Earnings Call: Q1 2016

May 3, 2016

All participant lines listen only. This conversation will be recorded. Good morning, ladies and gentlemen, welcome to the Swisscom first quarter results 2016, presented by Urs Schaeppi, Mario Rossi, and Louis Schmid. Who will start the call? Louis, the floor is yours. Thank you. Also good morning, ladies and gentlemen, from my side, and welcome to Swisscom's first quarter results presentation. My name is Louis Schmid, Head of Investor Relations. With me are our CEO, Urs Schaeppi, and Mario Rossi, our Chief Financial Officer. The first part of today's presentation, hosted by our CEO, consists of 3 chapters: a quick overview of our solid financial results and decent operational performance of our first three months, an update on our 5 priorities 2016, 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. 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. 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 CHF 30 million year-on-year, which is 1.2%. It's mainly also driven by cost discipline in Switzerland. The contribution of Fastweb to the EBITDA increase is CHF 14 million. We had also a good first quarter in Italy. Net income increased by CHF 13 million on a year-on-year base, despite higher depreciation but lower impacts from foreign exchange rates. CapEx are slightly higher, CHF 47 million higher compared to previous year. The main effect is the rollout of Fiber to the Street. Overall, good financial result. We are on track compared also to our guidance. On slide five, some remarks to our operational performance. RGU base in Switzerland is 12.5 million. This is on a year-over-year base 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. Overall, we have a solid market share in the mobile business and therefore I'm satisfied with the development of our wireless business. Firming business penetration is also increased. Fastweb has 2.2 million subscribers. A successful business on the operation side and a good momentum in Italy. Let me say some words to the priorities in 2016. On slide seven, you see that our five priorities. We also already explained them the last time. Only some remarks to maximize our core business. It's important, that this is our ambition, to defend the market share, retain our price levels and margins, 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. 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, the Swiss market on the left side. You see mobile in Switzerland has a penetration above 125%. The TV market is approximately at 100%, also saturated. Broadband business is above 95%. Overall, a saturated market in the telecommunications business in Switzerland. We are well-positioned. This 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, also with a differentiated offering on mobile. On the lower end of the market, you see our two brands, M-Budget and Wingo. 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 2.0, where we have increased the value of these offerings. Actually, easy said, it's a tariff plan, more for more. We have also a SIM-only option in it, 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 NATEL light product line. On the low end, we have introduced a new product on the brand of M-Budget. That's M-Budget Mobile Mini. We are better positioned in the mobile low-end market, we see a good momentum. 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 price. We have by far the best roaming prices in Switzerland. We also had an improvement of the roaming prices in 2016. With Infinity 2.0, we have included the roaming in our proposition. Interesting is also to see that our roaming data packages are very attractive. We improved them on the pricing side by approximately 20%. 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. It shows that Switzerland has or Swisscom has attractive roaming prices. 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 roaming prices. Slide 11 shows you our innovation roadmap of Swisscom TV. Swisscom TV is a success. We launched several weeks ago a new TV box. This new TV box is 4K-enabled, ultra high definition, a 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%. This 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 CHF 50 million savings in 2016. We do this through several actions. One is the headcount cut where we are on track. Second thing is, 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. We are also on track there. Also with the migration of All-IP, we are on track. We are today at 40% migration of our customer base. Overall on track 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. What is our target? We want to achieve 50% population coverage by 2020, this with a speed up to 200 megabits per second. We do this through several actions. The first one is an upgrading of our existing Fiber to the Street performance. The speed will be up from 100 to 200 megabits per second. We are expanding our UBB footprint from 30% to 50%. This means that we will have Fiber to the Street coverage in 500 cities in Italy. The whole investment will be approximately EUR 500 million in the years 2017-2020. But it is important to say that this is entirely self-financed by the cash flow of Fastweb. We will have a market-driven rollout of this investment. This means no changes in the CapEx guidance in 2016. At the end of 2020, we will have 13 million households covered by UBB, this is approximately 50% of Italy. Slide 14 shows you our strategy. It's a two-step approach. We build Fiber to the Street. Later we would have the ability to go to fiber to the home. This is certainly a topic which is market-driven. Now we are on the first step, Fiber to the Street. We could really fully reuse our investments which we make in fiber to the street. That means we have a flexible strategy for further developments. Slide 15 shows you the rationale. Why do 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 loop 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 interconnection charges to TI. This leads to a better profitability and a better business case for Fastweb. 