Good morning, ladies and gentlemen. Welcome to the Swisscom Third Quarter Results 2020 presented by Urshepi, Mario Rossi and Louis Schmid. Louis, the floor is
yours. Good morning, ladies and gentlemen, and welcome to Swisscom's Q3 results presentation. My name is Louis Schmitt, Head of Investor Relations, and with me are our CEO, Ute Chetty and Mario Roesse, our Chief Financial Officer. First part of today's presentation, hosted by our CEO, consists of 2 chapters. 1st, a quick overview with some highlights, the operational performance and financial results of Q3 and the 1st 9 months.
2nd, an update on our activities, operational results in Switzerland and some explanations on Fastweb initiatives to become an intra based OTMT player in the 9 months financials. In the second part of the presentation, Mario runs you through Chapter 3, the financials and unchanged full year guidance. With that, I would like to hand over to
Urs to start his call.
Urs?
Yes. Good morning, ladies and gentlemen, and I would like to start with Slide 4. So our Q3 results in a nutshell, we have financially positive results and are slightly ahead expectation. Also on the indirect cost savings side, we have a solid result. On the operational level, we have a good quarter.
So also, if I look to all our awards, which we get on the mobile networks, we won all the tests. We won also the tests for the fastest mobile network. And on the commercial side, we launched a new entertainment proposition. Blue, I will come later to it. In Italy, we made from a M and A, a smaller M and A, a transaction to strengthen our positioning in the B2B market with security with a security company and a cloud company.
And you can also see that we ranked on ESG in front, our number 1 under the 1 100 and 97 telcos. It was always a part of the strategy of Swisscom to be sustainable. And that leads to a confirmed guidance as it was before. So overall, a good Q3 results. If we go on Slide 5, some information about the market performance and market share performance.
So positive overall stable broadband net adds, which are, let's say, I would say, flat. And on both postpaid plus 83,000 postpaid subscription and also some growth on the revenue generating unit of wholesale. And the growth in Italy on the RGU units on mobile is plus 59,000 and on mobile plus on broadband, plus 12,000. So overall, a solid performance on net net in Q3. If you go on Slide 4, Slide 6, you see our financial performance.
The revenue, Mario will explain later, goes a bit decrease in the revenue by 3%. This is mainly driven by price and some COVID defects like roaming. On the EBITDA level, you see that we have strong results and increased EBITDA by
€27,000,000
and this is driven by an increased EBITDA of €8,000,000 in Switzerland and €10,000,000 of Fastweb. And a solid also a solid operation operating free cash flow of €5 $15,000,000 free cash flow proxy. Overall, solid financial performance. Some remarks to our business and strategy on Slide 8. You see our key success factor for 2020.
And I would say we are on the way, Oehut, to deliver another successful business year. So in Switzerland, the main priority is to maximize our core business. In Switzerland, that means having leading networks, investing in the networks in the improvement of our networks, then drive innovation and use the advantages which we have on the converged value propositions. And then the 4th important topic is to transform our B2B basis. And if you look to the figures, you can also see that we had a solid performance in our B2B business also on the margin side.
And in Italy, it's important to bring faster to the next growth level through this, I can relate it to it, infrastructure based OTT. If you go on Slide 9, you see what we are doing on the network side. So important to mention here is that we have the target to improve or to double our footprint on fiber to the home by 2025. So that means that in 2025, we will have approximately 60% of Switzerland, which is covered with fiber to the home. We made also field trials, field tests, and we were able to get 50 gigabit per second speed, download speed on NGPON technology.
This is, I would say, kind of world record in the field and shows the potential of this new technology. On the right side of the chart, you see that we are the network leader. You see the different figures and awards. If you go on Slide 10, here some information about the B2C market dynamics. So the competitive environment overall is unchanged.
We have still this strong promotion oriented market dynamic in Switzerland. And our strategy to defend the market share through a superior value proposition and converged offers. You see also that we accelerated a bit our B2C activities. We made a bit more pre to post data migration. We have strong competition in the fiber to the home turf.
