Ladies and gentlemen, welcome to the Q3 results conference call presented by Urs Schaeppi, Mario Rossi, and Louis Schmid. At the end of this call, you will have the opportunity to ask questions with instructions provided at the time. Let me now hand over to Louis Schmid. Louis, the floor is yours.
Thank you. Good morning, ladies and gentlemen, and welcome to Swisscom's third-quarter results presentation. My name is Louis Schmid, Head of Investor Relations, and with me are our CEO, Urs Schaeppi, and Mario Rossi, our Chief Financial Officer. The first part of today's analyst and investor presentation hosted by our CEO consists of three chapters. First, a quick overview of the highlights, net add performance, and financial results of the first nine months, then an update on our priority 2016, and finally, some explanations on our Q3 operations, both in Switzerland and Italy. In the second part of the presentation, Mario runs you through the financials and the unchanged guidance for the full year 2016. With that, I would like to hand over to Urs to start his part of the presentation. Urs?
Yeah, good morning, ladies and gentlemen. If you go to slide four, you can see that we are in line with our expectation. We have a solid operational performance. Fastweb was able to grow. Our nine-month financials are in line with the expectation, and therefore we confirm our guidance. We are on track concerning our cost-cutting program. Our operational figures, our operational KPIs are stable. We were able to keep our market share. We have stable churn figures, stable ARPU overall, and really a solid performance in the market. Important is also, if we look to the dynamic in the Swiss business, the Swiss market is still a market which is a value-driven market where quality counts. You can see this in the strong figures of Infinity 2.0.
We were able to grow our customer base on Infinity. We had very good results on the bundling business. If you go on slide five, some information to our market performance. The mobile business, overall, if you compare the market share on the service revenue level, revenue-based market share, you can see that our market shares are stable. We were able to grow in Q3 by 17,000 postpaid customers, and these are mainly Infinity customers. Solid business from the subscriber side on the mobile business. The fixed business, there you can see a mixed picture. The business of fixed lines is declining. The main reason is substitution. It is interesting that the biggest majority of the customers which leaves or which cancel their voice connection from Swisscom leave the market. We have only or less than 30%, which is churn.
The rest is really leaving the market. It shows the substitution in the fixed business. Broadband business was increasing by 3%. Also the TV business, strong momentum in the TV business. We were able to grow by 14,000 net adds, which is 13% growth in the TV business. Fastweb, a strong acquisition in Q3. If you go on slide six, the service revenue or the net revenue, actually, the reported net revenue is overall stable. You can see that if you take out the exceptionals. These exceptionals are M&As, exchange rate effects. We have an adjusted revenue, which is going down year-over-year by CHF 27 million. Overall, that shows that we have approximately a stable revenue.
On the EBITDA level reported. If you take out the special effect of the sanction from the antitrust body which we booked last year, the CHF 186 million. If you take out this, we have a reported EBITDA, which is +CHF 22 million. If you take out all the additional exceptional litigation from Fastweb foreign exchange effects, our EBITDA adjusted on a yearly base went down by CHF 55 million. The main impact is coming from Q3. I will come later to it. The main effects of the lower Q3 figures are roaming, high subscriber acquisition, and subscriber retention costs. This was really the driver of Q3: roaming, subscriber acquisition, and retention costs. If you go on slide seven, there you have some information to our margin dynamics.
On the left side, you see the EBITDA adjusted of Swisscom. It is CHF 55 million. This is the result. CHF 102 million is coming from Swisscom Switzerland. Fastweb increased by CHF 32 million. We have some other effects of CHF 15 million, which as a result, goes to the CHF 55 million EBITDA. Swisscom Switzerland in Q3, -CHF 102 million. We will have also in Q4 an impact mainly driven by price, by roaming. The effect will be a bit lower than in Q3. Fastweb, we have a good and strong development of the EBITDA. On slide eight, you see the dynamic of the service revenue and EBITDA. If you take the service revenue in Swisscom Switzerland, we have a decline of CHF 99 million. In the bubble, which are the effects.
