Louis Schmid - Head of IR Urs Schaeppi - CEO Mario Rossi - CFO

Frederic Boulan - BofA Merrill Lynch Georgios Ierodiaconou - Citigroup Vikram Karnany - UBS Jakob Bluestone - Credit Suisse Andrew Hogley - Mirabaud Andreas Mueller - Zuercher Kantonalbank Usman Ghazi - Berenberg Bank Nicolas Cote-Colisson - HSBC

[Abrupt Start] Urs Schaeppi, Mario Rossi and Louis Schmid. Louis, the floor is yours.

Good morning, ladies and gentlemen, to Swisscom's third quarter results presentation. My name is Louis Schmid, Head of Investor Relations, and with me are our CEO Urs Schaeppi and Mario Rossi, our Chief Financial Officer. The first part of today's presentation, which will be hosted by our CEO, addresses four chapters. A quick overview of the underlying Q3 results and highlights in chapter one, the second chapter some words about the functions of quality especially in Switzerland and its importance to generate sustainable free cash flows, chapter three is our intention to strengthen our Swiss position and in chapter four some explanations about Q3 performance for Fastweb. The second part of the presentation will be presented by Mario who will run you through the Q3 financials and the outlook for the full year 2015. With that I would like to hand over to Urs to start his part of this presentation. Urs.