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 second phase of this migration was in 2015, where we had mainly a market-driven migration. 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 this All-IP migration, we will have recurring cash savings. Let's go to some operational figures. If you go on slide 18. Overall, we have a balanced bouquet of business drivers. We have ups, certainly growing TV business, a 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 ARPU 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. Overall, the revenue in Q1 is approximately stable in a competitive market, and we have good market share. On slide 19, you see the development of our net adds. On the right side of the chart on the specific product area. Mobile in a saturated market is stable. If I would take out the special effect of Post, this enterprise customer which churned to Sunrise. If I would take it out, we would have a positive revenue generating unit or net adds in the mobile business. Voice business is declining, as I already mentioned. 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. We have slightly increasing market shares. 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. This is clear because we have a penetration which is above 120%, and the customer are optimizing themselves. We see that several customers are using tethering instead of a second SIM, for example, in an iPad. This is a bit dynamic in our business. The market shares overall for Swisscom, and that's important, are stable, and I'm satisfied with 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. Voice lines are declining, driven by mobile substitution and CPS migration. We have today in the residential market, 500,000 voice-only customers. 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. It's also interesting to see that the TV penetration on our ultra-broadband business is 69%. That means we are really able to upsell our internet base with TV. On the right side of the chart, you see that 64% 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 1 is the roaming prices. Factor number 2 are some airtime fee charges, the pricing pressure on enterprise business. 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. It shows that we have a solid business in the fixed market. On the bundling area, on the right side of this chart, you see a slightly declining ARPU of the bundle business. This is driven by mobile, mainly driven by the roaming price development, which we have, and some opt-outs of fixed voice business in our triple-play offers. Overall, a solid development of our ARPU. If you go on slide 23, you see the development of the service revenues. As in quotes before, a decline in one pay business, an increase in the triple-play business. You see that we have also volume effects and price effects, which are quite imbalanced. High volumes, lower prices, which leads to approximately stable revenues. Overall, I'm satisfied with the performance in Q1 of Swisscom, Switzerland. Coming to slide 24 on Fastweb. Good first quarter. Increasing customer base by 5% to 2.2 million. Reduced churn. That's a good performance, important for our margin development. We are able to decrease the churn in Italy. The development of our revenue-generating units. In all segments, we have a growing revenue. 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, a slight increase of CapEx because of Fiber to the Street investments and a positive free cash flow. The gaps to 2015 is mainly explained by phasing of cash outs. Mario will come later to it. 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 of CHF 2.89 billion. We have practically no impact from exceptionals. The exchange rate CHF/EUR was more or less unchanged in Q1 2016 compared to Q1 2015. In Switzerland, Swisscom Switzerland lost CHF 60 million in revenues, mainly coming from the roaming business. In the segment, residential customers and SME service revenue stayed flat year-over-year. The higher number of revenue-generating units could compensate the roaming decrease. In the roaming business, we had price effects of negative CHF 20 million. They were partly compensated by volume effects of CHF 11 million. In enterprise customers, we have two reasons for the decline in revenue. Again, roaming, CHF 3 million. From regulatory effect, the so-called airtime fee, which was stopped in July 2015, had a negative impact of CHF 6 million. The wholesale business went down by CHF 13 million. We had lower inbound roaming revenues and some lower regulatory prices. Fastweb, as was explained, increased revenues in all segments and contributed CHF 11 million to the revenues. On page 28, you see some details on our OpEx. Was 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 CHF 50 million in this year, CHF 75 million in next year, and in the coming three years, again, additionally, CHF 60 million. 