Louis Schmid - Head of Investor Relations Mario Rossi - Chief Financial Officer, Head of Business Steering Switzerland and Member of Executive Board Urs Schaeppi - Chief Executive Officer of Head of Swisscom and Switzerland and Member of Executive Board

Simon Coles - Barclays PLC Frederic Boulan - Bank of America Merrill Lynch Jakob Bluestone - Crédit Suisse AG Joshua Mills - Goldman Sachs Group Inc. Carola Bardelli - Deutsche Bank AG Matthijs Leijenhorst - Kepler Cheuvreux Georgios Ierodiaconou - Citigroup Inc James Ratzer - New Street Research LLP Julio Arciniegas - RBC Capital Markets, LLC Saroop Purewal - Redburn Europe Limited

Good morning, ladies and gentlemen. Welcome to the Swisscom First Quarter Results 2017. With us today as usual, Urs Schaeppi; Mario Rossi; and Louis Schmid, Louis, the floor is yours.

Good morning, ladies and gentlemen, and welcome to Swisscom's first quarter results presentation 2017. 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 analyst and investor presentation hosted our CEO consist of three chapters: a quick overview of Q1 highlights, our market and financial performance, then some explanations on Swisscom Switzerland and finally, an update on Fastweb. In the second part of the presentation, Mario runs you through the financials and the unchanged guidance for the full-year 2017. With that, I would like to hand over to Urs to start his part of the presentation on Slide 4. Urs?

