Good morning, ladies and gentlemen. Welcome to the third quarter results 2018 presented by Urs Schaeppi, Mario Rossi, and Louis Schmid. Louis, please, the floor is yours.
Good morning, ladies and gentlemen. Welcome to Swisscom's Q3 results presentation. My name is Louis Schmid, Head of IR, and with me are our CEO, Urs Schaeppi, and Mario Rossi, our Chief Financial Officer. The first part of today's analyst and investor presentation, hosted by our CEO, consists of three chapters: a quick overview of the highlights, operational performance, and financial results of Q3 in the first nine months, an update on our activities and performance in Switzerland, and finally, some explanations on the Fastweb results. In the second part of the presentation, Mario will run you through the financials and the unchanged full-year guidance. With that, I would like to hand over to Urs to start his part of the presentation. Urs?
Good morning, ladies and gentlemen. I would like to start with page four, the highlights. Our financials are as expected, and we are also on our guidance. We confirm our guidance for 2018. If you look to the Q3 EBITDA, you can see that the margins are slightly up on a year-on-year comparison. Fastweb is on track. Industrial-wise, we have an EBITDA growth of 5%. In the market, we are successful with our bundle offers. inOne, we have 2.1 million customers on our quadruple play offer. With TV, we have a solid momentum. Overall, the trends are the same as in the previous quarter with stable market performance, stable market share, and good joint figures. I will come later to it. On the regulatory side, we have the Telecommunications Act, which is under revision.
Now it will go to the second chamber, and we expect decisions at the end of this year in December. If you go on slide five, you see our operational performance. A solid ARPU momentum in Switzerland with a small growth on broadband, but also on TV and postpaid. Also a slightly declining reduction of voice line, which is a substitution business by mobile and IP. Fastweb, we have a net positive net add in broadband and also mobile. The Q3 mobile was slightly weak, but if I look to the October figures, we see much better figures on mobile because we made a readjustment of our product in mobile. Overall, a good and successful customer-based management and a growth in Italy. If you go on slide six, the key financial figures.
You see that we were able to have a slight growth on our net revenue, up by CHF 85 million. Dynamics are as in the previous quarter in Switzerland, a reduction of CHF 140 million, mainly driven by price pressure and substitution fixed to mobile substitution. In Fastweb, a positive revenue increase by over CHF 100 million. On the EBITDA level, if you look to the EBITDA organic in the first 9 months, you can see that our EBITDA is stable. In Switzerland, we have a declining EBITDA by CHF 77 million, driven by these voice line declines, some conversion discounts, and B2B price pressure, better indirect costs and some positive dynamics on IT products. Overall, if you take out the one-offs, a stable EBITDA. Fastweb has an increasing EBITDA by CHF 26 million. If you go on slide eight, you see our priorities in Switzerland.
Priorities are customer-based management, clear focus on a value focus. Further increasing in our networks to have this high-quality network in mobile and broadband. Pushing the bundle migration to increase the customer lifetime value. In the B2B market to leverage our strong customer base. That means share of wallet in the B2B market. Besides this, as already mentioned in the last quarter, the efficiency program, where we are on track to achieve our targets. If you go on slide nine, you see the situation in the Swiss market. The market is a mature market. You see that on mobile, we have quite high figures on retention, 191,000 retention offers. We have a postpaid customer share of 71%. I think that's important to say, we have stable postpaid churn figures or even slightly decreasing churn figures.
Also in the B2B market, we don't have an acceleration of the churn. If I look to our churn figures or to our market share in the B2B market, we have a stable condition. We lose some customers, we are also making win-backs. If I go to the broadband in the middle of the chart, you see also stable churn figures at 9%, which shows that we are successful with our customer base management. On the fixed-mobile bundles at the bottom of the chart, you see the churn figures. We have churn figures in the region of 5%, if we are in inOne, in a converged bundle. Strong and good momentum on our customer base management. On slide 10, you see our activities on the network upgrade.
As planned, you see that we have 61% of our network is now in speeds over 80 megabits per second. The target is that we will have 90% in 2021. We are there on track with the rollout of ultra-broadband coverage and also on mobile we are on track to have an excellent network. We also made pilots. We standardized 5G networks in some cities. There, I'm also convinced that we are in front, leader. There are always a lot of tests, as just mentioned, two of them where we have the best performance. If you go on slide 11, some information on the revision of the Telecommunications Act. The main topic in the Telecommunications Act out of the perspective of Swisscom is the fiber regulation. The first chamber rejected it. That is a good sign for Swisscom.
