Morning, ladies and gentlemen. Thank you for joining the Swisscom Q1 2026 results, hosted by Christoph Aeschlimann, Eugen Stermetz, and Louis Schmid. Louis, the floor is yours.
Good morning, ladies and gentlemen, and welcome to Swisscom's Q1 2026 results presentation. My name is Louis Schmid, Head of Investor Relations, and with me are our CEO, Christoph Aeschlimann, and Eugen Stermetz, our Chief Financial Officer. Let's now move to page two with the agenda of today. As you can see, our CEO starts the presentation with chapter one: achievements and a quick overview on the Q1 highlights, the operational and financial performances of the first quarter. In chapter two, Christoph presents the business update for Switzerland and Italy. In the second part of today's results presentation, Eugen runs you through chapter three with our Q1 financials, including the confirmation of our full-year guidance. With that, I would like to hand over to Christoph to start his part. Christoph. Thank you, Louis, and welcome also from my side to this Q1 2026 call.
I will move directly to page four, highlighting our key achievements of this quarter with a consistent delivery, reinforcing our position as the customer's preferred choice. I am pleased to announce that the operational results on the group level are as expected. We have sound financials. We have operating free cash flow ahead of consensus. We would like to highlight that this is mainly due to intra-quarter phasing during 2026, and we expect a result on a full-year basis as guided. In Switzerland, I would like to highlight the successful price increase execution, which I will detail a bit more later on, and the improved B2B IT profitability that we have achieved during the first quarter. In Italy, the integration of Vodafone Italia is on track.
Synergies are coming in as expected, and we are continuing on our turnaround of the B2C business to move from volume to value. I will talk a bit about in more detail about this later on during the call. You've also seen that we have achieved significant growth in the energy business, and we expect continued growth from that business throughout the full- year of 2026. Moving on to page number five, you see the overview, the commercial overview of 2026 Q1. You can see that overall, both on mobile and broadband in Switzerland and Italy, the results have been softer. I will explain those effects in detail later on.
There are some overlapping effects in both countries coming from B2C and B2B, I will mostly explain this in detail when we are in the section of Italy and Switzerland. On the other side, you can also see that the wholesale business in both countries, both in Switzerland and in Italy, is doing very well. We have continued growth both on the broadband side and on the mobile side in Italy. I will move on to page number six, which shows you the commercial overview of the Q1. We have a net revenue, which is slightly softer due to decline in revenues both in Italy and Switzerland and some overlapping currency effects, posting CHF 3.6 billion on revenue in line with guidance.
Profitability or EBITDA is roughly flat at CHF 1.28 billion. CapEx slightly down, delivering highly increased operating free cash flow of CHF 494 million. You can see that the increase of 96 million is mainly driven by Italy segment, where we see the synergy realization kicking in. Also a bit softer CapEx, Switzerland delivered on the guidance and contributed 34 million adjusted free cash flow on top compared to previous years' result. I assume Eugen will go into the details of the financial results in his section later on. I will now move on to the business update. I will go directly to slide number eight, which highlights our priority for 2026. For both countries, we have clear priorities. I will start with Switzerland.
Of course, priority number one in Switzerland is managing the telco service revenue top line, ensuring that our decline is slowing down and ideally coming to a halt. For this year, we expect CHF 120 million decline on the service revenue side. At the same time, we are continuously working on our cost base, boosting our efficiency. We expect as guided CHF 50 million of savings. At the same time, we want to work on IT profitability and grow the revenue at the same time. We do expect softer growth this year, but increased profitability, as you've seen already in the Q1 results. On the Italian side, our main priority is, of course, working on the integration of Vodafone and Fastweb, driving the synergy realization, which is very well on the way.
We are also working on the telco service revenue side, especially on the B2C business, turning around the B2C business, moving from volume to value to stabilize and the service revenue and massively reduce the decline on the service revenue side. At the same time, we are also continuously scaling the energy business and the IT business, and overall, this should deliver stable free cash flows from Switzerland and growing free cash flows from Italy so that we have growing free cash flows on the group level and are able to increase the dividend to CHF 27 for the year of 2026. I will now go into the details of Switzerland. I will start on page nine with the B2C business in Switzerland.
Of course, the, let's say, the main priority in Q1 and the highlight was the price adjustment that we executed for our own brand offerings in order to sustain the best network quality and service excellence. Basically, the price increase was executed as expected. We had roughly as expected, the churn in line with our business case. We had some effects also on customers moving or spinning down to the second brand, also roughly in line with expectations. You can see the impact on churn on the right-hand side of the chart. Mobile postpaid churn is roughly stable, slightly increased compared to Q4, but if you compare it to Q1 2025, it's roughly at the same level. Whereas on the broadband side, there was indeed more churn based on the price increase that we executed in the market.