Morning, ladies and gentlemen, and I would like to start to with a small overview on the Q3 results. And in a nutshell we can say, and you see it on Slide 3, that we have a solid underlying development in the third quarter both on top line and on EBITDA. If you take the comparable numbers you can see that we have an increase on our revenue by CHF103 million and on the EBITDA level on a year-on-year base by CHF72 million, without the exceptional effects, which are mainly exchange rates, some M&A activities, then non-cash pension expenses, some real estate effects and then thirdly has the biggest impact, the sanction or the possible sanction from the administrative court and this was the main effect which had an influence on our reported results. If you go to Slide 4, then we should have a deeper look to the key figures of the Group. The net revenue without exceptionals is CHF2.9 billion, unchanged compared to previous year. The revenue of the first nine months on a comparable base are CHF8.7 billion which is this improvement I mentioned before of CHF103 million. The EBITDA in Q3 on a comparable basis went also up by CHF32 million. On a nine-month view the EBITDA without exceptionals, the overall exceptionals are CHF345 million, increased by CHF72 million on an absolute amount of CHF3,444 million. The CapEx, the capital expenditures are unchanged, almost unchanged on a year-on-year basis. So solid figures in Q3. If you go to Slide 5, there we have some highlights of the quarter three. In the residential market, just as an example, a successful quarter if you look to our development in the TV market, but also if you look to the development of our bundled offering, triple-play offering, Vivo. Also the wireline business -- the wireless business, our Infinity product performs well. We have 1.8 million subscribers, residential subscribers which are already today on our Infinity Plus tariff, that means the tariff which includes roaming for the EU region. So 30% of our customers are on this growing tariff. We had a good development also in our SME business, with a bundled offering, we call it My KMU Office. We have a very good sales reach. If we have a look to our corporate business, the multinational companies and bigger enterprise customers, we had different successful launches and we were able to win some attractive cloud use in Switzerland. So overall order intake in the enterprise business went up by 42% on a year-on-year base, so a solid order intake also in the enterprise business unit. On the technology side we are investing in our broadband business and have several innovations. On the regulatory side, the regulation side, broadly the main event in Q3 is this sanction of CHF168 million. We booked it but today we are really thinking that this sanction is unjustified and we will go to the next level of -- and to appeal against it. On the financial side we were able to get a new bond of EUR500 million, a very successful bond issue. If you go on Slide 6 then I would like to come a bit deeper to our fundamental drivers in the Swiss business. And it shows actually that quality matters in Switzerland, not only on the network side but also, and this is extremely important, on the customer experience side, that means products and customer service. And if you are able to have a superior quality on these two levels, network and customer experience, we are able to increase our volume, to keep our prices high, to have a price premium, which results in a stronger free cash flow. But it means that we have to invest in our infrastructure. But that is the fundamental of our strategy, a differentiating strategy which leads to a strong free cash flow. If you go on Slide 7 and some remarks to our strategy in the broadband business, the domestic broadband network business. In Q3 we have now a rollout, we roll out fiber-to-the-home and we have 1 million households which are connected with fiber-to-the-home. Overall we have 2.5 million homes which are on ultra-broadband, that means which have a bandwidth above 50 megabits per second. And on the latest fiber technology we have 1.7 million. So a strong increase of our ultra-broadband footprint in Switzerland. But also the network coverage of mobile went up, so we have a coverage in the 3G network of 99% population coverage and the 4G coverage of 89%, and we will further increase the coverage in 4G. We are also testing currently the LTE advanced technology and we are piloting the technology with 450 megabits per second. If we got on Slide 8 then some remarks to our customer experience. It's a main pillar of our strategy to have the best customer experience and we can prove it also and we think also from the results in the markets that we are here on the right way. As an example, our TV proposition, where I will come later to it. But also our tariff models which we implemented in the Swiss market. As an example, our bundled offerings, our quadruple-play offerings, our mobile offerings. But also our multi-brand strategy works, not only a Swisscom brand we have also a second brand and third brand and so have really a good coverage in our different customer segments. Besides products, it's very important to have a strong distribution network and a good customer service. And if I look to our Swisscom shops we have 150 Swisscom shops in Switzerland. We perform very well with the Swisscom shops and it's one of the main pillars also of our sales performance, are the Swisscom shops. If you take neutral ratings of our customer service, also if you take the customer satisfaction, we can prove that we have a superior customer experience. If we go to Slide 9, then I would like to give you a bit more insight on our TV progress. We performed very well with our TV product, we will become number one in Switzerland