Ladies and gentlemen, welcome to the Sunrise first quarter 2026 financial results conference call and live webcast. I am Shire, the call's call operator. I would like to remind you that all participants will be listen only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero.
The conference must not be recorded for publication or broadcast. Page 2 of the presentation details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Sunrise expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts.
These forward-looking statements involve certain risks that could cause actual results to differ materially. Securities and Exchange Commission, including its most recently filed 20-F. Sunrise disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the condition on which any such statement is based. At this time, it's my pleasure to hand over to Alex Herrmann, Vice President of Investor Relations. Please go ahead.
Thank you, operator. Good morning, ladies and gentlemen, and welcome to our first quarter 2026 financial results call. Thank you for joining us today. As per usual, André Krause, our CEO, as well as Jany Fruytier, our CFO, are with me today and will lead you through the presentation. We will start the call with the presentation, which will be followed by a Q&A session. With that, I'd like to hand it over directly to André. Please go ahead.
Thank you very much, Alex, and good morning everyone from my side. If we started off with our summary page, then firstly, operationally, Q1 is usually a quarter of somewhat lower liquidity in the market, hence we have seen a solid trading result with 10,000 post-paid net additions at minus 1,000 internet additions. We also had a number of commercial topics that we launched in Q1. We are benefiting from a complete check on the Connect test.
I will talk about that in a second. We launched the Sunrise Rewards program, we also have launched a partnership on the B2B side together with Phoeniqs. Additionally, we have also announced a price increase, which is going to be effective from the first of August. Financially, we have seen a +2.5% growth year-over-year, and on the back of the financial outcome, we are fully reiterating our financial guidance.
Lastly, also our AGM, which was executed last week, has approved the dividend for the year 2025, which in the meantime has already been paid out on May 13th, which was CHF 30.42, and that has been fully happened. As a reminder, also other commercial topics that happened in Q1. For the first time, Connect, the magazine that conducts multiple tests in Switzerland, which are ranging from network quality tests on the fixed and mobile side, but also looking at service and products, has actually done a price-value comparison. This was looking at 7 different profiles of tariffs.
Sunrise has actually won 6 out of 7 of those profiles, which is a great outcome. If you look at some of the comments that they were making, it's pretty obvious that we are very much focused segment by segment to deliver a great price value equation, which is not only focused on an attractive price, but also is the most attractive package in comparison also with the value it delivers and with the service quality it delivers.
This recognition is something that actually not makes us only proud, but we also see as a clear motivation to keep innovating. Talking about innovation, in a saturated market that is seeing less and less liquidity, working with existing customers is becoming even more important. Hence one of our key innovations that we have started to launch already in Q1, but is now in full swing, is our new loyalty program, Sunrise Rewards. We soft launched Sunrise Rewards already in March, where customers could start to self-register themselves.
In the meantime, we have now fully enrolled all of the Sunrise consumer customers onto that program, so that they can benefit from the rewards that we are offering. Essentially, we wanna bring to life the marketing claim of the longer you stay and the more you have with us, the better it gets. Which is a massive, I would say, change in communication because so far, most of our outbound customer communication was focused on acquiring new customers.
Well, now we are clearly also externally are talking about the importance of our customer base and the rewards that customers will get for their loyalty. Essentially with that, we are bringing to life that loyalty is becoming a currency that we want to use to actually also sell more to our customers. The existing Sunrise Moments program is becoming a full, fully included part of that.
Meaning customers for the points that they can actually earn over time for the time that they are customers and for the amount of product holdings that they have with us, is actually can be converted into either moments experiences or can be converted into more attractive offerings for existing customers on products and services that we offer to them.
Over the midterm, we are expecting that this is going to reduce churn and increase also the RGUs per customers that we wanna sell. Not only on the consumer side, but also on B2B, because we keep innovating and driving more innovative offers to our customers. We have enrolled a partnership together with Phoeniqs just recently. Essentially, Phoeniqs is a clear pioneer in the sovereignty space with an end-to-end controlled cloud and AI solution.
If you look at the right-hand side of the chart, you see a comparison of what Phoeniqs delivers to the market. In terms of infrastructure, where they have their own supercomputer infrastructure. If you think about cloud architecture and software layers necessary to run a cloud architecture, it's a fully owned infrastructure stack.
Also, if you think about data sovereignty, that is fully under control within Phoeniqs. Talking about LLMs, all models are available. Also, there's a marketplace of existing agents that can be used by customers. Lastly, also a variety of certifications is available. With that, we believe this is really a unique set of capabilities that delivers a true sovereign AI and cloud solution, which we intend now also to make available to our B2B customers in terms of AI solutions, but also in terms of cloud solutions.
This will not only be available exclusively to Sunrise customers, but also to our partners, which we will also invite to participate in those products, which we are intending to develop and launch during the second half of 2026. Stay tuned. We will communicate further on the launch of the product range that is based on this partnership. With that, let me talk about also the competitive environment and how this has evolved. Always a important topic in our conversations on a quarterly basis. I would depict the market evolution as a rational but promotional market environment.
