Good morning, ladies and gentlemen, and welcome to the Swisscom First Quarter Results twenty sixteen presented by Urs Szczepi, Mario Rossi and Louis Schmie, who will start the call. Louis, the floor is yours.
Thank you, and also good morning, ladies
and gentlemen, from my side, and welcome to Swisscom's first quarter results presentation. My name is Louis Schmie, Head of Investor Relations. With me are our CEO, Urs Szeppe and Mario Rossi, our Chief Financial Officer. The first part of today's presentation, hosted by our CEO, consists of three chapters: a quick overview of our solid financial results and decent operational performance of our first three months, an update on our five priorities, 16 and finally, some explanation on our Q1 operations, both in Switzerland and Italy. The second part of the presentation will be run through by Mario, presenting the financials and the unchanged full year guidance.
With that, I would like to hand over to Urs to start his part of the presentation. Urs?
Good morning, ladies and gentlemen. I would like to start with Slide four, which gives you a short overview of our financial results. So financially, we have a solid result. The group revenue is almost stable. We have a pleasant development on our solutions revenues and also the revenues from Fastweb.
If I go to the EBITDA, we see an increase of our EBITDA by €30,000,000 year on year, which is 1.2%. And it's mainly also driven by cost discipline in Switzerland. The contribution of Fastweb to the EBITDA increase is €14,000,000 So we had also a good first quarter in Italy. Net income increased by €13,000,000 on a year on year basis and despite higher depreciation, but lower impact from foreign exchange rates. CapEx are slightly higher, 47,000,000 higher compared to previous year.
The main effect is the rollout of fibers to the steel. So overall, good financial results, and we are on track compared also to our guidance. On Slide five, some remarks to our operational performance. RGU based in Switzerland is €12,500,000 This is on a year on year basis an increase of 120,000 RGUs. Solid growth on TV and broadband.
Wireless business, this market is more saturated. We have a high penetration in this market. But overall, we have a solid market share in the mobile business. And therefore, I'm satisfied with the development of our wireless business. Pumping business penetration is also increased and faster at 2,200,000 subscribers.
So successful business on the operation side and good momentum in Italy. Let me say some words to the priorities in 2016. On Slide seven, you see that our priorities, our five priorities. We also already explained them the last time, only some remarks to maximize our core business. It's important and that this is our ambition to defend the market share, retain our price levels and margins.
And this, we want to do through a differentiated product and service portfolio. On the operational side, you will also remark later that we were able to stay on track to our ambition on our cost ambition. And on with Fastweb, you will see that we will invest in the future of Fastweb. We will increase our ultra broadband footprint, strengthening our position in the mobile business and also working on a higher Net Promoter Score. If you go on Slide eight, there you see the development of the penetration in the Swiss market on the left side.
You see mobile in Switzerland has a penetration above 125%. TV, the TV market is approximately at 100%, so also saturated. And broadband business is above 95%. So overall, a saturated market in the telecommunication business in Switzerland. We are well positioned.
As you see on
the right side of the chart, you see our multi brand strategy. On the higher end of the market, we have a broad Swisscom portfolio with triple play offers, but also with differentiated offering on mobile. And then on the lower end of the market, you see our two brands, Ambriche and Wingo. So our ambition is to remain our strong market position, the high value segment and to stimulate demand in the lower value segment. On Slide nine, you see our mobile portfolio.
We introduced it several weeks ago with promising first early indicators. You see the Infinity product line, Infinity two plus zero, which has increased where we have increased the value of these offerings. And actually, Yvesi said it's a tariff plan more for more. We have also a SIM only option in it. And you can also have a bundling with the fixed proposition of Swisscom.
On the lower end of the postpaid market, we improved our offerings. That's the NatTel Lite product line. And on the low end, we have introduced a new product on the brand of Ambrachet, that's MiniOne. So we are better positioned in the mobile low end market, and we see a good momentum. And the market shares, that's, I think, the most important remark.
We see stable market shares in our mobile business. If you go to Slide 10, some remarks on our roaming prices. We have by far the best growing prices in Switzerland. And we also had an improvement of the roaming prices in 2016. And with Infinity two point zero, we have included roaming in our proposition.
Interesting is also to see that our roaming data packages are very attractive.
So we improved them on
the pricing side by approximately 20%. And if you compare this pricing also to the German market, as an example, to the market leader in Germany, you see that we have really competitive pricing. Our price is CHF 15. And if you would compare the price from the German market leader, it's CHF 23.8. So it shows that Switzerland has or Swisscom has attractive roaming prices.