in, let's say, in a short time and this is a result of really a differentiated product. On the one side we have the widest variety of content, we have a lot of free-to-air channels. We have a superior picture quality, easier usability, but also a converged multi-screen offering, so you can not only look or see your TV on your TV but also we have the app service or on your mobile. It's a cloud-based product, with seven days replay, live pauses and other very attractive features. Also our price, you can see in on chart 9, is competitive. Superior products with a competitive price and this leads to our strong performance in the triple-play business but also in the TV business. If we go to Slide 10, there you can see the development of our revenue generating units. And we see that we have a solid development of our revenue generating units. At the end of Q3 we have a total amount of 12.5 million revenue generating units which is an increase of 300,000 compared to previous year. We can also see that see that the development of the different bundles is in line with our strategy, one-play products lost weight, bundled revenue generating units also for quadruple-play units increased, and despite the market which is becoming more saturated we were able to deliver a solid net add growth on the revenue generating units. So a strong market performance also in this year in the different quarters of this year. Let's have a look on Slide 11 to our market share development. We can see that our market shares in mobile, in broadband, are stable on a good level, on a high level stable, and then we are able to increase to increase our market share in the TV business and this will continue. Page 12 shows you that we have stable low churn figures and this is partly the result of our quality strategy on the network side but also on the service and customer experience side. Page 13 shows you the ARPU development and our ARPU development shows overall a stable development. In a competitive market, in a more accelerating market this is a good result. And despite our price increases for roaming, as an example, we were able to remain our mobile ARPU stable on a high level. Let's go to Slide 14. There you see the ARPU of the bundled -- that means the average ARPU per revenue generating unit, relatively stable development in this bundling business. Slide 15, some remarks to our revenue mix. You can see on the slide that our one-play products lost weight, as I mentioned before, from CHF515 million to CHF428 million in Q3. On the other side we were able to increase and that's impressive, to increase the one-play mobile revenues because of a strong performance of Infinity. The bundled revenues increased by -- from CHF440 million in Q1 to CHF570 million in Q3. Let's got to Slide 16, there you can see that the free cash flow development of Swisscom Switzerland. The average EBITDA on a comparable base over the last seven quarters shows a solid development and a very attractive margin. Also the average operating free cash flow over the last seven quarters is on a high level of CHF0.5 billion. So it shows that Switzerland is a sustainable cash flow generator. If we go on Slide 17 some remarks to our new organization. We have the ambition to change our force, our performance to -- further change our performance in the, let's say, customer-near organization. So that means we are a reorganizing all residential and SME departments using synergies and increasing our sales target, that means we will have a new sales and service unit where we can really push our sales and customer service. On a yearly base, in 2016 we are expecting to have a moderate reduction of our staff. The reason is there are some synergies between the different departments in the new organization. Slide 18 shows you then the setup of Swisscom Switzerland with the new departments, the target organization for January 1, 2016. Slide 19 gives you some figures to Fastweb. We had a good quarter two -- three quarters for Fastweb. We were able to grow our revenue by 5% and in fact the Q3 revenue is approximately flat but that's a normal effect of quarter three. If you take the overall market performance of Fastweb you can see that we had a strong first nine months, we were able to increase our customer base by 100,000 subscribers and also in the enterprise business we were able to increase our revenue on a year-on-year basis by 3%. Net adds are strong also in Q3 and we were able to reduce our churn. On Slide 20 you can see our development of the ultra-broadband network, new generation network. So far we have 600,000 customers on fiber-to-the-x product, that means either fiber-to-the-street or fiber-to-the-home, which is an increase on a year-on-year basis by 33%. 30% of our broadband -- of our internet customer base is on ultra-broadband. This has the impact that we can reduce our churn and increase our sales figures. Currently our rollout plan of our ultra-broadband network is proceeding according to our plans. We have today around 6.2 million households on ultra-broadband. Our target for the end of 2016 is 7.5 million and the mix of this 7.5 million, 2 million are fiber-to-the-home and 5.5 million and fiber-to-the-street. So the rollout of ultra-broadband is on track. Page 21 shows you some figures on EBITDA and operating free cash flow, or free cash flow proxy. We can see that we have, again, a strong EBITDA in Q3 of CHF145 million, this is an increase of CHF11 million. And also the EBITDA coming from in the first nine months went up by 9.5% and is on an absolute level CHF405 million. The free cash flow proxy in Q3 is positive with CHF21 million so we are confident that we will have a good closing of the 2015 results. Now I would like to hand over to Mario to give you some insights on the financials.