As you would expect, we are tracking the evolution of the market on a daily basis and, also, keeping track of what the evolution is. We this time have chosen also to depict a bit how we see the evolution, and we have taken 2 examples of 2 quite important, volume-wise important, product categories. On the left-hand side, on the top left, you see the CH entry tariffs, and the right line chart is talking about the CH flat rates.
What you can see is these are all of the promotional movements and the resulting price points that are offered at a given moment in time. We are going back until Q1 last year. You see this over a pretty long period, how this has evolved. I think the real readout that you can take from this is, yes, there are promotional activities. Yes, there's some volatility. What you can see is very clearly that the price band is very stable. This is exactly what I have been talking about a couple of times before.
We are not seeing that in this promotional environment where everybody's trying to capture the reducing liquidity as much as possible. Of course, there is competition going on. We are not seeing a continuous degradation of those price points. We rather see that the promotional price bands are very stable. Of course, Sunrise operating a multi-brand strategy. We are having offers on the lower bound of that band, which is, for example, our CHmobile or flanker brand offerings with Yallo.
On the other hand side, on the upper end of that band, you would rather see the Sunrise offerings. From that perspective, I think, it's pretty obvious that there is no degradation of that environment. Yes, there is a promotional and rather rational environment that moves very solidly within the band that we have seen now over quite a long period of time. In this environment, I think also important to give you short update on how we're doing on CHmobile.
Of course, the launch in Q4 was quite a news at the time that we did it. It was more aggressive at the starting point. It captured good attention and also liquidity in the highest liquidity moment of the year, which is usually the Black Friday period. Remember, we haven't started the exercise we were following on our competitors, but then CHmobile captured a good share of the market. Since then, it has actually turned down quite a bit.
Pricing is following what competitors are doing. We are not taking any aggression into this segment. It does what it's supposed to do, which is capturing liquidity that is available in that segment. Essentially, if we are looking at what is the contribution it does now on our inflow, that is well below 10% of our total inflow in Q1.
As such, you get an idea of the importance of that segment, which is not taking the overall market, but also of our ability to participate in this segment. In this market environment, we have also chosen to do a price increase, general price image, and also increasing costs are of course a cost driver in our business. As we have seen the market evolution, we are also reacting by tapping into that opportunity, which clearly is a positive upside for us.
Hard to predict exactly what the contribution of that will be, given the fact that it only will become effective later this year. We probably will only give you an update on how we see the financial evolution on that being positively impacted with the Q3 results.
Now, putting the things in comparison, we are running a price increase of up to CHF 1.50 under our main brand. On our flanker brands, it’s up to an average of CHF 1. Customers that are in bundle offers are benefiting from the fact that their second and third products that they are having are only seeing 50% increase. The average price point will be lower than the CHF 1.50 in total.
I think important to say that given the fact of how many hours per day customers are using our products, we are really only talking about a CHF 0.05 price increase on average per day, which I think is a fair price increase compared to the amount of value that customers are benefiting from. With that, let me also summarize on the trading results. I gave a few numbers already upfront, our usual page summarizes all over.
If we look at the quarter, of course, seasonally some softer market liquidity that is driven by the fact that there's quite some Q4 spillover effects that are driven by the intense trading environment that usually is available in Q4. On the back of that, January and February usually display lower liquidity. We have seen a good improvement of sales momentum into March. With that, we have delivered 10,000 mobile net adds in the quarter in comparison to the 12,000 that we did a year ago.
I think that's very much comparable and kind of in line with our expectations. Secondly, also on the internet broadband side, minus 1, we are seeing the gradual recovery post the finalization of the UPC migration in Q3 2025. I think that is also indicating a good trend. We also are seeing that for the first time we are reaching above 60% FMC quota. We continue to see a gradual increase of that FMC attraction, which I think is also a strong indication.
In terms of ARPU evolution, I think you can clearly see that they are kind of in line with what we have seen in Q4. Some evolution here. Important to note also that there is a moderating impact from the price increase that happened in Q2 last year, and that will fully lapse in Q2 this year. Sorry. On top of that, I think important to know, we have talked about that in previous quarters as well, that there's some impact from the FMC discount allocation between the mobile and the fixed products. I.e. underlying fixed is slightly worse and Sorry, other way around.
Fixed is slightly better and mobile is slightly worse than what you see here without that change in FMC discount allocation that happened last year. Now with that, I conclude my part of the presentation and hand over for Jan for the financials.
Thank you, André. Also welcome from my side to everyone. I think André spoke about it already, in general, a very busy quarter Q1. In general, we're pleased with the results and are able to post a stable revenue line with a growing EBITDA line at 2.5% on the back of lower OpEx. Which is on the one hand driven by a continued focus on reducing our OpEx, whilst also benefiting from different OpEx phasing throughout the year. What is important to note is that Q1 is not impacted on the one hand by the benefit that we saw last year in relation to our ESPP. I'll talk a bit about that later.