Yes. Good morning, ladies and gentlemen. If you go to Slide 4, you can see that we have a solid start into the year. So on the branding side we are really the trusted brand in Switzerland. On innovation, we made a lot of innovation. Just as an example, we increased our coverage for 4G plus, and we also launched a new product, which I will come later to it. We were able to keep our strong and leading position in the retail market, although we have the same dynamics as in the last quarters in the retail markets. Enterprise market, we have a very solid and strong positioning, a bit lighter solution basis in Q1, but overall, a good performance also in the enterprise business. Fastweb, strong results in the Q1 and if you look to the revenue evolution, you'll see that, overall, we have a flat revenue evolution; I will come later to with some details to it. So overall a good first quarter a solid financial situation. We also confirmed our A ratings, and we have unchanged guidance for 2017. If you go on Slide 5, you'll see the market performance of Swisscom. Easy said, it's good and solid. We were able to defend our strong market position even in a market which is becoming more and more competitive. If you take as an example our evolution in the broadband business, you see that we have a stable broadband business 2 million connections and the net adds are, let's say, stable or minus 4,000. And the main reasons behind is that SMEs who are on the cost pressure optimized their broadband connection, that's one. The dynamics there in the market is saturated. And on the other side, we have the CPS migration or All-IP migration. So even in such an environment, we were able to have a stable broadband business and also good KPIs in the broadband business. I'm optimistic of the performance of broadband in the next quarters because within - one, our new quadruple-play offer, we will gain more momentum, then we have the further rollout of our ultra broadband footprint. And we see that in areas where we have an ultra-broadband footprint, we have better figures, and also our Swisscom TV products is strong and, clearly, [indiscernible]. So I'm optimistic for the future on the development of the broadband. Here you will see that we were able to grow also on mobile postpaid, solid KPIs, a good market performance and a small growth in a saturated market. On the fixed voice business, you see that the substitution of the fixed lines, which we already saw in the last year is continuing, and we have a loss of 70,000 fixed line connections, and this is substitution that's actually not lost to competition. Fastweb has a good evolution, you see it on the right side of the slide, a good net adds in the first quarter. The financial performance on Slide 6, if I can begin with the net revenue, you see the net revenue is declining by CHF54 million. But if you go deeper in it, you can see that more than 40% of this decline is driven by one-offs. This is mainly an exchange rate effect. And second, it's hard to a business, there's always a bit of seasonality in it. So the real decline in the service revenue is much lower. And the reason that the service revenue is slightly coming back is the voice line loss and the impact of roaming. On the right side, you see the EBITDA. Actually, a stable or flat situation in EBITDA compared to the previous year. And if you go deeper into it from Switzerland, you see that the loss on the EBITDA level is CHF16 million, and CHF11 million is coming from roaming, CHF19 million is coming from the loss of fixed lines. And then through cost savings, we could compensate this decline on the service revenue. So as a result, we have this minus CHF16 million EBITDA in Swisscom Switzerland. If you go on Slide 8, you will see that we have solid market shares, and we will continue to defend these market shares. In mobile, we have 60% broadband. If you change - or if you include also the wholesale market shares, we have 67% market share on that and on TV, a growing market share of 32%. Slide 9 shows you that we continue to invest in our networks. In Q1, we had 3.6 million households, which are connected with ultra broadband, which have speed above 50 megabits and we have 2.1 million out of which has a speed above 100 megabits per second, so increasing fast, an increasing footprint in our ultra broadband network. In wireless, we're also building out our networks. We have 99% 4G coverage. We have 4G+ coverage, above 40%, and this leads to speeds up to 300 megabits per second. And this shows our leading position in the - also in the mobile market. On the right side of the chart, just some remarks to CHIP test. The test is the marketing instrument of Switzerland where a lot of competitors do the marketing of a test. We don't see our company on a test, but there are some tests which shows you that - there are a lot of tests where Swisscom is the winner, and it shows that Swisscom has a leading infrastructure and we'll do the necessary things to keep ahead on this infrastructure competition. If you go on Slide 10, you'll see what we have done to manage our market performance, to differentiate our project portfolio. In 2017, in March, we launched a new offer for Wingo Mobile sales plan, a very competitive offer on the price level for the more price sensitive markets where we have a good starting and also good sales figures. In April, we launched our quadruple-play offer or fixed mobile converged offer. I will come later it, and also a multi-device proposition. Page 11 shows you the performance, wireless performance in the retail market. So a solid postpaid momentum, ARPU was up, stable churn, stable long churn figures in the postpaid markets and a good momentum on bundling. On the left side of the chart, you see that we have 3.3 million postpaid customers. Out of that, 70% are infinity customers, and 23% are, again, bundles of these postpaid customers. The ARPU is overall - same with the blended ARPU, more or less stable. Infinity ARPU is slightly going back, some remarks to it. That is due to the mix - due to a mix because infinity is still a bit growing and then lower infinity customers are coming in the clusters, that's the main effects. If I look deep to the infinity customer base, we see a stable ARPU in the infinity customer base. So it's mainly acquisition-driven, mix-driven. So overall, revenue in the mobile market is stable, and we were able to compensate the impact of roaming. If you go on Slide 12, you see the wireline performance in the retail market. And there, we have a mixed picture, TV, which is growing on a year-on-year level of 115,000. Broadband, we have a growth of 20,000 year-on-year. And then the dynamics or the change which we have already last year is in the voice line business where we have a decline on a yearly level, year-on-year of 256,000. And this is a substitution, mainly substitution and consolidation. The good news is that the ARPU is stable, and we have also introduced the ticker average revenue per households, which you see here on the bottom line of this figure. I think that the KPI, which is becoming more and more important in a more converged market. Overall, the service revenue is CHF680,000 so minus - the overall minus CHF32 million, and the main effect is the voice line. Bundling is growing, good momentum in the bundling business. On Page 13, you see the performance in the converged market. So bundles went up by volume by 18% on a year-on-year level. The top line is growing by CHF72 million, so we have a good and strong momentum in the converged business. On the left side of the chart, you see the subscription and the bundling. In Q1, we have 1.7 million bundles, triple-play or fixed mobile converged bundles. And from the mobile revenue generating units, 15% are in this, so it shows that there's still a lot of content to increase the mobile penetration and the bundle. In the middle of the page, you see that the ARPU of our bundles is slightly going down because also of a mix effect of the new subscription. So if penetration is low, then we get lower charge in it. That's a mix effect and from impacts on growing and then some impacts out of the voice line. These are the main reasons of the ARPU evolution, but overall, growing revenue with bundles. On Page 14, you see some explanation to our new offers, our new price line, inOne. So the market is becoming more and more converged. We are in a mature market in Switzerland. And we have a market, let's call it, everybody offers everything. So we see this clear trend to a converged market. And also the customer is asking for it. So the customer is asking for more converged offers, is asking for flexibility and value for money. The strategy of Swisscom in this market is value-oriented approach. We don't want to decrease our prices. Our ambition is to maintain the price levels. And the philosophy behind inOne is more for more. And what we are doing with our new offering, one, we are combining our flagship offers Vivo, that's a [indiscernible] with our Infinity offer, and then it's a bundle discount on the top. On Slide 15, you see the structure of this new price plan. It's a multilevel concept. And then you can pick out different bundles, let's say, a large bundle on mobile, a medium bundle on the Internet and then also a large bundle on TV, according to your demands or your desires. And if you're bundling even more mobile, you see it on the right side of the chart at the bottom, you see as more mobile you put in, in the bundle, the higher is the monthly benefit you get. With this approach, we will be able to increase our mobile penetration to household. On Slide 16, you see why we are doing this. We want to defend our leading position in the Swiss markets. We want to get an instrument where we can do upselling and cross-selling and, at the end, we will be able to increase our share of wallet. With the flexibility of the bundles, we will be able to increase the Net Promoter Score and also reduce the churn on the lower end of the market, which is actually already low. In [summarizing] the last three marks on this slide. If you take the households which have a Swisscom broadband connection, you can see that more than 1 million in these households has the mobile with operators, and this shows actually the potential to increase the penetration of mobile to our inOne offering. Slide 17 gives you a short overview of our Enterprise business. On the right side, you see that we have a value proposition, which is very strong. So we are really the only fully integrated operator, we have strong ICT capabilities and we can really offer converged ICT offers in a market, which is becoming more cloud-based, and this shows our strong positioning in the B2B market. The revenue in the B2B market is - was in 2016 approximately CHF2.4 billion. And from this CHF2.4 billion, approximately 45% of the revenue is coming out of the telecommunication business, wireless and wireline. Other 45% is coming out of the solutions business. And there we have different business units. We have vertical solutions as an example for the banking. We have cloud solutions, we have workplace solutions. So it shows a strong solutions portfolio with 45% and with a mid-term potential to grow. And then the last 10% of the revenue is more hardware-driven or others business. The enterprise developments on Slide 18. You see that we have stable revenue-generating units in the B2B market, which shows our strong performance in the B2B market. We were able to increase the revenue-generating unit in the mobile market despite some aggressive price moves of competitors, and this leads to an overall stable ARPU development. The decline in the voice business is mainly driven through consolidation and IP migration. The service revenue is overall flat. On a year-on-year base, we lost CHF8 million, so it's more or less flat. It's developed under the service revenue. And the solutions revenue is slightly lighter in Q1, and there are actually two effects. One is we have always some seasonality in the projects business in the B2B market. And on the other side, we have the price pressure last year with some projects in the Workplace and collaboration area, that's why the revenue in Q1 is a bit lower. But mid-term, we have potential to grow in the solutions business. If you go on Slide 19, actually, the message of this slide is we are on track with our processing, so we will deliver this CHF75 million cost reduction. And there, we have a broad program to increase the efficiency to reduce cost or improve quality. On Slide 21, some remarks to Fastweb. So we continue to increase our ultra broadband footprint in Italy, and our target is to have in 2020 a footprint of 5 million households with more than 1 gigabit per second speed. We will have a footprint of 8 million households with approximately 200 megabits and 5.5 million with the speed, let's say, between 20 and 200 megabits. So we will have a good ultra broadband footprint, and we are on track with our plans. Slide 22 shows you our market performance of Fastweb in the broadband business. If you take the market share of the broadband connections, you can see that we were able to increase our market share slightly. And also on the revenue side, we are able to increase our revenue market share in the broadband business. The performance of the net ads in Q1 is good, so we were able to grow also compared to the Q1 in 2016. So overall, a good market momentum of Fastweb. Slide 23 shows you the wireless performance. We launched successfully our new 4G offer. 9% of the new customers are buying a bundled offer, mobile and wireline. And we see in this converged offer a lower churn by 3% point, so lower churn through a converged offering. Fastweb corporate performance on Slide 24. So also here, we have an increase in revenue market share in the corporate market and we have also a very strong proposition in the corporate market. And therefore, we are optimistic to have the good development in the corporate market also in the next quarters. Slide 25 shows the financial performance. Solid performance, 3% more revenue, 11% higher EBITDA and a positive free cash flow. And so we confirm our expectation on the financial development of Fastweb. So I would like now to hand over to Mario Rossi for the financials. Mario?