It will go to the second chamber in December, we have more clarity. There is still some discussion on net neutrality. I think we should wait for the discussion in the second chamber. Some discussion on roaming. The law proposed to set some price caps in roaming. We will have no effects on this revision of the Telecommunications Act. That will be my forecast before the second half of 2019. I think also that we should look quite relaxed to this revision. If I go to slide 12, you see some activities which we are doing to stimulate the retail market performance. The market is very strong promotion-driven in Switzerland. I would say the acquisitions are primarily promotion-driven, not only in the fiber-to-the-home service, also in other activities.
The liquidity of the market is mainly in the very price-sensitive area of the market. That's also the reason why we have so good and stable churn figures, as I mentioned before. Slide 13, you see the performance of inOne. We have 2.1 million inOne customers. We are at the penetration in the region of 50%. 50% of our customer base is now in this inOne offer. The impact on the financials of inOne are as expected, we have an increasing lifetime value because the churn is in the region of 5%. On slide 14, the service revenue performance in the retail market. You see that we have a stable ARPU, or in the bundled products even an increasing revenue per bundle. The revenues on wireline are at CHF 642 million, this is minus CHF 12 million compared to the previous year. This is mainly driven by voice substitution.
On mobile, we have CHF 662 million, which is CHF 26 million below previous year. The main effects here are the converged discounts and the roaming. Overall, stable ARPU and increasing revenues in the bundled area, which shows our strategy. Enterprise business on page 15. Slightly increasing revenue-generating units in mobile, which shows that we are able to keep our strong market position. Declining subscription in voice. This is driven by IP substitution and All-IP migration. You see the service revenue, which is slightly down by CHF 17 million on to previous year-on-year. There, the main effect is the general price pressure, price competition, and All-IP migration. The solution revenue is in the region as we forecasted it the last time, in the region of CHF 250 million.
We have stable market shares, we have a good win ratio and a good order intake. The solution revenue is slightly lower than previous years because we have always a project impact. It's a bit of seasonal business. We have, as already mentioned the last time, in the banking area, some changes also on the accounting level, we lost one customer. We have a good order intake in the banking segment. Overall, I would say also a good performance in the B2B business, but there is price pressure in this segment. On page 16, our activities on cost reduction. We are well on track to achieve the CHF 100 million savings. At the end of Q3, we are at CHF 82 million decrease in direct costs. On Fastweb, some remarks on page 18.
You see here on a high-level perspective, what is our strategy in the network side. We are targeting a hybrid fixed wireless technology network with our own network, where we have a footprint of 8 million households with five to six. On the mobile side, we have now some spectrum, and you can see on the chart, we have the 200 MHz, 26 GHz. We are on the way to get the spectrum of the 40 MHz in the 3.5 GHz area. This will enable us to get a very selective coverage in hotspots to deliver a good mobile and customer experience. This is a bit our strategy in the network area. The focus is the fixed network, where we are on the way to migrate much more customers on ultra broadband. On page 19, the consumer performance of Fastweb.
You see that we have a customer base increase of 4%. Ultra broadband customers grew by 35%. We have now a penetration of 52% of ultra broadband customers in our customer base. On mobile, you see that we have 1.3 million mobile customers, an increase of 34%. We have 28% mobile penetration in our customer base of converged customers. There, in this customer base, we have 30% lower churn. If you go on slide 20, you see the B2B performance and wholesale performance. Increased order book, important to mention, 31% market share in the B2B market. I am convinced that we are also here in the B2B market, we have further potential to grow. If you go on slide 21, you see the financial performance. Net revenue on a comparable base up by 7%.
EBITDA on a comparable base up by 5%. A growth on net revenue and EBITDA. Mario will give you some more flavor on it later. I would like to hand over to Mario to the financials.
Thank you. Also good morning from my side. We start on page 23 with some additional information on the financials, as was mentioned. On the top line, on a like-for-like basis, we are accumulated, we can show flat development. In Q3, other than the first two quarters, our growth of Fastweb is not sufficient to compensate for the revenue decline of the Swiss business. A few remarks on the segment. In retail customers, we lose CHF 38 million in Q3. That is a similar amount like in Q2. Also the driver behind that decline are the same. That is conversions, decrease of access lines, and there is a much lower amount roaming. I will give you some details later on before the guidance. Also in enterprise, similar evolution like in Q2 in both in service revenue and in the solution business.