It's roaming, which has an impact of CHF 68 million. Some opting out of fixed-voice telephony, which leads to a decline of CHF 12 million. The airtime surcharge, which has an impact of CHF 10 million. This leads to this CHF 99 million. The majority is coming from roaming. We have growing solution revenues from the enterprise business, CHF 37 million. The higher subscriber acquisition and subscriber retention cost of CHF 25 million. Overall, this leads to this CHF 102 million decline. The majority of decline is coming from roaming and higher subscriber acquisition costs. On the other side, with the cost initiatives, we can save CHF 37 million. Let's go to our priorities, our five priorities for the business on slide 10. We have these five priorities as we had them already in the last call. Some words to maximize our core business.
There, the main target is defend our market share, which we were able to do it, and retain our price level through a differentiated product portfolio. On slide 11, you see what we were able to deliver on our network side. We have today in the wireline business, an ultra-broadband footprint of 3.4 million households, which has a bandwidth over 50 Mbps. We implemented also G.fast as the first operator in the EU, which will bring us faster speeds on our network. We will be able to deliver up to 500 Mbps speed on our fiber to the street footprint. The goal in the wireline business is to have a coverage of 85% with a bandwidth of over 100 Mbps in the year 2020. 4G coverage, we improved, we increased. We are now at 99% coverage of 4G.
We are committed to technology leadership and an excellent customer experience. On slide 12, some information on our wireline business. We are ready to defend our strong position in the wireline business. You see on the left side the action which we have taken, and on the right side, the results. Stable market share. Certainly a strong performance in the actual market condition. We are gaining market share with our TV products. We have also attractive offer for the Christmas business, which is coming. We are optimistic that we can deliver a good performance in Q4 and defend also our market share in the lower end of the market. With All-IP, the migration or the phase-out of the TDM networks, we are on track. Actually, we have 65% of our retail customers which are on All-IP.
Page 13 shows you the dynamic or our actions and our results in the wireless business. We are back to postpaid growth, and the main majority is coming from Infinity in Q3. We have a good upselling from pre to postpaid, and we have, in our Infinity customer base, stable prices. No downgrading. We have a slight dilution of the Infinity ARPU, but this is driven by roaming and by lower-end customers which are migrating to Infinity. I will come to the ARPUs later. We have strong position in the mobile business. On page 14, you see that we are on track with our cost targets. We were able to save CHF 37 million year-over-year and through a basket of initiatives. On track with our cost program. Fastweb on page 15 shows you the effect of our ultra-broadband networks.
If we have a customer or if we are in the ultra-broadband footprint, we are able to increase the sales penetration, reduce the churn, and this leads to a better lifetime value of our ultra-broadband customers. Page 16 shows you our ambition on the footprint for ultra-broadband in Italy. The target is to have 13 million households in 2020 on ultra-broadband. From these 13, 8 million is coming out of the footprint of fiber to the street and 5 million with a footprint or with the technology fiber to the home. From this 5 million, 2 million is the historical fiber to the home footprint of Fastweb, and 3 million will come through the partnership Flash Fiber with Telecom Italia, where we plan to build out the fiber to the home network in 29 cities, and the commercial launch will be in Q3 2017.
This initiative with Telecom Italia will fully leverage our existing investments in the network because we are only building, let's say, the last 250 meters with fiber. On page 17, you see our ambition in the ICT business. The ICT business is a potential in the enterprise market to increase our share of wallet. As I mentioned before, we were able to increase our solution revenues in the enterprise business. Page 19 shows you our service revenue dynamic in Q3. We have a reduction of our service revenue in Q3 of minus CHF 53 million. You see that the majority of this decline is coming from roaming, where 50% of the impact is from the retail market and 50% is coming from the enterprise market. Growing access revenues, CHF 33 million, because our bundling strategy and infinity. This leads certainly or clearly to a reduction of the traffic revenues.