Thank you, Urs. From my side, a few additional remarks on the financials. You have seen the result in new segment reporting. Switzerland now consists of three segments, that's retail customers, enterprise customers and wholesale network and other. You received the restated numbers one week ago in order to fill you excel sheets and your new models. I'll start then on Page 27 with some remarks on revenue. In the three spaces, the retail revenue declined by 3.1%, and stand there at CHF1.5 billion for the first quarter. The decline comes mainly from service revenue, there we saw CHF29 million. There we saw a flat development in wireless, even a slight increase of CHF3 million compared to prior year. And we lost CHF32 million on wireline. CHF15 million came from the fixed line loss. Then you have two additional effects, we don't charge anymore for the TV activation fees and [indiscernible] fees. The bundle discounts, the total effect is booked on wireline. The enterprise business saw reduced revenues by 4.7%, it lands at CHF612 million revenues for the first quarter. The [indiscernible] evolution on service revenue is CHF97 million. 50% comes from fixed, 50% from mobile. And mobile is the impact of the roaming. And Urs mentioned, we have kind of weak start in the solutions business. Revenue is CHF16 million compared to the prior year. Then especially we had some weak start in the UCC workplace business. As you see, a slow evolution of the PBX business. I think that can be attributed to the all-IP migration as many customers wait for these projects until they get full visibility, what that will mean for their operation. On the wholesale business, there we have two effects. Less revenues from NTR, an NTR reduction among the mobile operators, CHF15 million. That's compensated by additional income in roaming revenues of about CHF12 million. I think Fastweb, Urs explained that the client saw an increase in the consumer segment, a bit like Q1 in the B2B segment, but that has something to do with seasonality. On the OpEx on Page 21. On the direct costs, SAC/SRC, there we have three different effects. We have higher box worth CHF11 million. First of all, we changed the model in 2016 related to TV boxes. They're now booked as OpEx that touching the first quarter impact of CHF16 million. Then we have higher subsidies of CHF6 million, and then you have less wireless SAC/SRCs of CHF11 million because we have less retention cases. You remember last year, we had extremely high retention number in Swiss business. On both goods and purchase, goods purchased had doubled. First, we had lower MTRs and lower international voice termination fees. And then because of the lower hardware revenues, of course, we had also lowered related to the hardware business. On the indirect costs, as Urs mentioned, we are on track to deliver the CHF75 million. You see also in Q1, we are able to reduce the headcount in Switzerland at approximately 150 FTEs. EBITDA in Switzerland, we lost 1.7% EBITDA. We stayed there at CHF928 million, but we were able to keep the EBITDA margin at a solid 41.3%. I would say approximately 50% of the pressure on topline service revenue were compensated by cost reductions in Swiss business. Fastweb clearly benefits from the revenue increase and have stable costs. In the cost, we have two effects. One is higher subscriber acquisition cost because we have a higher number of client customers. And second one is we have a change in the regulated prices in the [indiscernible] booked in Q1. The low EBITDA and EBIT, I think there are two points to mention, lower interest expenses, the standard CHF6 million. We will see further savings in the future, in mid of July, there's a €600 million bond with a coupon of 3.75%, so we are more than confident that we will create some savings on this side. Then on the tax rate, you see here in Q1 a high tax rate of 25% compared to expected one of 21%. We have two effects in Q1, adjustment of the prior year tax loss in Swiss business of CHF7 million, then you have CHF8 million corrections of prior year assessment for the year 2012 to 2015 allocation of profits to different [indiscernible]. But again, tax rate long-term will remain at 21%. On Page 31 on CapEx. Only one remark, we had, let's say, low CapEx activity in the FTTx environment in Switzerland, it's just seasonal reasons. We had a very cold January, which created limitations to the construction activities in Switzerland. So we will invest in the fiber area, as expected, around CHF600 million in 2017. Page 33, on the operating free cash flow. There's nothing special in Q1 in Switzerland. You remember last year, we had this payment of CHF186 million for the ADSL case. This case is still pending. As I said on the call, we don't know when we will be assigned a decision. Net debt at Q1 stands at CHF7.7 billion, which is 5% below prior year. And finally, coming to the outlook. As mentioned, the outlook is unchanged. So four main drivers for the decrease in the EBITDA level in the Swiss business was line loss, CHF50 million; roaming, CHF70 million; price pressure and other, about CHF50 million, compensated partially by savings of about CHF75 million. After Q1, I would expect a bit higher impact from the fixed line loss and a bit lower impact from the roaming business. At Fastweb, in Italy, we are confident that we will meet our growth targets on revenue and EBITDA. And with that, I would like to hand over to Louis for Q&A.