So there is more local campaigns are becoming important. Wingo is performing well. That's our 3rd our second brand is performing well. We also improved a bit our value proposition for younger customers. And as already we launched the new entertainment proposition, Blue, which you can find on Slide 11.
So the main idea of this proposition is to be a unique entertainment brand where our customer can use their beloved content anytime and anywhere. So there is a more converged proposition between the TV platform, the content and then also our news portal, BlueVin and then the CineMaster. This is also a converging business. And there, we made a good approach, and this is the first chapter. So we will continue to develop this entertainment brand.
We also implemented an OTT proposition for smart TVs, blue TV air, that's the name. And so also on other screens, you can now use the TV proposition of Swisscom. If you go on Slide 12, we see the operational KPIs of B2C. So on changed ARPU dynamic, that would be a bit of summary, stable ARPU in wireline, eroding ARPU in wireless and mainly on postpaid. In the middle of the chart, you see the postpaid ARPU, so it's CHF 52 minuteus CHF 5 and the mix of this decline of CHF5 is CHF1 is coming from roaming, less roaming because of this COVID effect.
Then fixed mobile converged is CHF1. Then the decoupling of our offer is CHF1 and then CHF2 is driven by the ARPU mix in the postpaid customer base. The blended ARPU for mobile is CHF 37, so minus CHF1. And then you see, as already mentioned, a stable blended wireline ARPU of CHF 30 7. Important to mention is that we have a sticky customer base.
Our churn figures are low in the region of 8% for single play and converged offers at 6.7%. The fixed mobile penetration, also interesting to mention, is in the region of 40% to 46 percent on postpaid and broadband. So overall, good churn figures and increasing penetration on fixed mobile conversions. On Page 13, some information about our SME business. So we have this leading and strong market position in the SME market.
Our strategy is to extend our ITT offer in the SME market. Cloud based products portfolio is an opportunity you see on the chart what kind of functionality is in it And then the strategy is to be a one stop provider for our SME customers in this digitalized world. So that means a conversion between connectivity products and then ICT, horizontal ICT offers. On Page 14, some information to our B2B business. So the solution business is slightly growing.
Interesting or good is to see that we have stable margins in a very competitive market. We have stable margins in EBITDA margins in the B2B business. It's driven also by cost reduction. So the organization made a good job on efficiency. And yes, on the bottom of the slide, on the right side, you see the evolution of our solution business.
We have a good momentum on cloud and security products. That's also important to mention. On Slide 15, our financial performance of Switzerland, Swisscom Switzerland. So recently said, we were able to compensate the top line decline on the service revenue to cost savings. And our operational free cash flow, free cash flow proxy is in line with the expectation.
So in the 1st 9 months, we created an operating free cash flow of 1 point 36,000,000,000 On the service revenue, maybe some information on the service revenue. You see that we have a decline of the service revenue of 226 €1,000,000 in the 1st 9 months. And out of this, is dollars 47 million is coming from outbound roaming, and this is mainly driven by COVID. But overall, good financial figures in Switzerland. To Fastweb on Page 16.
So the strategy of Fastweb is to become an infrastructure OTT. And what is an infrastructure OTT? You see on the bottom of the chart, that means it's a combination of a very strong network and then with an OTT platform to deliver ultra broadband services to our customers. And besides all, packed in, in a secure environment, so security solutions, which are embedded in the network but which are also embedded in the products. And to strengthen our positioning in this market and to enhance the strategy to become an infrastructure based OTC, you see what kind of initiatives we made in the last month.
So one example is we acquired a customer, that's a cloud based company in Italy. We have more activities on 5 gs fixed wireless access for wide area. And then also, we made an M and A transaction with 7 layers, which is a security company, a smaller security company in Italy. On Fibercop, that's the network company in Italy, where Fastweb has taken it. You see some information about it.
So important is that the JV is on the way, and there are now other discussions or discussions ongoing if CDP will also come to this joint venture and some discussion about fiber coke and OpenFiber. On Page 18, some information to our acquisition for 7 layers, that's a security company. I don't want to go deeper in it, but this will certainly enhance our proposition and our attractiveness in the B2B market, which is a very important market for Fastweb. It's also important to mention. On the consumer performance on Slide 19, so we have solid figures.
