And now I would like to hand over to Louis for the Q and A. Louis?
Urs, Mario and Alberto for the presentation. Now it's time for the Q and A session. As previously indicated, Birk Ritzke and Urslinger are also joining and supporting in case of any specific question on the Swiss business. Some remarks to people being registered for the Q and A and or raising questions. First, use Rise your hand feature to ask your questions.
2nd, I will do the assignment by welcoming the interested analysts by name. Thereafter, the operator will unmute this analyst. If this person wants to activate the camera, Feel free, but would be great, so it is more interactive for the total audience. And last, please do name And please indicate your name and institute you're representing. Thank you.
Now let's open the Q and A session And for the second part of today's meeting, with the first question coming from Polo Tang, UBS.
Yes. Hi, it's Poe Tang at UBS. I just have 3 different questions. Actually, before I start, I would like to say best wishes to Mario Rossi on his retirement. In terms of the three questions I had, the first one is just really about I'm trying to understand what you're assuming in terms of COVID-nineteen impacts as you look forward into 2021 In terms of what are you assuming in terms of your guidance?
So for example, what are you budgeting in terms of any recovery, if at all, in terms of roaming? In particular, what are you assuming in terms of any potential impact in terms of SME revenues? Are you factoring in Any significant step up in terms of bankruptcies, foreclosures? So that's the first one in terms of COVID-nineteen. The second question is really just about the competitive landscape.
In terms of Sunrise, have you seen any change in their behavior since the merger with UPC? And then also in terms of SALT, they've obviously got this new gigabox fixed wireless access product. So how has that changed the best dynamics and what's your sense In terms of the take up. And my third question is really just in terms of for Alberto, in terms of the Italian mobile market. So, Iliad seems to be attempting to raise prices in the low end of the market, but where's Alberto's sense in terms of the competitive dynamics here?
Are we past The worst. Thanks.
Thank you very much, Polo. I think the first question on guidance and consideration of [SPEAKER CARLOS ALBERTO PEREZ DE SOLAY:] The COVID is for Mario. And if Urs Lehner also wants something because of the SME, then fine. Second one is for Urs And the third one, as you, Paul, already indicated for Alberto.
Okay. I'll take the first one on the guidance and the COVID-nineteen impact. In 2019, I would say on the roaming business, we had an impact in 2 quarters during 2 quarters. And our budget has the same assumption that we will see low travel intensity in Q1 and Q2 And then a slight recovery Q3 and Q4. In terms of bankruptcies, we monitor That on a weekly basis, the inflow on payments, both in Italy and in Switzerland.
And so far, there was no impact. And so we have not included any impact from bankruptcies And so on in the guidance for 2021. Maybe one remark, I think I was There was some misunderstanding when I explained the guidance. So the reduction of the indirect costs Are approximately SEK100 1,000,000. I think some people understood SEK300 1,000,000 SEK100 1,000,000.
Good. Then on the second question on competition in Switzerland. Have the competitive dynamic changed? I don't see a change In this dynamic in Switzerland, we have still a very promotion oriented market. Sunrise and UPC are behaving in a separate way.
Both of them are doing, let's say, aggressive promotions. And I would say even or Sunrise is even the more is more aggressive on the market or even a bit more than in Q3 or Q4. So no change on this. On SALT, the launch of this fixed wireless access product, I think we can't compare Italy, what Alberto explained, and Switzerland. In Switzerland, the landscape is another one.
We have Very high ultra broadband penetration with strong performing networks also in rural areas. So the advantage of a fixed wireless network in Switzerland is smaller than in Italy, where you have really gray areas or even white areas. So it will be interesting what is happening with the take up of this fixed wireless access product in Switzerland, I don't think that this will be a game changer.
Okay. Then I take the third question. Maybe also a quick comment on dynamics On bad debt in Italy in 2020, we didn't experience any impact from COVID. So also On 2021, we do expect that we have the same neutrality, let's say. [SPEAKER LOUIS SERVRANCKX:] For the question on mobile, yes.
There are it seems that also EIAD is increasing Prices, the outlook there, I think, is quite good in general for the market, specifically for us, Which means that with our offer, we will be even more competitive in the future and we will have even more
Next question comes from Georgios, Citi.
Hi, thank you for taking my questions. I've got a couple. The first one is around fiber regulation. We had some news A month ago, the combination authority wanted to make some changes. Do you mind just running us through what the debate is and maybe the timing of This is Lonza.
Could you write on this? My second question is on Italy. Alberto, When you are going through the wholesale business, you mentioned that you are a key partner for anyone who wants to enter as a wireline provider. Obviously, we all know one that may be launching soon. So if you can give us an idea of how you are thinking between the wholesale opportunity Versus the retail risk for that.