You can see this on the left or the middle of the chart with the resulting net adds. Whereas on the broadband side, we had net add losses due to the increased churn and slightly lower order volumes due to the price increase. On the mobile side, we still managed to generate growth. On the net add side, slightly lower than in the previous quarters, but still a positive growth on RGU despite executing the price increase, which is obviously an encouraging result. From a promotional perspective, Q1 was a bit of mixed bag or let's say the previous four months. On the one side, we have positive movement in the market with both Salt and Sunrise following the price increase.
On the other side, we have seen excessive aggressiveness from Sunrise, especially in the previous three months. After our price increase, they became really aggressive on the promotional side, even moving to lifetime discounts again on the main brand under the Sunrise umbrella, which is kind of counteracting the price increase. I would say from a promotional perspective, a bit of mixed situation right now, overall in line with sort of our expectation and not that much different from before. This is also why we continue to bolster the Wingo positioning on the full service side, so positioning Wingo as an integrated wireline and wireless provider. We are expanding the reach on the shop or the sales side. We open new shops.
We bring Wingo in some of the Swisscom shops to make the brand more visible and sort of be more present in the market with the Wingo brand to make sure that we generate enough sales out of the Wingo side, especially on the broadband business, where we see continued losses on the main brand. Next to sort of the main telco service revenue, we are also working on new revenue potential. There are two areas where we are investing heavily at the moment. 1 is the security proposition. We have launched a new security proposition in Q1, integrated directly into the router, which we believe is very important, and we will continue to drive security service revenue in the future, which will help us to offset some of the ongoing decline on the traditional connectivity side.
We are also continuously investing on the AI side. We see quite a good momentum on the myAI solution, which achieved 78,000 registered users end of Q1. We will continue to drive user adoption throughout 2026 and looking into how to monetize the AI potential going forward. If you look at what's going on in the AI world and the general adoption throughout the planet, we do believe that there is potential also for us to generate revenue from this in the, in the consumer space. I now move on to page number 10, B2B. On the B2B side, you see that ARPU-wise, the development is nearly stable. There is a slight decline, mainly driven out of the SME space, but overall, I would say, quite a stable ARPU situation.
Whereas on the RGU side, you see continued losses. We had, especially on the mobile side, some corporate contracts had ended, but also some losses in the SME space on the mobile side, whereas broadband is roughly stable in terms of RGU development. What is important for 2026 that we are on track with the migration from the legacy portfolios to the new modern portfolios, both on wireline with Enterprise Connect and on the wireless with the Protect and Connect products, which integrates the beem security proposition. This is an important element going forward, driving the convergence between connectivity and security, which we believe will make a real difference going forward, both in positioning, but also in generating new revenues.
At the same time, we are also working on CVM, using better data and analytics to drive targeted campaigns, especially in the SME space, to stabilize the SME price and RGU develop going forward. I'm very happy about the beem evolution. We managed to secure nearly 60,000 users by end of Q1, over 1,000 locations. We are very pleased with this development, and we can really see a big demand and a good fit or product market fit with the beem proposition and the requirements of our customers. Both in the SME segment, but also in the corporate segment, we managed to win first corporate customers, which really tells us that the direction is the right one and security will be an important or is and will be an important topic going forward.
On the IT business side, I am very pleased with the development of the profitability. You can see that we managed to increase profitability from CHF 25 million to CHF 32 million EBITDA in Q1. This is obviously very pleasing development. On the other side, revenue evolution was flat. Market is not so easy at the moment. Demand is quite soft. On the revenue growth side, probably there will be only slight growth this year, and we will focus mainly on improving the profitability throughout the year to make sure that the services that we do deliver are also making the required profit or are at the required profitability level.
One positive note going forward, especially also into 2027, we have signed a multi-year contract with the Swiss Armed Forces, which should deliver continued growth on sovereign ICT investments going forward. Now on page 11, some words about network and wholesale. We continue to invest in network coverage. Both FTTH coverage is up 3% to 56%, going as expected and well. Also on the mobile side, we increased the 5G+ coverage to 89%. Sorry, I mixed up things now. We increased the 5G coverage by 3% to 89%, and we increased the FTTH coverage by 4% to 56%. Sorry for this mix-up. We have also finalized the 5G SA dual-mode core.
It's fully cloud native, fully automated, and we will start migrating users now onto the 5G SA core, which is, I think, quite a important milestone for our mobile tech team and a good achievement that we are proud of, and which will drive user experience and adoption of 5G going forward on the mobile side. On the wholesale side, we are pleased with the results I've already highlighted before. Access revenues have grown by 8% from CHF 49 million-CHF 53 million. FTTH share is up by 8%. You can see that this drives our wholesale market share in the market quite nicely, which stands now at 18.6%.
Over half of this revenue is already coming from FTTH and continues to grow quite substantially, showing that the FTTH rollout is driving adoption, it's driving revenues, especially on the wholesale side. Moving on or finishing on the Swiss side on page 12 with the cost-saving view. You've seen that Q1 has had quite extraordinary high cost savings of CHF 25 million. Please do not extrapolate this number on the full- year. We continue to expect slightly more than CHF 50 million Swiss francs in savings on a full- year basis as we had some cost shifting between Q1 and the other quarters. For example, we had less marketing spend in Q1 than expected and shifted some of the spend into Q2 and Q3.
