Good morning, ladies and gentlemen, and welcome to the Q1 results 2019 presented by Auss Scheffe, Mario Rossi and Louis Schmid. Louis, the floor is yours.
Good morning, ladies and gentlemen, and welcome to Swisscom's Q1 results presentation. My name is Louis Schmid, Head of Investor Relations, and with me are our CEO, Urs Schepp and Mario Rossi, our Chief Financial Officer. The first part of today's analyst and investor presentation hosted by our CEO, Urs Kjerfik, consists of 2 chapters, a quick overview of the highlights and an update of our activities and performance in Switzerland and some explanations on the Fast Up results. 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
Bruce to
start his closing presentation. Bruce?
Good morning, ladies and gentlemen. And I would like to start with Chart 3, Q1 in a nutshell. So overall, we have a good Q1. We were able to successfully launch our new mobile offer in 1 mobile. After 5 weeks, we have more than 250,000 customers on this product.
We also were able to acquire spectrum, 45% of the spectrum, all the spectrum which we were able to acquire for a reasonable good price. So we have all the ingredients to successfully build out 5 gs. On TV, on Swisscom TV, we were able to have a continuous growth. And in all the tests on mobile, we performed. So we were the winner of all of these tests.
Although a positive event from Q1 is certainly the revision of the Telecommunication Act. So there is no change on the access regulation, and so we have a stable condition as today. In Italy, with Fastweb, we have a resilient performance. So overall, a good Q1. If you go on Slide 4, you see our market share or market performance.
On broadband, we had minus 3,000. I'm not concerned about this development. There are some spillover effects from Christmas promotions, and we have a clear value strategy strategy on this side. And if I look to our market share on the revenue side, we have here stable conditions and also our churn figures on broadband are on a low level. So overall, I'm not concerned about this development on broadband.
On TV, you see that we were able to slightly grow. We have a market share of 30 5%. On fixed voice, you see that the losses are lower. We are almost through in the retail market on the all IP migration. So we can say that these losses will reduce also slightly reduce also in the future.
And on broadband, we had a net adds of 31,000. The main driver behind it is the good acquisition of Gop Mobile, 2nd or 3rd brand of Swisscom, where we get a new MVNO contract. On the other side, we are successful with our value management on the postpaid customer base where we have also low churn figures. In Italy, you see on broadband growth and also on mobile, so a good market performance in Italy. On Slide 5, you see our key financial figures.
So Q1 is a robust quarter, and we can reiterate our full year guidance. On the net revenue side, we are approximately flat. We have minus EUR 25,000,000 on net revenue. On EBITDA, we have plus 5.8 percent, so 60 1,000,000. I will come later to it.
There are some reconciliation effects or IFRS 16 effects. And also the net income is slightly increased by 1.1%. Operating free cash flow is at a stable robust level of SEK533,000,000 If you go on the bottom line of the slide, you see a bit more details to the development of the EBITDA. So on a comparable base, the EBITDA increased by 5 dollars by $9,000,000 so 0.8 percent on a comparable base. If you took out the reconciliation leases or this IFRS 16 effect.
Swisscom Switzerland has a slightly decrease on the EBITDA, minus €6,000,000 So we were able to compensate the reduction of the service revenue by lower costs. And in Italy, with Fastweb, we have EBITDA growth of €11,000,000 So overall, a stable, good Q1. If you go on Slide 6, you see our operational priorities. So no changes in it. We want to keep our technology leadership.
We are doing a lot on the rollouts of wireline networks, but also wireless networks. We launched our 5 gs network in April mid of April. We have now our first 5 gs smartphone in the shop, an OPPO shop, and our ambition is to have a coverage over Switzerland above 90% at the end of this year. Value based our value management of our customer base is the core of our strategy. We are successful in it.
On B2B, we are in the phase of our IP migration. I will come later to it. And we were able to generate growth on security, cloud and IoT.
Swisscom is 2% ahead. What debt was
Operational excellence remains important for us. So these are the key priorities and you can see it on Slide 6.
Which is to be comparable with If
we go on Slide 7, you see our some remarks to the auction, spectrum auction, which was finalized at the end of January. So Swisscom was able to acquire 200 megahertz spectrum. You see that the distribution of the spectrum, a good distribution in lower bandwidth, in lower frequency spectrum, 700 megahertz also, we get a share of 50%. And then also, we have the spectrum to also make our 5 gs network fast. We paid SEK 196,000,000.