And then finally, I wanted to also thank Mario for all the Help you've provided us over the years, I think he's been a great professional. And I just wanted to mention, I don't think there's been many CFOs In the last 8 years in telcos, NARC can move on and say they've never cut a dividend or issued a covered swarming. So
[SPEAKER LARS FRUERGAARD THANK YOU, Georgios. I THINK THE THIRD POINT WAS NOT A QUESTION, IT WAS MORE A COMPLAIN. SO THE FIRST QUESTION ON FIBER REGULATION IS FOR OUS AND THEN THE SECOND QUESTION IS FOR ALBERTO.
Okay. This fiber regulation from Competition Commission, They asked for this Layer 1 project from the central office. And They also made pre pre measure or they also asked for not for precondition measures. So that means we are not able to sell products in the new footprint up to now. And now there we claimed against it.
And I think in the next weeks, we will get a decision on it. That means if we have a relief there, we can continue to sell in the new footprint, only the new it only hurts in the new footprint, this request from the commission from the competition commission. So in the next weeks, I hope that we will have clarity there. I hope that we can continue to sell in the new footprint. And then it will take time.
It's hard to say. They will investigate On this competition play, it's hard to say. I think we have now to wait what's the that the court will decide on these precautionary measures. This will be in the next weeks. And the impact maybe the impact today is it's very limited on the business as it is today because we are rolling it's only on the new footprint where we have this obligation.
Okay. Then I take the second question. Actually, when I was talking about wholesale and newcomers, I didn't have in mind No specific name. Iliad is clearly one candidate, but also for us, Sky will be a very important client. We just announced a couple of weeks ago our agreement.
Thanks to our network, Sky will be able to cover 1500 cities in Italy. So he has substantially increased The footprint, I think that for us at the end of the day, yes, there could be some impact on our retail business. But at the end of the day, they will be offset through the wholesale margins. So it's for us, at the end of the day, is not a game changer. Either clearly could be an opportunity we will see in the future.
I think that we are already very well equipped in the wireline to continue to The leader in the Q4, we have been at least very we had very good performances. We do believe that We will continue to have performance in the future. But yes, wholesale business is a good offset in case. Thanks.
Thank you, Alberto. Next question comes from Jacob Bluestone.
Hi. If I can also echo the comments from the other from the previous about Mario, It's been a terrific CFO. So many thanks for all your patience and time over the years.
I had a couple
of questions For Mario on one for. Firstly, you mentioned earlier that You've had quite high uptake of 2nd and third brands. On the postpaid mobile side, I think it was about 18% of the base, Very little uptake on the wireline side where I think there's only 4% were on your No Frills brands in wireline. I was hoping you could maybe expand a little bit. Do you think that's something that will change?
Why is it so low? I guess most importantly, I mean, we've seen a significant amount of dilution On the mobile from the migration to these 2nd and third brands, do you see a risk that we see a similar headwind on your fixed line ARPU? And then two other questions, slightly shorter. Just on the CapEx side, your fiber to the Home coverage went from 30% to 32%. We spent about CHF 500,000,000 on CHF 500,000,000 on CHF 500,000,000 on CapEx.
Your guidance for 2021 suggests quite a big step up in the pace of deployment. So I think it's going Increasing by about 7 percentage points to 39%. But yes, there's only a very modest increase in CapEx. So can you maybe just help us understand what are some of the offsets? So what will you be spending less on given what looks like A fairly significant acceleration in FTTH deployment.
And then just finally, just on free cash flow, Maybe it's a little bit unfair asking about future items on free cash flow. But as you mentioned, you had very strong net working capital And you also had very low tax. Can you maybe just give a little bit of guidance on those items for 2021, Just given how big the boost to free cash flow from those two things were? Thank you.
Thank you, Jacob. I think the first question on second floor brand is For Urs or alternatively, Dirk, I mean, after you. 2nd question on CapEx, probably Mario on the last question, definitely for Mario.
I would say, Teersh, take the first one on this second and third brand penetration of broadband.
Yes. Certainly, I can do that. I really believe, let's say, the reason is that you're making some comparison towards mobile. We were first with mobile and only later with broadband there. And we are pursuing the strategy that we call defend and attack.
I mean, obviously, we want to defend the value On the own brand offer, yet participate in the market also, particularly in the price sensitive segments With an equal share, and so we might see certain developments that we have seated mobile Also kicking in on the broadband side, certainly, we will review Our pricing and promotion strategy is there to gain a fair traction in all this in the price sensitive market.
Jacob, on the CapEx. So you must be aware that the FTTS rollout What's going on in 2020 and will also go on in 2021, but in 2021 at the lower level. And so part of the FTTS CapEx will be replaced by FTTH CapEx. That's the reason why despite the higher penetration FTTH, The CapEx don't increase more. Then on the free cash flow, On the net working capital in the future, you can always have a swing of €50,000,000 because that's just a cash in You cannot control in the last months.