And this is important because we think that the decline of roaming prices will come. And Swisscom has done a lot of this price cut already today. On the right side of the chart, you see also that we are really much lower, much cheaper than our competitors if you compare the bromine prices. Slide 11 shows you our innovation road map of Swisscom TV. Swisscom TV is a success.
And we launched several weeks ago a new TV box. And this new TV box has four ks enabled ultra high definition, better navigation, faster navigation. And we see a good take up of this new TV box in the market. We are today the leader in TV. We have market shares above 30%.
And TV is also a strong driver of our triple play offerings in the market. Coming to Slide 12, some information about our operational excellence. With our cost reduction program, we are on track. We want to achieve €50,000,000 savings in 2016. And we do this through several actions.
One is the cut headcount cut with where we are on track. Second thing is, and this is long term, very important is the streamlining of our processes. Just as an example, we are in a process of redesigning our process sales to activation. We increased the efficiency through a reduction of the call center location from 14 to eight. So we are also on track there.
And also with the migration of All IP, we are on track. We are today at 40% migration of our customer base. So overall, on track here on our cost reduction program. If you go to Slide 13, some remarks to Fastweb. We announced several weeks ago a new investment plan for Italy.
And what is our target? We want to achieve 50% population coverage by 2020 and this with the speed up to 200 megabits per second. And we do this through several actions. The first one is an upgrading of our existing fiber to the street performance. So the speed will be up from 100 to 200 megabits per second.
Then we are expanding our ultra broadband footprint from 30 to 50%. And this means that we will have fiber to the street coverage in 500 cities in Italy. The whole investment will be approximately €500,000,000 in the years 2017 to 2020. But it is important to say that this is entirely self financed by the cash flow of Fastweb. Market we will have a market driven rollout of this investment.
And this means no changes in the CapEx guidance in 2016. At the end of 2020, we will have 13,000,000 households covered by ultra broadband and this is approximately 50% of Italy. Slide 14 shows you our strategy. So it's a two step approach. We build fiber to the street.
And then later, we would have the ability to go to fiber to the home. But this is certainly a topic which is market driven. Now we are on the first step, fiber to the street. And we could really fully reuse our investments which we make in fiber to the street. That means we have a flexible strategy for further development.
Slide 15 shows you the rationale. Why don't we invest in a bigger footprint in Italy? In the middle of the chart, you see a comparison between figures in the fiber to the street and in the local footprint. In the fiber to the street footprint, we have higher sales, a higher sales penetration by approximately 25%. This results in a higher customer base.
But we are also able to have a higher ARPU, approximately 5% higher ARPU, lower churn rate and lower costs because of lowering connection interconnection charges to TI. And this leads to a better profitability and a better business case for Fortress. Slide 16 gives you some information about the status of the All IP transformation. In the first quarter, we were able to migrate 100,000 customers to All IP. The first phase or the second phase of this migration was in 2015, where we had mainly a market driven migration.
And now in 2016, 2017, we are coming more to a pushed migration to keep up the speed of this migration.
If we are through with
the ZOLL IP migration, we will have recurring cash savings. Let's go to some operational figures. If you go on Slide 18. So overall, we have a balanced bouquet of business drivers. We have ups, certainly growing TV business, growing bundling business, strong solution business and good track with Fastweb.
On the other side, we have some downs. That's the development of the fixed voice business where we have actually this substitution fixed to mobile. We don't lose customers to our competitors. The main decline of the fixed business is the fixed to mobile substitution. The mobile RGUs are, let's say, stable.
If you would take out some special effects in the first quarter, you would see that the revenue generating unit of mobile are stable. We have also, in the mobile business, some ARPU pressure driven by roaming pricing, deeper roaming pricing. So overall, the revenue in Q1 is approximately stable in a competitive market, and we have good market share. On Slide 19, you will see the development of our net adds. On the right side of the chart, on the specific product area, so mobile in a saturated market is stable.
If I would take out the special effect of Post, this enterprise customer, which turned to Sunrise, if I would take it out, we would have a positive revenue generating unit or netback in the mobile business. Voice business is declining, as I already mentioned. And the broadband business and TV business is growing with a good strong momentum. Slide 20 gives you some more information about mobile business. If you look on the left side of the chart, you see our development of the market shares.
So we have slightly increasing market shares. And important to mention is that last year, if you take all the figures of our competitors, you see that the mobile market was declining by 84,000 revenue generating units. And this is clear because we have a penetration, which is above 120% and the customer are optimizing themselves. So we see that several customers are using settering instead of a second SIM, for example, in an iPad. And this is a bit the dynamic in our business.
