will also help us to use that as a backhaul capacity to connect. Again, in future, once five gs will be here, we can also connect the antennas
to that.
Yes. In the for five gs, a converged operator has an advantage because there are synergy between the different networks.
Okay. Thank you. Is there one very last question, perhaps David, and then afterwards, we have to close down because we have to leave in David?
David Lopez from New Street. I've got two questions, please. One on cost saving. So you mentioned €300,000,000 in gross cash savings to 2020. I was wondering if you give us can you give us some colors about net savings?
And the second question on G. Fast. You mentioned it's three times cheaper than FTTH to deploy. I was wondering if you could do a bit better than three times because it still seems a bit expensive for g. Fast.
Thank
you, David. So the first part on cost,
The net savings depends on how fast we can increase our revenues in the solution business in enterprise. That part of that will compensated, but that comes with additional margin. So our target must be, except for that impact, it must be net savings. We didn't fully succeed in 2016, but the CHF 75,000,000, we must come very close, except for this effect from solution business, to a net effect of CHF 75,000,000. Otherwise, my answer would have been wrong for the dividend question.
Thank you. Mario?
On the cost difference, I mentioned two factors. I mentioned the factor, if you would just compare the cities and the rural areas, there, the factor is roughly around two. If you now would have to build FTTH on the rural areas, the factor of difference would go up to three. You can count roughly six fifty at g. Fast line.
Okay. Thank you. Unfortunately, I have to close down, sorry. At this point, this is from our side. I would like to invite you to have drinks and some food and snacks with us outside.
Most of the people will be around so you can do some informal chatting and discussion. Thanks for your attention. Looking forward to seeing and hearing you soon. If not here, then certainly on the phone. Have a nice evening.
Bye bye.