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 FTEs base in the Swiss core business has been reduced by around 100 FTEs. On the next slide, EBITDA breakdown by segments. The EBITDA of Swisscom went up by CHF 30 million, approximately 50% coming from Fastweb. Residential was able to increase contribution margin by CHF 30 million. Increase is mainly driven by lower customer acquisition costs. Just to mention the retention, the number of customers we retained in Q1 was slightly higher than in Q1 2015. 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 personal expenses and slightly higher rental costs for data centers and site for antenna. Once again, Fastweb, strong performance also in Q1. EBITDA increase of approximately 10%. Below the EBITDA, we still have increasing depreciation and amortization. CHF 39 million higher due to the result of the high investment level since a few years. Net interest decreased by CHF 8 million to CHF 39 million due to very favorable refinancing conditions. The other financial result improved by CHF 17 million, mainly because we had in Q1 2015 the negative impact on the foreign exchange losses coming from the decision of the Swiss National Bank in mid-January 2015 to float the EUR against the CHF. Net income increased by 3.7% to CHF 364 million, result of EBITDA increase and the better financial result. On slide 31, on CapEx. CapEx of Swisscom Switzerland increased as driven by the UBB expansion. We are ahead on plan with our FTTS rollout. However, the full-year targets, they stay in place, we will not overshoot the CapEx. That was mentioned at the end of Q1, we have a UBB footprint of 3 million connections, meaning we can deliver 50 megabits per second or more to 3 million households. One remark on the free cash flow on page 32. The free cash flow in Q1 went down by CHF 160 million to CHF 184 million. This is the result of the prepayment of the sanction related to the HCL case. Remember, we booked that provision in Q3 2015. We had to pay this sanction in January 2016. The amount is CHF 160 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 a Swiss franc bond in the Swiss market of CHF 200 million with a coupon of 375 basis points. We renew the Swiss private placement in the amount of CHF 150 million, and we could renew our backstop facility of CHF 1 billion with mid-sized Swiss banks. In total, we have CHF 2 billion unused committed credit lines in place. Our rating. The rating review took place in Q1. The rating unchanged, Moody's A2 and Standard & 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. We confirm net revenue for 2016 slightly above CHF 11.6 billion, EBITDA at around CHF 4.2 billion, and CapEx slightly higher than CHF 2.3 billion. I hand over to Lorenzo for the Q&A. Ladies and gentlemen, you have now the opportunity to ask questions by dialing *14 on your telephone keypad. Please push *14 for questions. We have the first few questions coming up. I'll move to Van Lingenhurst. Yes, good morning. Matthias 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 it, we have a saturated mobile market. Over 120% penetration. That means that the whole market in 2015 declined by approximately 80,000 subscribers. The market shares of Swisscom are stable. If you look also to the figures of our competitors, you can see that we have stable market share. What kind of dynamic we have in this market? We have, let's say, more competition or let's say a kind of a washing machine at the lower end of postpaid market. 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. On a revenue-generating unit, I'm happy with the development of the market in these conditions where we are today. Okay. If I understood correctly, a big customer left in Q1 to Sunrise. Am I right? The migration was. It is a deal, the Post deal that's already long time decided, and now there was the last part of migration of the SIM cards. If you would take out this special effect, a lot of these customers which churned 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 Boulan from Bank of America, Merrill Lynch. Two quick questions, please. Firstly, just to follow up on the previous question on mobile. You seem pretty happy with the current development. 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? Secondly, on Italy, if you could comment on the competitive deployments we are seeing from TI and also Enel now. Is it something that could potentially derail the very good momentum you're currently enjoying? Or you're not expecting any material deviation for the foreseeable future? Thank you very much. Development on the mobile market. Mario? Yeah, again, I think it's as was explained, it's one of our key targets and priorities to defend our high market shares. 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. 