The market shares overall for Swisscom, and that's important, are stable. And I'm satisfied with the performance, the overall performance of our mobile business. We see also, as I already mentioned before, a better momentum with our new mobile portfolio. If you go on Slide 21, some remarks on the dynamics in our fixed business. So voice lines are declining driven by mobile substitution and CPS migration.
And we have today in the residential market, 500,000 voice only customers. So that means in the retail business that we have approximately 70% of our customers which are in bundles. The market shares in the middle of the chart, you see the market shares of broadband. We have 66% total market share in broadband, above 30% in the TV business. And it's also interesting to see that the TV penetration on our ultra broadband business is 69%.
So that means we are really able to upsell our ultra our internet base with TV. And on the right side of the chart, you see that 664% of our fixed revenue generating units are in bundles. Some remarks to the ARPU on Slide 22. In mobile, we see a slightly declining ARPU driven by three factors. Factor number one is the roaming prices.
Factor number two are some airfield charges and then the pricing pressure on enterprise business. So these are the main effects why ARPU is slightly decreasing in the mobile business. In the wireline business, we have a stable development of our ARPUs. So we chose that we have a solid business in the fixed market. And on the bundling area on the right side of this chart, you see a slightly declining ARPU of bundled business, but this is driven by mobile mainly driven by the roaming price development, which we have and some opt out of fixed voice business in our triple play offers.
So overall, a solid development of our ARPU. If you go on Slide 23, you see the development of the service revenue. Revenues, as in quotes before, a decline in OnePlay business, an increase in the TriplePlay business. And you see that we have also volume effects and price effects, which are quite imbalanced. And so high volumes, lower prices, which leads to approximately stable revenues.
So overall, I'm satisfied with the performance in Q1 of Switzerland. Coming to Slide 24 on Fastweb. Good first quarter, increasing customer base by 5% to 2,200,000, reduced churn. So that's a good performance important for our margin development. We are able to decrease the churn in Italy.
And the development of our revenue generating units in all segments, we have a growing revenue. So you see it on the right side of the chart in each segment growing revenues. The financials of Fastweb on Page 25 shows revenues are going up, strong increase of EBITDA and then a slightly increase of CapEx because of five to six investments and positive free cash flow. The gap to twenty fifteen is mainly explained by phasing of cash out. Mario will come later to it.
So now I would like to hand over to Mario to give you some more details on the financials.
Okay. Thank you, Urs. And also good morning from my side. A few words on the financials. We can present you solid financial results on all aspects.
They are all in line with our expectation. On Slide 27, revenue breakdown. We saw flat revenues We have practically no impact from exceptionals. The exchange rate, Swiss franc, euro, was more or less unchanged in Q1 'sixteen compared to Q1 'fifteen.
In Switzerland, Swisscom Switzerland lost €16,000,000 in revenues, mainly coming from the roaming business. In the segment, customers and SME, service revenue stayed flat year over year. The higher number of revenue generating units could compensate the rolling decrease. In the rolling business, we had price effect of negative CHF20 million that were partly compensated by volume effect of CHF11 million. In enterprise customers, we have two reasons for the decline in revenue.
Again, roaming, 3,000,000 and then from regulatory effects, the so called air fee, which was stopped in July 2015, had a negative impact of €6,000,000 The wholesale business went down by €13,000,000 We had lower inbound roaming revenues and some lower regulatory prices. FastLED, as was explained, increased revenues in all segments and contributed €11,000,000 to the revenues. On Page 28, you see some details on our OpEx. We've explained our operational excellence program again. I think we are well on track to deliver on that program.
Just to remind you, we want to reduce the running costs by EUR 50,000,000 in this year, EUR 75,000,000 in next year and in the coming three years, again, additionally EUR 60,000,000. In Switzerland, the indirect costs went down. They were mainly impacted by lower repair and maintenance costs and cost saving from these operational excellence initiatives. Since year end 2015, the underlying FTE base on the Swiss core business has been reduced by around 100 FTEs. On the next slide, EBITDA breakdown by segment.
The EBITDA of Swisscom went up by million, approximately 50% coming from Fastweb. On Residential, the Residential was able to increase contribution margin by €30,000,000 The increase is mainly driven by lower customer acquisition costs. Just to mention the retention, the number of customers we retain in Q1 was slightly higher than Q1 twenty fifteen. That shows again that the mobile business is very stable and solid. On enterprise, we mentioned the ongoing price pressure in the wireless business, and we had slightly higher indirect costs.