On page 20, some KPIs to the wireless business. Solid KPIs in the wireless business. Net adds are increasing. The ARPU, and this is a strong performance. The ARPU in 2016 is approximately stable. There is a small impact from roaming, but overall, the ARPU in our infinity business is stable. The revenue-generating units of mobile, and that is interesting, is postpaid driven. 70% of our RGUs in the mobile business are postpaid customers. From this 70%, 70% are infinity customers. That shows that our postpaid customer base is strongly infinity driven. Page 21 shows you some KPI to the wired line business, fixed business. We have a mixed picture. Growing revenue-generating units from TV and broadband and declining revenue-generating units from our voice business. As I mentioned before, this is mainly structured consolidation, so substitution by voice over IP or fixed to mobile substitution.
The ARPU in the fixed business are stable. If you go to slide 22, you see our bundling business. Very strong Q3 net adds in the bundled business, 220,000. ARPUs in 2016, approximately stable. We have a slight lower ARPU, and the main reason behind it is roaming, is outporting of fixed voice, and some loyalty discount in the quadruple play offers. Slide 23 shows you the service revenue dynamic. This minus CHF 53 million in Q3. You see that the decline is ARPU-driven. The main factor behind it is roaming. If you compare it to previous quarters, we were able to compensate the declining ARPU by growing revenue-generating units. In Q3, because of the strong decline of voice, we have a more or less stable revenue-generating unit and can't decline the reduction of the ARPU. Direct costs on page 24.
You see that Q3, we had higher direct costs. The direct costs, there are three factors behind it, why they are higher. The first one, with CHF 14 million, is driven by out-payment of roaming. If we have more, let's say, outbound roaming traffic, we have also higher out-payments in roaming. The second factor is the subscriber retention costs on mobile. In Q3, we had a lot of retention on the mobile business, which is certainly also a good news because the customers are protected. We have low churn figures, stable churn figures. Then you see also increased subscriber acquisition costs in the fixed business, which are CHF 8 million. This leads to the higher direct costs in Q3. Fastweb on page 25 shows the strong performance, increasing customer base and the revenue, which increased by 3% in the first nine months. Fastweb financial performance is solid.
This you can see on page 26. Revenue increased by 3%, as I mentioned before. EBITDA increased by 21%. If we take out the exceptionals from TI, which we get from TI, we have adjusted EBITDA, which increased by 7%. Also a good industrial performance of Fastweb, and we have a positive free cash flow. I would like to hand over to Mario, which gives you some information about our financials. Mario?
Thank you. Good morning also from my side. I'll give you some additional information on the segments mainly related to Q3. Let's go to page 28. You see there on the left-hand side, residential customers, that we lose CHF 34 million service revenue in Q3. 50% comes from roaming. The other half comes from the impact of the voice line losses. In the first quarter, we were able to compensate that with a growing number of revenue-generating units, which is not anymore the case. In enterprise customers, we lose in Q3 CHF 19 million service revenue. Again, here, around 50% is the roaming impact. The rest comes from pressure on mobile pricing. I'd like to point out that we don't lose customers in this segment. It's just the impact on competition on mobile pricing. Solution business is still growing. We show a minus three in Q3.
That's because we had in Q3 2015, high revenues on hardware. Fastweb, Urs mentioned it already. Steady growth on revenue then later on also on EBITDA. On the next page, on costs or OpEx in Switzerland, Urs explained the direct costs. I would like to point out the higher retention costs, which we had in Q3. Overall, in the first nine months, we were able to retain 12% more customers than in 2015. That shows that we do quite a good job in customer base management, which is essential in a saturated market. On indirect costs, we are on track with our operational excellence program. We are on track to deliver the CHF 50 million cost savings. On other, we had an increase of CHF 19 million in Q3. That's mainly IT costs, setup costs for future cost-saving programs, which we have to do in the IT area.