Secondly, also the reorganization that we announced earlier this year, is not impacting yet, as that effectively became coming from April onwards, so therefore the benefits of that can be seen from Q2 onwards. CapEx to sales ratio of 18.5%, which on the one hand is substantially above or below 15% guidance that we gave for the full year, yet is around CHF 10 million lower than what we saw last year, i.e. we are fine and are, again, speak about guidance later, but we're on the right trajectory in reducing our CapEx.
Yet Q1 typically is the quarter where we do and pull forward our investments to ensure that we have maximum benefit from those investments throughout the year. On the back of all of those results, a strong adjusted EBITDA less P&E additions growth of around 16%, which again, was then driven by the OpEx phasing that we spoke about, plus the CapEx reductions that we're seeing. Adjusted FCF at minus CHF 111 million, which is broadly flat to prior year.
Again, for you who don't know that is absolutely fine and typical given our working capital movements that we're typically seeing throughout the year. A little bit more about that later. The second big effect is that we pay the majority of our interest typically in Q1, and so therefore to some of the different lines, and we start with revenue.
I think a strong result with flat revenues. Secondly, important to note that all elements except for our fixed consumer revenue are growing, which is a good result. Now that 19 million subscription was similar to what we saw in Q4, again, is impacted by the FMC reallocation. The details of that one can find in the appendix, where we lay out the absolute reallocation between fixed and mobile. André spoke about it already as well, that we are now starting to see the tail off of the price increases as we partially implemented them last year from March 1.
That is then coming back with the new price increase that we will be seeing as of sort of mid and Q3 this year. Further to note that the CHF 11 million residential year-over-year other revenue growth was mostly driven by 2 elements. On the one hand, higher handset sales and on the other hand, the adjustment of various fees. Also positive to see that B2B in general had a strong growth and that both the subscription mobile and fixed were growing as we are lapping some of the hard comps that we were talking about last year.
Lastly, I think this is a strong testament of the progress that we're making in B2B, yet we expect the SME segment to further grow and accelerate towards the end of this year. Infra and support broadly flat, yet slightly down, which purely is a effect of the different phasing of our BTS tower sales, so the building of our towers and then the offloading to Cellnex as such. We go to adjusted EBITDA, André spoke about it, 2.5% growth, where again, if we start from the left, Growth in B2B, growth in infra and support, and then continued focus on OpEx and leasing.
All in all, I think, good progress and great to see that most of the lines are contributing to this result. When we zoom in a little bit more onto OpEx, the result is on the one hand driven by continued focus on lower IT and professional services. Really, good scrutiny and continued focus on our external spend. Marketing spend broadly flat versus prior year. On the one hand, also a little bit of phasing in some projects that we expect to normalize over the rest of the year.
Leasing is a continued effect of our optimization of the various contracts that we have in relation to our wholesale fixed access, underlying the cost base is broadly stable as we don't materially see a switch from owned to leased infrastructure. When we go to the OFCF or adjusted EBITDA less CapEx additions, strong growth there. Again, where we benefit from adjusted EBITDA, you can see that especially CPE and coverage were lower than prior year.
That is also something that we expect to continue for the year and what is driving, if you will, the reduction of our CapEx capacity, product and enablers. CHF 111 million this time. We spoke about adjusted EBITDA and CapEx. Two more things to call out. On the one hand, the lower interest payments, combination of our lower gross debt that we have. Secondly, I think we spoke about that last year in Q1, as we did the retirement of a large chunk of our debt when we did the spin-off end of 2024, some of the timing and unwinding of our hedging instruments fell into Q1 last year.
Therefore, again, the Q1 interest payments that you're seeing this year are on a more normalized basis. Working capital is slightly worse, if you will, than prior year, which leasing is only a small part. The rest is purely phasing of our organic and inorganic working capital elements, but nothing to call out in specific in relation to that. When we go to the next page, again, we executed on our reorganization. We delivered on the loyalty program. We announced a partnership with Phoeniqs.
All in all to say we're doing a lot of things, and yet on the one hand, we are not seeing as much of the stabilization of the fixed revenues that perhaps one would have expected, yet we are very comfortable with the trajectory.
I think, again, the fact that we were able to execute the pricing initiatives means that we are comfortable in being able to execute and stand by our guidance to in the end, continue to focus on our progressive DPS policy and a growing adjusted FCF, which we guide for this year, CHF 380 million-CHF 400 million. On the back of that, are expecting to be able to grow our dividend for 2026 full year to CHF 3.49 or around 2% growth versus prior year. With that, André, back over to you.
Thank you, Jany, let me summarize it again what we have been talking about. I think you've heard about the launch of the Sunrise Rewards program that On B2B offerings from the second half-year onwards. We talked about that this should drive better sales and o Forward.