We have an increase of our ultra broadband penetration by 9% year on year. That's important because the customers which are on ultra broadband have lower churn and a better ARPU. On mobile, you see also our momentum. We get this 59,000 net net in Q3. And on the right side of the chart, you see the benefits of a fixed mobile converged offers.
So in ARPU, we have an ARPU uplift of 24% and the churn benefit of 21%. And net promoter score on the bottom right side, you see that we have a very compelling and high net promoter scores. So we are a leader in the net promoter score, which is important for the loyalty of our customers. 20, Page 20, B2B performance in for Fastweb. So positive momentum in the enterprise market, you see 5% revenue growth.
And also on wholesale, you see that we were able to have a growth in core wholesale offers by 23%, so 23%. Financial performance on Fastweb on Page 21. So the performance is in line with our guidance. You see that we were able to grow by 6% on the net revenue, EBITDA growth of 5%, and we have an operating free cash flow in the 1st 9 months of €119,000,000 and this is a change of plus €57,000,000 With this, I would like to hand over to our CFO, Mario.
Thank you, Urs, and also welcome from my side to my second last earnings call. Some remarks on the performance of Q3. On Page 23, the overall dynamic of the service revenue development is unchanged. So we have still price drawn service revenue in Switzerland, a bit less decline than in Q2 and the solid growth of Fastweb in Italy. In for Switzerland, the drivers of the service revenue decline, we will discuss on Page 25.
Of course, we had also impact from roaming in the Q3. In the service revenue, we have accumulated impact in D2C of $20,000,000 $27,000,000 in D2B. Inbound roaming came down accumulated by €27,000,000 that's included in the segment wholesale. And maybe one remark again, Fast said very solid in Q3, growth on revenue in all three segments. On Page 24, we've mentioned it already.
I think we did once again a great job in cost management. On the direct costs, on acquisition retention costs, we have this positive impact of €40,000,000 in Q1 because of the lower sub peso fee because we had in 2019, we had in January, February still the mobile offering in the market where we subsidized the mobile handsets. Then on outpayments, we had less outpayments for roaming, €34,000,000 in Q3, the impact is €7,000,000 And on the goods purchase, we had less trading volume in B2B. And then we had less OpEx for sports events in Q3. The reason is because the Champions League and the Swiss Football League started later than prior year, and therefore, we had fewer events, and we book the cost for the events when events take place.
On indirect costs, we stand now at $88,000,000 savings for the first three quarters. So full year effect will be north of €100,000,000 of costs.
The EBITDA
dynamics in the Swiss business, we can say here fixed line loss. You see that's minus €4,000,000 per quarter. That's a minimal effect. I think that's over. Also, convergence, the convergence impact is coming down as it is expected.
We have seen some growing numbers of converts per customers, but less at the beginning of the new portfolio. And then the Q3 effect of the ARPU mix with €21,000,000 is better than
in Q2. We had
a bit less pressure on wireline, but I think it's too early to say that trend. So it's too early, I think. In B2B, we have an unchanged pressure in the mid market, and the decline in the corporate or in the larger accounts is slightly softer. And on the right hand side on the top, you have the bridge of the EBITDA development of fuel 3. In this block, ADOS, I think there are elements, nonrecurring elements of approximately €20,000,000 So we have this impact of the tea rights, which I mentioned, say, that's north of €10,000,000 Then we have lower assurance costs in Q3, approximately €10,000,000 less out payments, I mentioned EUR 7,000,000
and
then we had the better B2B profitability in the IT and Solution business. So again, approximately €20,000,000 out of the €38,000,000 are nonrecurring. On the next page, the EBITDA dynamics in Switzerland, as discussed, I would say, overall for the group, ongoing service revenue pressure, very strong execution of cost management and solid growth of Fastet, and that helps to show a flat EBITDA for the 1st 9 months in 2020. On net income on Page 27, we have no special effects below EBITDA. Despite flat EBITDA and EBIT, we have a small decline of €14,000,000 on net income.