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 SIMs in this saturated market. That's clear. With a market share of 60%. That's one point. The other point, if you see our new product offering, we implemented additional value in it, and it works. It works, that shows that not the whole market is driven by price. Also, if I look to our importing-exporting ratios, I'm not worried, no. We have more competition in the mobile business. That's right. That's clear because the market is saturated. Maybe one last remark. We should not show so much anymore. It's the number of SIMs, because all these second SIMs, many of second SIMs are being turned off because with the new handsets, we just use tethering, that means that these second SIM cards with a very low output, they will, over time, disappear in the market. It's more important what kind of value we take out of this market. 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 add market share in Italy and in Q1 were good for Fastweb, we were also able to decrease the churn. The churn that we are in a good situation. For the future, it is important that we perform on quality and customer service. That's our strategy. Then we are convinced that we can have a strong position in the Italian market. The Enel, yes, some words to Enel. They announced their fiber plans. Actually, they want to go to 224 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 fiber to the home, which is good for the whole position of Fastweb. Okay. Thank you very much. I'll move on to the next question coming from Luis Prota at Morgan Stanley. Yes. Hello. It's Luis Prota from Morgan Stanley. Two questions, please. First, on your mobile ambitions in Italy. I'm looking at the pending decision from the European Commission and the potential remedies that might arise for the WIND-H3G announced merger. You've 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. 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. Any help there would be much appreciated. Thank you. Okay. I will take the first part of the question from Mobile Italy. Then Mario will go on this dynamic in the Swiss market. To Italy, mobile business in Italy. Fastweb is interested in remedies out of the merger H3G-WIND. Because it is our ambition to strengthen our position in the mobile market. It is now a bit too early to say what kind of strategy we will go for. It is very important what kind of conditions are related to these remedies. We will ask for remedies out of this merger. With the idea to get a stronger position in the mobile market. Maybe on the second part, Mario, on the dynamics. On the dynamics. What do we see differently in the coming three quarters compared to Q1? We see more pressure on the roaming. This Infinity 2.0. Depends also on the dynamics in the market. We see higher acquisition costs in Q3 to four compared to 2015. On the cost side, as I mentioned, we will deliver these CHF 60 million. There I don't see different dynamics. Okay. Thank you. Move on to the next question coming from Vikram Karnani 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? Also, is there a mix effect there happening within the base that people are now going towards some of the low-end bundles like XS and S, where you have increased the content within the bundle, and that is probably explaining the ARPU pressure that you saw in Infinity recently, or is it mostly roaming? 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. Switzerland, as you have talked about in the past, is a heavily subsidized market. 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. Good. I am taking Infinity 2.0. Mario will come then to the cost savings. On Infinity, the new product portfolio shows that we don't have a down migration or a specific dynamic of down migration. Our Infinity customers are quite stable. We were capable to have more upgraders than downgraders with these moves. Overall, we have the biggest impact on the overall dynamic is the roaming pricing impact. The customers are stable on this Infinity product portfolio. Cost savings and on OpEx, there are slide in Q1, there are CHF 3 million below Q1 2015. Looking forward, we don't see that now all new customers jump to the SIM-only offerings. The market is still used to have the subsidized handsets. For us, it was important to give the customer also the possibility to get the SIM-only offer. Maybe it's a chance midterm to lower the acquisition cost. For 2016, we don't see a change of the trend. Again, the CHF 50 million saving is dedicated to indirect costs. Yeah, 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. The first one was you mentioned that the new rollout program will cost you about EUR 500 million over 2017 to 2020. Your current CapEx rate in Switzerland, or, sorry, in Italy, is actually about EUR 500 million per annum. Does that mean your Swisscom, or sorry, Fastweb CapEx, can actually fall over time during the following few years? Secondly, you also mentioned on slide 14 about your FTTC 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.fast. I was just trying to get a feeling of what next steps you see in technology in Italy. Finally, quick one. Are you actually interested in joining the Enel Open Fiber initiative? Do you see yourself still going it alone on all your infrastructure build in Italy? Thank you. Good. Maybe I am going to take the questions on the technology. Enel and Mario can then take the CapEx questions. Our strategy is to increase fast the footprint of ultra broadband in Italy. That's why we deploy Fiber to the Street. With this technology, we will be able to be competitive in the next years. We