So there's no in the future, there's no structural Positive or negative impact on free cash flow. That's just seasonal fluctuations. And yes, we had relatively low tax payments in 2020. I would assume cash out for taxes in the magnitude of CHF 350,000,000 CHF 350,000,000 per year
Next question comes from Ulrich Rathe, Jefferies.
Yes, thanks very much. I have three questions, please. The first one is on the wholesale revenues in Switzerland. Obviously, you are about to lose also revenues there from well, from Sunrise and presumably also UPC. What is baked into, therefore, 2021?
And how does that phase out? The second question is on The sort of the overall net effect of the cost cuts versus the revenues, you are saying somewhere in the annual report that you expect The revenue decline in 2021, not to be fully offset by cost cuts and an EBITDA drag for that reason in 2021. Obviously, there was a slight effect of that thought also in 2020, but a very, very small one, like million. So is it a similar dynamic in terms of the what you expect for the 2 trends separately? Or is there A bigger shift in 2021 in your plans currently.
And my last question would be on the Q4. There was an EBITDA boost from The indirect cost outside of workforce cost really trending very differently in the Q4 than the third And the one item, Mario, that you mentioned there in your presentation was the bonus payment last year. So does this mean that this was really everything, right? Does this mean the Q4 2020, the non workforce An indirect cost, that was a normal quarter for next year. Or were there any supportive items, unusual items in the Q4 of 'twenty that That produced a big, big trend shift there.
Thank you very much.
Thank you, Uli. I think the first question is either for Urs or financially impact Mario, thereafter net cost Mario and the last one probably again Mario.
So I will take the first one and then Mario can take the 2 other ones. Otherwise, he's too busy. The first question on the wholesale impact, which is affected by this merger Sunrise UPC. So what is clear, we will lose the MVNO, the mobile revenues from UPC. I think this will be in the first half of this year or middle of this year.
So the impact will be €15,000,000 to €20,000,000 from this mobile revenue site, MVNO contract. Then we will lose some broadband business, wholesale business from Sunrise, And it will be in the region of €20,000,000 this year. That's with our forecast. And then next year, euros 30,000,000, maybe €30,000,000 And but then you have to take in account that they will also remain as a wholesale customer. Broadband in areas where they don't have a network, I think they will rely on our network also in
the future.
But our overall impact in this year may be in the region of RMB40 1,000,000, RMB30 1,000,000 to RMB40 1,000,000.
Yeah. We mentioned in the guidance that the negative MVNO impact, which will come short term is €15,000,000 to €20,000,000 That's what those mentioned in the guidance 21. On the EBITDA guidance for And it's that's not Swisscom Switzerland, but Swisscom is out fast, right? So we mentioned that the guidance will be SEK 3,400,000,000 That compares to SEK3.45 billion in 2020 reported. And You're right.
We have this service revenue decline of around €250,000,000 to €300,000,000 Part of it will be compensated by the cost Savings of €100,000,000. Then you we have additional margin, competition margin for the B2B From the B2B segment, but the overall so we will see a decline or we expect a decline Of EBITDA in 2021 in the Swiss business, if you do this math. And on the indirect costs, Arthur, yes, in Q4, I mentioned 2 elements, 2 seasonal effects in 2019. That's Higher marketing expenses last year of CHF10 1,000,000 and the higher costs for B2B customer projects. And I would say these were the only extraordinary items in Q4.
But at the end, As a CFO, I don't look at the quarter. For me, it's important if it's recurring or not. And if I look at the last 4 years, And that's really the proof that we are able to reduce the cost base. And at the last 4 years, We are able to reduce the indirect costs by over €400,000,000 And you can do the calculations in 2020 That on net, SEK 129,000,000. So we have always some seasonality in the quarter.
And I just follow-up, just to clarify one question there. So in the Q4 2020, there was nothing that you would
Next question is coming from Fred Boulan, Bank of America.
Hey, good afternoon. Thanks very much for taking the question. Congratulations on my side.
A couple of
questions, Please. The first one is to sorry to come back on Q4. So I understood all the comments related to 2019. Just interested in the bridge you showed Slide 58 around the plus $40,000,000 impact you had In Wholesale IT and Network and maybe you spend a bit of time on this and where you see that going. Secondly, a follow-up on the ARPU question and the pricing question.
So your postpaid ARPU trends Remain pretty difficult. We're down around 9% before from CHF 56 last year to CHF51. Can you explain a little bit what is in there is COVID, is this decoupling, is the underlying mix And where do you see that trend going in the coming years? In particular, SMDC will have an option To charge higher speed, higher 5 gs speeds in your office, what kind of traction are you seeing on this? Then lastly, if you can give us an update on the difficulties you were experiencing initially on the 5 gs rollout, the Pushbacks against the deployment.