The reason is last year, we had benefited from adjustments of deferred taxes because of the change of tax rates in some cantons. I skipped the slide on Slide 28 because we are well on track on the rollout that we got from Urs. And free cash flow on 29, I'd say, very resilient cash flow generation. Collection of accounts receivable is unchanged in Italy and Switzerland. So far, no problems on that side.
And as in Q2, we have less income taxes paid because of deferral of some payments to Q2 we total out by the Swiss government. That brings me already to the guidance, which after Q3, it's no surprise that we confirm the guidance on revenue, EBITDA and CapEx. And with that, I respect to the operator for your questions.
So we have the first question from Ulrich Rathe from Jefferies.
Yes, thanks. I have two questions, if that's okay. Could you comment on the somewhat counterintuitive improvement of the wireless service revenue trend. And you're highlighting the pressures that I understand as a roaming pressure and ARPU pressure and competition. But when you simply look at the year on year growth, that was minus 12% last quarter and minus 9% this quarter.
So we even though the bromine pressures are presumably up in the Q3, the underlying trend seems to or the reported trend seems to improve. So could you just shed a little light on that? And the second question I had is in the cost discussion that you put out, on the big trend change, so to speak, versus the second quarter seemed to be the direct cost in particular. You mentioned some of the factors, the insurance cost, the sports events. It's a bit difficult for me to disaggregate what is nonrecurring or what is not nonrecurring is one word, but what is related to COVID and might just come back?
And what is underlying change on the direct cost picture. Could you also comment on that? It was like a CHF41,000,000,000 I think from memory now, CHF41 Swiss improvement in the 3rd quarter. And how much of that sort of just an unusual situation? And how much of that is sustainable?
Thank you.
So on the cost side, I mentioned on Slide 25, so out of this 38,000,000 adults, about €20,000,000 are non recurring. So the TV rights financial, the impact the TV spot rights are north of €10,000,000 because of fewer events in Q3. If all these events will take place in Q4, we will see that in Q4. And then, say, from the assurance costs they were very low in Q3, let's say, close to €10,000,000 are nonrecurring. And the impact on the outpayments for roaming, the direct cost was in Q1 was €6,000,000 in Q2, €21,000,000 in Q3, €7,000,000 and that's hard to predict now for Q4 because this is a current situation.
You really don't know the behavior of our clients in terms of struggling.
Good. And then to the second question, let's say, the dynamic on wireless or the trends or if there is some improvement, I think as Mario mentioned, it's a bit too early to say what is really a sustainable trend. But if you go on Slide 25, you see actually a bit of dynamic of the different elements. And you see also that there is an impact on COVID. So all of which is correlated with roaming is driven by COVID.
And if you take these two topics together, it's quite a substantial part of it. What we see is that we have a bit less or a bit better evolution in the B2B business on mobile, but this can change. This is a bit also driven by different renegotiations of contracts.
So
to summarize it, the whole dynamic on service revenue, we will have further pressure on the service revenue on mobile. Converging elements are the impact of convergence will go down. That's for sure because of the penetration. The RQ mix element will stay. Roaming will disappear when COVID disappears.
So that's a bit a summary.
That makes sense.
Can I just ask for clarification? Thank you for the particularly for the answer on the cost. So on Slide 25, the SEK38 million there, that is more or less the SEK41 million on slide on Slide, what is it, the cost slide, on EUR 24,000,000 that is sort of the item that's being explained there I mean, give and take.
It's approximately better now and exactly. Yes, of course.
Thank you so much. Thank you.
Next
question from Matthias von Leinhorst from Kepler.
Yes. Good morning, gentlemen. The first question is on your cost savings and related to that on the dividends. So far, you have been doing quite a good job on the cost cutting front. But where looking in the years ahead, where do you see further savings coming from?