So I would say, if I compare it with other countries for a good price, we get spectrum. And the important is to say that from the spectrum, Swisscom has 45% of the whole spectrum. On Slide 8, some remarks to our new offer, InOne Mobile. The main idea behind this product is that in Europe, roaming is included, And we have a very good momentum on the market, good feedback from customers, good feedbacks from our sales channels. And as mentioned, after 5 weeks, above 250,000 customers on this product.
And also the distribution or the mix of the acquired subscription are as we planned it. So we are here on the plan, and we will also have in the future lighter subscriber acquisition, subscriber retention costs. On Slide 9, some more information on our converged strategy. So our ambition is to drive the converged penetration conversion penetration. And you see it that on mobile, we have now a penetration of 56.6%.
So we increased on a year on year level by 19% points. And on broadband, we are at the penetration of 60%. So InOne is very successful. We have 2,500,000 customers on InOne. And the average revenue generating unit per bundle is 1.95.
So overall success story within 1 also important for our value based management. On Slide 10, you see some more information on the B2C market and also the dynamic on revenue generating units. So a solid performance on the net adds and slightly better performance or less negative performance on fixed voice lines. Penetration ratio, you can see in the middle of the chart. So also you can see that the penetration is increasing.
Fixed mobile share of our postpaid value base is today at 37.4%. Interesting is to see the ARPU development on the left on the right side of the chart. You see that on wireline, we have increased ARPU on a high level, so good performance on ARPU. And on postpaid wireline, you see that we have an ARPU of CHF 59, which is CHF3 lower than previous year. And there are the main effect behind it is the converged rebate.
But on the other side, we have the more the higher ARPU on the bundles and the higher loyalty. So overall, a good performance on in the bundle market. On the bottom of the line, you see our churn figures. They are on a low level and in a solid area. So no actually solid positioning in the B2C market.
If I come to Slide 11, some remarks to our B2B business. So we have price pressure in the B2B Telecommunications business and some special effects in the solution business or in the ICT IT business. If you look to our wireless performance, you can see that we have ARPU pressure. This is mainly driven by competition. We will also facing in the future some ARPU pressure in the wireless business.
But on the other side, it's also driven by all inclusive models. So overall, I think that we are already today on a quite low level of an ARPU in this B2B market. We have a stable customer base, and we were also able to win back some customers. But the competition in wireless is high. And I would say it remains high.
But why it is important for Swisscom to have a good customer base management through a broad product portfolio. In wireline, so we have a solid revenue development on Business Networks. We have some price pressure on the connectivity side, driven by all IP migration. But you can also see that we are now at 80 percent of the all IP migration. So this effect of access on traffic cancellation on wireline will certainly reduce in the future because we are now at 8% of the all IP migration.
Some remarks to our solution business. Swisscom is very well positioned in this business. We have a unique positioning if you look to the product portfolio, the wide product portfolio we have. But we are we have a mixed development. On some areas, we are growing.
We are growing with digital solution. We are growing with security, cloud, data center. On the other side, on workplace, we had less workplaces installed. That's why we have a slightly decrease on the workplace. And there is also the migration to Unified Communication and Collaboration.
And then on the Banking segment, we had this effect from last year, where we lost the client. So you see this also in the year on year comparison. Overall, I remain unchanged positive for this solution business.
We will
face in the B2B market with further price pressure. On the other side, we have opportunities in areas like cloud, security. That's why we say that we are unchanged positive on this solution business. If you go on Slide 12, you see that we deliver what we actually announced. So savings decreased in the Q1 by €31,000,000 So we are on the way to deliver cost savings in the region of €100,000,000 plus, so successful on cost management.
If you go on Slide 13, some remarks to the financial performance of Swisscom Switzerland. So you can see that cost savings are compensating the top line pressure. If we have a look to our net revenue, you see that the net revenue decreased by SEK 41 €1,000,000 or €2,160,000,000 And you see that the service revenue decreased by 52 $1,000,000 and there half or $30,000,000 is coming out of the retail market and $22,000,000 is coming out of the enterprise market. So we have a service revenue pressure still. And on the other side on other segments, a slightly increase on the revenue side.
On the EBITDA side, you see that approximately stable EBITDA in Swisscom Switzerland, minus SEK 6,000,000. And you see the EBITDA dynamic in the middle and bottom of this chart. So the reduction of the EBITDA driven by fixed voice line by SEK 12,000,000, SEK 18,000,000 from the converged discount and SEK 28,000,000 coming from B2B wireline and wireless, mainly wireline and wireless. On the other side, we were able to compensate it through better indirect costs, plus $31,000,000 and $27,000,000 others. And in these $27,000,000 others is that the majority is our lower SOX, subscriber acquisition and subscriber retention costs.
