Ladies and gentlemen, welcome to the Q3 Results Conference call presented by Urs Sheppey, 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, Ulf Scheppe and Mario Rozzi, 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 adds performance and financial results of the first nine months then an update on our priority 16 and finally, some explanations on our Q3 operations, both in Switzerland and Italy and the second part of the presentation, Mario rounds you through the financials and the unchanged guidance for the full year 'sixteen. With that, I would like to hand over to Urs to start his part of the presentation. Urs?
Yes. Good morning, ladies and gentlemen. If you go to Slide four, you can see that we have that we are in line with our expectation. We have a solid operational performance. Fastweb was able to grow.
Our nine months financials are in line with the expectation. And therefore, we confirm our guidance. We are on track concerning our cost cutting program and also our operational figures. Our operational KPIs are stable. So 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 two point zero. We were able to grow our customer base on Infinity, and 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. So 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. And it is interesting that the biggest majority of the customers, which leaves or which cancel their voice connection from Swisscom leave the market.
So we have only or less than 30%, which is churned the rest is really leaving the market, and it shows the substitution, the fixed business. Broadband business was increasing by 3%. And also the TV business, strong momentum in the TV business, we were able to grow by 40,000 netbacks, which is 13% growth in the TV business. Fastweb, acquisition in Q3. If you go on Slide six, the service revenue or the net revenue, actually, the reported net revenue is overall stable.
But you can see that if you take out the exceptionals, and these are exceptionals are M and As and exchange rate effects, you see that we have an adjusted revenue, which is going down year on year by 27,000,000. But overall, that shows that we have approximately a stable revenue.
On the EBITDA level reported,
we have and if you take out the special effect of the sanction from the antitrust body, which we booked last year, is CHF186 million. If you take out this, you see that we have a reported EBITDA, which is plus €22,000,000 And if you take out all the additional exceptional litigation from Fastweb foreign exchange effect, you see that our EBITDA adjusted on a nine year on a yearly base went down by CHF55 million. And the main impact is coming from Q3. I will come later to it. And the main effects of the lower Q3 figures are roaming and higher subscriber acquisition and subscriber retention costs.
So this is really was really the driver of Q3 roaming and 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. So this €55,000,000 and this is the result. You can see €102,000,000 is coming from Swisscom Switzerland.
Fastweb increased by €32,000,000 and then we have some other effects of €15,000,000 which has, as a result, posted this €55,000,000 EBITDA. Swisscom Switzerland, you see in Q3, €102,000,000 And we will have also in Q4 an impact mainly driven by price by roaming, but 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 the EBITDA. If you take the service revenue in Swisscom Switzerland, we have a decline of 99,000,000.
And in the bubble, you see which are the effects. It's growing, which has an impact of EUR68 million. Then some opting out of fixed voice telephony, which leads to a decline of EUR12 million. And then the airtime surcharge, which has an impact of $10,000,000 So this leads to this $99,000,000 The majority is coming from Boeing. We have a growing solution revenues from the enterprise business, 37,000,000.
And then you see that the higher subscriber acquisition and subscriber retention costs of CHF 25,000,000. So overall, this leads to this CHF 102,000,000 decline. The majority of this decline is coming from roaming and higher subscriber acquisition costs. On the other side, you see that with the cost initiatives, we can save €37,000,000 Let's go to our priorities, our five priorities for the business on Slide 10. So we have these five priorities as we have them already in the last call.
Onwards 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 project portfolio. On Slide 11, you see what we were able to deliver on our network side. So we have today in the wireline business an ultra broadband footprint of 3,400,000 households, which has a bandwidth over 50 megabits per second. 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 megabits per second 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 megabits per second in the year 2020. Four gs coverage, we improved, we increased. We are now at 99% coverage of four gs.
So we are committed to technology leadership and an excellent customer experience. On Slide 12, some information on our wireline business. So we are ready to defend our strong position in the wireline business. You see on the left side that action which we have taken and on the right side, the results. So stable market share, certainly a strong performance in the actual market condition.
We are gaining market share with our TV product. We have also attractive offer for the Christmas business, which is coming. So 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 customers, our retail customers, which are on all IP.
Page 13 shows you the dynamic or our actions and our results in the wireless business. So 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, so no downgrading. We have a slightly dilution of the Infinity ARPU, but this is driven by roaming and by lower end customers, which are migrating to Infinity.