And related to that, for this year, it is likely that you will distribute the CHF2022 in dividends. But looking ahead, given that we see ongoing pressure on service revenues, how confident are you that you will be able to keep the dividend at the same level? What kind of levers do you believe you still have you can pull to keep the dividend safe in the years ahead?
Good. We are convinced that we have further potential to decrease our costs. And how can or what are the levers to decrease costs? This is digitalization. It's reducing volume.
That means less calls, less interventions. So on this area, we think that we have further potential. We have also some potential to increase our CapEx efficiency mid term. And then you should see that we have if you go forward CapEx, there is a potential that CapEx is coming down in some years because now we are in the push to fiber to the home. We are in the push for fiber to the street.
Fiber to the street will be done in 2021. So you see that we have elements to save our free cash flow. And then Fastweb. Fastweb has a positive momentum, which brings us a positive free cash flow proxy.
Next question, Andreas Muller from ZKB.
Yes. Thank you for taking my questions. Good morning. I have actually two questions. I was wondering in the enterprise side, this is the solution business, which is probably lower margin than the service business?
I mean, is the margin gap there in any extent decreasing versus last year? And what's the trend there, solutions versus service margins? And then on the I was wondering in Italy, what is the impact of this Huawei ban on 5 gs? Is there any impact for you anyway given the partnerships? Or what do we expect there?
On
the margin side, if you compare solutions business with the telecommunication business or service business, that's right. The margin of solution business are lower. But we have good solution business margins and overall stable are that otherwise, we wouldn't have a stable EBITDA in the B2B business. So that shows you that we were able to manage this solution business margins. But you're right, they are below the service business but on a good level for solution and IT business.
On Fastweb, basically, this golden power rule of the government. So for us, we have alternatives to do it. So for us, it's not a big impact. There are other providers who can deliver us some infrastructure. And the overall impact for faster is negligible.
Okay. Thank you.
Next question is from Steve Malcolm from Redburn.
Yes, good morning, guys. I hope you can hear me okay. I had a couple of questions. I just want to come back to the point you made on programming costs. I understand that you've got a sort of temporary reduction given the late timing of sports events.
But can you just give us the sort of net EBITDA impact? I mean, are you billing your customers? Did the Q3 numbers reflect a full quarter of billing for these premium sports events? Or are you light on the revenues as well there? So just an idea of the sort of match of revenues and costs in Q3 and how to think about that going forward.
And just coming back to Huawei, can you just tell us how much Huawei you have in your Swiss fixed line network And what the implications of a more draconian position from the Swiss government would be if you were forced to swap it out on a sort of 5, 6, 7 year basis? Thanks a lot.
On the 4th slide, on the top line, the main part of the revenues are coming from flat subscriptions and the pay per view income is negligible. You don't see it in our top line. This business is basically 2 fold. 1 is you generate some revenues, but the more important part of this business is still securing the broadband and TV customers. Without good spot proposition, we wouldn't have such low churn rates indeed to be in TV.
Any TV.
But again So your customers
are basically your customers have been paying for sports that they haven't been getting and you've not had to pay for them, but you will pay fully in Q4. Is that fair? Yes.
If they pay you on a monthly basis, we gave some discounts during the lockdown because then no events have taken place. But now today, we have again from the Champions League, from the Swiss Football League, from the EuroLeague. So there's no reason to get a refund right now.
Okay. Great. So the $10,000,000 cost reduction is effective in EBITDA benefit this quarter that will come out in Q4 as you build those costs more normally as you said payment more normally, is that fair?
Yes. Okay.
Then on Uruguay in Switzerland. So as you mentioned, we don't have Huawei on our mobile proposition. So we have our supplier there is Ericsson. We have some infrastructure from Huawei in the wireline business, mainly in the access business by the street. And therefore, I think that our risk profile is low because on access, that's not a little bit difficult area.
And the other exposure is quite limited or manageable. In Switzerland today, we don't see a dynamic to getting bans of Huawei. And I think also the whole discussion about Uruguay is too narrow. If you want to attack an infrastructure, you have to look where is the weakest point in your whole system. And our process is weak.
