Louis Schmid - ‎Head of Investor Relations Urs Schaeppi - Chief Executive Officer Mario Rossi - Head of Business Steering Switzerland

Matthijs van Leijenhorst - Kepler Cheuvreux SA Frederic Boulan - Bank of America Merrill Lynch Luis Prota - Morgan Stanley Vikram Karnany - UBS Investment Bank James Ratzer - New Street Research LLP Maurice Patrick - Barclays Capital Georgios Ierodiaconou - Citigroup Jacques de Greling - Natixis Global Asset Management Joshua Mills - Goldman Sachs Luigi Minerva - HSBC Jakob Bluestone - Credit Suisse Group AG Usman Ghazi - Berenberg Bank

Good morning, ladies and gentlemen, and welcome to the Swisscom First Quarter Results 2016, presented by Urs Schaeppi, Mario Rossi and Louis Schmid, who will start the call. Louis, the floor is yours.

Thank you. And also good morning, ladies and gentlemen, from my side. And welcome to Swisscom’s first quarter results presentation. My name is Louis Schmid, Head of Investor Relations. With me are our CEO, Urs Schaeppi, and Mario Rossi, our Chief Financial Officer. The first part of today’s presentation, hosted by our CEO, consists of three chapters, a quick overview of our solid financial results and decent operational performance of our first three months, an update on our five priorities 2016, and finally, some explanations on our Q1 operations both in Switzerland and Italy. The second part of the presentation will be run through by Mario, presenting the financials and the unchanged full year guidance. With that, I would like to hand over to Urs to start his part of the presentation. Urs?

Good morning, ladies and gentlemen. I would like to start with Slide 4, which gives you a short overview of our financial result. So, financially, we have a solid result. The group revenue is almost stable and we have a pleasant development on our solutions revenues and also the revenues from Fastweb. If I go to the EBITDA, we see an increase of our EBITDA by CHF 30 million year on year, which is 1.2%, and it’s mainly also driven by cost discipline in Switzerland. The contribution of Fastweb to the EBITDA increase is CHF 14 million, so we had also a good first quarter in Italy. Net income increased by CHF 13 million on a year-on-year basis and despite higher depreciation but lower impact from foreign exchange rate. CapEx is slightly higher, CHF 47 million higher compared to previous year. The main effect is the rollout of fiber to the street [ph]. So, overall, good financial result, and we are on track compared also to our guidance. On Slide 5, some remarks to our operational performance. RGU base in Switzerland is 12.5 million. This is on a year-on-year base, an increase of 120,000 RGUs. Solid growth on TV and broadband. Wireless business, this market is more saturated. We have a high penetration in this market. But overall we have a solid market share in the mobile business and therefore I’m satisfied with the development of our wireless business. Bundling business, the penetration is also increased and Fastweb has 2.2 million subscribers, so a successful business on the operations side and a good momentum in Italy. Let me say some words to the priorities in 2016. On slide 7, you see our priorities, our five priorities. We also already explained them the last time. Only some remarks, to maximize our core business. It’s important and that this is our ambition to defend the market share, retain our price levels and margins, and this we want to do through a differentiated product and service portfolio. On the operational side, you will also remark late that we were able to stay on track to our ambition on our cost ambition. And with Fastweb you will see that we will invest in the future of Fastweb. We will increase our ultra-broadband footprint, strengthening our position in the mobile business, and also working on a higher net promoter score. If you go on Slide 8, there you see the development of the penetration in the Swiss market, on the left side. You’ll see mobile in Switzerland has a penetration above 125%. TV, the TV market is approximately at 100%, so also saturated, and broadband business is above 95%, so overall, a saturated market in the telecommunication business in Switzerland. We are well positioned, as you see, on the right side of the chart you see our multi-brand strategy. On the higher end of the market we have a broad Swisscom portfolio, with triple play offers, but also with a differentiated offering on mobile. And then, on the lower end of the market you see our two brands, M-Budget and Wingo. So our ambition is to remain our strong market position in the high value segment and to stimulate demand in the lower value segment. On Slide 9, you see our mobile portfolio. We introduced it several weeks ago, with promising first early indicators. You’ll see the infinity product line, infinity 2.0, which has increased - where we have increased the value of this offerings and actually, easy said, it’s a tariff plan more for more. We have also a SIM-only option in it and you can also have a bundling with the fixed