Of course, you have to take out the exceptionals in Q3. That's the provision for the ADSL sanction. That's more or less the main part. On EBITDA. On residential, we lost CHF 60 million in Q3 compared to prior year. The roaming impact is CHF 31 million. The impact from SAC, SRC is CHF 16 million, and the rest is we had less savings in Q3 because of a different phasing on the cost side, mainly on marketing. On enterprise, the reduction of CHF 28 million comes CHF 10 million from roaming and the rest from price pressure, as I mentioned. If you look at the EBITDA in Switzerland, we lost in Q3, CHF 81 million compared to prior year. I would like to repeat the impact of roaming. Roaming had several impacts on our P&L. First, we have lower revenues from reduced prices of the packages.
Secondly, we have lower revenues because we are including roaming in Infinity plus and in Infinity 2.0. Third, we have higher costs of goods sold because of the increased volumes of our outbound customers. In Q3, on the revenue side, we lost in Swisscom Switzerland CHF 26 million on roaming revenue, and we had CHF 16 million higher outpayments. That makes CHF 42 million impact on Q3. That is more than 50% of the CHF 81 million we lost in Q3 compared to prior year. On net income, there is nothing special to mention except for net interest on page 31. Had the cash out for net interest in the first nine months was because of the low interest rates, CHF 35 million below 2015. On CapEx, page 32. CapEx are in line with our expectation and strategy. You see in Switzerland on fiber, we invest 28% of our CapEx volume. That means CHF 360 million in nine months.
That is in line with our FTTx strategy. Second remark on IT systems invest and all IT, we invest 19% or CHF 245 million. That is 10% less than prior year. That is also part of our operational excellence program to reduce our project CapEx. On free cash flow on page 33, there is only one exceptional item which you already had in Q1 and in Q2. That is the extraordinary prepayment of the sanction in the ADSL case of CHF 186 million. On the financing side, page 34, we had one very successful transaction. You see it on the left-hand side in Q3. 80% of our debt portfolio is fixed, and the average interest rate of the portfolio is 1.8%. You see we have two quite high maturities in 2017 and 2018.
We assume that the interest rate will remain around at today's level, and that will help us to further reduce our cost of debt. On outlook, there is nothing to mention. Urs already confirmed it. We confirmed our guidance, CHF 11.6 billion net revenue, EBITDA around CHF 4.25 billion, CapEx CHF 2.4 billion. That brings us to a free cash flow proxy at around CHF 1.85 billion. With that, I hand over to the operator.
Thank you. Ladies and gentlemen, thank you for your attention. You have now the opportunity to ask questions by dialing star 1 4 on your telephone keypad. Once you are in the question queue, at your turn, you will hear a short announcement saying, "Unmuted." I already have questions that are coming in. The first one is from Mr. Frederic Boulan from Merrill Lynch. Please go ahead.
Hi. Good morning, gentlemen. Thanks for taking the question. Two questions, if I may. Firstly, on the cost side. You're saying you've now reached 65% on All-IP. Can you explain what benefit you're seeing versus the initial cost-cutting that you described for that? If you could comment on the CHF 19 million increase in other costs that you said, I think are linked to IT, to what degree is that recurring? Secondly, if we could talk a bit more about what's happening in the SME and enterprise segments. Both segments saw a pretty sharp drop in revenue in Q3 after solid trends in H1. Can you clarify to what degree this is pricing, roaming related, and how we should think about those trends going into Q4 and 2017? Thank you very much.
I will take the question to the enterprise and the SME, and Mario will come to the costs. First, on the SME business. The SME business from the performance side is stable. We have a good performance in the SME business. Also the SME business is impacted by roaming. This has a small impact on the SME business. On the other side, the business in SME is quite stable. If you compare the revenue to 2015, we have stable revenues in the SME business.
Q3 was weak because of roaming, because of the typical seasonality. A bit another dynamic we have in the enterprise business. There we are faced with the one impact of roaming, on the other side also with a strong competition or price pressure on the wireline business and wireless business. The main effect there is competition, also pressure from our enterprise companies which negotiate or renegotiate their contracts. That's a bit the price dynamic we have in the enterprise segment.