In the Network division and IT, we had slightly higher personnel expenses and slightly higher rental costs for data centers sites
for
antenna. And once again, Fastweb, strong performance also in Q1, EBITDA increase of approximately 10%. Below the EBITDA, we still have increasing depreciation and amortization. Amortization, euros 39,000,000 higher due to the result of the high investment level since a few years. And net interest decreased by €8,000,000 to €39,000,000 due to very favorable refinancing conditions.
The other financial result improved by €17,000,000 mainly because we had in Q1 twenty fifteen the negative impact on the foreign exchange losses coming from the decision of Swiss National Bank in Q and in mid January twenty fifteen to float the euro against Swiss francs. Net income increased by 3.7% to three sixty four million euros result of EBITDA increase and the better financial results. On Slide 31, on CapEx. CapEx of Swisscom Switzerland increased, driven by the UB expansion. We are ahead on plan with our FTTH rollout.
However, the full year targets, they stay in place, so we will not overshoot. And the CapEx that was mentioned at the end of Q1, we have a rugby footprint of 3,000,000 connections, meaning we can deliver 50 megabits per second or more to 3,000,000 households. One remark on the free cash flow on Page 32. The free cash flow in Q1 went down by €160,000,000 to €184,000,000 This is the result of the prepayment of the sanction related to the EDFL case. Remember, we booked that provision in Q3 twenty fifteen.
We had to pay this sanction in January 2016. The amount is CHF160 million. The payment is without any prejudice on the proceeding, and the case is now at the Federal Court in Lausanne. That's the main remark to the operating free cash flow. Few words on financing on Slide 33.
We had two financing transaction in Q1. We had placed Swiss franc bond in the Swiss market of CHF 200,000,000 with a coupon of three seventy five basis points. Then we renewed the Swiss private placement in the amount of €150,000,000 And we could renew our backstop facility of €1,000,000,000 with midsized Swiss banks. And in total, we have EUR 2,000,000,000 unused committed credit lines in place. Also, our rating, the rating review took place in Q1.
The rating are unchanged, Moody's A2 and the Standard and Poor's A, both with stable outlook. Average interest costs are at 1.9% and around 80% are fixed. Coming to the last slide of our presentation. As Q1 developed in line with our expectation, there is no need to change the guidance. So we confirm net revenue for 2016 slightly above EUR11.6 billion, EBITDA at around CHF4.2 billion and CapEx slightly higher than CHF2.3 billion.
And now I hand over to
We Q have the first few questions coming up. I'll move to van Leegenharst.
Good morning. Matthijs Vlaei with Kepler Cheuvreux. Can you give some more color on the dynamics in the mobile market? What are the trends through the quarter? And can you also give some more color on the minus 10 subscriber intake in Switzerland?
Good. As I mentioned, we have a saturated mobile market, over 120% penetration. That means that the whole market in 2015 declined by approximately 80,000 subscribers. And the shares the market shares of Swisscom are stable. If you look to the also to the figures of our competitors, you can see that we have stable market share.
So what kind of dynamic we have in this market? We have, let's say, more competition or let's say, a kind of washing machine at the lower end of postpaid market. But we have good churn figures. We don't see really a big problem in our mobile business. The main dynamic we see in our figures is that through roaming, the ARPU is slightly decreasing.
But on a revenue generating unit, I'm happy with the development of the market in these conditions where we are today.
Okay. And regarding the if I understood correctly, a big customer left Q1 to Sunrise, am I right?
That's an old that's the migration was that this deal the post deal that's already long time that decided. And now there was the last part of migration of the SIM cards. And if you would take out this special effect, but a lot of these customers, which turned, are low ARPU customers because there were some special connections in it. Okay. Thank you.
I'll move on to the next question.
Hi, good morning. It's Frederic Bouenon from Bank of America Merrill Lynch. Two quick questions, please. Firstly, on the just to follow-up on the previous question on mobile. Are
you
so you seem pretty happy with the current development. So I assume we should not expect more commercial efforts to offset a small gradual erosion of market share that's a development you're happy to see in the next few quarters or the next few years? And secondly, on Italy, if you could comment on the competitive deployments we are seeing from PI and also Enel now. Is it something that could potentially derail the very good momentum you're currently enjoying? Or you're expecting any material deviation for the foreseeable future?
Thank you very much.