On the back of all of that, we are fully confirming our guidance for the full year, including the progressive DPS, which for this year would be a 2% increase to CHF 49. With that, I think we are positively looking towards the upcoming quarters and are excited about the opportunities that we have created to leverage now. With that, I think we are going over to Q&A.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star 2. Anyone who has a question may press star 1 at this time. The first question comes from the line of Polo Tang, UBS. Please go ahead.
Morning, everybody. It's Polo Tang at UBS. Just have 3 different questions. The first one is just on price rises. You've moved to increase prices by about 2%-3% from August. On the Q4 call, you said you would only consider selective increases in response to the Swisscom move, and you played down a broader price rise.
I'm just trying to understand what has changed in terms of your recent price move, but also on pricing, what's your impression of how the price rises by both Swisscom and Salt have been received by consumers and what has been the reaction from your customers at Sunrise to notification of the price rises? Second question is just on guidance. You've kept it unchanged, but did your guidance already factor in the benefit of price rises?
Alternatively, do you see upside risk in terms of estimates? The third question is just on broadband. Can you give an update in terms of the share of gross adds on fiber wholesale versus cable? Is the split still around 50/50 or is it leaning more towards fiber wholesale? Thanks.
All right. Thanks, Polo, for those questions. Firstly, on the price rise, I would say indeed we were thinking of doing a selected, selective price increases instead of a general price increase. I think what we have been seeing is that some of the, I would say, costs that we are operating with have been under pressure also from the geopolitical crisis. Additionally, we have seen two of our competitors moving, and on the back of that, we decided to move from the selective to a general price increase. Because we sensed that the overall market environment was receptive and capable of taking that on.
From that perspective, and you remember that we did two price rises in the past, whereas our largest competitor has only followed this time for the first time. We were a bit cautious, but we got more comfortable as we were going in. That blends a bit also into your guidance question because I think the point here is, we are increasing those prices towards the 1st of August. We had, of course, a selective price increases as part of our guidance included.
Most of the selective price increases are not going to happen because they will be superseded, so to say, from the general price rise. The net positive is slightly mitigated from that. Secondly, the timing is now somewhat later in the year than what we had initially planned. There's some set off from what we have originally planned.
On the net lending, as you know, there's always a delta between the gross opportunity and the net lending that one can achieve, which also blends into your question of, well, what's the reaction so far? I cannot fully comment on what our competitors are seeing. At least we don't sense that this is a major topic anymore with customers. Effectively, as I said it earlier, we're talking about a price rise of CHF 0.05 per day on multiple hours of usage per day per customer.
I think this is probably also perceived as a pretty fair exercise. The reality is also, of course, you hardly get applause for a price increase, neither from the press nor from customers. Price rise usually comes in 3 waves. The first one is the announcement, the second one is the individual communication towards customers, which has not yet happened. Thirdly, the effectiveness, i.e., the customer receiving the higher invoice, which will only happen the first time in August.
From that perspective, we are pretty early in the process, but I think we are positive and confident given our prior experiences and also given feedback we have been seeing so far. Last question that you had was on the broadband share and the technology mix. If we look into that, I would say we see still a relatively robust HFC evolution. I wouldn't say it's completely robust.
It has come down a bit. In total, still, if we look at the technologies, then fiber is not making up, Well, it's making up just 50% of the technology mix, and other technologies HFC, our own FWA product, sorry, FWA product, as well as copper is in total making up also for 50%, with HFC taking the lion's share of that second half, if you want. Overall, we see some gradual evolution, but not a massive change at this moment in time.
Clear. Thank you.
The next question comes from the line of Robert Grindle, Deutsche Bank. Please go ahead.
Yeah, good morning, and thank you. I'd like to ask, actually 3 as well, please. A follow-up on Paulo's question about the selective price rises. They're not no longer gonna happen, as you say, and you're now moving in favor of the general price rise. Forgetting the timing impact, is it possible to say how the magnitudes differ? For example, is the general price rise equivalent to double what you're planning previously, on a sort of a just a run rate basis?
Secondly, noted on the broadband net adds improvement in Q1, have you seen an ongoing improvement in the second quarter? Thirdly, maybe you can help me on the Phoeniqs B2B relationship. Why is it so unique? Is it that other operators are using hyperscalers with outside of Switzerland, and this is all in Switzerland? Would this all be new business you get or would it be substituting existing cloud supplier business? Thank you.
All right. Well, thanks a lot for the, for your questions, Robert. On the impact of the general price rise, as I said, I mean, from a total quantum perspective, surely there is an upside versus what we had initially planned with selective price rises, but timing is different. Also the total lending of that, I think is we want to rather wait with actually giving some more quantitative information around it until we have really seen it. The recent experiences were rather positive.
From that perspective, I would expect this to be a clearly a positive versus our expectation. Now, what that means in terms of quantum, I would like to hold back on that answer as we want to get more visibility on what it really means. Clear indication is a positive. On the broadband net adds Q two, I mean, we're reporting Q one today, I think the trading trends into Q two are looking still very, very strong and slightly improving. I think that's a real positive.