The operator for Q&A.

Thank you, Louis. [Operator Instructions] Simon Coles, Barclays. Your question please.

Hi. Simon Coles from Barclays. Thank you for taking the question. So the first one, I guess, is on your recent pricing changes. I guess it's a bit early, but just wondering if you could give us any information about how traction is going for your new inOne products and whether you've seen any change in competition, some pricing changes from your competitors. And secondly, in the enterprise segment, we saw RGUs improve this quarter, but service revenues declined. I guess that's a function of the mix change, but is there also ARPU pressure from competition going on there? We've seen a competitor announced that they clearly want to be better in that part of the market. Thank you very much.

On our new offer, inOne, it's a bit early to really have a good understanding. But what we see is actually a good take up, and we see a good momentum on mobile. We see that it's going from - but it's too early really to say how the dynamics will be. Because in the beginning you have always build another dynamics in midterm, a bit too early, but we don't see really big deviations to what we planned. And then on the enterprise market development of the service revenue. Overall, the development in the service revenue in our enterprise space is - it's quite safe. So we were able to grow on the subscription side on mobile. We have the impact on roaming on the mobile and stable development in the fixed business. So what we see is in some customers we see very aggressive moves from our competitors who try to enter the market. But up to now if you've seen the development of our market shares, we are in a good and stable position, but the price aggressiveness is there.

That's very clear. Thank you very much.

Yes, thanks. I have couple of questions. Staying with inOne propositions, when you launched, you talked about initial pressure on bundled ARPU due to right-grading. However, since then, Sunrise has also launched their quad-play proposition at discount and so could also enter the fixed end market. So what makes you confident that the ARPU pressure will not be that severe, and you will be able to still see upselling at a later stage? And secondly, at Fastweb, you're having clearly a good success in mobile with 4G launch and bundling services. But at some point, you will also have increasing competition with Iliad coming in mobile. What makes you confident that the converged strategy can still drive growth? And also, can I clarify, what was the EBITDA growth this quarter, excluding the regulatory changes at Fastweb, and there shouldn't be any further regulatory benefit rest of the year? Thank you.