Again, as was mentioned, we have the same effect in Q3 as in Q2. We lost one banking client and we have some new customer requirements which result in lower revenues. Few remarks on the segment other. I saw some notes this morning. On revenue, the CHF 25 million is a cumulative number for nine months. The main reason for the increase of revenue comes from our subsidiary, cablex, where we have a huge contract in the installation business for the Swiss railways. That's more or less the full effect of this CHF 25 million. Few words on Fastweb's evolution of Q3. In consumer, we were able to grow revenues by 4.3%, compared to a cumulative growth of 8.6%. The reason for the lower growth is we don't see any more the effects of the four-week billing, because we implemented that in Q2 2017.
On enterprise, we have a steady growth of the revenues of north of 7% in all three quarters. In wholesale, we post revenues of CHF 52 million in Q3 2018 compared to CHF 62 million in 2018. The reason is there you have some seasonality, and we had a very strong Q3 back in 2017. If I look at our expectations for Q4 on the revenue side of Fastweb, we do expect the same growth in Q4 as in Q3 for both segments, enterprise and consumer. We expect a very strong Q4 in wholesale. Few remarks on page 24 on OpEx. On acquisition and retention costs. We have in Q3, CHF 11 million less subsidized internet routers and TV boxes. The reason is we had last with All-IP migration, and we replaced a lot of devices for free.
Then we had CHF 20 million less acquisition and retention cost in mobile in Q3. On the outpayments, we had lower outpayments for outbound roaming because of price increases. I think these are the main effects on the direct costs. On indirect costs, as was mentioned, we are well on track to reach our CHF 100 million savings on indirect costs. The main part comes from workforce, close to CHF 60 million, but also on other cost elements like external workforce, IT, marketing, we are able to reduce our expenses. Next page. On EBITDA by segment, can say on retail, we have more or less a flat Q3 compared to the prior year. Here we have two main effects. We have CHF 20 million less acquisition and retention costs in Q3, and we have CHF 15 million less outpayments, which I mentioned before. On enterprise, similar development in Q3 as in Q2.
We were able to absorb part of the price pressure on the top line, on the cost side. On wholesale IT and network, first we have here the impact of the cost reduction, Q3 wholesale revenue was impacted by lower inbound revenue of CHF 13 million. That's the reason why we have here a negative impact of CHF 18 million. On Fastweb, in all three quarters, we have a comparable EBITDA growth of exactly 5%. Here again, few words from other. Again, the CHF 45 million are the accumulated numbers. Each quarter around CHF 15 million. There are two reasons. One reason is we have some margin on the revenue growth I mentioned before on the top line. The main reason is the IFRS reconciliation. In the operating segment, we show the cash payments to the pension fund.
The reason is that we have more comparable situation along the course of the years. In the reconciliation, in the segment other, we have the difference between the payments and the calculation according to IAS 19. Again, in the segment, contribution payment, and in other, we have the calculation according to the IFRS rules. In 2017, we had higher payments because we had a lot of early retirement cases. That gives us this positive impact. On a quarterly basis, the difference of this effect is around CHF 10 million. I think that it's an accounting issue at the end. On net income below the EBITDA, I think there is nothing special to mention. We had 1 refinancing in Q3, CHF 150 million, and you find the debt portfolio and the maturity profile on page 15. On the next page, CapEx. Switzerland, we are prior year, more or less.
Fiber rollout is performing well. We invested in Q3, CHF 120 million in fiber, and the pace is accelerating. On a cumulative basis on mobile, we invested in 3 quarters, CHF 250 million. Fastweb in local currency is 2% below prior year and the main CapEx drivers are: in general, are customer-related CapEx. On the operating free cash flow, you see this negative change in net working capital. It's a relatively high amount, but that's due to seasonality. On the full-year basis, I expect an impact of -CHF 80 million to CHF 100 million coming from change in net working capital. That brings me to the underlying EBITDA trends 2018 of the Swiss business. You see here the quarter evolution in the retail business of fixed-line, voice line losses, outbound roaming, and the conversion discounts. I think on fixed line and conversion discounts, the impact will be a bit higher than we guided.
We guided for fixed line, CHF 60 million. We stand now at CHF 50 million. Conversions, we guided CHF 80 million. We stand now at CHF 65 million. The B2B segment, we guided for a margin loss of CHF 40 million. We stand now at CHF 56 million. The B2B business is able to compensate part of it in the line indirect cost savings. I would say overall, after 9 months, we have from this structural effect, a negative impact of CHF 77 million. In the full year, we expect it's CHF 100 million less EBITDA, and I think we are well on track to deliver this guidance. That brings me to the last slide. As Louis mentioned in the introduction, of course, we confirm after 9 months the full-year guidance. With that, I hand over to the operator.
Thank you. Dear ladies and gentlemen, thank you for your attention. You have now the opportunity to ask questions by dialing star 14 on your telephone keypad. Once you are in the question queue, as you join, you will hear a short announcement saying unmuted. I have already some questions. The first one is coming up from Simon Cole from Barclays Bank. Go ahead.