proposition of Swisscom. On the lower end of the postpaid market, we improved our offerings that’s in Natel light product line. And on the low-end we have introduced a new product on the brand of M-Budget, that’s Mini One. So we are better-positioned in the mobile low-end market and we see a good momentum. And the market shares that’s I think the most important remark. We see stable market shares in our mobile business. If you go to Slide 10, some remarks on our roaming prices. We have by far the best roaming prices in Switzerland, and we also had an improvement of the roaming prices in 2016. And with this infinity 2.0 we have included the roaming in our proposition. Interesting is also to see that our roaming data packages are very attractive, so we improved them on the pricing side by approximately 20%. And if you compare its pricing also to the German market, as an example to the market leader in Germany, you’ll see that we have really competitive pricing. Our price is CHF 15. And if you would compare it to the price from the German market-leader it’s CHF 23.8. So it shows that Switzerland has or Swisscom has attractive roaming prices. And this is important because we think that the decline of roaming prices will come. And Swisscom has done a lot of this price cut already today. On the right side of the chart, you see also that we are really much lower, much cheaper than our competitors if you compare the roaming prices. Slide 11 shows you our innovation roadmap of Swisscom TV. Swisscom TV is a success. And we launched several weeks ago a new TV box. And this new TV box has a 4K-enabled Ultra-High-Definition, better navigation, faster navigation, and we see a good take-up of this new TV box in the market. We are today the leader in TV. We have market shares above 30%. And this TV is also a strong driver of our triple-play offerings in the market. Coming to Slide 12, some information about our operational excellence, with our cost reduction program, we are on track. We want to achieve CHF 50 million savings in 2016, and we do this through several actions; one is the headcount cut, where we are on track; second thing is, and this is long term, very important, is the streamlining of our processes. Just as an example, we are in a process of redesigning our process sales to activation. We increased the efficiency through a reduction of the call center location from 14 to 8, so we are also on track there. And also with the migration of All IP we are on track. We are today at 40% migration of our customer base. So overall, on track on our cost reduction programs. If you go to slide 13, some remarks to Fastweb. We announced several weeks ago a new investment plan for Italy. And what is our target? We want to achieve 50% population coverage by 2020 and this with a speed up to 200 megabits per second, and we do this through several actions. The first one is an upgrading of our existing fiber to the street performance, so the speed will be up from 100 to 200 megabits per second. Then we are expanding our ultra-broadband footprint from 30% to 50%. And this means that we will have fiber to the street coverage in 500 cities in Italy. The whole investment will be approximately 500 million in the years 2017 to 2020, but it is important to say that this is entirely self-financed by the cash flow of Fastweb. Market - we will have a market-driven rollout of this investment, and this means no changes in the CapEx guidance in 2016. At the end of 2020, we will have 13 million households covered by ultra-broadband and this is approximately 50% of Italy. Slide 14 shows you our strategy, so it is a two-stepped approach. We build fiber to the street, and then later, we will have the ability to go to fiber to the home. But this is certainly a topic which is market-driven. Now, we are on the first step, fiber to the street, and we could really fully reuse our investments which we make in fiber to the street. That means we have a flexible strategy for further development. Slide 15 shows you the rationale. Why do we invest in a big footprint in Italy? In the middle of the chart, you see a comparison between figures in the fiber to the street and in the local loop footprint. In the fiber to the street footprint we have higher sales and higher sales penetration by approximately 25%. This results in a higher customer base. But we are also able to have a higher ARPU, approximately 5% higher ARPU, lower churn rate and lower cost because of lower interconnection charges to TI. And this leads to a better profitability and a better business case for Fastweb. Slide 16 gives you some information about the status of the All IP transformation. In the first quarter we were able to migrate 100,000 customers to All IP. The first phase or the second phase of this migration was in 2015, where we had mainly a market-driven migration. And now in 2016-2017 we are coming more to a pushed migration to keep up the speed of this migration. If we are through with the All IP migration, we will have recurring cash savings. Let’s go