I will take the question of inOne, and Mario will come down to Fastweb. If you go on our offer on Page 15, you see that the idea of our inOne offer. And with the flexible approach, we are also flexible in matching different price points, because not every customer needs 1 giga. A lot of customers are more than happy with the, let's say, with 30 to 40 megabit per second. So I think with our offer in inOne, our salespeople have the ability to really react on different customers and to offer them an attractive price point. And then with the advantage of mobile, we will be able to really offer an attractive proposition for the household. And as I mentioned it in our broadband household footprint, more than 1 million mobiles are not with Swisscom. So there is a potential to upsell. And then you have also a potential to upsell if we increase our ultra broadband footprint so we can upsell customers who are achieving for speed. We can upsell them and they get more results from ultra. So I think we have the instruments to react flexible on the mobile market, and it's a bit too early to say how successful the converged offer of Sunrise will be. And I don't see, on our side, a huge impact [indiscernible] and it's too early to say how Salt will launch, the fixed market. But I think we have a solid positioning to defend our market position.

And on the Italian business, but first of all we are happy with the move of our customers to the network of Telecom Italia and the ability that it can deliver 4G to our customers. Then with this offer I think we preempt the business mobile offer, we kind of - through kind of preempt and often expect it in the up-mark management, and that's also mentioned in his presentation, if you see that now, already at the very early stage that the 10% of new customers are willing to buy mobile and wireline. And as we mentioned several times, [indiscernible] might be very fast in delivering mobile services, but delivering fixed line services, as we all know, it takes a little bit long. And I think during this period, there is attractive bundle offers, we're able to further grow our customer base. And then, that combined with the fiber rollout that we see longer term, I think that's a sustainable strategy to defend against the market entrants of [indiscernible]. And on the financials we have an EBITDA increase of CHF14 million compared to Q1 2016. Around CHF7 million comes from a one-off for prior years. We don't see any additional positive impact in the remaining three quarters. But as I mentioned, we have also higher subscriber acquisition cost because of a high number of customers that compensate, more or less, the one-off from regulatory points.

That's very helpful. Thank you.

Thank you. Next question is from Frederic Boulan.

Hi, good morning. A couple of questions, please. First of all, to follow-up on the Enterprise side, we saw EBITDA worsening quite sharply in Q1, if you could discuss a little bit the dynamics you're seeing here. Is this temporary? Is this driven by the solutions trends? And what we should expect for the rest of the year? And secondly, if you could talk a little bit about your segmentation. We're seeing quite a lot of activity on your side with Wingo in particular, in the last year or so. Are you seeing any change in dynamics here between your core and discount brands? Or you still have a very solid segmentation? And then maybe, if I may, on inOne. I know it's quite early day, but what do you expect will be the dynamics between the standalone price increases you've actually implemented versus the strat of people in bundling for instance, telephony or benefiting from some of our discounts and getting a discount versus what they're currently spending? Thank you.

Maybe Mario can take the question on EBITDA on Enterprise, but I will start with Wingo. Wingo is actually - with the launch of Wingo, that's our, let's say, online-only mobile project. We have the good stuff. And what we see is that we are able to attract price-sensitive customers. Hence, that the maturity is coming from competition. But there is also some price sensitive customers from who is coming and who are going on home Wingo. That's clear. But the majority is coming from competition, therefore the approach with Wingo works, it works. And our acquisition on our old brands, with the mobile, is working well and there we are on our plan. So I think the multi-branded approach works at this time. To inOne, it's too early really to say, but clearly, we will have positive effects after upselling. The upselling potential we have in the triple-play offer, the share of wallet increase was mobile. These are the positive effects and the other sign is that we certainly have some customers who are going to - who will optimize themselves. But if we're going to offer them such a [indiscernible] ability, I think it will result in churn. Overall, we will have lower churn and the upselling potential, that's why I think we will have a better momentum with inOne in the actual market condition.

And on the Enterprise business, in Q1 compared to prior year, we lost 7 million on service revenue. I would expect that that trend will continue on during the next three quarters, more or less. That's again price pressure on fixed and mobile networks and the other 50% I would never expect that these trends will continue. On the Solution business, as we explained, it was a weak Q1. I think we believe we see a recovery in the next three years as was explained, it was a - let's say, a weak start on the project business, there we see some recovery. But the cost savings, we saw cost savings in Q1 compared to prior year of about $4 million per quarter. That will continue more acceleration. I would expect that overall I think we'll see some recovery. You can do now your calculations of that would mean on EBITDA level, but it will be a better EBITDA evolution in the next three quarters than in Q1 of this year compared to prior year.

Okay, thank you very much.

Thank you, Frederic. Next question, Jakob Bluestone, Crédit Suisse.