This leads to a free cash flow operating operating free cash flow of CHF 520,000,000. On Slide 14, some remarks to Fastweb. So a resilient growth of Fastweb increased broadband customer base by 4%. Important to say is here that we are able to increase the value of this customer base. So the growth on ultra broadband is plus 32%.
That's important because on ultra broadband, we have a lower churn and higher ARPU. So the ultra broadband penetration in Italy on Fastweb is now at 58%. Also on mobile, we have a good momentum, and we were able to reduce the churn. So the churn is 22% lower than previous year. You see on the right side of the chart the performance of the converged offers.
We are now at 31% fixed mobile converged penetration. The benefit from this is a 27% higher ARPU and a lower churn in the region of 40%. And that shows that the strategy of converged bundles is working. On Slide 15, some remarks to the B2B performance of Fastweb. So we have 12% increased revenue in the enterprise market.
On wholesale, we are slightly lower, but the figures on wholesale are also lower. So we have a revenue of $43,000,000 There are some seasonal effects in it. So overall, the core wholesale business is in a stable and good situation. Now on Slide 16, the financial performance of Fastweb. So a solid performance and also in line with our full year guidance.
The net revenue increased by $22,000,000 to $514,000,000 You see that we have the growth on enterprise and consumer. And then on wholesale slightly lower because of this seasonal special effects of last year. But overall, a solid development in enterprise and consumer on the revenue side. You see that we were able to grow on wireline, wireless, but also in the enterprise market with value added services by 20 $1,000,000 EBITDA increased by 6%, and our full year guidance of growth of 5% is so
on the good way.
Now I would like to hand over to Mario to give you some more results on the financial
side. Mario? Thank you, Urs, and good morning to everybody. A few additional remarks to the financials on revenue on Slide 17. We say overall, all trends we saw in Q1 are as expected, maybe the B2B segment was a bit lighter than expected.
On retail customers, the decline of the service revenue of SEK 30,000,000 or 2.3 percent consists of SEK 12,000,000 impact from the loss of voice access lines. This comes down. Please remember last year, we had an impact of SEK 64,000,000. The same is for the impact from conversions discount, SEK 18,000,000 in Q1, SEK 85,000,000 in prior year. Also here we see reduced impact and then we have a negative impact from roaming of SEK 4,000,000, which is compensated with additional incoming roaming revenue.
On enterprise, service revenue went down by 8.1% of SEK 21,000,000 SEK 11,000,000 coming from wireless and SEK 10,000,000 from wireline. We also explained that the pressure we see in YOLF. In YOLINE, I would say 50% of the impact comes from price pressure and the other 50% from the structural effect of the all IP migration. We think that by the end of the year, all lines will be migrated, practically all lines. On Solution and IT Business, we have a decline of SEK 14,000,000 or 5%.
Two main reasons: Banking, we have this spillover from Q1 20 18, and we have lower volume in the workplace business. Then we benefit from higher trading revenues. We have there an increase of SEK 18,000,000. The overall trading revenue in this segment is SEK 72,000,000 in Q1. On 0.4, wholesale.
For the increase of the wholesale revenues, we have three main reasons. We benefit from the MVNO business. And second point, growth in the B2B connectivity. And the third point, as I mentioned, the inbound roaming additional revenues of SEK4 1,000,000. Coming to Fastweb, we have the growth we see growth in consumer and enterprise, SEK 12,000,000 and SEK 22,000,000 and we had a decline in wholesale.
As important, the core services in wholesale are stable. We have this non core low margin revenue from Flash Fiber last year. This is coming to an end in 2019. The full year revenues on this business last year was around CHF 100,000,000 or EUR 100,000,000. Euro.
Okay. Then on Slide 18, a few remarks on the OpEx. On direct costs, we saw a lower acquisition and retention costs of SEK 21,000,000. Then on goods and purchase goods purchase, we have this impact that's driven by the higher hardware sales in the enterprise segment. And on the indirect costs, as Urs mentioned, we are well on track to deliver the €100,000,000 cost savings.
We saw savings in all Swiss consultants divisions. Workforce costs went down by SEK 22,000,000 and SEK 9,000,000 also is mainly coming from lower IT costs in the network division. I think on EBITDA, in the retail segment, minus 2%. The decline of service revenue of SEK 30,000,000 was partly compensated by lower costs and lower indirect costs and lower subscriber acquisition costs. The Enterprise segment was not able to offset the pressure on service revenue.