It's for Delant. Thank you very much.
Thank you, Fred, for your questions. I think the first question on the wholesale page, number 58 goes to Mario. 2nd question on ARPU dynamics And Trent might be a question for Dirk. Or alternatively, definitely Urs can add. And then the last question, 5 gs rollout and complexity for you, Urs?
On the wholesale on Page You know in this segment, wholesale is not only the wholesale business, But also IT and Network and there is the EBITDA impact. So this Point 3 on Page 58 includes the higher revenue, the impact of the higher revenue we had in wholesale in Q4, I mentioned in my presentation, The SEK 30,000,000 coming from broadband connectivity services and some high revenue on infrastructure services. And then in this €40,000,000 are also included savings cost reductions in the network and IT division. They are mainly coming from the IT elements. So we have both impact coming from revenue and coming from costs.
Thank you, Mario. And perhaps next question, postpaid value development. Dirk?
I think that there's several sources to the ARPU trends that you see. I mean, obviously, there's, Particularly for last year, some COVID based stuff and particularly on the international roaming side, we talked about it. There is ARPU dilution from promotional activities on our own brands. Where increasingly, you see discounts for the 1st 6 to 12 months of whatever half rate tariffs or so. And then there is the shift from the 1st brand, so the Swisscom brand to 2nd and third brand, we reflected upon that.
We see subsequent consequences of lower ARPUs. And then there's a little bit of, let's say, RGU mixed
in the
base where certain movements from, let's Historical traffic tariffs, I would call them, people optimize themselves for like newer tariffs and so on. Although that, I would dare to say, It's probably the smallest part, yes. To your question, will the trend continue? Yes, we see a downwards trend. That's basically triggered by stiff competition there.
You see that from 2nd and third brands in the marketplace. You have like an income price of CHF 30, even a little bit less in the recent weeks For a national fledge, so that is like flat voice and flat data. And we don't see any, let's say, relaxation on that. Yes. So clearly, its strategy remains to get the best value out from the own brands and then selectively Aggressive, particularly on the second and third brands.
But as a consequence, a bit of the trends that you have been watching will Probably
continue. And maybe
to add on it, a good chart for to explain it is on Slide 56,000,000 Mario already showed it. I think that shows quite good the dynamic. So the erosion on fixed voice, I think this will be in a region where it is. Fixed mobile converged will maybe slightly going down because of penetration. Our Q mix will remain or yes, this will remain?
And roaming, that's a bit of this is actually COVID impact. [SPEAKER LOUIS SERVRANCKX:] But in 2021, we will have still a roaming impact. In 'twenty two, I hope it will be away. So that shows a bit what Dirk explained, that the major impact is through this RG mix. Yes.
Then on the second on the third question, 5 gs rollout. So yes, we are facing a kind of blockage. We are blocked On building out new antennas, that's a bit regionally. In some regions, we have much bigger problems than in other ones. Normally, if you go more on the French side, it's more difficult.
In the German It's less difficult and in the Italian side, it's becoming more difficult. So in the Romanic area, it's more difficult to roll out the network than in the German I think it has a lot to do with communication, With trust, we have a debate which is driven by emotional minority in Switzerland. And that's why it is important that the government is also communicating and explaining that we have a more factor oriented communication in Switzerland. And I think situation will become better in the second half of this year. It takes now some time.
I hope that it will become better and that we can accelerate rolling out these networks. But it will stay difficult because we don't build an antenna without opposition. That will remain.
[SPEAKER DOCTOR. Loyce:] Loyce:]
Thank you, Urs. [SPEAKER LARS FRUERGAARD DE LA CHEVARDIERE:] Perhaps, Fred, to give you some idea, the CHF 4 decline year over year on ARPU. Half of it, CHF 2 is RGOMIX, CHF 1 is roaming, thereof 2 thirds is coming from COVID and CHF 1 is to give you an idea It's fixed mobile convergence for the discount. And as everyone explained, convergence is coming down, but RGU mix is definitely remaining. Okay.
Thank you very much. Next question comes from Simon Cowles, Barclays.
Hi, guys. Thanks for taking the question. It's sort of aggregating some of the questions you've had already. You talked about $250,000,000 to $300,000,000 service revenue impact in 2021. And you're saying RGU mix is Probably similar in 2021 and FM convergence gets a bit smaller.
Were you including the wholesale impacts and say, Sunrise And you can see that €250,000,000 €300,000,000 number? Or is there something else we need to be aware of? Because presumably, fixed Voice Lines is pretty much disappearing and roaming is only 1 quarter, like you said. So if you could just clarify that, that would be great. And then just another question on smart homes.