But I will come to the ARPUs later. So 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 €37,000,000 year on year and through a basket of initiatives. So 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 ultrabroadband customers. Page 16 shows you our ambition on the footprint of our ultrabroadband in Italy. The target is to have 13,000,000 households in 2020 on ultra broadband. From this 13,000,000, million is coming out of the footprint of fiber to the street and 5,000,000 with a footprint or with technology fiber to the home.
From this 5,000,000, 2,000,000 is the historical fiber to the home footprint of Fastweb and 3,000,000 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 twenty seventeen. This initiative with Telecom Italia will fully leverage our existing investments in the network because we are only building the last, let's say, the last two fifty 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.
And 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 53,000,000 And you see that the majority of this claim 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, 33,000,000 because our bundling strategy and Infinity, but this leads certainly clearly to a reduction of the traffic revenues. On Page 20, some KPIs to the wireless business.
So solid KPIs in the wireless business, net adds are increasing. And the ARPU and this is a strong performance. The ARPU in 2016 is approximately stable. So 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. And from this 17%, 70% are Infinity customers. That shows that our postpaid customer base is strongly Infinity driven. Page 21 shows you some KPIs to the wireline 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. And as I mentioned before, this is mainly structured consolidation, so substitution by voice over IP or fixed to mobile substitution. The ARPUs in the fixed business are stable. If you go to Slide 22, you see our bundling business, very strong Q3 netbacks in the bundled business, dollars 220,000.
ARPUs in 2016, approximately stable. We have a slightly 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 €53,000,000 in Q3. And you'll see that the decline is ARPU driven.
And the fact the main factor behind it is roaming. But if you compare it to previous quarters, we were able to compensate the declining ARPU by growing revenue generating units. And we, in Q3, because of the strong decline of voice, we have more or less stable revenue generating units and can't decline the reduction of the ARPU. Direct costs on Page 24. You see that Q3, we had higher direct costs.
And the direct costs, there are three factors behind it, why they are higher. The first one with €14,000,000 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.
And we have low churn figures, stable churn figures. And then you see also increased subscriber acquisition costs in the fixed business, which are CHF8 million. This leads to the higher direct costs in Q3. Fastweb on Page 25 shows the strong performance, increasing customer base and the revenue, increased by 3% in the first nine months. Fastweb financial performance is solid, as 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%, so also a good industrial performance of Fastweb, and we have a positive free cash flow. Now 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 CHF34 million service revenue in Q3.
50% comes from roaming and the other half comes from the impact of the voice line losses in the first half or in the first quarter, we were able to compensate that with a growing number of revenue generating unit, which is not anymore the case. In enterprise customers, we lose in Q3 CHF 19,000,000 service revenue. Again, here, around 50% is the roaming impact. The rest comes from a 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 3% in Q3. That's because we had in Q3 twenty fifteen high revenues on hardware. Fastweb, Urs mentioned it already, steady growth on revenue and then later on also on EBITDA.
On the next page, on costs, OpEx in Switzerland, Ulf 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 a quite 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 CHF50 million cost savings. On other, we had an increase of CHF 90,000,000 in Q3. That's mainly IT costs, setup costs for future cost saving programs, which we have to do in the IT area. Then of course, you have to take out the exceptionals in Q3 that the provision for the APSL sanction, that's more or less the main part. On EBITDA, I mean, on residential, we lost CHF60 million in Q3 compared to prior year.
The roaming impact is CHF31 million. The impact from SAC SRC is CHF16 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 €28,000,000 comes €10,000,000 from roaming and the rest from price pressure, as I mentioned. And if you look at the EBITDA in Switzerland, we lost in Q3 euros 81,000,000 compared to prior year.
And I would like to repeat the impact of roaming. Roaming had several impacts on our P and 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 two point zero. Third, we have higher cost of goods sold because of the increased volumes of our outbound customers.
In Q3, on the revenue side, we lost in Swisscom Switzerland 26,000,000 on rolling revenue,
and we had CHF 16,000,000
higher out payments. That makes €42,000,000 impact on Q3. That's more than 50% of the €81,000,000 we lost in Q3 compared to prior year. On net income, there's nothing special to mention except for net interest on Page 31. The cash out for net interest in the first nine months was because of the low interest rate, million below twenty fifteen.
On CapEx, Page 32. CapEx are in line with our expectation and strategy. You see in Switzerland on cycle, we invest 28% of our CapEx volume. That means three sixty million euros in nine months. That's in line with our FTTx strategy.