This explains most of the advance that we have on the cost-saving side, and we will catch up or basically spend this money later in the year. You shouldn't expect much more than the guided CHF 50 million on a full- year basis. What is important, we continue to work obviously on the efficiency, both on the sales side, making our shops more efficient, finding new formats. We work on the call center efficiency, heavily investing into AI-driven technologies, both on, let's say, chatbot side, but also supporting and helping agents serving our customers better and faster. This is an ongoing effort from which we continue to expect continued savings this year but also next year. At the same time, we are also heavily investing internally.
We are still working on phase out of legacy IT systems but also legacy network systems. We are also building a new data platform which will help us move into the agentic world and deliver cost savings going forward when we shut down the old platforms in 2027. You can see a lot of things going on, both on the commercial front but also on the efficiency front, which is making sure that we can deliver on our targeted and guided revenues and profitability. Now I'm moving to Italy. Page number 13 gives you a overview of the integration. I am happy to announce that the integration activities are all on track. We have one legal entity since January this year. We have also merged the SAP systems into one system.
We are now working on harmonizing all the financing activities. We are rolling out one integrated HR system, which allows us to streamline all the HR payrolling processes. Things are going as expected. We've delivered EUR 77 million of synergies. We are very well on track to deliver the full EUR 300 million that we expect this year. This is a topic I am very pleased about for Italy this year. If things go as expected, we will have reached half of the planned synergies that we expect from this deal on by 2029. On the cost side, integration cost side, we are slightly below our planned values. This is also good news from the integration cost side.
Moving on to page number 14, looking into the B2C business. You can see that we are working on all fronts to turn around the business into a more value-oriented approach. The first and foremost most important topic is making sure that our existing customers are happy, have high NPS and stay with the company. You can see the effect of this on the right-hand side. Churn is down quite impressively from 20% to 17.6% on mobile and from 20.3% to 16% on broadband. This is despite the fact that we are still have ongoing price increases going on. As you know, we are executing what we call a back book to front book alignment.
We have increased front book prices, past year, and we are now migrating all back book customers which are below the front book prices onto the new front book prices. Despite these activities going on and of course, generating some incremental churn, the overall resulting net churn is actually going down, demonstrating that all the activities that we are executing in the call center side, servicing side, network side are impacting positively the customer experience and customer happiness and driving down the related churn. Another important aspect that we are working on is driving down, or bringing up, driving down the ARPU that is leaving the company. Making sure that the high-value customers are not churning and staying with the company, and if they are churning, that less ARPU is flowing out.
At the same time, we are working on the inflow ARPU, we have increased front book pricing. Historically, we had a very, very high percentage of inflow on the lowest value subscription. We have now managed to shift this. Now, over 1/3 of the subscription inflow is on the higher value subscription. It lifts our inflow, average inflow ARPU up. The resulting effect is that the differential between outflow ARPU and inflow ARPU has substantially decreased. It is nearly half on the mobile side, precisely minus 43%. Of course, this generates on the journey while we are executing this generates some more net add losses as we have softer gross adds. We are focusing on higher value sales.
For example, we are less aggressive on tourists or some of the other segments which generate very low revenue. This generates lower gross adds and despite lower churn results in a bit softer net adds. We expect this to improve over the year as we are reaching the end also of the back book to front book alignment, and we are more into stable territory. Going forward, we expect revenues to stabilize throughout the second half of the year. This is, I would say, all I would like to say on this. On the other side, ARPU, you can see, is roughly stable, especially important on the mobile side. It's exactly stable, broadband, slightly declining. On the energy business, we are very pleased. We have now reached over 119,000 customers.
The growth has doubled as we have sold also into the Vodafone base. We will continue to focus on the energy business as this revenue growth helps us to compensate still the expected service revenue decline going forward and making sure that the B2C business stabilizes overall throughout 2026. On page number 15, looking into B2B. On the telco side, I would say roughly stable. You can see the ARPU development slightly positive on mobile, slightly negative on broadband. Overall, we could say the telco service revenue on the ARPU perspective is roughly stable.
From a revenue perspective, it is still slightly declining, the most of the service revenue decline is actually coming out of the B2C business in Italy and on the B2B side, things are going quite well. The ICT trajectory is also confirming the strategic trajectory. We have been selected as a AWS European Sovereign Cloud Launch Partner. We are continuing to push on the AI front and making sure that we can also again, generate growth out of the ICT business in Italy going forward. Going to slide 16, network and wholesale. You can see that also in Italy, we are continuously investing in our network. 5G coverage has reached 89%, up by 4%, and FTTH coverage has reached 58%, up 6%.