have always the freedom to also make migration to fiber to the home, but that's not planned. We now want to extend our footprint on Fiber to the Street. On Fiber to the Street, we made these pilots, and we will also do the rollout now in Switzerland on G.fast. There you 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. That shows the potential of this technology mix. On Enel, we are open to cooperate with Enel if the conditions are the right ones. We will go with our strategy, which we explained. That means we will increase our ultra broadband footprint independent from the plans of Enel. There is certainly a potential to partner also with Enel in a specific area. Question of pricing at the end. On the CapEx level. We had in CapEx level in Fastweb in 2014, 2015, and 2016. Around EUR 550 million. That included the current FTTS rollout, where we are targeting 7.5 million households coverage with UBB by the end of this year. Expected all this CapEx going down after the completion of this rollout. Now we announce the new one, additional EUR 500 million up to 2020. That means that CapEx in 2017 will not go down, but we don't guide the correct number for 2017 right now. Great. Many thanks. I'll move on to the next question. Hi there. It's Maurice from Barclays. Couple of quick questions. Italy churn down 15%. Could you explain a bit about the drivers of this? Was it just higher bundling, higher speeds? About the drivers of the churn reduction. Just quickly on the Swiss enterprise side, I think you indicated again this quarter mobile, somewhat challenging. The fixed on pricing, fixed more stable. Is that the same as the dynamics you stressed at the Capital Markets Day? Thanks. What are the reasons behind the decreasing churn figures in Italy? There are several dynamics. The first dynamic is if we go to Fiber to the Street, we see lower churn figures. 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, this also leads to a lower churn figure. The third dimension is actually also the acquisition strategy. It depends a bit on your promotion design, you can also influence your churn figures. These are the main factors. On the enterprise business in Switzerland mobile business, what we see is some competitors who are attacking our mobile business, that's why we have this price pressure in mobile. Overall, our mobile shares remain stable in the enterprise business. We have a special effect also on the mobile pricing level. This was this airtime fees, which were regulated away actually. These are the main impacts on our mobile business. The churn figures in the B2B business are stable. Okay. Thank you. Got our next question coming up. I'll open up. Hi, it's Georges from Citi. Thank you for taking the questions. Maybe the first one around Fastweb and 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. I'm just trying to understand whether that is something you still stick to, even if you would need to invest in mobile. Is it the case you just need to cover the interest cost of Fastweb? I'm just trying to understand how you're thinking about participating in the remedies while maintaining the ring-fence around Fastweb. Then my second question is around the sports rights. Some of your competitors are uniting together to bid for some of this content. I know you mentioned the past expires in 2017, I was wondering if you could give us a bit more detail as to what you expect from the process. Thanks. Good. I will start with the sport rights, Mario can come to the remedies. Sport rights. It's important to know that this auction of the sport rights, we will go for this auction. It's not the most important thing for Swisscom. The differentiated product portfolio of the Swisscom TV business is not only related to this Swiss sport rights. We have extremely good content portfolio for all other sports, football content in Europe. This is actually more important than the Swiss football rights. Therefore, we will not go for extremely high costs in this sport content auction. The process is to follow. We have to give now a first offer until the end of May, the process will be defined by the sport leagues. It's important to know that sport rights is not really the major topic for Swiss business. On the remedy side, we want to be self-financing. Mario. Looking at the financing side of Fastweb. Fastweb standalone, including the UBB broadband, is cash flow positive. That was always our target that we met last year. Looking at the remedies. Georges, I think it's just too early. We think the merging part is to wait the end of the U.K. process. I think that's due on May 19th this year before presenting the remedies. You have two parties. There are either private negotiation between the merging parties and potential beneficiaries, or you have a remedy proposal without upfront agreements that the merging entity just present the remedy without making an offer to potential partners. It's really too early. We need to look carefully at the business case, at the risk profile, that gives now the input for the financing, what the thinking behind the financing from our side will be. Theoretically, you would be flexible to amend it if the opportunity was something you wouldn't pass on? You believe in the business case, you do your judgments on the risks, then of course, we need to be flexible to further develop the Italian business. It has always to be seen in the whole context of the Swisscom Group and the risk profile of the Swisscom Group. That's very clear. Thank you. I'll move on to the next question coming from Jacques de Greling from Natixis. Thank you. 