On All-IP , as it was mentioned, we are well on track with the All-IP migration to our target to turn off the TDM platform around the end of 2017. The savings, we have our CHF 300 million saving program, CHF 50 million in 2016, CHF 75 million in 2017, and then three times CHF 60 million. All-IP is part of this CHF 300 million program. If you isolate the savings on All-IP on, let's say, a stable basis, the savings will be around CHF 100 million. That will build up in 2018, 2019. The IT costs in Q3, they are not recurring. Part of it is recurring because you have always to invest something, let's say, to get rid of legacy platforms, et cetera. In Q3, it was extraordinarily high, these expenses.
Okay. Thank you very much.
Okay. I have the next question from Louis Porta from Morgan Stanley.
Yes, hello. I have two questions, please. The first is on the deterioration in the single play, in the one play wireline revenues that we've seen this quarter sequentially. Wireline revenues were coming down 12% in the last three, four quarters. Suddenly in the third quarter, the decline is 17%. There is a five percentage point sequential deterioration, which I understand is somehow having to do with migration to bundles. The fact is that bundle revenues are also slowing down a bit. I would like to understand whether there's any one-off or year-on-year weaker comparison in the single play wireline revenues in the third quarter, or what are the dynamics behind this deterioration? The second question is on the guidance reiterated for the full year.
If my numbers are correct, that means that the reported EBITDA in the fourth quarter should be 5% down year-on-year. On a clean basis, should be down 8%, which compares with down 6% in the third quarter. Definitely there's something which is going to deteriorate further in the fourth quarter. I would like to get your thoughts on what factors are those. Thank you.
I will go to the ARPU question, and Mario will take the guidance. To single play wireline. What we actually see, if you take only the single play fixed voice and access revenue and also broadband, we have quite stable ARPUs. You can see this in the presentation on page 14. The effect which we have is actually the migration to the bundles. This leads to a declining single play business. The ARPU in the bundling business, as I showed it in the presentation, is overall stable. There are slightly impacts. This slightly impact in the bundling business is driven by the, let's say, outportings of fixed voice telephony. Some loyalty impacts if you go to a quadruple play offer. Also a slight impact from roaming. Overall, the bundles business is quite stable on the ARPU side.
On Q4, first of all, the guidance is around CHF 4.25 billion. There are some uncertainties. If I look at the trends in Q4, we will again have a roaming impact, which will be a bit lower than in Q3 because of less traveling activities from the Swiss population. We will have, again, the impact coming from the voice line losses. There are two. Definite line losses or final line losses, then the voice opt-out in the bundles, that will continue. We don't see different trends in Q4 compared to Q3. On Fastweb, I would expect a similar growth in Q4 on EBITDA as in Q3.
Thank you.
I have the next question from Jakob Bluestone from the Credit Suisse.
Hi, I've got two questions, please. Firstly, could you maybe update us a little bit on what sort of ARPU effect are you seeing from customers migrating to the Infinity 2 tariffs? Are you seeing ARPU go up or down versus where it was previously? Secondly, can you maybe update us a bit on what's happening in the residential wireless business in particular? I noticed that your postpaid net adds were -24,000 during the quarter. Maybe you can update what drove that decline in postpaid subscribers. Thank you.
Postpaid residential, postpaid or wireless business, huh?
Wireless.
Wireless, huh? There you can see that we were able to grow our net adds on postpaid. On prepaid, we have a declining revenue-generating unit, but these are very low ARPU customers. We are quite successfully in upselling prepaid to postpaid. Let's say the new Infinity customers or the customers which are migrating from the lower-end postpaid or from prepaid to Infinity, they mainly go to lower Infinity tariffs. Overall, there is a small upsell in it. I think that's the positive message, that the Infinity customer base is really quite stable. We don't have a down migration in our Infinity customer base. The impact of roaming is actually the following. We were able to keep our ARPUs on Infinity high, even with a strong price competition, because we have also this roaming bundle thing.
The overall ARPU of infinity is stable. Jakob, I have one remark on development of the postpaid residential. On single play, we have a reduction of 28,000 customers, but we have more wireless customers in bundles, and that are an additional 45,000. The net effect is positive in Q3.