Hi, guys. Thanks for taking the questions. I have one on Switzerland. You're still making steady progress on fixed-mobile bundling. Do you see any need to accelerate that? Because it's in a lot of promotions this summer. I'm guessing you're not seeing much impact from sort, but any color on how competition has been progressing would also be helpful. The second one. On Fastweb in Italy, I was just wondering how you feel about MVNO economics now versus owner economics, because we're obviously seeing mobile data increase quite substantially in tariffs in that market, and we've seen headlines around potential M&A there. Thanks.
On the competition or in Switzerland on this converged offer inOne. We have a good momentum on inOne. We don't see that we have to change now something. As you see in the presentation, the penetration is increasing. It will continue, but certainly, the speed of adoption of inOne will be declining a bit because we are already now at 50%. I think we are well-positioned with our inOne project. Our strategy on this bundled project is to further increase the USP or the advantage on our TV product and ramping up the speed in the ultra-broadband product. We don't see there actually.
A need to change the strategy in the bundled offer. Competition is, as I mentioned, very promotion-oriented, very short-term oriented. The competition is trying to get some customers with aggressive promotion. The liquidity of the market is mainly in the low end, in the very price-sensitive segment. On Fastweb, on the MVNO offer, we are certainly not subsidizing the MVNO business because we are talking about margin. We do our business in a way that we have a margin on mobile. We are doing a customer base management because then we are able to decrease the churn. The whole strategy of customer base management of Fastweb is to bring in more customer on our ultra broadband networks and having a mobile product to get a more converged customer base. That's a bit our strategy. M&A, we don't comment rumors on M&A.
We think that we can develop Fastweb.
Okay. That's great. Thanks so much.
I have the next question from Jakob Bluestone from Credit Suisse.
Hi. Good morning. I've got a question looking at page six in your slides where you sort of break out the quarterly development of your revenues, particularly for Switzerland. One of the things that sort of jumps out is that every quarter the decline in Swisscom Switzerland revenues gets a bit bigger. You lost CHF 39 year-on-year in Q1, CHF 47 in Q2, down CHF 57 year-on-year in Q3. I was just wondering, do you think we're sort of at a low point, or do you think we should be looking for continued erosion in your Swiss revenues? Just secondly, can I just follow up? I think you mentioned the weakness in wholesale was to do with lower inbound roaming. Should we basically be sort of expecting wholesale revenues to be shrinking going forward, given this is, I guess, annualizing some of the roaming changes last year?
Is that sort of more seasonally driven? Just any color you can give on the wholesale outlook. Thank you.
I will take the question on service revenue in Switzerland. Mario will go to the inbound roaming question. On the service revenue in Switzerland, we will have some pressure on the service revenue in Switzerland. If you look to the whole dynamic, the negative dynamic was flattening out. You see this already today. The impact of roaming is flattening down. Fixed to mobile or fixed line will also flattening out because the majority of All-IP migration is done. A lot of customers who made the substitution have done it. You see it also in the reduction of the lines, fixed voice lines that they are reducing. This impact will be lower. The converged discount is actually driven by the amount of migration to inOne, and this will also have, let's say, a saturation effect.
Overall, there will be a less hard dynamic on the service revenue in Switzerland. Our strategy is to work on the customer base, to have a more for more approach and keeping the churn low. That's the big dynamic which we will have in the service revenue. Mario?
On the inbound roaming, we will have also in the future lower prices. We see a decline. We can expect also in Q4 a decline. Don't forget on the other side, we will have lower outpayments because that's a combined business. The prices for the outpayments will also go down. There you will see the positive impact, mainly in the retail segment.
That's very helpful. Thanks guys.
The next question is coming from Frederic Boulan from the Bank of America.
Hi. Thank you for taking the question. Just a few points. First of all, on the Telecommunications Act if you could explain a little bit the range of outcomes. You seem very confident, but if you could detail a little bit the areas where things could be against you and what could be the impact for the group in the long run. Secondly, on Fastweb, if you could clarify a little bit what actions you have in the pipeline at the cost side. I think to reach your CHF 700 million guidance, you need probably about 20% EBITDA growth in Q4. If you could explain a little bit why we're trending a bit below trend for the time being and what actions do you have in place to achieve the guidance that you are reiterating today. Thank you.