We have seen very good broadband momentum since Q one. That is continuing, on the back of that, I think I'm also expecting a good outcome for the second quarter. I don't want to speculate now and give any indication of what we expect that to look like. Yeah, I think the trend is clearly a positive indication. On Phoeniqs, I think you largely got it. The point is really that this is an end-to-end sovereign solution.
In fact, if you are relying at the back end on a hyperscaler, then you can put your servers wherever you want. In particular, on the B2B side, that is increasing that, our B2B customers wanna make sure that they are in full control of the solution. In that perspective, Phoeniqs is clearly a unique opportunity for us. I think we're gonna be able to deliver a unique set of products with attractive pricings in the second half of this year.
To your question of, is this kind of largely cannibalization of existing business? I would say to a certain extent, yes. If you think about cloud solutions for enterprises, most of the enterprise today are on cloud to a large extent. On the small and medium-sized businesses, different story, because many of those have not yet gotten into the cloud. In regards to AI, I think also different businesses are at different degrees of embracing that trend.
I think clearly there is incremental upside as we are also benefiting from the general growth of AI. Of course, with a model that gives you your own secluded sandbox, which means your data will not be used for any training of the model. You can be rest assured that security is given. That is a clear upside.
We can actually offer all models in that quality, and I think that is a clear upside and proposition that is in this way, not existing in the Swiss market at this moment. I think from that perspective, we are very excited about that opportunity, and I think we will have a very unique and great set of new products that will come to market in the second half.
The next question comes from the line of Max Finley, Rothschild & Co. Please go ahead.
Good morning. This quarter's OpEx was helped by changes in IT and professional services costs. It looks like savings across these two lines in the Q1 report were about CHF 50 million, I was just wondering how much of this you expect to be sustainable OpEx savings and what is phasing. On the last earnings call, I think you expected marketing costs to be a bit higher in Q1, given lower liquidity in the market.
Marketing commission costs were stable, year-on-year. I was wondering if you might need to spend a bit more in the coming quarters to get the volumes you want, especially in B2C, given the lower volumes achieved this quarter compared to last year. Thank you.
All right. Let me take your second question first. Jany will cover the OpEx question. From a marketing spend perspective, I mean, yes, there's a bit of volatility in the marketing spend. I mean, Q1, yes, you're right, lower liquidity in January, February, but also accelerating liquidity in March and better momentum on the back of that also somewhat higher commercial spend.
We clearly will of course invest in the communication of our Sunrise Rewards program in Q2, that will have a slight impact. From a liquidity perspective, I think we are expecting better liquidity, but also Q2 has spring vacations and a May that usually has a lot of public holidays. Again, also not a quarter with full trading. Q3 has the holiday season. I would not expect massive changes except for the launch of the Sunrise Rewards that happened just this week.
All right. I think one thing to add to that still is that, of course, the acquisition cost in relation to new customers are deferred as per IFRS accounting standards. Therefore also even if the volumes are spiking up, of course that is then partially deferred over a longer period. Just to add sort of and explain the result that you're seeing here. When it comes to the external cost, yes, Q1 was better and perhaps better than expectations.
I think a couple of things to highlight here. Last year, Q1, we still had some cost in relation to actually becoming a standalone company that partially we rebase for certain costs you're not allowed to rebase for, therefore they were sitting there. That's partially driving it. Secondly, IT spend, we are optimizing. Our other external spend, we are optimizing. Therefore, I don't want to give you too much specific guidance around what the run rate of these savings are because, of course, we're still I mean, before the half of the year, and we have a number of initiatives to execute.
Perhaps the best way to think about is that from a full year perspective, a meaningful chunk of what you're seeing in Q1 will remain full year on a year-over-year basis, perhaps somewhere between, I don't know, mid double-digit percentage-wise, sort of as a broad perspective. Again, we do expect a continued improvement versus prior year in all quarters, but definitely not as strong as what we have seen in Q1.
Thank you very much.
The next question comes from the line of Molly Whitcomb, Goldman Sachs. Please go ahead.
Hi. Thank you for taking my questions. Just first of all, on slide 8, I think you said that the price increase will also be offset by a geographical development. I'm just wondering what you're assuming in guidance now and if there's been an incremental change on this front versus what you were previously assuming. I think you said you're well hedged, is this really a material drag on price increases?
Secondly, you said that you're expecting SME to accelerate towards the end of the year. Could you give us an idea of the key drivers of this acceleration aside from the Phoeniqs opportunity? Is there anything else that you're expecting to help drive growth? Could we have an update in terms of competitive dynamic in SME? Thank you.
Thanks, Molly. Can you please repeat because you're very quick on your second question? What was the dynamic that you wanted to understand? Dynamics, competitive dynamics I got, but what was the other one on?
In SME. In B2B.
SME. Okay. All right. Yes.
I apologize.