Second remark on IT systems, we invest in all IP, we invest €19,000,000 19% or €245,000,000 That's less that's 10% less than prior year. That's also part of our operational excellence program to reduce our project CapEx. On free cash flow on Page 33, there's only one exceptional item, which we already had in Q1 and in Q2. That's the extraordinary prepayment of the sanction in the ADSL case of CHF186 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%. And you see we have two quite high maturities in 2017 and 'eighteen. And we assume that interest rates will remain around at the state level, and that will help us to further reduce our cost of interest our cost of debt. On outlook, there's nothing to mention.
We've already confirmed it. We confirmed our guidance, euros 11,600,000,000.0 net revenue, EBITDA around €4,250,000,000 CapEx, 2,400,000,000.0. That brings us to a free cash flow proxy at around €1,850,000,000 And 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. At your turn, you will hear a short announcement saying unmuted. So I already have questions that are coming in.
The first one is from Mr. Frederic Boulan from Merrill Lynch. Please go ahead.
Good morning, gentlemen. Thanks for taking the question. Two questions, if I may. Firstly, on the cost side, so you're saying you've now reached 65% on the IP. Can you explain what benefit you're seeing versus the initial cost cutting that you described for that?
And if you could comment on the €19,000,000 increase in other costs that you said, I think, are linked to IT, so to what degree is that recurring? And 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. So can you clarify to what degree this is pricing roaming related and how we should think about those trends going into Q4 and next year? Thank you very much.
So I will take the question to the enterprise and SME, and Mario will come to the costs. First, on the SME business. So the SME business from the performance side is stable. So we have a good performance in the SME business. And but also, the SME business is impacted by roaming.
So this has a small impact on the SME business. But on the other side, the business in SME is quite stable. If you compare the revenue to previous year, we have stable revenues in the SME business. Q3 and 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. But on the other side, also with a strong competition or price pressure on the wireline business and wireless business. And 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.
And on All IP, as 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 twenty seventeen. And the savings, we have our CHF300 million saving program, CHF50 million this year, million next year and then CHF3x CHF60 million. And all IP is part of this CHF300 million program. But if you isolate the savings on all IP on, let's say, on a stable basis, the savings will be around CHF100 million. That will build up in twenty eighteen, nineteen.
And the IT costs in Q3, they were 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, etcetera. But in Q3, it was extraordinary high, these expenses.
Then we have the next question from Louis Porta from Morgan Stanley.
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. So revenues were wireline revenues were coming down 12% in the last three, four quarters. And suddenly, in the third quarter, the decline is 17%. So there is a five percentage point sequential deterioration, which I understand is somehow having to do with migration to bundles, but the fact is that bundle revenues are also slowing down a bit.
So 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? And the second question is on the guidance reiterated for the full year. That if my numbers are correct, that means that the reported EBITDA in the fourth quarter should be like 5% down year on year, but on a clean basis, should be down like 8%, which compares with down 6% in the third quarter. So 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.
Okay.
I will go to the ARPU question, and Mario will take the guidance. To single play wireline, so what we actually see, if you take all this is the single play fixed voice and access revenue and also broadband, we are we have quite stable ARPU. You can see this in the presentation on Page 14. The effect which we have is actually the migration to the bundles. And this leads to a declining single play business.
And the ARPU in the bundling business, as I showed it in the presentation, is overall stable. But there are slightly impacts, and this slightly impact in the Berlin business is driven by the, let's say, outportings of fixed voice telephony, some loyalty impacts if you go to a quadruple playoffers and then also a slight impact from roaming. But overall, the bundled business is quite stable on the ARPU side.
And on Q4, first of all, the guidance is around €4,250,000,000 So there is some there are some uncertainties. But 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. Definitive line losses or final line losses, then the voice opt out in the bundles, that will continue.
But we don't see different trends in Q4 compared to Q3. And on Fastweb, I would expect a similar growth in Q4 on EBITDA as in Q3.
Thank you.
Then I have a next question from Jakob Bluestone from the Credit Suisse.
Hi. I've got two questions, please. Firstly, just could you maybe update us a little bit on what sort of ARPU effect are you seeing from customers migrating to the Infinity two tariffs? Are you seeing ARPU go up or down versus where it was previously? And then 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 minus 24,000 during the quarter. And so maybe if you can just sort of update what drove that decline in postpaid subscribers?
So postpaid residential postpaid or wireline wireless business.
So then wireless.
Wireless, yes. So there, can see that we were able to grow our net adds on postpaid. And on prepaid, we have declining revenue generating units, but these are very, very low ARPU customers. And we are quite successfully in upselling prepaid to postpaid. And let's say, the new Infinity customers, the customers which are migrating from the lower end postpaid or from prepaid to Infinity, they mainly go to lower Infinity tariffs.