Development on the mobile market, Mario? Again, I think it's as Ulf explained, it's one of our key targets and priorities to defend our high market shares. And you saw now we received all the numbers for last year. We were able to keep the market share. We are convinced also in Q1, market shares were more or less stable.
And going forward, I think with the new positioning of Infinity, where we have 70% of our customer base on the Infinity plans, we are in a good position to keep this high market share. You cannot expect an increasing number of things in this saturated market. That's clear.
With a market share of 60%. And that's one point. And the other point, if you see our new product offering, we implemented additional value in it, and it works. It works. And that shows that not the whole market is driven by price.
And then also, if I look to our importing, outporting ratios, I'm not worried now. But we have more competition in the mobile business. That's clear because the market is saturated.
And maybe one last remark. We should not show so much anymore at the number of SIMs because all the second SIMs, many of second SIMs are being turned off because it's the new handset. You just use tethering. And that means that these second SIM cards with a very low ARPU, they will over time disappear in the market. So it's more important what kind of value we take out of this mark.
And there, we are convinced that with our high margin strategy, we take out the stable share of the Swiss mobile market.
Some remarks to the Italian market, competition from TI and Vodafone. As I mentioned it before, we were able to have a good momentum on the net adds. Net adds market share in Italy in Q1 were good for Fastweb. And we were also able to decrease the choice. So that choice that we are in a good situation.
For the future, it is important that we perform on quality and customer service, and that's our strategy. And then we are convinced that we can have a strong position in the Italian market. And Enel, yes, some words to Enel. They announced their fiber plans. Actually, they want to go to two twenty four cities.
That's certainly not a risk. That's also a chance for Fastweb because we could, in specific areas, we would have a second wholesaler for five to go, which is good for the position whole position of Fastweb.
I'll move on to the next question coming from Prota Lewis at Morgan Stanley.
Yes. Hello. It's Luis Prota from Morgan Stanley. Two questions, please. First is on your mobile ambitions in Italy.
I'm looking at the pending decision from the European Commission and the potential remedies that might arise from the for the wind hatch announced merger. And you just mentioned several occasions that you are keen to strengthen your mobile position in Italy. But I wanted to get a sense on whether if as part of those remedies, the European Commission would be forcing a new network player to be created, whether Fastweb would be interested in buying some spectrum or some towers or both, if those become available as part of these remedies? This is the first question. And the second question is on the dynamics that you are expecting for the next three quarters in Swisscom, Switzerland as following this very good first quarter with EBITDA growth.
If I compare with the full year guidance, which is implying a clean 5% decline year on year, You are definitely expecting some deterioration either on phasing of costs or dynamics, which I would like to understand. So any help there would be much appreciated. Thank you.
Okay. I will take the first part of the question from Mobile Italy, and then Mario will go on this dynamic in the Swiss market. To Italy mobile business in Italy. So Fastweb is interested in remedies out of the MergeHutch wings. And because it is our ambition to change our position in the mobile market.
It's now a bit too early to say what kind of strategy we will go for. It's very important what kind of conditions are related to these remedies. But we will ask for remedies out of this emerge. With the idea to get a stronger position in the mobile market. Now maybe on the second part, Mario, the dynamics.
On the dynamics, what do we see differently in the coming three quarters compared to Q1? So we see more pressure on the roaming. This Infinity two point zero, depends also on the dynamics in the market. I see or we see higher acquisition costs in Q3, Q4 compared to 2015. On the cost side, as I mentioned, we will deliver this €50,000,000 and there I don't see different dynamics.
Thank you.
We'll move
on to the next question coming from Vikram Karanay from UBS.
Yes, thank you. I've got two questions. Firstly, on your Infinity mobile adjustment with this more for more strategy, I know it's still early days, but have you seen any impact in terms of churn level on the back of it? And also, is there a mix effect happening within the base that people are now going towards some of the low end bundles like XSNS, where you have increased the content within the bundle and that is probably extending the ARPU pressure that you saw in Infinity recently? Or is it mostly roaming?
And secondly, on the cost savings aside from the already announced plan, there is also a lower subscriber acquisition cost, which is coming on the back of the lower volume and saturation in the market that you're talking about. And Switzerland, as you've talked about in the past, is a heavily subsidized market. Now is this a new trend emerging that we see lower subscriber acquisition costs, which will be the main driver in terms of EBITDA going forward? And then that probably will support despite the headwinds you face in terms of roaming? Thank you.