All right. Yeah. Let me start off with that one, and then Jany Fruytier talks about the price rise implications. In SMEs, I think the opportunity that we have with the Phoeniqs product becoming available, which will be probably from Q3 onwards, well, actually end of Q3, beginning of Q4, I think onwards, that we will be able to actually sell unique product offerings that today are rather comparable in the marketplace.
That will, I think, drive a better take rate for us. I would not expect that to have a material impact yet on, I would say, financial evolution on the SME side because sales cycles in B2B take a while. From a product launch to financial implication, this easily can take 3 to 9 months. From that perspective, the financial upside that sits on that is probably rather to be expected for 2027, rather than for 2026. I think it's a clear point of differentiation and a fresh opportunity for us to drive momentum on the B2B side, in particularly on SME.
All right. Thanks, André. Molly, let me try to answer your question on the price increase to potentially raise our guidance with revenue broadly stable and adjusted EBITDA around CHF 1 billion. As you are clearly aware, that implies a range and of course there is a consensus and you all have a specific number in there, yet we guide for a range of scenarios and possible outcomes that we are expecting. Therefore, to nail us down on a specific number and how one impact potentially offset the other is not as easy, if you will, but that's the broad context from which we start.
Within that, I think we have seen various increases of price, of cost, if you will, not just in relation to the conflict. You are right that energy is hedged, I think it's in general a continued focus in the market to improve our network quality, to improve our service. Of course, André was referring there is a number of external costs that are impacted by it. I don't think it's a step change as such. We are guiding for continued optimization of our OpEx in general.
Of course, partially offset by one of some of the one-off effects that we had there. Yes, there is a gradual change, if you will, that is impacting us. Yet, it's not a step change, and so therefore, that's the starting point. On pricing, I think André mentioned the elements, let me repeat. Starting off a range of revenue, which sort of can be from minus to plus.
I think what we told you in Q4 is that we expect the revenue result, all things equal, to be better than what we saw in 25. That sort of gives you a sense of direction of travel that we're expecting. Secondly, we had selective price increases that we were expecting to execute throughout the full year. We now partially replaced that by a general price increase, but pushed that later into the year. All things equal on a run rate basis, once the sort of a one-off effects that you typically see when you execute are run out, there should be an upside.
Therefore, 27 will be the year where the majority of that impact come through. Yet there is a bit of a net positive, if you will, all things equal, for the full year. That's how sort of the things are working out. Yes, some trend changes, not so-- not substantially and sort of step up in nature. Yes, price increase, all things equal, should be slightly better, but because of all of the moving parts, perhaps only a minor impact into this year, more into next year. Again, then, sort of finalizing the fact that we are guiding for a range, not an exact number, sort of gives us confidence that this is the right thing to do.
I think lastly, and André mentioned it already earlier, I think all things equal with the Q3 results, when we have 1 or 2 months behind us and sort of all of the things that I just explained are behind us, one could potentially think about tightening a range or doing anything to that. Until then, I think it really is too early, given all of the moving elements that I just explained.
Understood. Thank you very much.
The next question comes from the line of Joshua Mills, BNP Paribas. Please go ahead.
Hi, guys. Thanks for the questions. A couple from me. On the service revenue side, just so I'm fully understanding this, I guess the message is Q2, Q3 could look a bit worse because you're not having any benefit from last year's price impact, price increase, and then the hope is that that recovers in Q4. Can you confirm that's kind of the shape, how we should think about service revenue growth and then EBITDA growth through the year?
Secondly, I think you started the call saying it's been a solid quarter with stable revenue growth. The most important number here is service revenues. Despite getting into detail on the allocation of discounts, we have seen a deterioration there. Do you think it's sustainable to deliver stable EBITDA growth with the kind of -2% to -3% service revenue trends we're seeing over the next 1 or 2? Does your midterm strategy of stabilizing and growing EBITDA depend on getting back to positive service revenue growth?
Finally, I think on the last conference call, there was a lot of discussion about how CapEx can come down as key driver free cash flow going forwards, and you mentioned some AI initiatives in order to drive that lower CapEx. Can you give any more specific examples around that AI theme, particularly related to CapEx as you've started to implement some of those processes within the business? Thanks.
The midterm outlook that you're alluding to. For sure, we are wanting to not only stabilize our top line, but also to get to growth again. I think we are on a good way of this because essentially the one thing that is, at this moment, the key drag on our top line evolution market pricing is stable, right? We are not seeing a deterioration of the market price for broadband connectivity.
The price levels are lower than on the back book. Our back book is approaching the front book prices. From that, we are expecting gradual stabilization. If that drag is out of the system, all other segments, if you look at mobile, if you look at B2B, we do see growth. From that perspective, I think we are clearly expecting a stabilization first and thereafter a return to growth on the service revenue line. I think that is backed up by the current trends, but it's also backed up by our strategy and the opportunities that are sitting within the marketplace for us.