This is the first time that Italy has a higher FTTH coverage than Switzerland. This will remain like this for many years to come as the rollout in Italy is driven by Open Fiber and FiberCop, and they are heavily investing in expanding the FTTH coverage in Italy. On the wholesale business, we have seen very pleasing growth both on mobile and on broadband. You see plus 108,000 on mobile, plus 68,000 on broadband. Really shows that our wholesale strategy is successful and working. We expect continued growth on broadband going forward, whereas on wireline, as you know, Poste Mobile is leaving our wholesale business. They are executing or have substantially finished executing the migration in Q2.
At the next quarterly call, you will see a substantial decline on the wireless side from mobile. We should enjoy this picture of growth in Q1 on both mobile and wireline. We will of course, or are already working since many months now on compensating the Poste Mobile loss with new customers on the mobile side. We launched Sky Mobile, but we're also working on new customers on the broadband side, making sure that we can compensate the revenue loss from Poste Mobile going forward over the next quarters until running into 2027. The final slide on Italy regarding our RAN or mobile infrastructure strategy. We have taken three actions in the Q1 to work on accelerating the rollout, improving coverage, and at the same time decreasing our cost base.
The first one is the RAN sharing that we have announced with TIM that will essentially help us in accelerating rollout and improving coverage. We expect the final agreement in Q2 2026 to be signed, and then subject to regulatory approval, which will last up to one year. We will see if we can accelerate this a bit, but this will take some time. At the same time, we signed a tower JV with Telecom Italia to deploy up to 6,000 new towers at sustainable market conditions. This is also in the stage of finding the final agreements and the authority approvals.
We have terminated the MSA with Inwit, where we believe we have the right to exit by 2028, and this will also help us moving away the infrastructure from Inwit onto a new infrastructure at sustainable market prices will help us reduce our cost base to effectively compete in this very competitive market in Italy. This was it from my side, and I will now hand over to Eugen for the financial results.
Thank you, Christoph, good morning everybody from my side. All in all, a very solid set of numbers, I'm happy to walk you through the details. As usual, I'll start on with the group perspective on page 19 with revenue. Revenue is down CHF 153 million, thereof CHF 44 million currency. Net of currency revenue is down minus CHF 109 million. Switzerland, minus CHF 25 million, essentially service revenue decline. Italy is down CHF 76 million. That looks like quite a big number. There is service revenue decline on the one hand, but there's also a sizable decline in hardware revenue with no impact on the margin, and that is a bit distorting the picture in Q1. There is compensation by growth from the wholesale and from the energy business as well.
On the EBITDA side, EBITDA is slightly up, both on reported numbers and adjusted numbers. Switzerland almost stable thanks to higher telco cost savings. A bit of phasing in there, as Christoph already mentioned. Italy is up CHF 30 million, so the telco service revenue decline could be offset by the realization of synergies. We also have lower costs there in the first quarter compared to prior year. On page 20, CapEx. CapEx is down CHF 86 million in the group. That's very much driven by phasing effects both in Switzerland and in Italy. Switzerland CapEx is down CHF 40 million. We have lower FTTH construction volumes, which were pretty high in the first quarter 2025. Italy is down CHF 63 million.
It's a combination of somewhat lower CapEx for business as usual as we guided, and also a number of phasing effects in Q1. By implication, the operating free cash flow is up CHF 96 million, so we're clearly on track to deliver stable free cash flows from Switzerland and growing free cash flows from Italy as guided. Given all the phasing effects on OpEx and CapEx, obviously, please don't multiply the year-over-year numbers by four, but stick to our guidance for the full- year, which we're going to confirm in this call. Sorry. I move on to page 21, Switzerland. Switzerland revenue down CHF 25 million. If we look at individual segments, B2C is down CHF 12 million. That's telco service revenue decline compensated by a bit of higher hardware revenues.
B2B, minus CHF 13 million, lower telco service revenue, and also slightly lower IT service revenue, as Christoph already pointed out. The wholesale, minus CHF 8 million, is mainly due to roaming. The underlying excess service revenue is actually growing steadily as we communicate on a regular basis. On to EBITDA. EBITDA is almost stable with minus CHF 5 million. B2C, almost stable. We have the top line decline, which is compensated by telco cost savings. Here we have, as Christoph already mentioned, some phasing in there with advertising spend being much higher in the first quarter 2025 due to the introduction of the We are Family offering back then. B2B is down CHF 9 million. The telco decline was partly compensated by the improved profitability from the IT business.
Wholesale at minus 7 is just the revenue impact of the roaming effect I mentioned. Infrastructure and support functions, plus 13. This is the telco cost savings flowing in. Next page, 22. CapEx is down CHF 40 million. There is a number of in-year phasing effects across all categories. Obviously, the most important point is wireline access CapEx, which is down CHF 28 million. This is related to the very high FDH volume in the first quarter in the previous year. As a result of stable EBITDA and lower CapEx, obviously, operating free cash flow is up by CHF 34 million. Deep dive into Switzerland on page 23. Top right, the telco P&L. Telco service revenue came in at minus CHF 34 million. That's pretty much in line with the previous quarters.