Good. I take the question of Telecommunications Act and Mario, the cost question of Fastweb. The Telecommunications Act is actually, for Swisscom, the major discussion is on this fiber regulation. The Telecommunications Act, what is in discussion, that we get a technology neutrality. That would mean that Swisscom would be regulated also on the fiber network. Today, we are only regulated on the copper networks. That's the main discussion. The first chamber of the parliament exactly rejects this proposal of fiber regulation. The first chamber actually made a decision which is good for Swisscom. I think we have strong argument why this fiber regulation would be not good for the Swiss market at the end, because this would reduce the investment dynamic in Switzerland. I think the parliament is very aware of this.
We have to wait until December, I think we know much more about it. The other thing is more a question on net neutrality. There the discussion is still going on. In our industry in Switzerland, we have a codex for net neutrality, and we don't have violation of net neutrality in Switzerland. I think, I don't know the result of the parliament, but I'm not afraid now too much about this net neutrality topic. Also on roaming. On roaming, I would say the impact on roaming would not only be on Swisscom. I would say Swisscom, on the roaming side, it's the one who has the strongest roaming prices. We made the most of the roaming migration. The migration in a sustainable roaming business, we actually made.
I would say we would be the one who is suffering the least if there would be a roaming migration. I think that's also a good sign that the roaming regulation wouldn't be a too strong one. That's speculation.
On Fastweb, on organic EBITDA result, the IFRS 16 actually stand now after nine months, EUR 502 million . As you mentioned, we still expect the EUR 700 million EBITDA on a pro-forma basis. The main driver for Q4 to reach this guidance I mentioned. We expect a similar growth from consumer and corporate in Q4 as we had in Q3. We expect a quite strong wholesale Q4. This business has some seasonality. With the wholesale business, we see there high-margin wholesale revenues from the infrastructure business in Q4. On the cost side, you mentioned there is nothing special.
We think we can reach this guidance with flat indirect costs in Q4 compared to Q3. That's more like how we see the evolution of the group operating 2018.
Okay. Thank you very much.
I have the next question coming up from Matthijs van Langenhorst.
Yeah. Good morning, Matthijs van Langenhorst, Jefferies. First question is on the competitive environment. What I understood is that in Q3, you mainly saw competition at the low end of the market. I was wondering, is this still the case in Q4? The second question is regarding Fastweb. During the Q2 call, you provided some guidance for the Swiss domestic business. I was wondering, could you also provide some CapEx guidance for Fastweb? Because if I look at the cash conversion for the Italian business, it is still quite limited. Could you give some more color on that one?
Okay. I take the question on competition in Switzerland and more of Fastweb guidance. The competition in Q4 in Switzerland will stay approximately the same. There will be the Christmas business. Competition will certainly do some nice promotion. I think that Swisscom has the right strategy to be resilient against it. We will also do certainly some promotion to get a good position also in the low-end market. To compete in the low-end market, we have also our second and third-brand product portfolio. They are actually performing well. It is the fact that in Switzerland, competition is trying to run against net adds on the lowering market share on the overall side. I think it is important in the future to compare not the subscription market share. It is more important to compare the revenue market share to judge the dynamic in the whole market. On that, Mario?
You are right. The cash conversion of Fastweb is still quite low, we expect for the full-year CapEx of CHF 600 million. Still grading material part of the CapEx still comes from the next generation network rollout, where we still have rollout in specific cities. These did not take off, so we have less outpayments to Telecom Italia. That means we have a higher margin and, let us say, on a full-year basis in 2018, it is NGN CapEx of close to CHF 100 million, I would say. Another part of the CapEx is driven by success of the B2B business. You have some CapEx if you have some new customers, you have some customer-specific CapEx on your books. I think we say let us raise them as so-called good CapEx because that generates future revenues and margin.
In my model, I should assume that CapEx for Fastweb should increase, right?
I would say for now, I would keep them flat and the detail you will receive in February 2019 then.
Thank you very much. This is really helpful.
The next question is coming from Ulrich Rathe from Jefferies.
Thank you. My first question is, you're mentioning passing 5G in 2020. Could you talk about what form of 5G would come first for Swisscom? Is it more on the mobile broadband side, or is it industry verticals, or is it IoT, or do you have anything to indicate on that already? The second question is a bit more on clarification in this other item that Mario sort of discussed already. What is notable is that the EBITDA contribution from other is actually increasing quarter by quarter. It's a bit difficult to see how they proceed because you're highlighting here in particular this contract work for the railways. I'm just wondering, could you give more color how this unfolds from here? Is this a multi-year contract, and is it currently ramping, or is it now at the run rate, or whatever you could say about this?
I wasn't entirely sure when you discussed the IFRS 15 effect in other, the footnotes of exceptionals says that the IFRS 15 adjustments are actually in the exceptional. You seem to say that the IFRS 15 adjustments are actually in other. Could you clarify that as well in this context? Thank you very much.