So I am taking Infinity two point zero, Mario, will come then to cost savings. On Infinity, the new product portfolio shows that we don't have down migration or specific dynamic of down migration. So our Infinity customers are quite stable. We were even we were capable to have more upgrades than downgrades with these moves. But overall, we have the biggest impact on the overall dynamic is the roaming, the roaming pricing impact.
But the customers are stable on this Infinity project portfolio. And at
cost savings and on FOX SRP, they are slight. In Q1, they are €3,000,000 below Q1 twenty fifteen. And looking forward, we don't see that now all new customers come to the only offerings. The market is still used to actually subsidize the handsets. But for us, it was important to give the customer also the possibility to get the thing only off.
Maybe to change mid term to lower the acquisition cost, but for 2016, we don't see a change of the trend. And again, the CHF 50,000,000 that are only on the €50,000,000 saving is dedicated to indirect costs. Yes, that's helpful. Thank you.
I'll move on to the next question.
Yes, good morning. It's James Ratzer calling from New Street Research. I had a few specific questions on Fastweb, please. So the first one is you mentioned that the new rollout program will cost you about €500,000,000 over 2017 to 2020. But your current CapEx rate in Switzerland sorry, in Italy is actually about €500,000,000 per annum.
Does that mean your Swiss sorry, Fastweb CapEx can actually fall over time during the following few years? Secondly, you also mentioned then on Slide 14 about your FTTH CapEx being compatible with FTTH. Does this mean you're actually thinking about deploying FTTH in Italy? In the past, you've talked about G. Far.
So I was just trying to get a feeling of what next steps you see in technology in Italy. And finally, quick one. Are you actually interested in joining the NL Open Fiber initiative? Or do you see yourself still going it alone on all your infrastructure build in Italy? Thank you.
Good. Maybe I am going to taking the questions on the technology, and then Mario can then take the CapEx questions. Our strategy is to increase fast the footprint of ultra broadband in Italy. And that's why we deploy fiber to the street. And with this technology, we will be able to be competitive in the next years.
But then we have always the freedom to also make migrations to fiber to the home, but that's not planned. So we now want to extend our footprint on fiber to the street. And you know on fiber to the street, made this pilot, and we will do also do the rollout now in Switzerland on G. Fast. And there, have still a lot of potential.
In Switzerland, we were able to get 500 megabits per second on a fiber to the street architecture with G. Fast. So that shows the potential of this technology mix. On NL, so we are open to cooperate with NL if we have if the conditions are the right ones.
But
we will go with our strategy, which we explained. So that means we will increase our ultra broadband footprint independent from the plans of Enel. But if we there is certainly a potential to partner also with Enel in specific area. Question of cost pricing at the end.
And on the CapEx level, so we had in CapEx level in Fastweb in 'fourteen, 'fifteen and 'sixteen, so around €550,000,000 That included the current FTTH rollout, where we are targeting 7,500,000 households coverage with UPB by the end of this year. And we expect it always, CapEx going down after the completion of this rollout. Now we announced a new one, an additional €500,000,000
up to twenty twenty. That means
that CapEx in 2017 will not go down, but we don't guide the correct number for 2017 right now.
I'll move on to the next question.
Yes. Hi, there. It's Maurice from Barclays. A couple of quick questions. Italy churn down 15%.
Could you explain a bit about the drivers of this? Was it just high bundling, high speeds? Is that the drivers of the churn reduction? And then just quickly on the Swiss enterprise side, I think you indicated gain this quarter, mobile somewhat challenging also fixed on pricing fixed more stable. Is that still the same as the dynamics you stressed at the Capital Markets Day?
Thanks.
What are the reasons behind the decreasing churn figures in Italy? So there are several dynamics. The first dynamic is if we go to fight to the street, we see lower churn figures. So and we have a higher percentage of fiber to the street customers. That's one dimension.
Second dimension is we are working hard on the net promoter score. And this also leads to a lower churn figure. And the third dimension is actually also the acquisition strategy. It depends a bit on your promotion design, and then you can also influence your churn fix. So these are the main factors.
And then on the enterprise business in Switzerland, mobile business, what we see is some competitors who are attacking our mobile business, and that's why we have this price pressure in mobile. But overall, our mobile shares remain stable in the enterprise business. And we have a special effect also on the mobile pricing level. This was this airtime fees, which were regulated the way, actually. These are the main impacts on our mobile business.
The churn figures in the B2B business are stable.
Okay. Thank you.
We've got our next question coming up. I'll open up.