You obviously highlighted that we've had some good traction. Do you see that as sort of the next step after convergence? And is that A way that you think you can continue to increase average revenue per household, which is a metric I think we've talked about in the past? Thank you.
Thank you, Simon. Second question about smart life. Smart home is definitely for Dirk. And the first question, I think, is For Mario, so we start with smart home, smart living. Diet?
Look, the business as of now is mostly a, let's say, accessory or device business with the associated margins Yes. As we don't yet have, let's say, any service package with the recurring monthly fee, we are looking into that. And particularly that will also then be enriched with, let's say, for instance, in the security space, you can think of certain services that make customers pay a recurring fee For a new surveillance solutions and alarming solutions and these kind of things, we are looking into that, have not yet made a decision. Right now, it's more, let's say, offering that security and convenience into the customers' homes, actually a trend that has been Enforced by COVID. People are more at home and looking how they kind of upgrade and pin box their home for connectivity, but also Convenience and so on and so forth.
So it's mostly right now like an accessory or device business with the associated margins there. And also, obviously, there's a benefit, as everybody knows, the more products and services a household has, Even if not paid on top, the more let's say, the more loyal and less susceptible to competing offers Customer is yes, so it's really also about loyalty, customer happiness and a great service. And whether they can monetize it From a recurring monthly fee perspective, I think the future will show.
And on the it's the revenue side. So the decline of €250,000,000 to €300,000,000, there is included our assumption that this deals will see Quite heavy promotions in the B2C segment. So that's clear. These promotions will be going on. That's also what we saw in January.
We included some expected pressure in B2B, especially in the SME segment Because there we have high market shares and high ARPUs and the 15,000,000 to 20,000,000 Decline on because of the service revenue of the Merzto Sunrise UPC is not included in service revenue. We guided separately for it. So the MVNO revenue or the wholesale revenue are not included in service revenue. And As we mentioned, we expect there an impact from the MVNO business because they can move their customers From our network to the X Sunrise network on fixed line, on broadband connectivity, We don't think that we'll see a material impact already in 2021.
Okay. So That's not included. But if we think RDU mix is flat and price pressure on B2B is similar like you've given in slide like 56. You also said the other impacts are probably smaller. It sort of doesn't quite get to 250,000,000 or is that just rounding?
No, it's nobody has a crystal ball. Our assumption is €250,000,000 to €300,000,000 We think that the promotion pressure will remain. We will have some pressure on the SME segment. There we have high ARPUs. So we think that's, let's say, a reasonable Amount included in the guidance.
Okay. That's great. Thanks very much. And you no longer have to ask my questions.
Thank you, Mario. Thank you, Simon. And by the way, you don't have a crystal ball, but a crystal stone meanwhile. Anyway, next question comes from Michael Bishop, Goldman Sachs.
Thanks. Good afternoon, everyone, and congratulations Mario from my side on your tenure and echo all of the sentiment so far. It's been really a pleasure working with you. I've just got one question, which is around CapEx containment and it's a slight follow-up. I think you touched on this earlier.
When we were here last year in person, I think you were basically saying, look, we're going to have to really sort of push in terms of the CapEx containment to achieve our fiber to the home targets in terms of the unitary costs or perhaps do some sharing to achieve that cost? And from your earlier comments, it sounds like you're not necessarily going to sign up to any cost sharing agreements necessarily or if you do, that'd be very local. So Given your reiterating the Swiss CapEx containment message, has the unit cost continued to come down? And is that related to the 20% saving, I think you flagged on one of the slides in terms of this move towards point to multi points. I'm just trying to Get what the big picture message is in terms of the change in message this year versus last year and what you've done?
Thanks.
Thank you very much, Michael. I think that question last year already came up and was answered by Mario.
You see, okay. As was mentioned, we are open to corporations, but That's clear that we'll be not the big corporations which we saw when we did the FTTH FTTH rollout in the big cities like Zurich, Geneva, Berghne Basel and so on. In this saving, there is part We included some cooperations in our calculations. And then in addition, we have a lot of experience now with This is the FTTS rollout and with contracting the construction companies in a General contracting way and we want to use this experience also to reduce Unitary CapEx in the FTTH, Charlotte, maybe Urs, you have to add something?
Yes. No, it's exactly like you say. And if we are Building on fiber to the street, we can also reduce costs because the feeder is already constructed. So we have only to do the job and the in house in Western. So that's why the unitary costs are also coming down.
Thank you. All clear, Mikael.
Great. Thanks very much.
Thank you. Next question comes from Luigi Minerva, HSBC.
Thank you. Good afternoon. And yes, I start also with my best wishes to Mario and many thanks for your great work all over the years. So my first question is, well, I have 3, the first two on Switzerland. The first is on the B2B Competitive dynamics.