Thank you, Urs. A few remarks on the financials from my side, let's start with revenue on page 23. I think on the revenue dynamics the most important thing is that our bundling strategy still showed a positive impact on the top line. The revenue increase of bundles still overcompensates the single-play revenue decrease, you see that on the left-hand side, bundles increased by CHF242 million when single-play and wireline revenue decreases by CHF192 million. Also the dynamic per quarter is still promising, in the third quarter increased, this effect started this by CHF11 million and in the third quarter by CHF13 million, so we have the same dynamic in Q3 as in Q2. Then the second important thing on this slide is the revenue increase of Fastweb, that's a 4.6% increase in local currency and all segments have increased their revenue in 2015. If we look at Q3 we see a strong performance on consumer, on the consumer revenue in Fastweb we were able to increase revenues by 4.8%. Revenues on the enterprise segment decreased in Q3 by 4.5%, the reason being we had lower revenues from FFOs which has a very low margin but there is nothing to bother about. Wholesale revenues in Q3 were more or less flat. A few words on the next slide, the breakdown by segments. Again, a very strong performance of the residential segment, also there is important that the dynamics of the high margin service revenue is still positive. in Q1 we increased service revenue by CHF34 million, in Q2 by CHF14 million and in Q3 also by CHF14 million. A few words on the enterprise segment in Switzerland, there we see some price pressure in the mobile market. We had some competitive price pressure this year, especially from Sunrise, but then we had in Q2 and Q3 some reluctance of the corporate customers to pursue the IT projects that led to a slightly lower revenue. But as Urs mentioned, the order intake is still very promising and we are satisfied with that. In the wholesale segment we have increased revenues due to higher inbound roaming revenues. We have then Fastweb which we already discussed. On EBITDA, after the exceptionals which was already discussed, we were able to increase the underlying EBITDA by 2.2% for CHF72 million. As mentioned, in Switzerland we have seen an increase in service revenue, mainly in the retail segment. This contribution was partly compensated by higher costs. These higher indirect costs are related to customer support which secures our outstanding customer satisfaction and some internal IT projects mainly in the SME division because of the All IP transformation. Q3 benefited from lower direct costs because we had lower SACs and retention costs in Q3, CHF27 million lower compared to Q3 2014. You can see the details on Slide 39 in the backup. Again a strong performance of Fastweb in local currency and a net EBITDA of 9.5%. Then I go directly to Slide 27, to the net result. We have this lower EBITDA, but again impacted by a CHF345 million one-off, underlying EBITDA increase by CHF72 million. Depreciation and amortization were more or less stable but with two effects, we had higher depreciation in Switzerland, in Swisscom Switzerland, CHF74 million, due to the high investment level. And lower depreciation at Fastweb that's mainly driven by the lower exchange rate of the euro. Net interest stands at CHF147 million, CHF18 million below prior year because we have still very favorable refinancing conditions. And in the other financial results we had some one-offs in the prior year, we had in Q3 2014 CHF82 million revaluation of the 49% participation of the LTV business, and we had the negative impact of CHF33 million of a repayment of a financial lease, that's main impact in the prior year to a net CHF50 million had a positive impact. The effective tax rate for the first nine months stands at 23.2% because the fine for the BBCS case is recognized without a positive tax impact. In the long run we still calculate with an average tax rate of 21%. CapEx on Slide 28. The CapEx in the Swiss business went up by CHF61 million. We had higher CapEx in the fixed line infrastructure, about CHF40 million, then in the rollout FTTx and FTTs we spent CHF48 million more than in the prior year. On the other side, we had lower CapEx in mobile, CHF20 million -- CHF32 million and less project-driven CapEx services, CHF11 million. On Fastweb in local currency, the CapEx are more or less on the same level as in the prior year. The FTTS, as was mentioned, we are well in plan with our FTTS rollout. The operating free cash flow is below 2014 by the amount of CHF41 million. Of course, the provision for the BBCS case has no impact on cash flow, for the decline, slight decline, comes from very small effects in the net working capital area. It was mentioned on Slide 12, it was mentioned we had the successful transaction mid of September in the Eurobond market. We were able to get EUR500 million at very favorable conditions. The market timing was perfect, and that was part of Swisscom's refinancing program in 2015. You see also the current financing mix with the two peaks in 2017 and 2018, which we have to refinance. We have still very attractive funding costs, that the average debt -- cost of debt stands now below 2% at 1.8%. And the average credit spread is 70 basis points. 80% of the interest-bearing debt is fixed. So I come to the outlook. On October 6, we communicated that we need to lower the EBITDA expectations due to the provision for the BBCS case, but everything else remains unchanged. Net revenues will be above CHF11.5 billion. EBITDA after the provision will be above CHF4 billion, and CapEx expect to land at slightly over CHF2.3 billion. With that, I hand over to the Q&A. Q - Frederic Boulan: Hi, it's Frederic Boulan from Bank of America. A couple of questions, please. Firstly, on the cost-cutting side. So if you could discuss your margin expectations considering the cost initiatives you announced and the longer term targets you have on the All IP side. Is the idea of the repositioning to shift more headcount to client-facing functions that improve your client traction or really to drive better margins in the medium term? And secondly, on the mobile side, if you could discuss prospects for -- sorry, mobile ARPU going forward, in particular, dynamics going on between -- in the switch to Infinity, within Infinity, and the overall price positioning of the Swisscom offers versus competition? And in particular, I think at Q2 you told us you felt very limited impact from price moves. Is saw still your assessment at this stage, despite the more recent moves you sold at the end of August? Thank you very much.