Good. I take the question on 5G and Mario, then this other, more information about others. The use cases of 5G are actually mobile broadband business. That will be the biggest market on 5G. Some industrial verticals, as you mentioned, this will be a business which will come, which will be an important one, but it will also take time. IoT, it's certainly also a part of it, but the value creation for an operator, that's my view on IoT will be slow. There will be IoT. There are opportunities for an operator. The major impacts are coming from mobile broadband and verticals. Therefore, it is important to have a strong position in the B2B market to have solution capabilities to do verticals in the industry segments.
The second topic is how skillful our industry will be to monetize the speed on 5G. I think our industry should really be skillful on monetizing the speed on 5G. I'm not alone if I am talking about this because also competition will do the price step, but that could be an opportunity to get better outputs.
On the segment other, maybe on the IFRS, maybe I didn't explain it well enough. This reconciliation item belongs to IAS 19. That's the pension liabilities that is recurring, that comes each quarter. IFRS 15, that's pension subsidies and revenue recognition, that is shown in the exceptionals. Again, to the pension, to the IAS 19, there we have a quarterly impact of about CHF 15 million. That's more or less, once a CHF 15, once a CHF 14, but that's more or less CHF 15 per quarter. On the other small items, these are small numbers. There you have some seasonality. There's project business from our subsidiary, cablex. There you have a few millions per quarter. We had a positive impact this year because we had last year a loss-making entities, small entities from the takeover of PubliGroupe, which we sold in the meanwhile. They're really small numbers.
50% of the impact is coming from this IFRS stuff. That CHF 15 million per quarter. I would model it like that.
That's great. Wonderful. Thank you very much.
The next question is coming up from Luigi Minerva from HSBC.
Yes, good morning. Thanks for taking my questions. I have two. The first one is on Switzerland. You mentioned achieving fiber coverage by end of 2021 in every Swiss municipality. I was wondering if you can translate that as a % of households or maybe more useful as a % of premises. Then give us a bit more details about your hybrid approach. So the mix between FTTH, FTTC, and other technologies. Then lastly, if all this could happen within the same CapEx level that we are seeing this year. Secondly, on Italy, I was wondering how do you see the entrance of Sky as a fixed-line broadband provider next year, and what is the impact it can have on Fastweb's market position and commercial activity? Thank you.
Good. On our network strategy in Switzerland. Our strategy, as shown on page 10, is to increase the footprint for households with ultra broadband to 90% in 2021. That means 90% of the households will have speeds above 80 megabits. The majority of them will have a speed strongly above 100 megabits up to 1 gigabyte. This is a mix of different technologies. We have approximately a footprint of 30% fiber to the home coverage already today. This will stay approximately stable or slightly increase, but in the region of up to 30%. The rest is mainly fiber to the street coverage. There we have speeds up to 500 megabits per second. The last 10%. 90% we will have on fiber to the street and fiber to the home.
The last 10%, they are mainly on fiber to the curb, and there you have speeds in the region of, let's say, 30-80 megabits. The majority are strongly also above 50 megabits. That's a bit the strategy. The whole CapEx of Swisscom Switzerland will stay in the region where they are today. We will have some now investment in the next years in fiber to the street, 5G investments are going a bit up, and fiber investments, the wide line network. They will stay approximately the same the next years. On Sky. The entrance of Sky can also be an opportunity for Fastweb. We are also in a cooperation with Sky. We have some bundles with Sky, and if they now go in the retail market, they need a wholesale partner.
The wholesale partner can't only be Open Fiber or even Telecom Italia. I think Fastweb is a very agile and competitive wholesale provider. This can also be an opportunity for Fastweb.
If I may follow up on this last point, do you feel that the wholesale opportunity may offset the additional pressure you may see on the retail side?
Yeah. It's difficult to judge, but I think the main element for the performance of Fastweb in the wireline market is not driven by Sky. It's more driven by-
By the mobile operators. If they try to push with aggressive promotions, fixed to mobile bundles, this would have the bigger impact on the broadband business in Italy. I think 2018 was a hard year for Italy. If you looked also at the price competition in Italy, I think there could also be opportunities that the market is becoming more rational also in the wireline market, because if you have so much pressure on mobile, you should be also prudent on the wireline market to keep the margin up. I think there could be, let's say, some less promotion activities, but that's speculation. Overall, I would say if you look to Fastweb, it's important to see that we are doing 50% of the business in the B2B market, that we have 30% market share, that there is potential to grow, that the Italian broadband market is still under-penetrated.