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 give these close figures, the roaming traffic is increasing. The price is decreasing. Overall, the revenue in roaming is going down. Okay. 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. 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 do it. Yeah. Because you have the bounding products. Doesn't make sense. To give you an idea, it's below 5% of the group EBITDA. Thank you. I think we really made the big hit in roaming. We made in 2015 and 2016. 2014, 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. 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 M-Budget brands 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 M-Budget versus Swisscom? Thank you. Okay. 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. We have a stable business in mobile. The percentage of M-Budget is a bit increasing, but we have also now a good momentum with our low-end postpaid offering, NATEL light. You can also see it on our figures on Infinity. We are still able to increase on Infinity. That's the good message. If you see the percentage of our Infinity customer base, it's in the area of 70%. 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's seeing, whether you have any plans to combine it with a 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. We have it in an offering in the fixed market. Up to now, it's a niche. It is still a niche in Switzerland. Long term, this could be more important. Thank you. I'll go to the next question coming from Luigi Minerva 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 further and introduce more junior brands, for example. 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, the 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 soft segments, very price sensitive segments, which we want to address with second brands. That's M-Budget and this is Wingo. We don't have the intention now to introduce a lot of additional brands. That's not our intention. We feel as of today in a comfortable way. On this cabinet in Italy, yeah, 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's coming from Jakob Bluestone from Credit Suisse. Hi, it's Jakob Bluestone here. I just had a couple of questions. Firstly, just on the Infinity 2 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. On the other hand, the headline price point for most of the tariffs has gone up. 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. Then just secondly, was there any impact from the leap year on your metered revenues? If so, can you possibly quantify that? Thank you. From what? Could you repeat it, second part? From the leap year. From the fact that there was an extra day in the year. From the what? Jakob, we can't hear your question. It's the 29th of February. Oh, okay. Exactly. This impact is very limited because the amount of metered revenue- Oh, okay. The amount of metered revenue is becoming more and more immaterial. It is a couple of million CHF, nothing more. On Infinity 2.0, the first signals are that the ARPU is flat, and as was mentioned, we don't see down migration so far. We have placed this development of the introduction of 2.0. Thank you. Okay. Perhaps operator, the last question. Yes, last question is coming from Usman Ghazi at Berenberg Bank. I'll put you through. Hello, gentlemen. I have 3 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 a secondary strategy it seems to me. Now with RGU growth turning potentially negative in the midterm, is the focus more on extracting price? Just any comment with that would be great. The second question was on this airfree impact. You said it was CHF 6 million in Q1. Is this a full margin impact or is this coming with some margin erosion as well? 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. Have you seen that impact in Q1 on your roaming margins? Thank you. Okay. To the first part of your question on the strategy more for more and the development of the revenue generating unit. We have always a premium strategy. Our strategy is to give more value and to have a bit higher price. This will remain. We see still an RGU growth in the TV business, in the broadband internet, broadband business. 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 Rossi mentioned, with both under 20% penetration, we have to work on the value on the customer base and not only on the amount of SIM cards. That's a bit our view on this business. Still growth in TV and broadband, saturation mobile. The airfree is full margin. You saw this impact in Q1, the CHF 6 million. You will see it once again in Q2, then it's all. This was introduced 1st of July 2016. On the international termination fees, you have to look at the business always as inbound roaming and outbound roaming. So far, we are able to keep the impact limited during negotiation with the other European operators. But it's a slightly negative impact for Swiss operators. It depends on the traffic profiles from each operator. Okay. Thank you very much. Thank you. Thank you, Usman. Well, from this 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.