So if you want to get a secure networks, we have to have a multi vendor strategy with a holistic security framework around. And so and that's the strategy of Swisscomers. So we and up to date, we don't have evidence that Huawei is actually doing our own things. So let's say, in short, we have some exposure in the access business. The other one is manageable.
And the access business, I think that the risk is quite low.
Okay. Do you have some exposure in your core as well?
Yes. We have some exposure in some elements of the core, but that's not that's really manageable.
But your current expectation is that nothing is going to change in Switzerland and Norway will remain an acceptable Yes.
I don't know, but we will certainly explain ourselves to the government that if you want to have secure networks, you have to work on the on a holistic approach and not just only on making a ban on one technical supplier.
Next question from Uli Fati from Jefferies.
Hello. Hope you can hear me. Thanks for letting me on again for a follow-up question. I would like to ask about the Liberty Sunrise deal that seems to be getting closer to coming through. Would you from an operating perspective, would you see an opportunity to sort of steal some customers there to attack the customer base a bit because these sorts of integrations are difficult.
They create a bit of an internal focus of management usually. And it is an opportunity to maybe have a go at the customer. Is this something you'd consider doing in 2021?
Thank you. So I didn't know if I get your question right. So if there is an opportunity for Swisscom because of post merger consolidation, as I say, they are not so agile in the market. I would say, our behavior is another one. We always have the thinking that they will be successful, and we have to do our business as good as possible.
And for us, it is important to execute our strategy, to differentiate ourselves, to invest in networks, to have an excellent customer service. And all the other things is speculation. I don't know how they will manage the company in the future, but you should never underestimate your competitors. So that's why we are executing our strategy, and we don't do speculation about our competitors.
So next question from Casey Usman from Berenberg.
Hello, thank you for taking my questions. I've got I've got 2, please. The first question was just going back to this slide, which is showing the B2B price pressure in Switzerland. Obviously, we can see that there's been a significant improvement. And I just wanted to understand your earlier answer.
I mean, are you saying that the reduction in price pressure this year is because of lower renewal activity and that this might not be a trend? Is that so just wanted to make sure I understand what's going on, on that front. And then the second question was on Italy. OJ Fastweb continues to execute really well in what is a very tough macro environment. Just on the enterprise segment in particular, where for some of the other telecom operators, we're beginning to see some early signs of pressure on revenues in B2B.
I mean, how is it that Fastweb is actually posting an acceleration in revenue growth in the enterprise market in a challenged kind of macro environment in Italy?
I will take the fastest question, Mario. I know I will take both because Mario is already in the retirement phase. No, no, no. Okay. No.
You said to be
We had less pressure in Q2 and Q3 in B2B. But overall, as you mentioned, it depends on the renewal activity. And there, you have some seasonality. And I would say it's too early to think that we have really released. So we still see, especially on the mobile side, very tough negotiations.
We still see on certain accounts Sunrise being more than aggressive, I would say. So
it's too
early to take a few years. And we expect the same trend also in Q4 and then going on also into the next year.
And then on the Fastweb question, the dynamic for the development in the B2B market. The Fastweb has a strong positioning in the B2B market. We have also a capable very capable customer oriented go to market structure. And through the also the small acquisition and the capability improvement in the B2B market, we are able to offer differentiated project portfolios. So also, let's say, improved with security proposition and some cloud proposition.
And Fastweb is an agile B2B provider. So that's the reason why we have a good momentum in the B2B market. And we see in the last month, we see a good development on bigger corporates in the B2B market. A bit calmer is actually the SME market in Italy because of all this COVID, and they are really suffering. But overall, we have really good figures in B2B, and we also believe that we will have a good momentum in the next months.
A question is what is happening with the bad debt. Up today, we don't see any signs that bad debts are going up, neither in Italy nor in Switzerland. So yes, that's a bit of what I can say to it. I think we will continue to have a good momentum in B2B.
Can I just follow-up? I mean, so the pricing kind of the pricing pressure on renewals on the corporate side, you're not seeing that in Italy, it seems from your commentary?