I think if you look to the broadband business in Italy, that's still a market with potential.
Okay, that's very helpful. Thank you so much.
Can I have the next question from Usman Ghazi from Berenberg Bank?
Hello. Thank you for taking my question. I've got two questions, please. If I look at slide 29, which is the underlying EBITDA trend broken up between fixed voice, outbound roaming, et cetera. If I compare this slide to what was being shown in Q2, I guess in most areas, you're on track, but except for in B2B where the full-year impact, I think, in B2B, you were estimating at around CHF 60 million. Already for nine months, you're at CHF -56. Is that to suggest that this headwind that we're seeing in B2B on EBITDA will not come through in Q4? Is it that something changed from Q2 which has been below your expectations in B2B? That was the first question. I hope that's clear. The second question was just on mobile broadband as an opportunity for 5G.
I guess that really needs millimeter-wave spectrum to be made available. In that respect, is there a roadmap to release that spectrum over the next few years in Switzerland? Thank you.
Good. I take the question on 5G and Mario with page 29. I will start with mobile broadband 5G. We will have this auction in January 2019. We are now in a process, I can't talk about actually this spectrum auction. You saw what are the conditions of this spectrum auction. I think the industry, and now I'm talking about the whole industry with this spectrum auction, will have the ability to build a good 5G network. Actually, the main hurdle or the main challenge for Switzerland on 5G are the limits for radiation. With the non-ionizing radiation limits in Switzerland, that's the main bottleneck. It will be difficult to ramp up a 5G network because we have so-small limits. That means if we don't get a relief on this regulation, we have to build more sites.
To build more sites in Switzerland is a very challenging topic. From the spectrum side, I think the whole industry will be in a good situation to make good 5G networks.
Right.
Mario?
Can I just follow up on that? You don't think that for mobile broadband 5G, you don't necessarily need the very high-frequency bands, the 20 to 30 gigahertz, the millimeter-wave bands. You don't need that specifically to launch mobile broadband 5G?
No, in Switzerland, there will be a lot of 3.5 gigahertz spectrum available. There are 300 megabits, 3.5 gigahertz spectrum available. That's a big part, much higher than in other countries. I think with the spectrum which is coming to the auction, Switzerland should be in a good position.
Okay.
On slide 29, and your question regarding the B2B performance. First of all, B2B, it's a bit difficult to compare quarter by quarter because we have a lot of project business in the solution business. The solution business, it makes 50% of the overall revenues of the B2B segment. When you look at the quarterly evolution and where we stand after nine months compared to the 12-year expectation. Yes, the decline of margins is a bit higher than expected, will be a bit higher than expected on a full-year basis. We implemented a lot of cost actions in the B2B business only at the end of Q2, beginning of Q3. We saw already in Q3 that we were able to compensate part of the margin decline. On Q4, I would expect, thanks to these cost measures, a similar EBITDA contribution as in Q3.
Thank you.
Okay, then I have a question from Georgios from Citibank.
Yes, hi. Actually, most of my questions have been answered, I want to clarify with you, Urs, on two things. Firstly, there was a question around the net neutrality changes. I just wasn't sure it was whether it has a material change in a specific product or service that you provide now, or it's something that could change more future evolution of the industry. The second element is around Italy. You do own some spectrum, and I want to understand whether there are any restrictions as to what you can do with the spectrum that you own in terms of selling it to someone or leasing it or using it in their networks or any arrangements you may want to do. Thanks.
Sorry, the first question I didn't get. What's exactly the first question?
I think earlier there was a question about the Telecommunications Act, you said there were two elements. One was net neutrality. You made some comments around what could change there, but I didn't exactly understand whether it has an effect on the services you have now, the changes that may come about to this proposal, or whether it's something that you are monitoring because of future services and how it would impact those.
Okay. I take the question on net neutrality first. The proposal of the regulator was actually a very liberal one. They didn't make a proposal to have a strong regulation on net neutrality. That was the proposal from the regulator. Then in the discussion in the parliament, there came some new ideas. Now they are discussing about this net neutrality in the parliament, everything is open. I would be relaxed on this net neutrality topic because our industry in Switzerland has a codex. Where we actually say that we behave us in a net neutral way. We don't have violation of net neutrality in Switzerland. I don't think that there we will have problems on our portfolio side and all this because we don't have violation of net neutrality. I think we could be quite relaxed on this discussion.
We know in December. Then the second thing on if we have some obligation of using our spectrum of Ticino, which we acquired on Ticino. No, there are not any new obligation on it. It was like before. On your question around can you sell it, transfer it. We are currently in the process of closing this transaction, and we cannot give any details because we are also in discussions with the ministry around this closing. Sorry for that.