There is no effect yet in there from the price increase, which becomes effective in the second quarter. This is fully in line with our full- year guidance of roughly CHF 120 million of service revenue decline. In the P&L top right, you also see the impact in the indirect costs. Indirect costs are CHF 25 million down, which is obviously quite a bit above the expected quarterly run rate. We stick to our original guidance of CHF 50 million plus for the full -year. Bottom right, the IT P&L. Service revenue down -CHF five million. The market environment is rather challenging. As Christoph already mentioned, we expect only limited growth for the full -year. EBITDA, however, is up in the first quarter, +CHF seven million with improved profitability.
The smaller growth outlook in IT services has neither an impact on our revenue guidance, nor obviously on the EBITDA guidance for the full- year. I move on to page 24, Italy. Revenue Q1 was down CHF 81 million. B2C, minus CHF 45. We have a service revenue decline of CHF 35 million and also lower hardware sales. B2B is the biggest chunk here with minus CHF 55 million. Service revenue down CHF 20 million. As I said, thank you. There is a significant decline in hardware revenues, which we expect to recover at least partly and has very little margin impact anyway. Wholesale is up due to wireless and wireline business growing.
Obviously, the post effect will kick in from Q2. This number will turn negative once we present the second quarter results. EBITDA up CHF 36 million. Very nice contribution margin from B2C, up CHF 21 million. You clearly see the significant synergy realization out of MVNO costs in the B2C segment, which overcompensates the telco service revenue decline. B2B contribution margin, down CHF 10 million, very little influence of the lower revenue line, in particular the hardware, and also some compensation out of synergies that we realized on the B2B side. Wholesale up CHF nine million in line with revenue. In indirect costs, we have lower costs of CHF 15 million.
It's also driven a bit by in-year phasing, so that number will probably not last once we go into the subsequent quarters. Page 25. CapEx down CHF 42 million. Adjusted number is even down CHF 67 million. Integration costs obviously up with CHF 29 million year-over-year. Total adjustments, CHF 25 million up CapEx. As you know, adjusted CapEx is expected lower for the full- year as per our guidance by about CHF 100 million, but CHF 60 million CapEx down in just one quarter is obviously driven by some phasing across all categories. As a result, operating free cash flow is up by CHF 78 million as a result of higher EBITDA and lower CapEx. I move on to page 26. Deep dive into Italy.
You see the service revenue on the left side. Service revenue decline is minus CHF 55 million, is slightly better than in previous quarters. Obviously, still not where we want it to be, and we clearly expect a greater improvement of that number over the coming quarters, in particular in the 2nd half of the year, as guided in February. You already see the first signs of what is going on in the year-over-year numbers in B2C wireless, where we first started with our back book alignment to front book and the consequent increase or consequent of this effect onto the ARPU. The service revenue decline in B2C wireless is just minus CHF 13, significantly better than in the previous quarters.
This is back book alignment to front book already showing up in the ARPU effect, which is basically down to zero with just the RGU effect remaining in the service revenue decline. This is the first sign of what we expect to come overall. Next, page 27. Synergy and integration costs all on track. Synergy realization is running smoothly. We have reached a quarterly run rate of EUR 77 million. This quarterly run rate will not increase dramatically over the course of the year, given that the biggest item in there is the MVNO synergies, which is now already at full quarterly run rate.
As already mentioned, we expect overall a yearly run rate increase over the previous years of CHF 200 million-CHF 300 million, which is already half of all the synergies we expected. Integration cost is on track. We expect this to pick up speed over the course of the year. Page 28, free cash flow. Free cash flow is up CHF 115 million. I'm back in the group. Sorry. Up from Italy, back in the group.
Free cash flow is up CHF 115 million versus prior year, fully driven by the increase in operating free cash flow. Not much else to report on this page. I move on to page 29. Net income. Net income is down CHF -35 million. Actually, EBITDA and EBIT are all flat. The only negative impact on net income that is driving the number is a transitory non-cash effect in the financial result. Otherwise, net income fully in line with the operating numbers. On to page 30. Last but not least, obviously, given this solid set of Q1 results, we confirm the guidance for the full- year. With that I hand back to the operator.
Yeah. Thank you for the presentation. We will now start the question and answer round. To ask questions, please press star one four. I repeat star one four on your touchtone telephone. If you wish to withdraw your request to speak in case your question has been answered before, please press star one five. I will now open the lines one by one. As soon as your line is open, you will hear a corresponding text on your own line. Please introduce yourself by name and company before asking your question. I will now take the first question.
Hi, it's Polo Tang from UBS. I have three questions. The first question is just on back to Swiss price rises. You talked about how you're executing according to plan, but should we expect more Swiss subscriber declines in Q2? Also, were you surprised by the recent 2%-3% price increases by both Salt and Sunrise? Did you assume competitor price rises when you set your guidance for 2026? Second question is just about Italian IT service revenues. They saw declines. Can you maybe elaborate in terms of what's driving this, and how should we think about the outlook for Italian IT service revenues for the rest of the year? My final question is just on spectrum. What are your expectations for the structure of the Swiss spectrum auction in 2027?