Thank you.
I have the next question from James Ratzer from the New Street Research.
Yes. Good morning, gentlemen. Thank you very much. Two questions, please. As we're sitting in November 2016, probably starting to form some views looking into 2017. Consensus numbers for next year are looking for EBITDA to be around stable, but yet we're probably going to be exiting the year with Swiss EBITDA declining around 6%-8% year-on-year. I was wondering if you could give us thoughts on how confident you feel about those trends improving sharply in 2017. Will less roaming drag be enough to get us back to a stable EBITDA trend next year? One more specific question on Slide 8 of your presentation which shows the underlying EBITDA drivers of Swisscom Switzerland. Actually, one of the biggest deltas this quarter is in all other, and your footnote says that this is due to higher indirect costs from solutions.
Could you give us a bit more color on what's driven that? Is that just a one-off item that should recover in Q4? Is there something more structural there? Thank you.
Okay. Mario Rossi will take the question on costs of others. I will give you some flavor on our outlook. It's too early to give the guidance. We will give it on the 8th February 2017. Some dynamics to the EBITDA. What we will have is a slight reduction in Swisscom Switzerland and an increasing EBITDA of Fastweb. We will have this dynamic as we have it in 2016. The Swiss business is driven by price pressure in our core business. This will go slightly down because of the roaming effect. The roaming effect in the next year will be lower than this year. We will have some positive effect from our cost-cutting program.
Also a stable market position. That's a bit my view on the business in Switzerland. Fastweb will have an increased EBITDA. Overall for the group, we are more or less in a stable EBITDA situation.
On your question on page eight, do you see the solution revenues? That's a solution and IT business coming from the enterprise segment. We were able to grow these revenues by CHF 37 million in the first nine months. These revenues come with a cost, and these costs are personnel expenses, IT consultants, et cetera. These were CHF 21 million in the first nine months. These are not one-offs. These are coming on a recurring basis, on a recurring way. We continue to grow this solution and IT business, which is our strategy to compensate for the pressure we have on the connectivity business. Still a good margin business if you compare the CHF 37 million with the CHF 21 million cost.
That cost, do you think that those costs continue to grow going forward?
They continue to grow with growing revenues. Exactly.
Okay. Thank you.
Okay. I have the next question from Tim Boddy from Goldman Sachs.
Hi there. It's actually Josh Mills here. I didn't think Tim would be calling in from Vodafone. Just a couple of questions from me. Firstly, is there any change that you've seen in terms of whereabouts the subscribers are coming from? Is it that it's still the Swisscom main brand or is there an increasing portion from the M-Budget side as well? Secondly, on slide 11, you've shown your network upgrades plans for 2020, 85% of homes with 100 meg speeds. I'm just wondering what portion of that will be with G.fast, which you're introducing to network this month. Thank you.
Good. M-Budget. We introduced new tariffs in Q3, and this gave us a more positive dynamic on our Swisscom brand customer base. We had a stronger performance on Swisscom and a bit less performance on M-Budget. M-Budget had also a slight growth. That's the bit dynamic with the second brand. G.fast, we will implement now G.fast on our fiber to the street rollout. All the new cabinets which we are rolling out will be on G.fast.
That's very clear. Just one follow-up. In the presentation, you note that you have increased the speed of the Wingo product to 500 megs, which is higher speed than your Vivo L products, if I'm looking on the website here. What's the rationale behind that? Why not just keep the faster speeds using this new technology for the main brand only?
Wingo is an online-only brand for, let's say, more for digital natives, which only looks for a fast internet connection. Let's say that's a specific market. For them, we improve the performance to be competitive. That's only the cities where we compete with the cable operator. We don't have to deliver that nationwide, just on these specific spots. Only the fiber to the home would change.
Understood. Thank you.
We will also observe the market, and if we think that we have to do something on speed on our Swisscom portfolio, we will do it.
Okay. Thank you.
I have the next question from Georgios Ierodiaconou from Citi.