It's Georges from Citi. Maybe the first one around FAST-two, I've got a follow-up from one of the questions you were asked earlier. I'm just trying to understand if we get to a point where there are some structural remedies, you also pledged that you want Fastweb to be self funding. So I'm just trying to understand whether that is something you still stick to even if you would need to invest in mobile? And is it the case you just need to cover the interest cost of Fastweb?
Or is there I'm just trying to understand how you're thinking about participating in the remedies while maintaining their interest around Fastweb? And then my second question is around the sports rights. Some of your competitors are uniting together to beat for some of this content. I know you mentioned in the past the expansion in 2017, but
I was wondering if you could give us a
bit more detail as to what you expect from the process.
I will start with the sports rights and then Mario can come to the remedies. Sport rights. So it's important to know that this auction of the sport rights, it's we go for this auction. But it's not the most important thing for Swisscom because the differentiated product portfolio of the Swisscom TV business is not only related to this Swiss sports rights. We have an extremely good content portfolio for all other sports, football content in Europe.
And this is actually more important than the Swiss football rights. And therefore, we will not go for extremely high costs in this sport content auction. And the process is to follow. We have to get now a first offer until the May, and then the process will be defined by the sports leagues. But it's important to note that sports rights is not really the major topic for Swiss business.
And then on the remedy side, yes,
we want to be self financing. But Mario, looking at the financing side of Fasten. Now Fasten standalone, including the UPB broadband, is cash flow positive. That's the all it was always our target that we met last year. Now looking at the remedies, charges, I think it's just too early.
So we think the emerging part is the way the end of The U. K. Process. I think that's due on May before presenting the remedies. Then you have two parties.
There are either private negotiation between the merging parties and potential beneficiaries or you have remedy proposal without upfront agreements that the merchant and they just present the remedy without making an offer to potential partners. And now it's really it's too early. And then we need to look carefully at the business case, at the risk profile,
and then that gives now the input for the financing and then what the
thinking behind the financing from our side will be.
But theoretically, you would be flexible to amend it if the opportunity was something you wouldn't pass on?
If you have if you believe in a business case, you do your judgments on the risks, then of course, we need to be flexible to further develop the Italian business. But that's all we need be seeing in the whole context of the Swisscom Group and the risk profile of the Swisscom Group.
I'll move on to the next question coming from DeGerling Zhek from Netrexis.
Regarding the roaming pressure, could you give us an idea of what is the current volume of roaming traffic in terms of percentage of total mobile traffic, please?
No, we don't disclose these figures, but traffic is increasing. The price is decreasing. And overall, the revenue in roaming is going down.
Okay. But to better assess the remaining revenue level, which is under pressure for the coming years, what about the size in terms of revenue? Is it still about 11% of mobile revenues?
To give you an idea on I think it's meaningful to have a comparison on the overall roaming margin. And the overall roaming margin is below 5% of group EBITDA. Of group, but not of mobile? We don't disclose the mobile EBITDA. You can't do the same store because you have the bump in product.
It doesn't make sense. But to give you an idea, it's below 5% of group
Thank you.
I think we really made the big hit in roaming. We made, we made in twenty fifteen twenty fourteen, 2015. We made a big hit on roaming. Okay. Thank you.
We have a few more questions. I'll move on to the next one.
Hi, there. It's Joshua Mills here from Goldman Sachs. Just on the mobile trends, I wonder if you could quantify how many of the Swiss Post losses were booked this quarter and also how that's been phased over the last few quarters? And the second question is, in your full year presentation, you gave quite a useful breakdown of where your postpaid net adds are coming from, be it the mBudget brand or the main Swisscom brands. Could you provide a similar level of color on this quarter, I.
E, how much your growth or losses are coming from non budget versus Swisscom? Okay.
So if I would the development of mobile business in Q1, if I would take out this migration to Swiss Post, we would have been positive. We would have been positive. And so we have a stable business in mobile. And the percentage of AM budget is a bit increasing. But we have also now a good momentum with our low end postpaid offering, not the Lite.
So and you can also see it on our figures on Infinity. We are still able to increase on Infinity. And that's the good message. And if you see the percentage of our Infinity customer base, it's in the area of 70%. So we have overall a good business in mobile.
The main actually downside in mobile is the roaming, but there we took the hit, a big part of the hit.
That's very clear. Maybe just one follow-up on the Wingo brand. I just wondered if you could give us any update on the commercial traction that seeing, whether you have any plans to combine it with the mobile offer going forward?
Wingo is an online only product. We don't push it up to now very hard. It's really an offer for people who want to have an online only offer. And we have it in the fixed an offering in the fixed market. Up to now, it's a niche.
