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Results of operations

Structure

Results of operations

Income statement

In CHF million, except where indicated20142013Change
Swisscom Switzerland8,5718,3892.2%
Fastweb2,0432,0131.5%
Other operating segments1,0881,0325.4%
Group Headquarters1––
Revenue from external customers11,70311,4342.4%
Swisscom Switzerland3,5763,5470.8%
Fastweb6256200.8%
Other operating segments36130319.1%
Group Headquarters(121)(127)–4.7%
Reconciliation pension cost 1–(17)–
Intersegment elimination(28)(24)16.7%
Operating income before depreciation and amortisation (EBITDA)4,4134,3022.6%
Net revenue11,70311,4342.4%
Goods and services purchased(2,369)(2,338)1.3%
Personnel expense(2,751)(2,706)1.7%
Other operating expense(2,540)(2,476)2.6%
Capitalised self-constructed assets and other income370388–4.6%
Operating expenses(7,290)(7,132)2.2%
Operating income before depreciation and amortisation (EBITDA)4,4134,3022.6%
Depreciation, amortisation and impairment losses(2,091)(2,044)2.3%
Operating income (EBIT)2,3222,2582.8%
Net interest expense(218)(251)–13.1%
Other financial result(42)(8)425.0%
Share of results of associates2630–13.3%
Income before income taxes2,0882,0292.9%
Income tax expense(382)(334)14.4%
Net income1,7061,6950.6%
Share of net income attributable to equity holders of Swisscom Ltd1,6941,6850.5%
Share of net income attributable to non-controlling interests121020.0%
Average number of shares outstanding (in millions of shares)51.80151.801–
Earnings per share (in CHF)32.7032.530.5%
1 The operating income of segments consists of pension cost especially employer contributions. The difference to the pension cost by IAS 19 will therefore be recognised as a reconciliation item.
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Net revenue

Swisscom’s net revenue rose by CHF 269 million or 2.4% to CHF 11,703 million. On a like-for-like basis, net revenue increased by 1.9%. At ­Swisscom Switzerland, revenue from external customers was CHF 182 million or 2.2% higher at CHF 8,571 million, resulting in a like-for-like growth in net revenue of 1.4%. Price erosion and reductions in roaming fees totalling CHF 360 million (of which roaming fee reductions accounted for CHF 170 million) were outweighed by customer and volume growth. Fastweb’s net revenue increased by EUR 46 million or 2.8% to EUR 1,688 million, or by 1.5% in Swiss francs. Excluding wholesale revenue from interconnection services (hubbing business), net revenue at Fastweb was EUR 63 million or 3.9% higher at EUR 1,660 million. Fastweb’s broadband customer base grew year-on-year by 130,000 or 6.7% to 2.07 million. Primarily as a result of corporate acquisitions, revenue from external customers generated by other operating segments increased by CHF 56 million or 5.4% to CHF 1,088 million.

Goods and services purchased

Goods and services purchased rose year-on-year by CHF 31 million or 1.3% to CHF 2,369 million. The lower expenditure at Fastweb is attributable to the shrinking hubbing business and lower termination rates. Expenditure at ­Swisscom Switzerland rose due to higher costs for subscriber acquisition and retention.

Personnel expense

Personnel expense increased by CHF 45 million or 1.7% year-on-year to CHF 2,751 million, largely as a result of corporate acquisitions. Headcount rose year-on-year by 1,017 FTEs or 5.1% to 21,125 FTEs. Adjusted for corporate acquisitions, the increase amounts to 1.4%, which is largely attributable to measures to strengthen customer service operations and the insourcing of external staff.

Other operating expense

Other operating expense increased by CHF 64 million or 2.6% year-on-year to CHF 2,540 million. The increase is mainly attributable to corporate acquisitions, the purchase of services for call centre operations and higher spending on advertising.

Capitalised costs of self-constructed assets and other income

Capitalised self-constructed assets and other income fell by CHF 18 million or 4.6% year-on-year to CHF 370 million, and includes gains on the sale of real estate of CHF 59 million (prior year: CHF 9 million). Capitalised self-constructed assets were CHF 11 million or 4.3% higher year-on-year at CHF 267 million.

Operating income before depreciation and amortisation (EBITDA)

Operating income before depreciation and amortisation (EBITDA) rose by CHF 111 million or 2.6% to CHF 4,413 million. The figure was positively influenced by higher gains on the sale of real estate, lower pension costs and corporate acquisitions. Adjusted EBITDA rose by 0.9% due to the higher revenue and as a result of cost management.

Depreciation and amortisation

Depreciation and amortisation rose by CHF 47 million or 2.3% year-on-year to CHF 2,091 million, due to higher depreciation and amortisation related to the increase in capital expenditure. Intangible assets resulting from business combinations were capitalised for purchase price allocation purposes. Depreciation and amortisation includes scheduled amortisation related to intangible assets from business combinations (for example, brands and customer relationships) totalling CHF 140 million (prior year: CHF 156 million).

Net interest expense and other financial result

Net financial expense in 2014 amounted to CHF 260 million (prior year: CHF 259 million). Net interest expense declined by CHF 33 million to CHF 218 million as a result of lower average interest costs. The other financial result declined by CHF 34 million year-on-year, chiefly as a result of negative effects of CHF 76 million arising from the fair value adjustment of interest rate derivatives.

Associates

The share of results of associates fell year-on-year by CHF 4 million to CHF 26 million, primarily due to the acquisition of majority stakes in LTV Yellow Pages and Cinetrade in the prior year. Dividends received, amounting to CHF 30 million (prior year: CHF 43 million), largely concern dividends paid by LTV Yellow Pages, Belgacom International Carrier Services and Cinetrade.

Income tax expense

Income tax expense amounted to CHF 382 million (prior year: CHF 334 million), corresponding to an effective income tax rate of 18.3% (prior year: 16.5%). The higher income tax expense is largely a result of using and recognising tax loss carry-forwards in the prior year that had previously not been capitalised. Excluding non-recurring items, ­Swisscom anticipates an income tax rate of around 21% in the long term. Income taxes paid were CHF 108 million higher than a year earlier at CHF 386 million.

Net income and earnings per share

Net income rose by 0.6% or CHF 11 million to CHF 1,706 million. The increase in EBITDA was offset in part by higher depreciation and amortisation and higher income tax expense. Earnings per share increased by 0.5% from CHF 32.53 to CHF 32.70.

Revenue in 2014 totalled
11.7 billion CHF
EBITDA in 2014 totalled
4.4 billion CHF