On CapEx, talking about the opportunities on CapEx. Firstly, one key driver, obviously, of our CapEx reduction is the fact that we have largely invested into 5G. That's a rollout almost entirely done. There's of course, always a bit of spend that you have to do in the networks to keep the stuff fresh, some maintenance, CapEx, and so on. But the rollout chunk, if you want, is behind us. We are largely benefiting from that. Secondly, next to that comes other CapEx opportunities.
A large one, and you alluded to that, is obviously AI. AI in particularly, of course, there's some cost that you have to invest in AI to make it going. Clearly investments into software development will significantly come down over the next years. We are seeing some of it already happening now, what we are expecting a lot more to happen going forward. The effort necessary, especially the people intensity of software development, is massively reducing.
From that end, we are expecting to also be a clear beneficiary of that trend. That is one example that we are expecting to have a significant impact. There are others, but I think this is for sure, from our perspective, the largest one also given the fact that software development is a large chunk of our total CapEx spend.
Good. On the service revenue trend, I think you're picking up in general a fair point in that Q1 was still declining similar to Q4. When we zoom into that and before I go to the guidance, of to sort of the seasonality point, of course, you are aware that what the result that we're seeing in Q1 in terms of quarter-over-quarter decline is predominantly an annualization of what we have seen in the prior four quarters, both on volume and value.
If you look at that, and again, André talked about it on the slide, you can see that especially Q2 to sort of H2 last year, we had negative ads, and we explained why that was. We don't expect that to continue. Secondly, you see the ARPU year-over-year development. Super important to note that you take out the FMC allocation. We're not allowed to do that and to show you the number, but we are allowed to show you the absolute number. I think if you divide that number over the RGUs, you get to a different ARPU trajectory.
If you look at that ARPU trajectory, we are seeing an improvement over the last 5 quarters, yet not as much as what we had hoped. We also explained why that is. On the one hand, the phase out of the UPC base took a bit longer. Secondly, the retention discounts that especially we gave last year were a bit higher than what we had expected.
We talked about the loyalty program and the currency that we are creating, which we fundamentally believe should reduce our retention discount. Lastly, André spoke about the net gap between in and outflow that is reducing. If you equate all of that, and yes, we're not there yet, but we are very comfortable with our plans to see that continuous improvement, then I think the equation still holds for 27 or perhaps 28, that we should get into better territory and get into a net growth on total revenue.
That's again supporting everything that André just said. When you look at sort of the in-year quarterly phasing, Q2, one indeed should expect to be the softest, if you will, on a comparative basis for all quarters because there is no price increase. You see the annualization impact of prior quarters of last year financial performance. That is Q2. Q3, from August 1st, price increases. Starting to run in some of the annualization tailing off and a continued commercial improvement that helps.
Then Q4 should be meaningfully better than what we see in Q2 and Q3, without giving you specific percentages or a sort of absolute trajectories. I think that is the best way to describe the overarching developments that we're seeing.
Thanks. That's really helpful. Just to come back on that front good point, which is clearly a drag on ARPU at the moment. It's quite difficult to see from the outside how long it will take that gap to close or how big the gap is. Would you be able to give us a bit of a steer for our modeling on when you expect that front book, back book to fully close based on the current trend levels we've seen in the way that you used to give us on the UPC migration? Thanks.
Well, if you look at the current market offers, I guess you get a good indication that pricing is ranging not that far away from where our ARPU evolution now sits. I think we are not expecting that the gap to the front book has to be fully closed because there's always some sort of optimization that we can drive. From that perspective, we believe that we are very close to that point where it tails off. Exactly, can't tell you what that final number is, but it's not like, oh, there's another, whatever CHF 5 that you have to expect to decline.
Next question is from Christian Baader, ZKB. Please go ahead.
Yes. Good morning also. I have 2 questions, please. First of all, in your presentation on page 12, you showed quite nicely that the other revenues, both in the residential and B2B segments, were quite strong. You pointed out that this is due to handset sales and various fees. If I calculate correctly, the revenues for these 2 segments increased by almost 13%. I was just wondering, is this something that we should continue to expect in the coming quarters or for the rest of the year? That's my 1st question.
Go ahead. Yeah.
Yeah. Sorry. Okay. I thought the second question was coming then straight away. Yes, strong growth. Let me zoom a little bit more in. On residential, it was a mix, and perhaps, I would say a majority of that CHF 11 million was in relation to handsets, with then the rest the adjustment of fees. The adjustment of fees, one can expect sort of to be continuing throughout the year. Handsets is hard to forecast as such because, of course, it depends on what launches will come throughout.
I think 2025 had a really low spillover from 2024 sales on the back of that. Whereas this year, the Q4 handset sales were strong, yet not everything we were able to deliver to our customers. Therefore, Q1 was not just the in-quarter sales results, but also the spillover from Q4. How that is going to develop in the rest of the year, hard to determine. On B2B, it's a more mixed, not mixed bag, but it's a more a mix of elements that are happening.