Hello, and thank you for taking the questions. I just wanted to ask around the pricing changes we've seen from your cable competitor recently, whether you believe that will stem the flow of customers to your network. Aggregate on retail and wholesale has been gaining quite a bit of traction versus cable. Whether you think that may lead to a bit more competitive pressure overall. Following on from just the previous question, when do you expect to see commercially real benefits from G.fast in the sense that, not just availability, but whether you expect at some point that to accelerate your customer share wins in some of the areas you haven't had fiber so far? Thank you.
On the dynamic of G.fast, what we see is actually in the footprint where we have fiber to the home or where we have ultra-broadband connection, we are able to get better sales figures to increase slightly the ARPU and also the market share. G.fast will certainly strengthen our position in the market.
On the move of UPC. That's a clever move from UPC, but I believe that we will be able to be competitive with our Vivo portfolio, with our TV offering, which we have. We will be able to be strong in the bundle business. I am convinced about this. Up to now, we have very good TV figures. We have increasing broadband subscribers. We don't see actually impact from Cablecom up to now.
Sorry. If I would ask another question more relevant to 2017. On the enterprise segment, you faced a lot of price pressure, mainly from Sunrise in the last couple of years. Is it possible to give us an indication? Earlier, you gave some color as to the 2017 trends for roaming and some other drivers, whether in the enterprise segment, the headwinds ease or whether they stay where they are this year? Thank you.
Good. In the enterprise market, we will have also the roaming pressure. The roaming pressure in the next year will be lower than in this year. That's one message. The second message is the price dynamic in wireline business in the enterprise market is driven by two factors. The enterprises which are under cost pressure, and the second is the competitive dynamic mainly of Sunrise. If I look to our market share, if I look to the win backs, we had very nice win backs in Q3. The market shares in the enterprise market is stable. Actually, Sunrise don't progress on the market share side, but they bring us more pressure on the pricing side in the wireless business. I hope that they see that they don't win market share and that they became less aggressive on the price.
Okay.
I have the next question from [Puruval] Zarov from Redburn.
Morning, everyone. It's Zarov from Redburn. I just had a couple of questions on, firstly, your fourth quarter. Your guidance basically implies that the client's going to get worse. Is that basically SAC related, given that your comments on the roaming effects being slightly lowered? Secondly, on your quad-play discount. Basically, when I'm looking at your wireless customers, there's a relatively small proportion that actually take the bundle. I just was interested in how you market that converge discount. If you market it actively or only market to those customers that are thinking of leaving, and the kind of risks you see to ARPU around that converge discount.
Good. I will give you some ideas about quadruple play, and Mario will take the questions on Q4 and the guidance. The four-play business. You are right. We have still a small amount of customers which are in quadruple play offers. We see a dynamic or a bigger market demand for quadruple play, and we will push it a bit more, quadruple play. We have already introduced in the last month a new offer for quadruple play. Let's say a better loyalty offer for quadruple play. We see a bit more dynamic on quadruple play. The main driver in the bundling business remains triple play offers.
On Q4, as I mentioned before, the general trends in Q4 are more or less the same as in Q3. Expect, as you mentioned, less impacts on roaming. You're right, we expect some higher retention and acquisition costs, mainly due to the iPhone 7 launch in Q4.
Sorry, what was that last sentence? Sorry, I didn't hear.
Mainly due to the iPhone 7 launch in Q4.
iPhone 7.
Yeah.
Okay, perfect. Thanks very much.
Thanks.
I have the next question from Usman Ghazi from the Berenberg Bank.
Good morning, gentlemen. Thank you for taking the questions. I have three questions, please. The first question I had was on SAC and SRC levels. Could you confirm that the unit SAC and SRCs are stable and a higher absolute amount is mainly due to higher renewal volumes? The second question was just, again, looking out into 2017, the roaming impact is just going to be, I guess, one quarter next year versus three quarters this year. On top of that, you have a bit of relief because renewal volumes will be cyclically lower next year than this year. You don't get the headwind from the higher SAC and SRCs next year, and then you have the higher cost savings.