We have some higher costs in the IT and Solutions business. And on Fastweb, as expected, we have this EBITDA growth of 6% in Q1. A few remarks on Slide 20 on net income. You see now all the details on the IFRS 16 impact on depreciation
and interest.
Just to remember, prior year is not restated. Then secondly, our net interest is now down to SEK 15,000,000 per quarter. On a comparable basis, that's SEK 14,000,000 less than 2018 Q1. And net income for the group went slightly up by 1.1%. On the next slide, on CapEx.
CapEx in Q1 in Switzerland are higher than in prior year as we had a very slow start for the FTTS rollout in Q1 2018. We are well on track for full year guidance in Switzerland, our overall CapEx of SEK 1,600,000,000 for Swiss Business. The spectrum the allocated spectrum will be booked in Q1, SEK 196,000,000 and also paid in Q2 and also paid
in Q3.
There are no special remarks on free cash flow. That brings me to Slide 23. On the financing side, there you see net debt. You see the impact of IFRS 16. As expected, the net debt goes up by about SEK 1,300,000,000 Then we had 1 transaction financing transaction in Q1, SEK200 1,000,000 Swiss bond.
10 years tenure at interest coupon of 0.5%, very favorable, thanks to our credit ratings. That brings me to the guidance. As mentioned by Lillian Doerr, it's unchanged for the group, around SEK11.4 billion revenues, more than SEK4.3 billion EBITDA and CapEx of around SEK2.3 billion. And with that, I hand over to Louis or to the operator.
Operator?
Okay. Thank you for your attention. And you have now the opportunity to ask questions. I already have some questions. I will open the first one from Simon Cowell from Barclays Bank.
Good morning, guys. Thank you
for taking the question. Simon from Barclays. So the first one is on your new mobile tariffs that you launched in the quarter. They're clearly very attractive and competitive to pricing from peers. And we've seen some response by them cutting some of their roaming pricing.
But your results to say today show the success that you've had. So I was just wondering how is competitive intensity going in mobile? And do you see a risk that your competitors respond aggressively to try and take back some of the market share? And then secondly, on service revenues, you touched on it in the call and you gave us some good clear defined guidance at the CMD in February. I'm just wondering, has anything really changed?
I think you said B2B has got a bit worse as fixed losses maybe getting slightly better than previously expected. If you could give us any more color on how you expect that trend going forward, that would be great.
Well, on our new offer in 1 mobile, so that's a competitive offer. I don't think that this will actually lead to a lot of or to additional price competition in Switzerland because the market is very promotion driven. And if you look to the main net adds of our competitors, they are a lot of them are coming out of promotion. So I think that the reaction will be more on the promotion side than on the list prices of the products. And since we launched InOne mobile, we see some reaction also on roaming on the promotion side, but I don't think that we will now have a new dimension of competition in mobile.
For us, it is important to improve our price performance ratio to keep to have a good value management and to get that we have to get some customers from prepaid to postpaid. That's the main idea behind it, and it is working well. To the service revenue development,
Marius? If you take the details, it was explained on Page 13 of the presentation. I would say that the impact on fixed voice line losses and fixed mobile conversions in the retail business. There's no big seasonality. You can take them 4 times around 4 times for the full year impact.
And on B2B, as Ulf mentioned, we think that the second half, we should see a better performance. And please don't take the SEK 28,000,000 4x for the full year impact. It should be lower what we see today.
Thanks, guys. Very clear.
Thank you. Then I'm having another question from Ulrich Rathe from Jefferies.
Yeah, thanks very much.
I have 3 questions, please, if I have to write. The first one is on the wholesale revenues. You highlighted some of the factors there. Could you comment maybe whether there are any one off ish type contributions there? I'm thinking about things like connection fees rather than sort of monthly recurring fees.
So could you give some color on whether the sort of one off fees compared to the sort of recurring fees in the Q1? The second one is on the broadband, the minus 3,000. I think in your presentation, you said this is a spillover from Christmas and you're not concerned. Could you just describe that? Could you give a bit more color on that, what this means spillover from Christmas?
And what the dynamics of this is and how this could unfold and repair itself in future quarters? And the last one is on the cost savings, €31,000,000 versus the €100,000,000 target. It looks like it's front loaded. Does this mean the target is maybe looking slightly conservative at this stage with €31,000,000 already achieved? Or is that sort of a phasing that's front loaded in the year?
Thank you.