Thank you.
Okay, I have one question from James Ratzer from New Street Research.
Hi, good morning. This is David actually. Thank you for taking my questions. I've got a follow-up on the competition on pricing, please. Just looking at your net adds in Switzerland on the broadband side. They are a bit weak this quarter. Just wanted to know if you can comment a bit more on competition. Is it getting more traction now that they have launched a product for six months on the fixed side? Is it Sunrise continuing taking shares or UPC maybe improving their situation? Similar question on Italy, the mobile net adds were a bit weak compared to last year. I was wondering if the Iliad impact, or if you can comment a bit more on that.
On the pricing, I've noticed that on your low-end 15 megabits per second triple play product, you increased the price by CHF 5 last month. Whereas competition, Sunrise has reduced the price and UPC has offered more promotion. I was wondering if this gives you more confidence in the fixed outlook, or is it just a way of trying to push people up in the models? Lastly, just a follow-up on the previous question. I just wonder if you can comment on your plans in Italy about the 3.5 gigahertz spectrum, please. Thank you.
On competition in Switzerland, in the broadband market. As I already mentioned it, the market is saturated, fully penetrated. From out of the perspective of Swisscom, we are happy with our performance in the broadband. We have a low churn. If I look to our net adds in the fiber-to-the-home churn, where the most promotion activities are today, I would say we are quite happy. I don't know the figures of our competitors up to now. We will see later what has been the shift in the market share in broadband. Overall from the view of Swisscom, I think we can be quite satisfied with the performance in broadband. On this slightly price increase in the lower end of the broadband market, what we have done is an approach more for more. That was the main idea.
Actually, we were able to do it in a good way. We were able to do it. That means to increase the price on the lower end. Also the price positioning in the lower end was realized also by our competitors. There was a dynamic of increasing prices in the lower end of the market. That shows a bit the dynamic in the Swiss business. Actually, the business is driven also not only by the list prices, it's also driven by promotion on a below-the-line area. On Fastweb, the use of this 3.5 GHz is actually, if you go to the presentation of Fastweb 18, you see what will be the idea of using this 3.5 GHz. We would use it in hotspots, in very dense area where we can leverage our infrastructure of the fiber to the street cabinet.
That means mainly in the hotspots to offload the MVNO volume. That's the main idea behind it. On the net adds performance of Fastweb, as Mario explained it was not the strongest one. If you compare it to the low market share in Italy, I think we can be satisfied. We don't see it from out of perspective of Iliad. Iliad effect was on the mobile market. I think there is the main dynamic of Iliad. In my view, it's too early to judge how our performing there will be in the mobile market. We have a very good momentum, and I already explained it before. [In October mobile], our strategy is to push the convergence to have more fixed-mobile converged products on our broadband customer base.
Thank you.
Okay. Operator, a very last question before we close.
I have only one left.
Okay. It fits perfectly.
Okay. It's from Julio from RBC.
Hi. Thank you for taking my question. You mentioned that the take-up of inOne should decline over time given that there is a 50% penetration. However, inOne fixed-mobile convergence penetration still below the 30% mark. Can you give us some color on how the penetration of fixed-mobile inOne should evolve? My second question is regarding some of the comments about the radiation limits in Switzerland. You mentioned that if these limits are not changed, basically there would be a requirement of having more sites. Can you give us some color on how should we think about the extra CapEx needed for these extra sites? Thank you.
I take the inOne question. The overall fixed-mobile penetration is 35%, and that consists majority inOne subscription. Then you have a part of the old so-called Tutto subscription. In the future, we will have the two developments. The old Tutto will go to the inOne. The overall fixed-mobile penetration, we would say it will reach around 50%.
Okay.
On this radiation limit. The limit in Switzerland, the threshold is 10 times more, let's say, severe than in countries around us. What is now actually discussed is that we can get some relief on the method how you measure this emission. Because if you go to 5G, there is beamforming in it, beamforming is actually, in the actual measurement method, it's actually even increasing the problem. I think we can get some relief on this measurement method, this will give us some time to have a discussion then on the bigger picture of these thresholds. The impact to CapEx is we need more sites. Even it's independent from this topic of radiation. We will need more sites on 5G because the networks will become more dense.
Overall, we will manage the business in a way that our CapEx will stay in the region where they are today. Okay?
Okay. Thank you very much.
Thank you, Julio, and thank you to everyone. With that, I would like to conclude today's phone call. If you should have any further questions, please don't hesitate to contact us from the IR team. Speak to you soon, and have a great day. Thank you.
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