Is that directionally the right way to think about it, or should we continue to expect SAC and SRCs to be going up next year as well as the roaming impact to be higher next year versus this year? My final question was just on the voice lines. I think previously it was mentioned that you have 725,000 residential RGUs for voice lines for single play. Is that basically going to zero, or how should we be thinking about that? Thank you.
Good. The SACs, you are right. The subscriber retention costs and subscriber acquisition costs, the majority is renewal. As Mario mentioned, it's also always a bit depending on the handset portfolio on the market. Right now we have this iPhone 7 impact in Q4. Overall, I think the volume will be in the area where we have, but the overall amount of SAC or the specific price will not go up. The SACs will stay on the level or even going a bit down. The roaming impact for the next year will be a bit lower. The main dynamic which we have is we have not already all the customers, the postpaid customers are on Infinity 2.0. With the migration of customers to Infinity 2.0, we will have also in the next year, some impact on roaming.
This will be low because normally if you have a migration in the first phase, the high-end volume spender of roaming will migrate. Now we have the less intensive roamers which are going to Infinity, so the impact will be lower. On the declining of wireline voice. We will have a similar decline in 2017 on voice, but there will be a rest of customers which will stay on voice. Elderly people, just as an example, will stay on voice. In the B2B market, voice is more important than in the residential. It's, let's say, the address of the company to their clients. There will stay voice connections.
Okay. Thank you.
I have the next question from Vikram Karai from the UBS.
Thanks. I have a couple of questions. Firstly, on the Swiss mobile side, what sort of take-up are you seeing with your SIM-only offers in the market? You previously had suggested that Switzerland is a subsidy-driven market, you still launched this as probably a defensive tool. I just wanted to understand in terms of take-up of your SIM-only offers. Secondly, on the 5G for Switzerland program, is there any update in terms of timing for the 700 MHz spectrum auction, would you be able to use that for 5G deployment?
Also, I would like to understand a bit more in terms of what sort of data consumption are you seeing with your unlimited Infinity offers, if there are any capacity constraints emerging on the side, especially in peak hours that would imply that you would be interested to have that spectrum auction sooner rather than later. Thanks.
On the SIM-only offers in the mobile market. We have a SIM-only offer, limited traction in the market. We don't disclose the exact figures, very limited traction. For us, it is more important to stay to the subsidized business model. On these 700 MHz frequencies-
There are no news from the regulator. We expect them for 2018, there are no news so far. Vikram, I can't give you the details on the network planning, whether they will use it for 5G or not.
The other question was data consumption. Do we run in congestion problems? No, we will be able to manage it.
We still see the doubling every 12 months. This trend remains, but we don't have quality problems in the network.
Okay. That's helpful. Thank you.
Finally, I have the last question from Luigi Minerva from HSBC.
Good morning. Thanks for the questions. The first one is for an update on regulation and the plan for the regulatory reforms. If you can give us a comment on the timing and whether you still see a risk of a switch from ex post to ex ante. The second is on technology, and it applies to Switzerland, but also to Italy. When you are going from fiber to the street to fiber to the home, covering the very last bit, would you consider also some alternative solution, like alternative wireless solution like millimeter waves? If you have any thoughts on or any experience on that would be great. Thank you.
On the regulation. The revision of the Telecommunication Act, this will be the next year in the parliament, and then we will have a process which will last until, let's say 2019, 2020. The exchange from ex ante to ex post, we don't see it. I think that's not a part of the revision. We will stay with our actual environment on the ex ante, ex post topic. Fiber to the street, fiber to the home, I think that the technology for the next year will be fiber to the street for broader coverage and fiber to the home more for the hotspots for the cities. I think these are the technologies which will really be important in the market.
Okay. Thank you.
Okay. There are no more questions.
Okay. With that said, I would like to conclude today's call, and also thank you for your participation. If you should have any further questions, please do not hesitate to contact us from the IR team in the course of the day. Goodbye.
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