Good. I will take the broadband question and cost question and Mario then on wholesale. On broadband, this spillover from Christmas, during Christmas time, there are a lot of aggressive promotions in the market. And then normally, the churn in January is a bit higher. That's the spillover effect.
But if I look to our net debt, what we have and if I look to our whole churn figure, I don't feel concerned about the broadband penetration. And then we are able, with a strong bundle, in one mobile and in one mobile in one home to gain some, let's say, some market share in a saturated market with our strong TV platform and if we bundle it with our new mobile offering. So that's why overall, I think that we will have in a saturated market with a network which is becoming faster because of the rollout of our ultra broadband strategy. I'm not concerned about this development. And if I look to the last week, I also can say that I'm not concerned about this.
On the cost side,
yes, we were able to save €31,000,000 and we will certainly
we feel ourselves comfortable that we can save SEK 100,000,000 or even maybe slightly over SEK 100,000,000, but not in factors. But overall, we feel ourselves comfortable to deliver this SEK 100,000,000 plus.
And on the wholesale revenues, there are no one offs. Maybe the ENVY No benefit is around €5,000,000 and broadband connectivity is also around CHF 5,000,000. And as I mentioned, inbound roaming, which compensated by higher outbound costs is €4,000,000 So you have €14,000,000 of this €20,000,000 growth and the rest is related to termination fees with this practice in OMAR. Thank
Then I have the next question from Mike Bishop from Goldman Sachs.
Thank you very much for taking the questions. Just two questions from me, please. Firstly, again, picking up on the margin, but more on the SAC and SRC costs, they were down in the quarter, which led to the quite strong margin performance in Switzerland. Do you think this is just phasing or is this more a structural decline in SAC and SRC? Just because I noted in your comments that with the in one mobile tariffs, you mentioned structurally lower SRC costs.
And then just secondly, given your very, very rapid progress on 5 gs, I was really keen just to get some initial feedback from a real life situation in terms of the speed you're seeing. And then also as a quick follow-up, what sort of pent up customer demand do you think there is in Switzerland for 5 gs and potential early adopters? Thanks very much.
Well, I take the 5 gs question and then Mario the question on subscriber acquisition retention cost. On 5 gs, as I mentioned, we launched the first order network, the 5 gs network And also with the smartphone, now the smartphone is in our shop. We have 1st smartphone in our shop. So we are here in a very early phase. And now your question is how is the pickup.
So 5 gs will have on different levels an impact. Certainly, on the enterprise market, Industry 4.0, campus networks and all such things, you can do there more IT oriented projects through 5 gs. And then on the other side, you have all this potential in the B2C market, IoT and then also virtual reality, augmented reality cases and so on. So my belief is that 5 gs will be an important technology, which will change the mobile communication. The key question is how skillful our industry will be in monetizing these advantages.
The strategy of Swisscom is to charge CHF10 more for 5 gs speeds, and but we are not alone in this market. So you will see how skillful we are. But on the other side, we will get more SIM cards also in the market, and we will be able to differentiate ourselves. 2019 is still a starting year. We will have now the first smartphones.
The majority of smartphones will be in the market at the end of this year. And also then we will have a good coverage on our 5 gs and I think to really get a take up on 5 gs, you need also first the coverage. And so the main impact of 5 gs will begin in 2020 plus. But now we are in the beginning phase, and our strategy is to be really a technology
leader in this area. Mario, on the subscriber acquisition. Yes. On the acquisition retention costs, so they went down by SEK 21,000,000 in Q1. So 60% is coming from the mobile business and 40% of the fixed line business.
On mobile business, the acquisition costs were more or less stable. On the retention costs, we had lower amount of subsidy per contract. The volume was more or less unchanged, let's say. And the saving on in the fixed business, in Q1 2018, we were still in the middle of the All IP migration. And during this migration, you had to grant higher subsidies for router and set top boxes.
Looking ahead in the next three quarters, we will see impact from the new one in MobileGo. There we will have reduced acquisition retention costs, but that will be compensated in the next week or by the release of the IFRS 15 assets we have in the balance sheet. So full impact on this changed model, you will see only in 2020.
Thank you. That's very clear.
Then I have a next question from Patrick Boulan from Bank of America. Hi,
it's Fred Boulan at Bank of America. So just a follow-up on the previous question on costs. So we had almost stable domestic EBITDA in the quarter. I think if we look at some of the one offs you flag in Q1 last year, maybe the trend is about minus 2. What kind of trends can we expect for the rest of the year?