to some operational figures. If you go on Slide 18, so overall we have a balanced bouquet of business drivers. We have ups, certainly growing TV business, growing bundling business, strong solution business and good track with Fastweb. On the other side, we have some downs, that’s the development of the fixed voice business where we have actually this substitution fixed to mobile. We don’t lose customer to our competitors. The main decline of the fixed business is the fixed to mobile substitution. The mobile RGUs are, let’s say, stable. If you would take out some special effects in the first quarter, you would see that the revenue generating units of mobile are stable. We have also in the mobile business some ARPU pressure, driven by roaming pricing - deeper roaming pricing. So overall, the revenue in Q1 is approximately stable in a competitive market and we have good market share. On Slide 19 you see the development of our net adds, on the right side of the chart, on the specific product area. So mobile, in a saturated market, is stable. If I would take out the special effect of Post, this enterprise customer which churned to Sunrise, if I would take it out, we would have a positive revenue generating unit or net adds in the mobile business. Voice business is declining as I already mentioned. And the broadband business and TV business is growing with a good, strong momentum. Slide 20 gives you some more information about mobile business. If you look on the left side of the chart, you’ll see our development of the market shares. So we have slightly increasing market shares. And important to mention is that last year, if you take all of the figures of our competitors, you’ll see that the mobile market was declining by 84,000 revenue generating units. And this is clear because we have a penetration which is above 120% and the customers are optimizing themselves. So we see that several customers are using tethering instead of a second SIM, for example, in an iPad and this is a better dynamic in our business. The market shares overall for Swisscom, and that’s important, are stable. And I’m satisfied with the performance - the overall performance of our mobile business. We see also, as I already mentioned before, a better momentum with our new mobile portfolio. If you go on Slide 21, some remarks on the dynamics in our fixed business. So voice lines are declining, driven by mobile substitution and CPS migration. And we have today in the residential market 500,000 voice-only customers. So that means in the retail business that we have approximately 70% of our customers which are in bundles. The market shares, in the middle of the chart you see the market shares of broadband, we have 66% total market share in broadband, above 30% in the TV business. And it’s also interesting to see that the TV penetration on our ultra-broadband business is 69%, so that means we are really able to up-sell our ultra - Internet base with TV. And on the right side of the chart, you see that 46% - 64% of our fixed revenue generating units are in bundles. Some remarks to the ARPU on Slide 22. In mobile, we see a slightly declining ARPU, driven by three factors. Factor number one is the roaming prices, factor number two are some LTE charges, and then, the pricing pressure on enterprise business. So these are the main effects why ARPU is slightly decreasing in the mobile business. In the wireline business we have a stable development of our ARPU, so it shows that we have a solid business in the fixed market. And on the bundling area, on the right side of this chart, you see a slightly declining ARPU of bundle business, but this is driven by mobile, mainly driven by the roaming price development which we have, and some opt outs of fixed voice business in our triple-play offers, so overall, a solid development of our ARPU. If you go on Slide 23, you’ll see the development of service revenue. Revenues as in the quotes before declined in the one-play business and increased in the triple-play business. And you see that we have also volume effects and price effects which are quite in balance, so high volumes, lower prices, which lead to approximately stable revenues. So overall, I am satisfied with the performance in Q1 of Swisscom Switzerland. Coming to Slide 24 on Fastweb, good first quarter, increasing customer base by 5% to 2.2 million, reduced churn, so that’s a good performance, important for our margin development. We are able to decrease the churn in Italy. And the development of our revenue generating units, in all segments we have a growing revenue. So you see it on the right side of the chart in each segment’s growing revenue. The financials of Fastweb, on Page 25, shows revenues are going up, strong increase of EBITDA and then a slight increase of CapEx because of fiber to the street investments and a positive free cash flow. The gap to 2015 is mainly explained by phasing of cash-out. Mario will come later to it. So now I would like to hand over to Mario to give you some more details on the financials.