Yes, it is again, a bit of handset sales, but here it's not as much mobile handsets. It's often also, fixed not handsets, but equipment sales, which then sometimes have to do with installation of bigger customers or one-off sales that we're doing to support in-home or in-building connectivity.
Therefore, I think in B2B especially as well, it is harder to sort of determine because it is a mix of what sales efforts we're doing and how customers want to sort of structure the contracts on the back of that. Fundamentally, we do expect a growth year-over-year, but it's I wouldn't want to give any sort of guidance, especially when it comes to quarterly phasing of how that is going to evolve.
Okay. Very clear. My second question relates to your interim financial report. The detail of, let's say, OpEx, and there's quite a big number in there of restructuring expenses, CHF 27.8 million. In your comments you say this is largely due to the restructurings you're doing on the personal side. I was just wondering, can we expect that this restructuring charge is plummeting materially in the next couple of quarters?
As you are aware, we announced in Q1 approximately a 7% headcount reduction focused on more of the management part of our company structure. As per accounting rules, you then have to recognize the total provision that you're going to be paying out over the next, say, 12 to 18 months. Yes, from an OpEx stat, because you're focusing on the statutory financials where that is the way you account for it. Yet, from a cash flow perspective, it's only going to materialize over the next 12 to 18 months.
Also important to note that from our adjusted EBITDA definition, from our performance metrics, we're excluding that restructuring charge all in all above the EBITDA perspective, and it's then just running through our net working capital as such. I think that's the total context. It's a one-off charge that from a cash perspective is going to unwind over the next 12-18 months. When you look at our adjusted performance metrics, it is fully out of our adjusted EBITDA definition as per our guidance.
From an accounting point of view, we shall not expect a similar charge in the coming quarters, right?
Absolutely. We did one restructuring and we're not intending or expecting another restructuring.
Okay. That's clear. Thank you.
No worries.
The last question is from Ajay Soni, JP Morgan. Please go ahead.
Hi, guys. Thanks for taking my questions. I've got two. The first is around CHmobile. It's been around 6 months since you've launched. Just wondering where your inbound customers are coming from here. Is it downtrending within your base? Are you capturing non-Sunrise customers here? What's been the impact on your overall ARPU growth because of CHmobile?
If you can give us an idea of, like, maybe the number of customers you have on that brand, it'd be great. My second question is just around Swisscom price rises happened in April. Have you seen any benefit from this with more customers inquiring or moving over to the Sunrise brands? Thank you.
Thanks, Ajay Soni, for your questions. Let me start off with the CHmobile question. Essentially, as I said in Q4, there was quite a meaningful contribution from CHmobile as part of the launch in the Black Friday seasonality. That was, I would say, meaningful. Since then, inflow, in comparison to the total inflow that we're doing across all of the other brands is well less than 10%. It's not like that this is playing a major role in terms of inflow contribution going forward.
Yet it has had an impact because some of the customers were not just added in Q4, but were via a mobile number porting only added in Q1 and some are also in Q2. We refrain from reporting the total customer base evolution of the different brands also for competitive reasons. But CHmobile is still a very small part of our business, hence also the dilutionary impact on ARPU is meaningless at this moment in time, I would argue.
Now, given also the inflow contribution, I would not expect that to be a major driver or a driver of ARPU evolution on mobile in total. Yes, in total, I mean, there's many mixed components on the mobile side, not only the different brands, but also different products, right? If you're buying a mobile subscription in the first line is more expensive than the second line, there's also dilution that is coming from multi-mobile offerings, which have a more meaningful contribution to the ARPU dilution than the CHmobile segment.
I would say at this moment, this is rather a rounding error than a factor. On the benefit of the price rise of Swisscom, not that much, to be honest. I mean, we have seen some of it. We have not seen a major mix change. Sorry, you had another question on the mix of customers that were joining into CHmobile. The cannibalization remains very small. Overall, the vast majority of customers that CHmobile is winning is coming from competitors and to a large extent, also very much skewed to the lower end of the price spectrum. It's rather C segment customers that are rotating into CHmobile.
Only a minor part of the contribution is actually coming from customers that are coming from potentially higher price points and are spinning down into the C segment. I think that's kind of the structure of it. It's according to our expectation. At this moment, I think the cannibalization is quite small, and we are very, yeah, positive about the impact that it has from a net perspective.
Swisscom, as I said, so far while we have seen a bit, but not a lot, we have also not intensified any promotional activities on the back of that. From that perspective, I think there was a pretty, yeah, non-event so far, I would say, from a market and inflow perspective.
Great. Thank you very much.
Thank you.
That was the last question. I would now like to turn the conference back over to Alex Herrmann for any closing remarks.
Well, we'll leave soon with thanking everyone for your participation questions. With that, we conclude the call for today. Thank you for dialing in. As always, in case of any further questions, please do reach out to the investor relations team. With that, have a good rest of the day. Bye bye.
Thanks, everybody.