In particular, we had very strong wholesale IT. Is this sustainable or you would point to some elements that we need to bear in mind in terms of not extrapolating that more stable trend for the rest of the year? And then second, Satish, smaller question, if you could just quantify for us the impact of Coop Mobile on your revenue and subscribers? Thank you.
Sorry, Fred. Can you repeat the second question? It was not very clear.
Yes. Just the impact of COP in subs and revenue. For the migration to your network?
The migration to Outsold.
COP Mobile, yes. Okay,
okay. Good. The question of CORE Mobile, that's the 3rd brand. So customers with this new product. But overall, if you take the whole amount of it from the network loading, so that's neglectable.
So we get some additional net adds. But this will also a bit flatten out. You have the first peak because we could get a lot of customers back. And this is flattening out, but Dofre is an attractive one. So that I think we will also have in the next month a good momentum with Crop Mobile.
But that is not certainly the main pillar of our strategy. The main pillar of our strategy is that we have a value management on postpaid. And then on the second part of the question was cost. What are the trends? And so actually, as Mario already mentioned, we have now saved $31,000,000 and we are really confident that we get $100,000,000 plus at the end of the year.
And there are a lot of different actions behind this to make the savings, and there is not really a very special seasonal effect in it.
Okay. If I may follow-up thank you very much. If I may follow-up on mobile. So you on the non convergent offer now Swiss Mobile, you have a core offer Swiss Mobile, flat at CHF 65. If I look at the range you've had of offers historically on mobile only, you and the tiering on speed, you had offers which were priced substantially higher than that, above CHF100.
Can you talk a bit about dynamics here going on in terms of is there any repricing at all or you managed to keep customers or to move them to in 1 mobile with no significant impact on ARPU? Thank you.
Yes. On the in 1 mobile go, the CHF60, that's the converged offer. So that's the less CHF 20 discount. So the face value or the value for mobile only customers is CHF 80. And that you can compare to the former N subscription, which is stuck at CHF99.
But don't forget, we don't we have now the savings on the acquisition costs. So as we mentioned when we introduced the InOne Mobile Go, we think the overall impact of this introduction in 2019 and the full year will be EBITDA neutral. And we can you give some more color on the ARPU development after Q2? Now it's too early. We have just 5 weeks in
the market, it is too early.
Thank you very much.
We then have the next question from Mikael Freyjaewen from UBS.
Good morning. Thank you very much for taking my questions. I have 3 on Swiss Enterprise and then one on Fastweb, please, if I may. Firstly, I wonder if you could talk a bit more about the competition you're seeing in the enterprise mobile space. Have you seen any changes in the behavior of your competitors given there appears to be a renewed focus on B2B from at least one of them?
Then you highlighted how RFPs are explaining some of the ARPU pressure you're seeing in B2B. I appreciate it may be commercially sensitive, but I wondered if you could give us any color on what portion of your enterprise mobile base could perhaps retender in the next year or any other way of quantifying the potential ARPU risk from future RFPs? Then finally on Solutions, the disclosure around the different moving parts of the Solutions business was interesting.
But I
wonder if you could give us any color on how much your Solutions revenue is still from workplace and UCC Solutions? And then just finally, the one on Fastweb was obviously, your wholesale revenues were under pressure in Q1. And you mentioned how this basically reflected the phase out of flash fiber related projects. At the full year results, I felt wholesale was an area management quite confident about. Obviously, you highlighted core revenues were stable this quarter.
So I just wondered how we should expect core wholesale revenues to trend during the rest of 2019.
Well, I take the question on enterprise, and Mario will give some flavor on the wholesale revenues. The competition in the mobile space in the B2B market is, let's say, is a very fragmented one. What we are seeing is attacks from Sunrise not with a clear pattern, but on very specific customers with really very aggressive prices. And that's a bit dynamic in this market. Overall and that's why I think we will the competition or the price pressure on mobile will continue, maybe a bit on a lower level, but we will have further pressure on mobile service revenue because also in the B2B market, the contracts are normally 2 year contracts and then you have a renegotiation on this contract.
On the other side, we are at an ARPU of CHF26, and this is already low. So I think the effect can't be a huge one. But competition will remain on wireless business in B2B. Our strategy is to differentiate ourselves through an excellent customer service, through full portfolio solutions. And this is actually working out because if you look to our churn figures in the B2B market, they are really low.