Obviously, it's also in Italy, but it's everywhere the same. If you have to renegotiate contracts, you lose some ARPU. But on the other side, in Italy, we have the potential to gain market share. So we have we are in the region of 30 percent market share in B2B, so we have momentum to get market shares. And this overcompensates the price decline.
Great. Thank you very much for the detail.
Next question from Georgios Arijakou from Citi.
Good morning, and thank you for taking my questions. I have a few. Some of them are follow ups. The first one is on B2C, and particularly the very good numbers you had on mobile net adds. And I understand there's been a bit more promotions in the 2nd and third brands.
Is it possible to give us a bit more of a picture of what the rest of the market is doing, whether we are seeing some signs of more rational behavior from some of your competitors or not? My second question is on B2B and kind of a follow-up from what you just discussed with Uzi around the long term growth drivers of B2B. And you mentioned security and cloud. Is it possible to perhaps give us an idea around what are the prospects you see now versus in the past in the B2B segment, whether it's stronger potential? And then finally, on Huawei, just a quick follow-up.
You mentioned that you don't expect a ban necessarily. Do you see a problem with some of the sanctions they are facing in maintaining a competitiveness of the equipment that they provide? So is there perhaps a reason to not use them? I know for you, you don't have exposure, but some of your competitors do. Do you see a reason why people could diversify away from Huawei just on the equipment side?
So to the dynamic in the mobile market. So we had a better net adds because we had a good momentum also on pre to post migration on 2nd and third brands, good dynamic. And let's say, low figures in our core portfolio of Swisscom. This leads to this better net adds. On the other side, promotion activities are unchanged.
So we see a lot of, lot of promotion. And if I would say, what is the red line through these promotions, it's half price. Half price promotion, that's a bit the red line. And I don't see changes there. I don't see actual changes.
And on the driver of the B2B business, So it's, as you mentioned, it's security, it's cloud, the digitalization of the industry actually is potential to grow. This needs more connections, This needs more bandwidth in the networks. And on top, you have this possibility to deliver solutions. And therefore, we think that there is further potential. We are also in some verticals as the banking as an example.
And there, through the digitalization, we see also some potential. And then maybe last remark to this B2B growth drivers. In the SME market, this there is a midterm, not short term, but midterm is really ITT potential. So the whole SME market is from the IT part, underdeveloped, and the digitalization will need more cloud based solution in the SME SME market, and there we have, as a Swisscom, a potential to grow. That's not tomorrow, but midterm, that's a potential because it has quite a low adoption phase.
And then to just the third question on Huawei, I actually didn't get it. What is that?
Whether without a ban, you think they will remain competitive given some of the sanctions they will face. So if you are exposed to Huawei, would you think that over time, you could continue to rely on keeping that equipment?
Okay. I think Uruguay is a strong company. They have a huge, huge home market. And they have other countries where they can deliver infrastructure so they can remain scaled. So I think they will remain competitive for Huawei in the future.
This is a capable company. They will be competitive also in the future even if they have sometimes some challenges. But no, I wouldn't say that this will be a less competitive company in the future.
Very clear. Thank you.
It's a
political driven discussion with a lot of uncertainty in it.
Thank you.
So we have the next question from Steve Malcolm from Redburn.
Thanks. I just had a couple of quick follow ups. One was just on Italy. You mentioned the small acquisition that you made. Can you just confirm that there were there was no sort of material financial contribution to the Fastweb business on the back of that acquisition.
That would be great. And secondly, just on wholesale. I mean, your wholesale revenue trends were very strong. I mean, inbound roaming was down, but not as probably as much as we thought. Are there any particular sort of movements in that?
Did you have any big price rise in the quarter? Just help us understand, clearly that's an area you would expect to be weak through the Liberty Sunrise merger as the Liberty MD and A traffic moves off. But just maybe some color on the wholesale trends in the quarter, which looked particularly strong, would be great. Thanks.
On Itria and Fastweb, these 2 acquisitions there, no material impacts on both top line and EBITDA. Nothing.
That's more these are more acquisition to get some more momentum on the capability side.