So I will begin with the mobile ARPU question, and then Mario will come to the cost-cutting. The development of the mobile ARPU, we show quite stable figures. Also, the June figures in the mobile market are really good. So we have actually a stable condition in the mobile market. And also, if I look to our net adds, and on the price move also, I don't see a dynamic which is really influenced by the price move also. But I would say it's a bit too early to judge it. And so we have done a lot of switch, but today, the figures of Swisscom are really good in the mobile market. And also, if you look to the migration from Infinity, in the Infinity, the subscriber base from non-Infinity to Infinity, we see a good dynamic. The biggest pressure in the mobile market we see in the absolute low-end business. But there we have third brands or second brand products where we have a good net add. So today I see quite favorable conditions in the mobile market. But you have to look to it.

Okay, thanks.

If I come to -- you called it cost-cutting, and I would say the key of the organizational changes, the first thing is we need to ensure a strong and established client focus in our company. So -- and that's the reason why we created the sales and services division. There we see end-to-end responsibility for the customer process and the full customer experience. We need to defend our top line. Whatever we lose on the top line will be very difficult to compensate in the cost section. The second point is we want to become stronger on the operational excellence. You can call it the cost-cutting. But there, it has always been out in the past, all the non-direct productive elements. On that, we always work. Three years ago, we cut our overhead expenses by more than 10%. On the other side, we increased the number of FTEs on the direct properties, in the touch points, etc. So the whole impact of this reorganization on the number of FTEs and the cost, we can work out now from today until February, then we'll give the guidance for 2016. And on IP, we're still very pleased to turn off the TDN network by around the end of 2017. And we will start to see an impact on the costs coming from the All IP technology in 2018, and we expect that will have, recurring positive impact on OpEx of around CHF100 billion.

Thank you very much.

I’ll move to next question from George of Citi.

Good morning. I've got two quick questions, hopefully. The first one is around the overall pricing environment, mainly in mobile. Obviously, the consumer segment is quite visible to us. But I was wondering if you could comment as to whether you've seen similar price moves in the SME and corporate segment, whether the conditions there are deteriorating or improving in the last few months? And my second question is regarding Fastweb. You mentioned earlier your low cost of funding and everything else. So I was wondering whether with consolidation process we're seeing now in Italy, you would be tempted or interested in some way of entering the mobile market, whether as an MVNO or owner of some part of the network? Thank you.

Good. On the mobile pricing in Switzerland in the corporate market, we had what we saw was quite aggressive moves, but very, very targeted unclear in the B2B market. On the other side, if I look to our market, market structure, market share in the enterprise market, we see that we have stable market shares in the B2B market. We had also impacts from Sunrise. And that's a bit my view on the mobile market. I think the price dynamic in the mobile B2B market will decline, because Sunrise will see that they will be not able to win real market share only through price -- through aggressive price moves. The market is more working on quality. And so I think we will have more stabilizing conditions in that enterprise market. On Fastweb, mobile market in France, we are already in the mobile business. We have an MVNO agreement in the mobile market in Italy. But we will certainly look to different scenarios in Italy, how we could entrench our position in the mobile market.

Thank you, and --

With a full MVMO, we are already -- we already told you that we will go on to MVMO, but we will look to areas all conditions -- all scenarios.

If I could very quickly follow up on your comments on the enterprise segment. Have any of the changes you described been recent? Or was it Sunrise being competitive, which has been the case for the last couple of years?

I didn't understand exactly your question.

So has there been any change from Sunrise recently? Or the same type of intensity you are seeing last year and the year before?

No, let's say two years ago, Sunrise was not -- really not a -- we don't saw the presence of Sunrise in the enterprise market. In this year, they enter more aggressively or at the end of last year anticipate they went more aggressive in the mobile enterprise markets. But with that in mind, with limited success, they won some customers, but on the other side, we also made win backs and overall the market share stable.

Thank you.

I’ll move on to the next question Vikram Karnany.

Yes, thank you, Vikram Karnany from UBS. I've got a few questions. First of all, on Infinity it keeps on getting closer potentially to your previously saturation limit of around 20% -- of around 70%. In terms of increasing the life of this product, do think you need to give more value-added services like roaming and shared plans? And how do you justify another price premium you have in terms of the premium end of the market, despite the significant higher network quality? And secondly, on the fixed line side, how do you see the market development where it seems like Liberty is cash flow focused by increasing fixed line prices? Are you worried the potential entry of a new player like Salt in the market could disrupt the dynamics due to relatively high prices? Thanks.