On the solution side, your question was how many business we are doing in the workplace area on solution. We don't disclose this figure, but it's now not what we are seeing in the workplace area are actually 2 dynamics. The one dynamic is that you have workplaces in a traditional model, on premise workplaces, which are migrating on a cloud based solution. So that's one effect. And then on the second effect, and that was the effect with which we see in our figures, is actually that some customers have less workplaces, some volume effect on workplace.
And this was the case, which Mario explained. But overall, I think workplace remains an attractive business unit for Swisscom because it's moving more in Workplace. It's getting more connected with the connectivity part. And with the migration to unified communication, we will be able to get there a good business out of workplace. Mario?
And on your question on Fastweb wholesale, so as I mentioned, the decline in Q1 revenues was fully attributable to these low margin flash fiber revenue. And full year in 2018, we had revenues out of this business of SEK100 1,000,000 out of the SEK275 1,000,000 wholesale revenues we have in Fastweb. For the full year this year, on flash fiber, we expect, I don't know, SEK 30,000,000 to SEK 40,000,000 from this business. And so in the core business, in the high margin core business of wholesale, we still expect small growth in 2019.
Then I have the next question from Radeer James from the New Street Research.
Yes, good morning. Thank you very much indeed. I had two questions, please. The first one just from a kind of market perspective.
Could you speak a bit louder, please?
Yes, sorry. Can you hear me now?
Yes, yes.
Yes, great. So the first question I have is just about the competitive impact you're seeing in the market at the moment on the fixed line side from Salt, whether you are really seeing any pickup at the moment. I know a question earlier around some of the broadband customer losses in Q1. And do you think any of that can be attributed to a slightly higher loss to salt? And then the second question I had, please, was around plans and timetable for rolling out your 3.5 gigahertz network in Italy on Fastweb, have plans on that firmed up a little bit more?
When can we think about you being able to reduce some of the MVNO costs you pay to TI and migrating on to your own 3.5 gigahertz network?
So on the competitive dynamic of SORT, so we let's say, we don't feel actually sold as the reason why we had this minus 3,000 net adds in Q1. As I mentioned, it's more an overall very aggressive promotion topic in the market, and we have more value based approach. If you look to the figures, at the end, if all figures are out in the market, I'm quite confident that you can see that we kept our market share in this B2B broadband market. And that is more a question of volume driven topic here. And the impact of thought on the side of Swisscom is, let's say, is slow.
And then on this on our plans of the 3.5 gigahertz in Italy, It's too early to disclose it. But what I can say you is that we are operating successfully the mobile business in Italy also with the contract on which we have today as an MVNO. So and it's not our intention to cross subsidize mobile with broadband. So we are happy with the development also on the margin side on mobile in Italy.
And currently, we use the 3.5 gigahertz spectrum for fixed wireless access business from fiscal. It's a small one, but we use it. And as it was mentioned, we are now studying and planning the future potential rollout in the cities, but it's too early.
But is it your intention then to be able to use that to help save costs on your MVNO by Yes, that's the ultimate target. Is that a 2020 impact we'll start to see that or is it further beyond that?
Oh, really? We don't I think it's too early to give here a clear message. The main idea is, and that's the strategy of Fastweb, to use assets which we have in the wireline market and now some spectrum assets to get a better positioning in the mobile market. But today, we are on an MVNO, and we are doing fixed wireless access offers out of the business of Tiscali, which we acquired.
Great. Thank you.
Then I have next question from Gaye Paddy from Macquarie Bank.
Good morning, team. Just a couple of quick questions, please. Could you just elaborate on what your pitch to the consumer is for your 5 gs services? Are you just selling speed or capacity? Or what else are you doing in order to try and sell it?
Secondly, with the IP migration now to the consumer and SME market complete, what do you think that means for your cost stack going forward in 2019 with regard to duplication of spend? Or are we going to have to wait till 2020 for when all the IP migration is done before we see the visibility of that coming through? Thank you.
Well, I'm taking the question on 5 gs and Mario and then on all IP IP migration and costs. To the pitch to our customer, it's very different on B2B and B2C. On B2B, we have a strong value proposition, which we can deliver through campus networks, Industry 4.0 solution optimization of the whole production. There we have also we already made some nice showcases with B2B customers, and this is very compelling. But this is a project business.
This is a business which need specific projects. On the B2C market, the pitch is also a fragmented one. On the one side, you have speed. That's important for downloading, for cloud solutions and such things. But I think that's not the major value add we can bring in the beginning.
The lower latency is certainly another point. And this will bring us new forms of application. Maybe some of them will be virtual reality, augmented reality. This will take a bit time. It's actually we are in the same situation as when we launched 3 gs.