Hi, Jakob Bluestone here from Credit Suisse. Just couple of shorter questions, firstly, just in terms of sort of customer perception as your mobile offering, I guess it's six months ago now that we have the connect test. You've obviously had some other mobile tests since then went more your way. But I was just interested, has there been a shift in customer perceptions, things like net promoter scores and since the connect test back in December or perception is that your mobile offering is pretty stable or sort of heading in the right direction? Any color you can share on that would be useful. And then just secondly, I didn't quite catch what was the decline in the MTR costs during the quarter. I think Mario ran through some of the individual cost items, but I think I might have missed that. Thank you.

Well, on the customer perception. We are doing regularly a net promoter score mission. We don't see an impact on our net promoter score. So that awareness, the perception of the network's quality is stable, high and clearly above our competitors. And yes, that's what I can say. That's what our customers are telling us. And we don't - the churn problem - our churn in mobile is even lower than a year-ago. So we have a very stable mobile business. And then in Switzerland, a lot of marketing is done through this test. I think the test it's not the whole - it's not the whole reason in the market. And the network of Sunrise is certainly becoming better, that's clear. But the Swisscom network is a good one. You are also in Switzerland so you can talk with customers.

And Jakob, the impacts on the MTR, on revenue, it's minus 15 million net revenue and then on the cost side, minus 13 million. So we have a small benefit because the [indiscernible] was a little bit reduced.

Can I maybe just ask one follow-up as well and then you reported adjusted EBITDA growth slightly up, I think plus 0.6% and your guidance for the full-year is down. Obviously, quite a lot of moving parts through the year, and just actually new plans, which you said initially, it's dilutive. But then I guess, you also have an easier comp later in the year as a result of the roaming drag being smaller in 2017 than in 2016. Can you maybe just sort of give us a sense of through the years - through 2017, which are the strong quarters, which are the weaker quarters, just given the fact that there's quite a few moving parts this year? Thank you.

I don't think that we should do guidance per quarter, Jakob. So I think I explained the four main drivers for the full-year, there I explained that we will see a little bit higher impact on fixed line loss, bit lower impacts on roaming. You have moving parts. For example, incoming roaming was strong this year in Q1, also because of the key role championship in [indiscernible]. On the other side, east will be differently in Q1 and Q2 that relate to outbound roaming, so I think we will quarter-after-quarter and then we see to the full-year guidance.

Okay, fair enough. Thank you.

Next question, Joshua Mills.

Hi, thank you. And just a couple of questions for me on the Enterprise side, so just following up on the comment that the pressure in the Enterprise revenues from continued heavy price pressure, I'd be interested to know whether you're actually losing B2B contract or whether that price pressure is just coming through as you offer discounts to existing customers. I mean and if that is the case, what kind of discounts do you end up offering to customers in order to keep them on the Swisscom network? The second one, you talked about enterprise EBITDA improving over the next few quarters. I wonder if you have kind of any longer-term guidance on when you think revenues can stabilize. Obviously KPN is in a similar situation, facing Enterprise revenue pressure at the moment, and they have targeted stabilization in the medium term. Is that something you feel you could commit to seeing the legacy declines and some growth in the new services that you see today? Thank you.

On the EBITDA, Mario can come later to it. But on the development in the B2B market, so we don't have actually big losses in the B2B market. It's going to take all of the customers, let's take the mobile market because actually, the main attacks today are coming is far in the mobile market. If I took all the SIM cards, we increased our SIM cards. And then we have - our win factor ratio is a lot slow. So I think we have a stable comp situation in the B2B market. We're able to defend our position in the B2B market. But as you mentioned it, this is always also a price driven game, not only price but price discounts are important in such RFPs. On the other side, this is always a very selective approach, so that's not to all customers. It's only a few customers where we have this aggressive promotion. So the main impact on our service revenue development in the enterprise market is driven by the roaming impact. But that was the big impact we had in the last quarter that was not by price competition.

And again coming back on the EBITDA, so in Page 17, we showed you the distribution of the revenues. And I think we should just look at the telecom business of course that has a higher margin. But we are quite stable in the solution business. And they are looking at this as a bundle, looking at the old book. We are confident that we ahead than in Q1 - as I explained before. Mid-term, I think we are well positioned, for example, in the [indiscernible]. We are well positioned to redevelop this business, then also Cloud. Cloud services, I think, there are mid-term possibilities there to grow the business at a lower margin than the telecom business, but still at a decent margin and with less CapEx intensity. So I think that is what we can say for midterm perspective.

Yes, also digital solution is the digitalization of the industry is actually a chance or a potential for Swisscom, because with our capabilities, ICT capabilities, we will be able to deliver more solution. But on the other side, we have now some effect, but mid-term, I'm optimistic on the solution base.

Thank you.

Thank you, Joshua. Next question, Carola Bardelli, Deutsche Bank.