But so overall, there is a small upsell in it. And the Infinity and I think that's the positive message that the Infinity customer base is really quite stable. So 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 bundled in.
So the overall ARPU of Infinity is stable.
Jacob, have one remark on development of the postpaid residential. So 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. So the net effect is positive in Q3.
Thank you.
And I have the next question from James Ratzer from the New Street Research.
Yes. Good morning, gentlemen. Thank you very much. Two questions, please. I mean, now 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% to 8% year on year.
So I was wondering if you could give us thoughts on kind of how confident you feel about those trends improving sharply in 2017? Will kind of less roaming drag be enough to get us back to a stable EBITDA trend year? And then one kind of more specific question on Slide eight of your presentation, which shows the underlying EBITDA drivers of Swisscom Switzerland. Actually, 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 kind of color on what's driven that?
Is that just a one off item that should recover in Q4? Is there something more structural there? Okay.
Mario will take the question on costs of others. I will give you some flavor on our outlook. So it's too early to give the guidance. We will give it in on the 08/2017. But some dynamics to the EBITDA.
What we will have is a slightly reduction in Swisscom Switzerland and an increasing EBITDA of Fastrip. So we will have this dynamic as we have it in 2016. The Swiss business is driven by price pressure in our core business, but this will go slightly down because of the roaming effect. The roaming effect in the next year will be lower than this year. And we will have some positive effect from our cost cutting program.
So and also a stable market position. So that's a bit my view on the business in Switzerland. And Fastweb will have an increased EBITDA. So overall, for the group, are more or less in a stable EBITDA situation.
And on your question on Page eight, you see the solution revenues, that's solution and IT business coming from the enterprise segment. We were able to grow these revenues by CHF37 million in the first nine months. And these revenues come with a cost, and these costs are personnel expenses, IT consultants, etcetera. And these are CHF21 million in the first nine months. And these are not one offs.
These are coming on a recurring basis, on a recurring May, when we continue to grow this Solution and IT business, which is our strategy to compensate for the pressure we have on the connectivity business. But still a good margin business if you compare the CHF 37,000,000 with the CHF 21,000,000 cost.
So that cost, do you think that so those costs continue to grow going forward in this?
They continue to grow with growing revenues, exactly.
Then we have the next question from Tim Boddy from Goldman Sachs.
It's actually Josh Mills here. Think Tim will be calling in from Vodafone. So 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 still the Swisscom main brand?
Or is there an increasing portion from the end budget side as well? And then secondly, on Slide 11, you've shown your network upgrades plans for twenty twenty, 85% of homes with 100 meg speeds. I'm just wondering what portion of that will be with Gfast, which you've introduced into network this month? Thank you.
Good. M and Burchard,
had we
introduced new tariffs in the Q3, and this gave us a positive a more positive dynamic on our Swisscom branded customer base. So we had a stronger performance on Swisscom and bit less performance on Amburched. But Amburched had also a slight growth. So that's a bit dynamic with the second brand. And G.
Fast, we implement now G. Fast on our fiber to the fleet 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 fastest speeds using this new technology for the main brand only?
Yes, because Wingo is 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. And for them, we improved the performance to be competitive. And also And that's
only the cities where we compete with the cable operator. And so we don't have to deliver that nationwide. It's just on the this specific spot. Only the fiber to the whole footprint.
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.
Then I have a next question from Georgios Iropiakounou from Citi.
Hello, 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 and whether you think that may lead to a bit more competitive pressure overall? And following on from just the previous question, when do you expect to see commercially real benefits from GFAST 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.
So 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. So that's g. Fast will certainly change our position in the market. On the move of UPC, that's, let's say, 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 bundled business and convinced about this. And up to now, we have very good TV figures. We have increasing broadband subscribers. So we don't see actually impact from cable common up to now.
So 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?
I would. In the enterprise market, we will have also the roaming pressure. But the roaming pressure in the next year will be lower than in this year. That's message. And the second message is the price dynamic in wireline business in the enterprise market is driven by two factors: the enterprises, are on the cost pressure and the second is the competitive dynamic of mainly of Sunrise.
And 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. So actually, Sunrise don't progress on the market share side, but they bring us more pressure on the pricing side in the wireless business. And I hope that they see that they don't win market share and that they became less aggressive on the price.
Okay. Then I have the next question from Pouraval Zarop from Redburn.