Separately, how should we think about the range of outcomes for the allocation of Italian spectrum going forward? Do you think Italian spectrum could be allocated at low cost in return for investment commitments? Thanks.
Thank you, Polo. I will start with your first question. In terms of RGU decline, I mean, we will see now going forward how promotional aggressiveness develops, and I think this will also impact RGU development. I don't expect the same amount of negativity as we've seen in Q1, because Q1 also had the additional effect of sort of Black Friday cancellations coming in from Q4, which kind of overlapped with the price increase impact. Now during Q2, customers received their first increased invoice this month, so we still need to see a bit how customers react if, how churn develops. I think so far, what we've seen post, or in Q2 is the churn has sort of reverted back to where it used to be.
We still need to, you know, I would say observe one or two months more. Overall, the overall effect, we expect, you know, service revenue to come in as guided at roughly -CHF 120 million overall for B2C and B2B.
We made no specific assumption with regard to price increases by the competition. The, you know, on-top churn that we expected out of the price increase happens basically between the announcement of the price increase and the first month where the customers get the higher invoice, which is in our case, from January to April, May. There will not be much of an impact of the price increases by the competition on the overall outcome of our price increase.
In Italy, you see a bit the same effect in the Italian market as in the Swiss market. The demand is softer, especially on the corporate side. We are working on sort of reverting the Italian IT revenue back to growth. We do expect this to improve over time. We will see how it develops going forward. Overall, I would say we should be able to get at least back to a stable situation and maybe a slight growth. On the spectrum question for Switzerland for 2027. The consultation on the spectrum auction is ongoing. We expect the final rules to be published after summer.
We can probably talk about this at the Q3 call going forward, knowing exactly how the auction will be structured and when it will happen in 2027. At the moment, I would say it is roughly in line with expectations, but it's a bit too early to tell as we don't know the final rules yet. The same situation is in Italy. There is also the final consultation going on on network auction 2029 in Italy. The, with final opinion of AGCOM, like the telecom regulator, is expected also by summer in Italy. Then we will actually know if there will be a renewal or not, which spectrum will be renewed and at what conditions, which right now is hard to predict.
Clear. Thank you.
I will now open the line for the next question.
Good morning, everyone. It's Andrew Lee from Goldman Sachs here. I had two questions. Just one, a follow-up on the Swiss competitive environment, and then just a second question on Italian towers. Just first on the Swiss competitive environment. Am I right in understanding that what you're basically saying is we've had this back book price rise in the first quarter, but that positive is netted off by the negative of more aggressive promotional activity? The competitive environment in Switzerland hasn't improved structurally or even actually on a kind of near-term basis versus where we were, let's say, six months ago.
Are you seeing any signs of that trajectory towards at least any form of sustainable improvement in the competitive environment, notwithstanding the fact that you're expecting Swiss revenues to improve through the year? Secondly, just on Italy, just as one independent tower co put it, that looks to be a commercial dispute in terms of what's actually happening on Swiss towers. Our understanding, until at least recently until today is that you haven't come to the table with Inwit to discuss a way of alleviating this problem. You know, I guess it is a problem for both of you. You're obviously not happy about price, you also need to invest in your network at some point, this is delaying that.
Could you just give us your thoughts in terms of the timeline to resolving this issue? Because it's obviously undermining your network quality ambitions in that market. Thank you.
Okay. Regarding your first question, I think your-- If I understood your summary, I think it's well, you know, summarized. Overall, there is some positives regarding, you know, different, price moves, but of course, they are completely offset if the promotional aggressiveness in the market continues to be very high. If, you know, other brands move to lifetime promotion on the main brand, basically it, there is no more positive effect from the price increase because it kind of what people really look at is what is going on at the promotion side to attract new customers. In order to structurally improve the competitive environment, it would really need a sustainable change on the promotional approach in the market.
On the Italian tower side, we do expect this issue to take quite some time to be resolved, I'm not expecting any rapid resolution. I'm not sure. I think you alluded that we haven't come to the table, actually we did try to negotiate many times with Inwit, which they refused to enter into or entertain a discussion with us. Finally forcing us to, you know, exiting or providing the notice to the overall MSA contract. We continue to invest into the network, we are continuously building out new towers, densifying the network. This dispute doesn't prevent us from continuous investment because as you say, continuously investing into network quality coverage densification is really important, and we continue to do this in Italy.
Of course, at the same time, we need to come to sustainable cost base on the tower side. And this is why we have to taken this action. This is why we are working on the JV with Telecom Italia. We are in discussion with other tower companies to prepare our migration plan away from Inwit. Of course, if Inwit is open to discuss on moving back to sustainable cost base, we are open to discuss with Inwit finding an agreement on the necessary towers that we need to retain post-migration.
Thank you. That's all very clear. Just one follow-up. Has there been any kind of conversations between you and Inwit post, your announcement of the JV and the subsequent abandonment?
No.
-of the contract?
No, there has been no further.