Yes, good morning. It's Carola Bardelli from Deutsche Bank. Thank you very much. I have a couple of questions on SAC, if I may. So I was wondering, what is the average ARPU that you are generating on your mobile subscribers in Italy and what kind of usage in terms of giga per month? And then I was wondering if we could have an indication on the margin that you expect to generate on the 90 million voice service contract one with the public administration? And lastly, if you could elaborate a little bit on your content strategy in Italy going forward, what you intend to do? Thank you very much.

But we don't disclose the ARPU and the gigabytes of mobile. But those percents, then you maybe can estimate that approximate with the ARPU. But on the margin on PA also, there we don't disclose the ARPU on specific customers. But you see that we are able to increase our market share in the market segment of the Japanese inflation. And now also with the deal we made with Italy, we will be able to have a good and strong portfolio and position in the public administration market. Our content strategy in Italy, so we have a partnership with Skype, we have also the specific offers to address in March. Our intention is not to act quite in our [indiscernible] in Italy.

Maybe, Carola, asked if the $20 million is coming from the incremental revenue. I think there it has a little. We don't disclose margin per customer or contract, but we have an average margin because of the advantage of faster bit speed that we have a strong [Proxelle] that we don't need to run with [Proxelle] to deliver services to the customer on that average margin you have on this $20 million.

Okay. Thank you very much.

Thank you. Next question, Matthijs Van Leijenhorst.

Yes, good morning. I've got only - I have only one question left. And how should I look at the development of the retention costs in - because it's positively impacting your adjusted EBITDA. But what is actually happening there because what I understood is, last year, it was significantly higher. Could you give some more color on this subject?

We had approximately 30,000 less [indiscernible] this year compared to the prior year. But again so we had stable churn rate. That means we don't have a problem with the customer base. We had very high, very high retention cases throughout the quarters last year. So that doesn't make us nervous, this trend is less retention. And then you have at the low level, you have the impact of increasing number of SIM only customers often at Swisscom. We have to see multi-offering in the market, but it's very - it's at a low level. But you see there an increase in impact of SIM only customers. But overall, I would say that development as expected.

Thank you very much.

Next question, Georgios Ierodiaconou.

Hi, thanks for taking the questions. I have a couple on Fastweb. The first one is around - we've seen some news that you may be putting out accounts for sale. And I just wanted to check with you if there would be any regulatory issues with you being involved or any other issues, apart from price, that may keep you from being interested in asset? And then second question on Fastweb is around the timing of the change of the billing dates to 28. I believe that was in late February. Is it possible - do you have an idea of what the impact it will have on your numbers going forward? And whether it's just in Consumer or whether some of the business customers will also be affected by the billing change? And then finally, very quickly a question on Switzerland, I just wanted to get a better idea on the target plan and the logic behind it. And I understand you are expecting to get a little bit more upselling in mobile and you may lose a bit more voice line. What I wanted to understand is on broadband. Whether the improvement you expect to see is around net additions or the mix? Whether this is a tool for you to upsell higher speeds to the base?

Maybe I will start with inOne, and then Mario can come to the billing cycle and regulatory environment in Italy. inOne that I think that we will be able to keep our market share in this broadband business, but the market is saturated at the end. But with inOne, with an increasing ultra broadband footprint and the good TV products, we have a decent value proposition for our customers. But that the main advantage is actually coming to us in cross-sell, but the market is saturated, so the market shares will not shift dramatically from one to other, and that's why it is important to work on the share of wallet and upsell, and that's the idea behind inOne.

And on four weeks billing, there's no impact in the first half and in fact, we will see the impact in the second half. It's only for residential customers, not for the B2B segment, and the impact is included in the guidance. As you remember, we see for Fastweb a similar increase of EBITDA as in 2016. In 2016, of course, except the one-off coming from the litigation of Telecom Italia, and around BT, right now, it's too early to say.

Too early and let's say that I don't see any regulatory obstacles. But we just look at the situation in Italy, and then that's what we have to say around BT.

Thank you.

Next question, James Ratzer, New Street Research.

Yes, good morning. Two questions, please. The first one is regarding your inOne product, going back to that I mean you've mentioned a few times on this call that you're kind of excited by the opportunity of around 1 million people in your footprint set by other mobile operators. So two questions on that, specifically can you give us any guidance on how you are doing so far on upselling to that part of the base? But secondly, what's the risk on the other side? How many Swisscom mobile customers do you have in particular in Sunrise and Salt homes - or sorry, Sunrise homes you could try to set upsell and target your mobile customers? And then secondly, just with regards to the FTTH buildout from Fastweb. I mean, you've given the 2020 target, but at the run rate you are building out, it looks like you could hit that towards the end of 2018. So as a result, I was wondering if you could kind of, say, that you think you can hit that at 5 million homes two years early or do you think actually you will then maybe continue above 5 million and see a bigger opportunity there?