So what do you expect with Sunrise UPC arguably becoming more active in this segment? I think They have a clear ambition to become stronger in B2B. 2nd is on the Blue. And it's very interesting what you're doing with the over the top To be up. So if you can share maybe some KPIs on the take up from the non Swisscom clients, is it working really?
And lastly on Italy, I have a question on fiber cop. And I just wanted to understand from Alberto His expectations from fiber COP, whether the contributions that Faster will make to fiber COP Are included in your CapEx guidance? And ultimately, if you think that fibercop as a project can stand up As a standalone project, if there is no merger with OpenFiber.
Thank you very much, Luigi. I think the first question on B2B and takes Urs Lehner. The second one on blue Dirk and the third one, Jullu, which you already addressed to Alberto.
Yes. Within B2B, we definitely expect additional competition in the SME space as it was already explained by Mario. And on the enterprise space and corporate business, I don't believe that the behavior in the market will change dramatically or fundamentally by the Merger, we definitely are looking much more to the SME space. And we definitely also believe that we've our integrated offerings On converged offerings on the telco side, but also in addition with the ICT services covering Full service solution, managed service solutions in the security and workplace base integrated with connectivity for our SME We believe we have a strong proposition. But yes, fundamentally speaking, we have we are prepared for a battle within the SME space, which will Keep on in the dynamics.
That's what we expect from the merchant in the B2B space.
Dirk on Blue? Yes.
So Blue basically is, let's say, it's a TV solution, which is Swisscom Blues and there's a fictional content package, the Blue Plus and then there's a sports package, which is blue sports. And you're right, with all of these, we have also Like OTT also to other access operators, which by the way for sports and fictional, To some extent, we have all the time been on cable networks also with Sunrise. Now we widened up the And also puts it under one common brand umbrella, which makes marketing and sales so much easier. And honestly speaking, we had the best months ever in terms of content sales since we launched it in end of September. So there's a high demand there.
Switzerland is in a way, particularly for sports paid content, an underdeveloped Country because there traditionally has been lots of content in the free TV. As that is changing, we see that consumers are more and more to Page TV packages. And then Lou is the right agent to monetize the sports rights, not only within the Swisscom Access
Thank you very much, Dirk. And now, Alberto?
Okay. I think the third question, Definitely, FiberCorp is a standalone project. So basically, as a Great ambition to connect and to cover households in the black areas and gray areas. And the company has specific target, specific business plan. Also, the company We'll be entitled in posting directly the CapEx is already fully funded.
So all the Well, this CapEx would be financed basically by the wholesale revenues and by the beginning from the copper revenues that they will Be translated in the following years in the fiber revenues. So definitely, there will be no impact For what concerns CapEx in Fastweb at all? As I said, we do believe that this is an industrial project. So that's why we participate to such project by contributing our, let's say, flash fiber assets. And with just the matters, starting in 2021 to scale up operations and start to roll out the network, that's what the fiber has to do it.
Thank you. Thank you very much. Next question comes from Steve Moulton, Redburn.
Yes. Good afternoon. And yes, congratulations, Marion, best of luck with your retirement. I'm very jealous, I have to admit. Right.
Three questions. 2 on Switzerland, 1 on Italy, if that's okay. 1st, just coming back to the ComCo investigation on fiber. I understand that only relates to new areas. But If the decision goes against you, will that impact your future fiber plans or will you just have to proceed On a less profitable basis going forward, so I just wanted to hear your thoughts on that.
Secondly, I just want to come back to sort of mobile service revenue versus OpEx Discussion. I think it's fairly simple. You're losing $250,000,000 to $300,000,000 in service revenues. That's pretty high margin, call it 80%, 85%. You offset that with 100 of OpEx savings and the gap is filled with various things.
One of the big pillars has been device decoupling and SAC and SRC. Can you just confirm that the $30,000,000 to $40,000,000 this year, is that a cash or a non cash benefit you're going to get? And after that, do we assume 0? And also on the SAC and SRC front, can you are there more savings to cut that budget enormously in the last couple of years? Should we assume that that's kind of run dry as well looking into And then just on Fastweb, can you just shed a bit more color on the 5% revenue growth?
It looks like consumers slowed quite a lot in the last couple of quarters. Should we assume good growth in wholesale? And how much of that comes from build to suit? Is that a big contribution on the wholesale side looking into 20
Thank you, Steve, for your questions. The first question on the Comcoin investigation is for Urs. The second question on service revenue OpEx is for Mario and the last question is clear, that is for Alberto.
Good. On this ComCom question, they are asking for a layer 1 product, And it's too early to judge what is coming out, but there would be possibilities to offer a layer 1 product from central office or also from manhole. So but it's too early to judge. And it's not our ambition to change now the rollout plans of a pipe to the home. So we stick on our plans.