Thank you very much.
Now taking the next question. Your line is open.
Hi, guys. It's Josh Mills here at BNP Paribas. A couple of questions from my side. I'm gonna start with the Inwit question. You've got a slide in your presentation talking about the options going forward. Telecom Italia put out a bit more detail last night as well. What they're saying is it would take 10 years to replace the Inwit contract structure, and obviously they're looking to terminate the contract in 2030 rather than 2028. My question is how practically are you, if you go down this route, going to replace these towers in such a short time period? I understand there's a transition agreement, but it's probably not going to last 10 years.
It might last a few years. On that, have you actually engaged in discussions with other Italian tower companies on transferring anchor tenancies from Inwit to them already? Or is this something which you're just going to talk about doing in the future? Basically want to understand at what point we'll get clear guidance on how you go down this route. Secondly, on the cost savings clearly came in ahead of expectations this quarter. What gives you the caution to not raise the full- year guidance of CHF 50 million now? Which of the areas of cost savings have been over-delivering in Q1 versus what we might have expected? Thanks.
Okay. Thanks, Josh. I'll take the Inwit question. We are working on our migration strategy and, of course, this migration strategy needs to be discussed together with Inwit. This activity has not yet started together with Inwit because it is a joint discussion that we need to have with Inwit to make sure that we have a sustainable way of moving towers away. I would say that overall, looking at what TIM published last evening, you know, kind of made sense. We have the same building blocks. We probably have a similar timeline in mind.
Also sort of a mix of moving to existing towers, which are provided by many different or multiple different tower companies in Italy. We are in discussion with all of those tower companies already since quite some time to look at what this would mean for them. We are also working out on how to build new towers directly with new tower cos or also with the JV. I would say overall, it's sort of a similar approach. Of course, the migration period needs to be agreed with Inwit. The contractual provision for this is a negotiation in good faith.
It lasts at least three years, like from the end of the contract, giving us it already two plus three years, that means five years of migration period. I mean, Inwit has an interest to sustain revenues on their towers. We do expect that we can accommodate the full- year, the full duration of the migration with a good faith discussion of migrating those towers in due time, one by one. Thanks.
Okay, Josh, just briefly on the second one. The target for this year is CHF 50 million cost savings. If you do a kind of regular quarterly run rate, that would be CHF 12, CHF 13 million a quarter. If you look at the cost savings out of our infrastructure and support functions segment, that's CHF 13 million year-over-year. That's, you know, very much in line with what you expect quarterly. On top, there are cost savings, mostly in the B2C segment. If I remember correctly, it's CHF 11 million out of advertising, which comes on top of the normal regular run rate. This is just in-year phasing. As I mentioned in 2025, we launched the We Are Family offering in the first quarter, so we had higher advertising spend.
That advertising spend is gonna be spent over the course of the year. There is no more magic to our reasoning here.
Got it. Thanks. Maybe if-- Just to come back on this tower question. Presumably, there is a date by which you will have to communicate to the board and to shareholders, you know, who will take on some of these anchor tenancies because the third-party providers will take a while to ramp up. I think TIM say it will take, you-- they can enable 500,000 towers a year through new players. Are you actually already talking about switching the anchor tenancies, or are the discussions with existing tower companies just about future secondary tenancies, build-to-suits, et cetera? When will we find out-- When-- At what point do you expect to update the market on the detailed plan for switching away from Inwit?
I would say, you know, the detailed plan, as said, needs to be discussed with Inwit first. I don't want to communicate things to the market that we didn't discuss with Inwit beforehand. Until now, there is no discussion. I assume Inwit is waiting for the outcome of the legal proceedings that are currently ongoing for the provisionary measures, which we expect, you know, to happen over the course of the summer. I expect to enter into discussions with Inwit about the migration, and once we have, you know, substantially agreed with Inwit how this is going to happen, we will also communicate and update the market. Might be by the end of this year, might also be only next year.
What I can assure you is that we are very seriously and intensively working on this topic to make sure that we have a sustainable way forward for our operations.
Thank you.
We are now taking the next question.
Yeah, good morning. It's Robert Grindle from Deutsche Bank here. Hopefully it's not gonna be an issue much longer, please remind what you're hedging on energy costs in Switzerland. Is the higher energy cost a boost for your Italy business as customers are looking to change suppliers? My second question is back to Italy Towers. How did the Oh, no, it's not actually the towers, it's the relationship with Vodafone. How did the indemnity work in Q1, what's the full -year effect, please? Is it the same benefit for four quarters? At the EBITDA level, is it just like the past customers didn't move away this year? Thanks.
Okay. First on the energy cost. Both in Switzerland and in Italy, we have a hedging strategy in place for the energy costs, which protects us from, you know, short-term spikes. Obviously, there is no protection for long-term increase in energy prices anywhere. That is in place. Both in Switzerland and in Italy for 2026, about 90% or so of our energy needs are already purchased and the price, the price is fixed. The methodology which we, with which we do this in Switzerland and Italy differs a bit. In Switzerland, we have a rolling hedging strategy for the forward years. In Italy, we have a part of the energy need covered by a power purchase agreement.