On Infinity, in the mobile business, the tariff plan is important. Network is also important. But then, as I mentioned before, also extremely important is your distribution network and your customer service. And all in all, will give you the performance of the mobile business. And I'm confident that we have and we will have a premium product with the clear USP in the mobile market. So we will work on different levels of the network quality to have an attractive product, and also on the customer service and sales side, and at the end that will be -- bring the good results of the mobile business. In fixed business, if you look from where our revenue generating units are coming, you see that they are coming out of the triple-play and quadruple-play business. And that means the customer looking for bundles and there we have a superior offering, the bundling of our superior TV product with our broadband network will work also in the future. We see very good figures in the last week in our TV business, and it's a question mark what Salt are doing in the wireline business. We don't know. But we have will have a look to it and we have certainly the positioning to protect our market share.

Okay, that's great, thank you.

I have a next question from Jakob Bluestone.

Hi, good morning, Jakob Bluestone here from Credit Suisse. I've got a few slightly detailed questions. Firstly, on your voice access line loss, and as you said, your voice access line loss is roughly stable. I think you lost about 38,000 voice access lines in Q3, so the same as Q2. However, if I look a year ago, that was closer to 20,000. So just trying to understand, is there a lot of seasonality in voice access line loss? Or should we just consider that sort of development as stable? Secondly, could you possibly just comment on the slightly lower net adds at Fastweb? I think you added about 15,000 broadband subs during Q3, the last few quarters you've been doing 30,000 to 50,000. Again, is that seasonally driven or is there anything particular we should be aware of for that? And then finally, could you maybe give us a little bit of timing on when should we see the savings coming through from merging the residential SME business? So is that a 2016 benefit or is that -- does it take a little longer? Thank you.

Okay. On Fastweb, net adds broadband in Q2, yes, it's the seasonality. In August we said as goes to Italy, you know, has closed. That was always the case in Q3. You have very low net adds and usually a very strong Q4. The voice access losses, we had for a long time, we had exit losses between 1% and 2% per year. And now the 38,000 loss per quarter, that gives you a yearly loss of up to -- close to 5% per year. And we see that finally the fixed mobile substitution kicks in. And yes, I would, going forward I would also expect that the 5% level will remain. On the savings, it's not only savings merging residential and SME. Also -- we will see some other savings and they are starting to get an impact in Q3/Q4 2016.

That's very helpful, thank you.

I have a next question from Andrew Hogley.

Hi, it's Andrew from Mirabaud. In the release you talk about some more aggressive cable competition. It doesn't seem to be being borne out in your RGU trends, but I wondered if you could comment in some more detail about that? Thank you.

Good. This is the competition in the broadband market in Switzerland is high, but on the other side, we were able to increase our broadband customer base and strongly our TV customer base. And that shows that we are really competitive in this cable market. I don't see actually an increasing competition from the cable operators. If you look to the last moves of Cablecom, they increased slightly their prices. And the regional cable operators, they have certainly to work on their value proportion on the TV products. I think we are in a good situation with our positioning. We have to work on our ultra-broadband footprint to be competitive on the broadband-only business. And if you look at the competitive dynamics in Q1 and Q2, where we have -- see the numbers of UPC, there we see their growth is coming from the 2 megabit for free. So that means in the higher-end offerings they don't really grow their customer base. And what we see in areas, in rural areas where we are now rolling out fiber-to-the-street, that there we have a positive impact on our gross adds. So that means our strategy in terms of rolling out NGN, as was mentioned, works.

Thank you.

Moving on to the next question, that's coming from Andreas Mueller.

Good morning. I've got a question on the lower-end mobile side. What kind of market dynamics do we see there? And also, how do your brands outside of Swisscom work on that side? And the second question would be on the net working capital, SAC and SRC which were pretty low in Q3 and seasonally are going to be up Q4. But could you indicate there the development?