We continue and now we have to find yes, we must get more clarity on this ComCo process.
So should we assume that the 60% is sacrosanct and we'll just the concrete decision will determine the overall profitability of the project?
I have it on the studio. Could you remember? [SPEAKER LARS
FRUERGAARD THANKSEN:] When we're trying to model, should we assume that you will proceed regardless The decision that ComCo gets on layer 1 will determine how profitable your investment in fiber will be over those 4, 5 years?
We can't judge this now because they don't question point to point, point to multipoint technology. And so if we can deliver a Layer 1 product for this, the cost wouldn't be too high. That would be a low investments for a layer 1 product so that I don't have a crystal ball. I don't know what they decide. But out of the view today, we don't think that there will be a big impact, but we don't know the decision.
And Malcolm, on your question on the guidance, further that's clear service revenue, €250,000,000 to €300,000,000 That's high margin revenue. Part of it will compensate, as indicated, is around CHF 100,000,000 cost savings. Then the decoupling effect that started in Q2 2019 when we introduced a new product portfolio. And this item, this reconciliation item washes through the balance sheet against the revenue And we will have an impact of €30,000,000 to €40,000,000 in 2021. That's a non cash benefit.
And most of it will come in the first half because the contracts typically have a lifetime of 24 months And we introduced that in Q2 2019. And on the SAC, I would say in the guidance, they are assumed More or less flattish, but you know you still did the acquisition and retention costs nearly on a monthly basis. You saw that also during 2020, we had quite low in Q3 and then high acquisition costs and retention costs. And retention costs are more important
Basically, even if you clearly the math would suggest a deceleration in the revenues in the 4th Quarter, that was entirely due to a huge performance in Q4 2019 in the wholesale business, as I said, Specifically to the rollout of BPS that has cannot be calendarized and it depends on the orders from clients. But if you neutralize that, definitely all our segments, consumer, both mobile and wireline, And I would say the wholesale volume business are growing nicely. So you will see also in 2021 Consistent growth in all the 3 segments. Wholesale will be a contributor, as I Playing in the presentation because clearly we do expect the ultra broadband connections will increase and so our clients We'll require and we'll do more orders. But nevertheless, I think that we will have also a huge opportunity and growth in Consumer and mobile and fixed in the enterprise.
So growth will come from both. We see a very strong business. Also, the The year has been consistent. All the markets are growing and we will do all we will follow this trend all across the year.
We should think about 5% being evenly spread across consumer, enterprise and wholesale.
I think that is a good start. Let's do the 5%,
One final. Can you just give us an idea of the sort of overall magnitude of build to suit revenue, somewhat the cash margin, it's not the EBITDA margin on those sales when you build in CapEx to execute those contracts?
It depends on the there is always some CapEx attached because yes, definitely we are talking about high margin. High margin both I would say in the ultra broadband connection And also on the BTS, with the difference in the BTS, clearly, when you do a big rollout of the BTS, the first lots Clearly closest or on net. The others sometimes you do need to do specific links and therefore they are Generating CapEx, all in all, I would say that also typically the high margin CapEx with these Sorry, margin would be specific distinction from VTS and volumes, I would say.
Thank you, Alberto. Okay. Thank you, Steve. Thank you. The next question comes from Andreas Mueller, Czech
Yes. Thank you for taking my questions. I've got 2 or 3. One was On the margins, you mentioned that on the solution side margins are going up. Can you give us the driver behind this Development also that solutions are growing is probably clear, but What are really these drivers also say in 2021?
Next question on cost savings. You mentioned this €100,000,000 for the next years. What is going To be the driver beyond, say, 2022 for these cost savings, and Then I would have an add on probably on the multi point to multi point issue.
Okay. Thank you very much, Andreas. I think the solutions outlook and improved profitability is a question for Urs Lehner. 2nd question, cost savings 2020 beyond is why mix between Mario and Urs, but I think it is a question for Urs. And then point [SPEAKER DOCTOR.
LOUIS SERVRANCKX:] Louis:] So multi point, I leave also to you, Urs.
Starting with the solution business, the profitability evolution, I would say it has 3 prime levers. 1 is, let's say, a better performance in professional services, higher percentage of workload, which was delivered to, let's say, impact on the way how we managed our professional services business, which have paid off in 2021 and will remain way forward. Second one is, first, let's say, effects of simplicity activities. Mario mentioned the 1b or Urs mentioned the 1b2b program, which starts Pay off in certain elements on process costs. And last but not least, we definitely have, let's say, Good new business, new customers arriving in our managed services solution where, Let's say the foundation of cost is pretty given and all new customers are also paying off with variable costs.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So therefore, I would say these are the 3 predominant levers. And I say I see a sustainable trend of these 3 levers also way forward.