The details differ, but the bottom line is we are protected for this year. On the Vodafone indemnity for the PosteMobile migration, that will most probably be booked during the year in one single quarter. We have not booked anything in the first quarter. The numbers you see for the wholesale segment in Italy in the first quarter are the operational numbers. PosteMobile is actually still fully in there because they just started their migration after the end of Q1.
Thank you.
We will now take the next question. Go ahead. Your line is open. Please introduce yourself.
Thank you very much. It's Paul Sidney from Berenberg. Just a couple of questions, please. The first one, to go back to this, but on Swiss competition levels. You've been pursuing a value over volume strategy for some time. You're putting prices up modestly, but it just doesn't seem to be working as I think Andrew said earlier, he summarized it with it's just being given away in promotions. I was just wondering, is there anything more Swisscom can do to reduce competitive intensity? Maybe at the ends of raising prices more, focusing more on churn reduction. Is there anything else you can do? Do you just have to accept the rational competition levels that we're currently seeing?
Secondly, on B2C, Swiss B2C, you set out how you would like to monetize additional services by upselling security myAI. I was just wondering, are you currently charging for these services? If not, what do you think the appetite is for customers to pay for these types of services going forward, and what's your strategy there? Thank you.
On the Swiss competition side, I mean, our overall strategy is to be a price follower in or like, we are not trying to position Swisscom as an aggressive brand. We are restraining our commercial aggressiveness, really trying to tone down competitiveness in the market. This has always been our strategy, and we continue to work on this. There is not much more I would say we can do. I mean, at the end, competitions behave the way they or they do what they do, and it's their own decision. I think we have executed the price increase on our second brand. We have executed price increase on the main brand. Our promotional strategy is around six or 12 months promotions. We are not executing lifetime promotions on the main brand.
We will, I think this is an important way of positioning Swisscom brand as a premium brand and not something that we give away at a low cost. I think things we are working on right now are churn reduction, honestly, is quite hard because with the churn levels we have are already quite low. They have now temporarily increased slightly on the broadband side. We will of course work again on that side to bring it down even more. I would say, we continue to work on branding, on positioning the brand as a premium brand. We are continuously working on reinforcing Wingo positioning as a converged provider, and we are working on increasing our sales footprint to make sure that we are enough visible in the market.
Overall, I would say that the strategy will be unchanged, going forward, and we will see how the competition evolves over the next, the next quarters. On the additional products, so security, we are already charging for these products. Since many years, we have, we've always had a security offering that we are kind of amplifying right now and expanding. We have 300,000 paying customers for security already. It's quite a nice penetration into the base. We are looking at expanding this penetration, adding new security options so that we can upsell and cross-sell more into the, into the base and really drive revenue generation from this product. I would say on that side, we are confident that we can monetize security more, going forward.
The myAI proposition at the moment is a free proposition, we are mostly looking at driving adoption, making sure that customers know about the product, and we will look into monetizing this next year. It's still quite hard to tell how many customers are willing to pay for this proposition. Hopefully, of course, we will find many. I think it also depends a bit on the evolution of what the hyperscalers are doing, what other AI players are doing, what they are charging, et cetera. We will, of course, look into monetizing the AI proposition also on the consumer front.
Perfect. Thank you very much.
I will now open the line for the last question. This is the last question. Please introduce yourself.
Yes. Hi, good morning, gentlemen. It's Christian Bader from ZKB. There's a couple of questions regarding Italy. First of all, telco service revenues declined by EUR 55 million the first quarter, and you commented that you expect an improvement in the second half. The B2C side, they could be flat. I was wondering, I mean, would it be possible to get an, let's say, annual number of your expectations what the telco service revenue loss might be in Italy? That's my first question.
Yes, I can take that immediately. The guidance for the full- year for telco service revenue decline in Italy is CHF 150 million, CHF 100 of which from B2C.
Okay. Thank you. My next question relates to the wholesale business in Italy. Can you maybe quantify the loss that you do expect from the Poste Mobile contract in terms of user numbers or revenues that we should expect from second quarter onwards?
It's a full year- effect in 2026 of about CHF 75 million. The migration started after Q1. You will have a 12-month effect that goes into 2027 of about CHF 100 million.
All right.
Sorry.
Yeah, thank you. A question related to that, I believe I somewhere read, but I can't remember where, that you do get some compensation for this loss. Therefore, the, let's say, effect on the results will only be visible in 2027. Am I correct or?
That is correct. There is indemnification provision with Vodafone, which we also guided for in February, and it will hit the P&L positively by CHF 75 million this year, and we will show it in adjustments, and it will be booked in one individual quarter as I just explained.
All right. That's it. Okay. Very clear. Thank you.
Thank you very much. With that, I would like to conclude today's conference call. If you have any additional questions, please free to reach out to the IR team. We look forward to speaking with you and wish you a pleasant day.