It's Sarut from Redburn. I just had a couple of questions on, firstly, your fourth quarter. And so the your guidance basically implies that the client is going to get worse. Is that basically SAC related, given that your comments on roaming, the roaming effects being slightly lowered? And then secondly, on your Quad Play discount.
So basically, when I'm looking at your wireless customers, there's relatively small proportion that actually take the bundle. And I just was interested in how you market that converged 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 converged discount.
Good. I will give you some ideas about Quadruple Play, and Mario will take the questions on Q4 and the guidance. The Foreplay business, you are right, we have still a small amount of customers which are in Quadruple Play offers. But we see a dynamic or a bigger market demand for Quadruple Play, and we will push a bit more quadruple play. And we have already introduced in the last month a new offer for quadruple play, let's say, a bit more loyalty, a better loyalty offer for Quadruple Play.
And so we see a bit more dynamic on Quadruple Play. But the main driver in the bundling business remains Triple Play offers.
And on Q4, as I mentioned before, so the general trends in Q4 are more or less the same as in Q3. Expect, as you mentioned, less impact on roaming. And then you're right, we will or we expect some higher retention and acquisition costs mainly due to the iPhone seven launch in Q4.
What was that last sentence?
Mainly due to the iPhone seven launch in Q4.
IPhone seven. Okay, perfect. Thanks very much.
Thanks.
Then I have a next question from Usman Gazi from Berenberg 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 rate SAC and SRCs are stable and the higher absolute amount is merely due to higher renewal volumes?
The second question was just again looking out into 2017, I guess, I mean, 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. So you don't get the headwind from the higher SAC and SRCs next year and then you have the higher cost savings. So I mean does that kind of is that kind of 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?
And then 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. I mean, that basically going to zero? Or how should we be thinking about that?
Good. The Saks, you're right, the subscriber retention costs and subscriber acquisition costs, the majority is renewal. And as Mario mentioned, it's also always a bit depending on the handset portfolio in the market. And now we have this iPhone seven impact in Q4. But overall, I think or I think the volume will be in the area where we have, but the overall amount of SAKT or the specific price will not go up.
So the stocks will stay on the level or even going a bit down. And 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 two point zero. And with the migration of customers to Infinity two point zero, we will have also in the next year some impact on roaming. But this will be low because normally, if you have a migration in the first phase, the high end volume spend of roaming will migrate.
And now we have less intensive roamers, which are going to infinity, so the impact will be lower. And 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 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. So let's say, the address of the company to their clients.
So there will stay a voice connection.
Then I have the next question from Vikram Karanai from UBS.
Yes, thanks. I have a couple of questions. Firstly, on the Swiss mobile side, what sort of take up are you seeing with your new SIM only offers in the market? You previously had suggested that Switzerland is a subsidy driven market, but you still launched this as probably a defensive tool. So I just wanted to understand in terms of take up of your SIM only offers.
Secondly, on the five gs for Switzerland program, is there any update in terms of timing for the 700 megahertz spectrum auction? And would you be able to use that for five gs deployment? And also, I mean, I would like to understand a bit more in terms of what sort of data consumption are you seeing with your unlimited Infinity offers and if there are any capacity constraints emerging on this side, especially in peak hours, that would imply that you would be interested to have that spectrum auction sooner rather than later? So
on the SIM only offers mobile in the mobile market, so we have a SIM only offer, but limited traction in the market. And we don't disclose the exact figures, but very limited traction. For us, it is more important to stay to the subsidized business model. On this 700 megawatts frequencies
There are no news from the regulator. We expect them for 2018, but there are no news so far. And I can't give you the details on the network planning whether they will use it for five gs or not.
But the other question was data consumption. Do we run congestion problems? No, we will be able to manage it.
We still see the doubling every twelve months. This trend remains, but we don't have quality problems in the network.
That's helpful. Thank you.
Finally, we have the last question from Luigi Minerda from the HSBC.
Yes, good morning. Thanks for the questions. Well, 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 Expos to Exanti? And the second is on technology, and it applies to Switzerland, but also to Italy.
So when you're going from fiber to the street cabinet 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, that would be great.
Good. On the regulation, so 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. And the exchange from ex ante to ex post, we don't see it. So I think that's not a part of the revision.
So we will stay with our actual environment on the Exxon, the export topic. And fiber to the street, fiber to them, I think that the technologies for the next year will be fiber to the street for a broader coverage and fiber to the home, more for the hotspots for the cities. I think these are the technologies which will be which will really be important in the market.
Okay. There are no more questions.
Okay. Well, with that, 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 today. Goodbye.
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