It is still a niche in Switzerland. But long term, this could be more important.
Thank you.
I'll go to the next question coming from Minerva Luigi from HSBC.
Yes, good morning. It's Luigi Minerva from HSBC. Thanks for the questions. The first one is on Switzerland. I wanted to ask whether your multi brand strategy is satisfactory as it stands or given the saturation and competition in the market, you plan to develop it farther and introduce more junior brands, for example?
And the second question is on Italy. And I'm just interested in the fiber to the cabinet deployment of Fastweb and whether you would need to build your own cabinet next to TI's one or whether you are able to place your equipment into the Telecom Italia Street cabinet when you do the fiber to the Street deployment? Thanks.
Good. To the multi brand strategy, our target is to have really the Swisscom brand is the strong brand. And in the Swisscom portfolio or in our whole customer base, Swisscom brand should be the most important thing. That's clear. And it's very simple.
But that means that we really design a product portfolio, which is also competitive or which is competitive on the Swisscom brand in the low end and in the high end market. But on the other side, there are sub segments, very price sensitive segments, which we want to address with second brands. And that's unbudgeted, And this is Winkl. And but we don't have the intention now to introduce a lot of additional brands. It's not our intention.
So we are in a comfortable we feel us today in a comfortable way. And on this cabinets in Italy, yes, we build our own cabinets beside TI, and we are able to do this.
Okay, thank you very much.
I have two more questions. The first one is coming from Bluestone Jacob from Credit Suisse.
Hi, it's Jacob Bluestone here. So I just had a couple of questions. Firstly, just on the Infinity two tariffs. Can you just explain whether the ARPU actually goes up or down? On the one hand, you're including more roaming and more international calling.
But on the other hand, the headline price point for most of the tariffs has gone up. So just in terms of thinking about how the Infinity ARPU develops, if you
can maybe give a little
bit more detail there on whether it's higher or lower ARPU? And then just secondly, was there any impact from the leap year on your metered revenues? And if so, can you possibly quantify that? Thank you.
From what? Could you repeat it?
From the year, from the fact that there was an extra day in the year?
The what? We can't tell you. This is February 29. Okay. So today, this impact is very limited because the amount of major revenues is becoming more and more immaterial.
It's a couple of millions, nothing more. And on Infinity two point zero, so the first thing is that the ARPU is flat. And as all as always mentioned, we don't see down migration so far. So we are pleased with the development of the introduction of two point zero.
Thank you.
Okay. Perhaps, operator, the last question?
Yes. Last question is coming from Gazi Usman at Berenberg Bank. I'll proceed through.
Gentlemen, I have three questions, please. The first question was just on your strategy in Switzerland. In the past, you've been happy to get RGU growth and the price increases or this more for more strategy has been kind of a secondary strategy, it seems to me. But now with RGU growth turning potentially negative in the midterm, I mean, the focus more on extracting price? Just any comment with that would be great.
The second question was on this air free impact. You said it was $6,000,000 in Q1. Is this a margin free impact? Or is this coming with some margin erosion as well? And my final question was just on roaming.
I think around Q4, there were some comments being made that EU operators are charging more for termination fees to Swiss operators. I mean, have you seen that impact in Q1 on your roaming margin?
Okay. To the first part of your question on the strategy More for More and the revenue the development of the revenue generating units. We have always a premium strategy. Our strategy is to give more value and to have a bit higher price, and this will remain. And we see still an actual growth in the TV business, in the broadband Internet broadband business.
And we think that the mobile market is saturated. There, it's more that the question how we can keep the value in the mobile business through a differentiated product portfolio and the good network quality. But as Mario mentioned, with both 120 penetration, we have to work on the value on the customer base and not only on the amount of SIM cards. So that's a bit our view on this business. Still growth in TV and broadband and curation mobile.
And then the healthy full margin, so we saw this impact in Q1, the EUR 6,000,000. You will see once again in Q2, and then it's owned.
So this was introduced July 1.
And on the international termination fees, you have to look at the business, all is as inbound roaming and outbound roaming. And so far, we are able to keep the impact limited during the negotiation with the other European operators. But there's a slight negative impact for Swiss operators. It depends on the traffic profile from each operator.
Thank you
very much. Thank you.
Thank you, Usman.
Well, from that perspective, I would like to thank you to the operator, but also to everyone who participated. If you should
have any further questions, don't hesitate
to contact us from the IR team. Again, thank you, and have a great day. Bye bye.