Okay. So 0 revenue, 0 EBITDA effects?
No, not 0. That's
$1,000,000 2,000,000 in other words. It's required in Q3 and in Q2. We just started. We can see some impact next year.
Okay. Thank you. And on wholesale, so the dynamic on wholesale, if I go to the real wholesale business, it's driven a bit by a bit more broadband wholesale business, which we are doing with competitors of us. It's not only Sunrise. There are also other ones.
And if this merge is coming, Sunrise UPC, that's clear. We have an exposure on the MVNO business with UPC. And the exposure there for 20 21 is a low, I would say, a low 2 digit million figure.
A load. So did you say that again a low two digit figure?
Yes.
Next year and then it will build up within 3 years up to $56,000,000 Yes. My first one is
on mobile, on MVNO. It will go faster way. Clear? And then there will be some erosion on the wireline business connections, but this will take time.
Yes. If I look at wholesale services in particular, that seemed to grow north of 10% in the quarter, which has been fairly flat. Was there the increase in wholesale broadband lines, I guess, is fairly consistent. So it wouldn't explain a sudden jump up in revenues in Q3. I'm just curious as to why that line seemed to grow quite so strongly in the Q3.
I mean, I mean, Q3 revenues from 3rd parties is more or less flat. We have a growth on the core wholesale services, as you mentioned, in line, about €10,000,000 And then we have a decline in inbound roaming of about €10,000,000 dollars and the successful and flat.
Yes. I guess when I look at it, the wholesale service revenue growth appears to stand out in Q3, but I don't see it being sort of stable versus the previous couple of quarters. It seems to grow half in Q3.
No.
Maybe if you check later, we can go with the order number.
Next question from Luigi Minerva from HSBC.
Yes, good morning. Thanks for taking my questions. The first one is on the CapEx outlook. You hinted that CapEx medium term may decline once you're done with the current fiber program. Perhaps can you make a more general comment how you see CapEx over the next 3, 4 years?
And particularly, how the mix will change with 5 gs, fiber and maybe more traditional CapEx? And then secondly, I was wondering if you have some early indications, early feedback on your OTT TV product? How is it going?
On the CapEx mix, so we will have slightly higher CapEx in wireline because of the rollout of 5 gs, but that's not so big actually. The CapEx drivers in the next 2 years are driven by wireline network rollouts. And my message was that the fiber to the street investments will go down after 'twenty one. And on the other side, in the next year and up to 2025, we will have some high fiber to the home investments. But because of the boost of this fiber to the seat there in investments, there is a potential that the CapEx are slightly going down midterm.
But at the end, it's all related to also the competitive dynamics. It depends also on the competitive dynamic of the investments in fiber infrastructure.
And on the mix, I wouldn't see a dramatic change. We show the mix on Slide 28, and that will be more or less unchanged. It's also we always said that with 5 gs, the CapEx will not explode. So the overall mix will be maybe a little bit more in fiber, as Urs mentioned, and then maybe a little bit less on projects and basic infrastructure. But there are no material change.
Okay.
May I ask if the fiber to the home deployment will go will have to go beyond your current targets and perhaps you will want to match fully the cable footprint?
That's the long, long, long, long term, it will be 5 to the home. But we will have a footprint of 60% where we have fiber to the home. In other areas, we will have through fiber to the street a bandwidth of 200 to 500 megabits per second. So we will have a footprint of more than 90% with speeds above 200 megabits. So we have a competitive network.
And that's a bit the message.
Okay. Thanks.
And then on OTT, we had a good starting momentum on this OTT. Also on the app side, on smart TV, that was your question on smart TV. We have we get some new customers, but that takes time because the smart TV penetration is still not so high in Switzerland. And therefore, that's more a topic which will have a mid term
impact. There are no further questions at the moment.
Okay. Then whilst with that, I would like
to conclude today's conference call. Thank you
to everyone participating. If you should have any further questions, please do not hesitate to contact us from the IR team. Speak to you soon. Have a great day, and stay healthy. Thank you.