When we launched 3 gs, there were a lot of IT switch application will be successful. Nobody has thought about the smartphone in the way we have it today in the market. I think we will have exactly same effect. Mobile will be coming more important, will be more central in the digitalization and will drive the whole multimedia world. And this will lead actually at the end to more SIM cards.
Maybe last point to this pitch to our customer. Another strong pitch is the service level or quality, which we can bring through 5 gs. Today, mobile is a shared medium. With 5 gs, we will be able to deliver a stronger service level agreement, and this is also important for a lot of different application and the digitalization.
Mario? And the impact of the completion of the Ola IP migration, that's included in our cost saving targets, in our cost saving program 2018 to 2020. We said that we save each year SEK 100,000,000. Last year, we delivered SEK 121,000,000. This year, as Urs mentioned, that's at least SEK 100,000,000.
And also in 2020, it will be at least SEK 100,000,000. If we can deliver more, then we deliver more, but the savings are included. We benefited already last year from lower interventions on the network to lower number of calls because of the migrated customers. So that's part of this program.
Brilliant. Thank you.
We have the next question from Gaje Usman from Berenberg Bank.
Hello. Thank you for taking my questions. I've got 4, please. The first question was just on 5 gs again. I mean, you mentioned that you'll reach a coverage rate presumably of the population of 90% by the end of the year.
I was just wondering, I mean, what kind of 5 gs are we talking about here? Because presumably, you won't be going around deploying massive MIMO on all your or new network radio on all your sites so quickly. So just The second The second question was just on churn levels in mobile. So admittedly, the apps the churn levels are low, but they have been trending up over the last few quarters. And that's obviously despite convergence being accounting for a bigger portion of the base.
So I was just wondering if you could explain why these churn levels are trending up as opposed to trending down, albeit they are at low levels as we can see. So the third question was on the TV market. I think in one of the appendices where you show the overall development of the market, I mean, the TV market as a whole seems to be shrinking. And I was just wondering if you could if you had a view on actually what is going on? Are people just not watching TV anymore?
Are they just any thoughts on that would be interesting. And then finally, I just wanted to ask a very quick one on UPC. They did indicate towards the end of last year a fairly aggressive turnaround plan. They changed their tariffs around as well. So are you seeing them more visible in the market now than you have over the last couple of months or not?
Thank you.
Good. Maybe on 5 gs, our ambition is to have a coverage, as you mentioned, it's of above 90% at the end of 2019. And we call this 5 gs wide. So we see 5 gs wide solution and 5 gs fast solution. 5 gs fast solution is mainly done out of the 3.5 gigahertz and wide is done through the lower frequencies and also in a combination with our very strong 4 gs plus network.
So that's actually a combination, but you will have a very good speed and low latency with 5 gs wide. Then on the churn on the wireless, yes, he went slightly up. But if I look to the areas, this is in the lower end of the market. So these are these low end postpaid products where we you see a can of washing machine. And our ambition is certainly to increase the share fixed mobile conversion share.
We are now at 37%, and this will continue to increase that. And then we but then this effect, you will see mainly on the value on the more on the top end of the postpaid market. In the low end of the postpaid market, through all these promotions, you will have this washing machine, but still on a very good churn level compared to other countries. On TV, you say that the market is shrinking. What we see in Swisscom is actually not these people who are leaving the TV market because of Netflix or other OTT solution.
We see still a momentum on TV. Important for us is to have a very attractive platform where we can have a attractive platform where we can have an excellent customer experience where we aggregate all the different content and have a good usability. And I'm convinced that this will be working out also in the next years. Mario?
You mentioned the appendix, I think Page 30, the overall mark. Yes, it's from 2014 to 2019, the overall mark went down by about 3%, but that's all coming from satellite. And frankly spoken, I don't know where these customers went from satellite, maybe to the PC. But for us, it's important that the market on cable and on fixed line was more or less stable and in that area we were able to grow our market share.
Good. And then on UPC, turnaround on UPC, I'm the strong I'm the wrong man to ask this question. What I can tell you is that we don't feel UFIC is stronger than in the past quarters. So we don't see a change actually.
Great. Thank you very much.
Thank you. Operator, Yes.
I have one last question in the queue even. I will take it. It's from von Leninghorst from the company Kepler Equiress.
Yes. My questions have been answered. Thanks.
Okay. Thank you. All right.
Thank you. And with that, I would like to conclude today's conference call. And should you have any further questions, please do not to contact us from the IR team. Speak to you soon and have a great day. Thank you.
The conference recording has been stopped.