Good. Then on the cost side, how do we want to reduce our costs in the future? What are the main drivers behind it? For 2021, we have a clear road map. And the main drivers for 2022 and 2023, I would say, on a high level, the drivers is digitalization.
Through digitalization, we can simplify the customer interface, The customer experience, which leads to less calls in the call center, to less visited in the shops, To less field force intervention and so we can reduce this cost, this customer touch point costs. Automization is the 2nd important driver. Just to give you an example, With artificial intelligence, we can decrease the operational costs in our networks. This is another topic. And the 3rd main driver for cost reduction is simplification.
If we can simplify our legacy infrastructure. Now we are phasing out 2 gs. We have done all IP migration. We will reduce the complexity of the different platforms in our network and IT So with such things, we can reduce costs. And on the development side, So agile approaches, through sourcing approaches of development resources, we can also reduce costs.
So it's a bunch of different drivers, which will reduce the costs in the future. On the point to multipoint issue, just to say what how ComCo is thinking. They think if we build in a point to point architecture, smaller ISPs don't have the ability to get a dark fiber access. And if they don't get a dark fiber access, they can't drive innovation, they can't be innovative or it would be too expensive to get products On layer 1. So that's the thinking of Comco.
We offer them We offer our competitors an access to our network. And just as an example, the biggest wholesale customer of Swisscom, he is using exactly this access and he is very competitive in the market. So that's why we think we have good arguments why we have a compelling wholesale off. And you could do also some other kinds of wholesale offers on you call it Color debandling, it's a kind of product to decouple the light on the fiber cable, But that's not a very mature technology today. So I just can't tell you, it's too early to say what how the way is going, but I think at the end, it will not totally change is fiber game and that's why we also stick to our ambition to roll out now this technology and point to multipoint.
That's the standard how operators are building today fiber networks and why should it be other in Switzerland?
If you had to change the architecture, just theoretically, what would be per line the additional CapEx? You mentioned it's not much. Let's say, what would be the additional percentage? And would that fit Into these CapEx brackets, which you've got already or would that change anything on the CapEx Going
forward. It's too early to judge because we don't know in which way it is going. But changing the point to multi point architecture to a point to point architecture,
this would need
a lot of time. That's not just switched and so that would also mean that additional CapEx would be stretched over different years. So it's too early to say, but I think now we have to wait for the next weeks? And then we have more clarity on these precautionary measures.
Yes. Okay.
What I can say? Okay. Thank
you. All the best to Mario.
Thank you, Andreas, Also for your question and timing wise, I think and suggest we do one last question before closing today's meeting. This last question comes from Ulrich Rathe from Jefferies.
Thanks very much. I have just a quick one and a follow-up. When you talk about the So the fair share in North Rose and the activities on the second and third brands, I'm not entirely sure whether you are indicating an increased effort, a dedicated increased effort in 2021, whether it's sort of change in go to market or whether that's what you're indicating here is a Continuation of what you have been doing already for some time. And if it's a change, what drives that change? That will be my question.
And then just a quick clarification. Sorry to come back on the Sunrise UPC question. But I heard slightly different color there From Marion Doloz. So is it just the MVNOs that are weighing in 2021 It's a 15% to 20% or is there another 20% expected to drop out of the fixed, which I heard all saying, but I'm not entirely sure. Thank you.
Thank you very much. I think the first question goes to Dirk.
Yes. Look, I think in the last couple of months, we have seen even an incentivized level of Promotional and marketing activity, yes, which we cannot completely ignore. I mean, obviously, We want to be the leader on many dimensions, but not the leader on the lowest price. As you imagine, that's not Swisscom's strategy and statue. Nonetheless, even in the price sensitive market with the 2nd and third brands, we need to ensure, let's say, what I call fair share We have traction there.
So yes, I think we want to intensify overall our aggressiveness In that space, so to some extent, be more aggressive on promotions and marketing and the overall market approach. I think that's probably fair to say.
Then maybe I take the second one and Mario can add. So I wasn't maybe not too clear I wasn't not clear enough. This 20 To it is €15,000,000 to €20,000,000 on MVNO. So we are quite clear that this will happening because they will migrate on the Solarize network. This other €20,000,000 which I mentioned, that's the view of Sunrise, how they saw it when they published the merge UPC Sunrise and that's their view or that was their view.
And I think that the impact, it's not so easy to migrate customer from one day to the other, from operating networks to a table operating networks, so it will need time. It's a bit too early, but I think we will not have such an impact. And that's why the guidance Mario explained is that's the right view.
Thank you very much.
Thank you very much, Ulrich. And at this point, it is it from our side. Thanks for your attention and participation. Stay healthy and have a nice evening.