Well, on inOne there, as I mentioned before, it's too early to give more details on our performance of inOne. But we made the calculation, and we are optimistic that we can do upselling, and the second question is now do we have further churn potential on mobile, because in the areas where we don't have ultra broadband footprint. If you go overall, you have the market share of probably about 50%. So that shows that that's already there on broadband there in a good situation for YouTube player offer. And with the household advantage, I think we have a strong margin to gain market shares. On the other side, the loyalty of the mobile customers is - I think we are working on customer service on the network policy. So I don't think that we will have a churn rate, a big churn rate on mobile therefore.

Do you know how many customer you actually have in this Sunrise fixed footprint?

Sunrise has a footprint which is - they can work on the footprint of Swisscom, that's clear, because they are a wholesaler of Swisscom. But at the end, in a quadruple-play operate as a whole our portfolio, which is important. And then I think there in a good situation. We have the launch of the mobile. We have the advantage of the over the TV products. We have a good customer service. So there are a lot of arguments, which - say for Swisscom.

Okay, great. And then on the FTTH point in Italy?

So if you look at the FTTx, so that means ultra broadband, and there we stick to our target of 30 million by 2020, I don't have the overall plans. But if you look end of 2016, we had 7.5 million households in the FTTx area, and if we [indiscernible] around 1 million per year, then we reach our target in 2020. But I don't know the exact lease negotiation between H and x. H depends also on the rollout with in JVs - within Flash Fiber and Telecom Italia.

But it does seem that you are running ahead of the required rate on FTTH. I mean, so do you think you could see opportunity to increase above the 5 million homes?

Yes, but as Mario mentioned, really we are on the plan. We are not faster than announced.

Great. Okay, thank you.

Thank you, James. Next question, Julio Arciniegas, RBC.

Yes. Hello, thank you for taking my question. Two questions, one regarding broadband, actually for example, this quarter basically the broadband net adds were negative when actually in 2016 they were all positive. Can you give us more color about the competitive dynamics in the broadband market? We know that for example, Sunrise is becoming more active. Do you expect this trend to change? Should we expect positive net ads in broadband in the coming quarters? And the second question, coming back to the inOne, you mentioned that you don't expect revenue cannibalization from this offer. But can you help me to work out for example if I take that [AM] size bundling inOne is 190, and I believe that the previous [AM] offer, the price was higher. So how come we shouldn't expect any revenue cannibalization? Thank you.

On the mobile performance, as I explained, in Q1, there are different elements, which led to a weaker performance on the net ads. This is a chart shows elements like the migration of All-IP where customers are doing consolidation. Also [CPS] migration that's - these are the main effects, and there has been more promotional activity in Q1. But overall, the performance of broadband is fine. It's fine, though also we don't get the churn - really a churn problem in this market. And with inOne now we have the possibility to even accelerate it. But don't think that the broadband business will be the big growth potential in a saturated market and we have a stable situation there. And I think it's too early, as I mentioned it several times, it's too early to give a bit more flavor on the dynamics of inOne. Okay, operator, perhaps a very last question before we finish this call.

Okay. Your last question is Saroop Purewal, Redburn.

I just had a question on - firstly, on your roaming. So I kind of noticed in your packages, you include roaming. But I was just wondering how important that is for the fresh consumer just to have it all included and they don't have to worry about it versus Sunrise's approach, which is just to add on roaming packages as a when? And then my second question was just regarding Salt and what you're expecting in terms of their fixed coverage when they're expected to launch later this year? Thanks.

Okay. On roaming, so also in the infinity choice, they have roaming included, depends on the tariff plan more or less stage. And what is here actually is that this really stimulates strong traffic. Two-third of the roaming traffic actually is done is a bundle. On the other side, we also with this, we see also with stimulation on the roaming packages. So overall, the roaming volume is in data is strongly growing. And on the Salt, the footprint, I can't only make a forecast that over what would [indiscernible] they can take the footprint of the wholesale in - prior to the footprint in Switzerland. This will be approximately 30% of the households. That's one of the possibilities, and the second possibility, they can come to Swisscom and buy wholesale off from Swisscom, and then they will have a broad footprint or they will have a footprint in whole Switzerland, but this can do everybody in Switzerland.

And have they approached you so far? And if they have, if those kind of talks - how those talks have gone?

Yes, but they always have talks on wholesale. They also - we don't disclose on the details of our talks, but Salt is a customer of Swisscom wholesale.

Sorry. What was that? Salt is a...?

Salt is a customer of our wholesale products. But already today, this was already the case. And if Salt is coming to Swisscom and ask for wholesale products, we would offer them. We have the commercial on all of our products, which everybody can buy and we would certainly offer them this product.

Okay, thanks very much.

Thank you. Also thanks to the operator. And With that, I would like to conclude today's presentation and call. Also thank you to all of you for your participation. If you should have any further questions left, please do not hesitate to contact us from the IR team. And with that again, thank you for your participation, and a good day and goodbye.

Dear participant, your conference call has come to an end. Thank you for attending. Goodbye.