Good. On the low-end mobile market, what we see actually, that customers from pre-paid are migrating to low-end post-paid. That's one dynamic we see. And on the other side we see some MVNO offerings in this market. And we have a strong development with our products, with our third brand products in this area, for example, with M-Budget. Just on remark to the subscriber acquisition costs. Last year, we had the launch of the new iPhone 6, and this year we didn't have this effect on a comparable basis. So we have now the iPhone 6s but it changed later in October. And let's say the innovation between iPhone 6 and iPhone 6s is not so big, so we don't see such a big impact on the new iPhone in the Swiss market. That's why also the SACs are low.

And then that always expect cost, higher SACs and retention costs in Q4, that has something to do with seasonality. You see it on the Slide 39. Last year we had also very strong Q4, and we also expect for this year higher -- significantly higher SACs and retention costs in Q4 than in Q3.

Thank you.

I have a next question from Usman Ghazi.

Good morning, gentlemen. Thank you for taking my question. I have two questions, please. The first question was just on the difference between the year-on-year bundle revenue growth and the decline in the single-play mobile revenue growth. We can see in absolute terms that difference used to be around CHF20 million almost last year per quarter. Now it's gone down to around CHF9 million like you suggested in the presentation. Do you see this trend continuing to decelerate? Or is there anything that you can do to keep the favorable trend? Particularly my question is pointed to the fact that your TV market share is obviously at a higher level now, broadband penetration is near maturity as well. So any thoughts on that front would be helpful. The second question was just on the churn rates. On Slide 12 you show your churn rates for mobile, broadband, TV, and bundled products. I was just a bit surprised that the bundle product churn is not lower. I mean, the bundle churn rate here seems to be in line with your broadband churn rate, which is just a bit surprising. So maybe if you could give the exact numbers, that would be useful, thanks.

On the churn, we don't disclose the exact numbers for competitive reasons. Then on -- why don't we have on the bundle a lower churn than on the broadband? And the reason is, because the churn is very low, and a churn rate of around 8%, 9% is I would say close to the natural churn. Because we have people moving out of an area, etc., so it is very rare, seldom to reach churn in the fixed line business below 8%. So that is the main reason. And then on the impact decline of reduced revenues on single play and increase on bundles, yes, that's reflecting out all the time. The main reason is the upselling on the Infinity is coming more or less to an end, because we already have two-thirds of the residential and SME customer base on this product. So that's natural.

I guess, how do you -- I mean, if trends don't reverse, your service revenues at some point is going to start going backwards, right? So do you see that as a possibility? Or do you see a possibility to revive growth in single play post-Infinity?

We don't see declining revenues. We really see it in flattish area.

Okay. Great, thank you very much.

I have a next question coming from Nicolas Cote-Colisson.

Hi, thank you. Just a follow-up question on Italy. I was wondering if you could come back on the apparent weakness in the corporate segment at Fastweb in Q3? And also, would you be in theory interested in taking some of the remedies that could arise from the merger between Hutch and Wind including spectrum remedies? Thank you.

On the corporate segment, in Q3 in Italy, we see two dynamics. One dynamic is that we have a good dynamic on value added service, higher services. And still there are in the market some attractive RFPs. So I'm optimistic for the enterprise market. But Mario can come to some fixed revenues. And then on the remedies in Italy, I will look to it.

I think the enterprise revenue had declined, as I mentioned in Q3, by 4.5%, but on a cumulated bases by 3%, and this minus 4% is not the change in the trend. We had lower revenues from hardware sales, and these are seasonally or by contract driven and have a very low margin. So we are not concerned with our performance on the enterprise segment.

And if I may follow up on the margins, EBITDA margins for Fastweb, do you think they continue to move up as you keep going up and transferring unbundled subscribers to fiber? If you can share some color on the future margins there?

Yes. On the business -- on the NGN rollout, with fiber-to-the-street, with each customer we are able to migrate from ULL to our FTTS infrastructure, we can increase our margin because we have lower out-payments towards Telecom Italia. That will continue. That's also the reason why we extend our footprint to 30%, and that we go up and we have completed that by the end of 2016. That helps to increase the margin in the residential business.

Thank you.

That was the last question. There are no further questions.

Okay. Then I would like to thank you to everybody for the participation and in the case of further questions potentially coming up, we are happy to help and support you. Speak to you soon, and thank you again.

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