Okay. Thank you, Urs, and also good morning from my side. A few words on the financials, we can present you solid financial results on all aspects. They are all in line with our expectation. On Slide 27, revenue breakdown, we saw flat revenues of CHF 2.89 billion. We have practically no impact from exceptional. The exchange rate Swiss franc to euro was more or less unchanged in Q1 2016 compared to Q1 2015. In Switzerland, Swisscom Switzerland lost CHF 16 million in revenues, mainly coming from the roaming business. In the segment residential customers and SME, service revenue stayed flat year over year. The higher number of revenue generating units could compensate the roaming decrease. In the roaming business, we had price effects of negative CHF 20 million that were partly compensated by volume effects of CHF 11 million. In enterprise customers, we have two reasons for the decline in revenue, again, roaming, CHF 3 million, and then from regulatory effects, the so called AFP, which was stopped in July 2015 had a negative impact of CHF 6 million. The wholesale business went down by CHF 13 million. We had lower inbound roaming revenues and some lower regulatory prices. Fastweb, as Urs explained, increased revenues in all segments and contributed CHF 11 million to the revenues. On Page 28, we see some details on our OpEx. Urs explained our operational excellence program. Again, I think we are well on track to deliver on that program. Just to remind you, we want to reduce running costs by CHF 50 million in this year, CHF 75 million in next year, and in the coming three years, again, additionally CHF 60 million. In Switzerland, the indirect costs went down. They were mainly impacted by lower repair and maintenance costs and cost saving from these operational excellence initiatives. Since year-end 2015, the underlying FTE base in the Swiss core business has been reduced by around 100 FTEs. On the next slide EBITDA breakdown by segments, the EBITDA of Swisscom went up by CHF 30 million, approximately 50% coming from Fastweb. On residential, residential was able to increase contribution margin by CHF 30 million. The increase is mainly driven by lower customer acquisition costs. Just to mention the retention, the number of customers we retained in Q1 was slightly higher than in Q1 2015. That shows again that the mobile business is very stable and solid. On enterprise we mentioned the ongoing price pressure. In the wireless business we had slightly higher indirect costs. In the network division and IT we had slightly higher personnel expenses and slightly higher rental costs with 8% and site for antenna. And once again, Fastweb, strong performance also in Q1, EBITDA increase of approximately 10%. Below the EBITDA, we still have increasing depreciation and amortization. Amortization CHF 39 million higher, due to the result of the high maintenance level since a few years. Then net interest decreased by CHF 8 million to CHF 39 million, due to very favorable refinancing conditions. The other financial results improved by CHF 17 million, mainly because we had in Q1 2015 the negative impact on the foreign exchange losses coming from the deflation of the Swiss National Bank in Q - in mid-January 2015 to float the euro against Swiss franc. Net income increased by 3.7% to CHF 364 million, result of EBITDA increase and the better financial results. On Slide 31, on CapEx, CapEx of Swisscom Switzerland increased, driven by the UBB extension. We are ahead on plan with our FTTS rollout. However, the full year targets, they stay in place. So we will not overshoot the CapEx. And as was mentioned, at the end of Q1, we have a UBB footprint of 3 million connections, meaning we can deliver 50 megabits per second or more to 3 million households. One remark on the free cash flow on Page 32, the free cash flow in Q1 went down by CHF 160 million to CHF 184 million. This is the result of the prepayment of the sanction related to the ADSL case. Remember, we booked that provision in Q3 2015. We had to pay this sanction in January 2016. The amount is CHF 160 million. The payment is without any prejudice on the proceeding, and the case is now at the federal court in Lausanne. That’s the main remark to the operating free cash flow. A few words on financing, on Slide 33, we had two financing transactions in Q1. We placed a Swiss franc bond in the Swiss market of CHF 200 million, with a coupon of 375 basis points. Then we renewed Swiss private placement in the amount of CHF 150 million and we could renew our backstop facility of CHF 1 billion with mid-sized Swiss banks. And in total we have CHF 2 billion unused committed credit lines in place. Also, our rating with the - rating review took place in Q1. The ratings are unchanged. Moody’s, A2; and Standard & Poor’s, A; both with stable outlook. Average interest costs are at 1.9% and around 80% are fixed. Coming to the last slide of our presentation, as Q1 developed in line with our expectations there is no need to change the guidance. So we confirm net revenue for 2016 slightly above CHF 11.6 billion, EBITDA at around CHF 4.2 billion and CapEx slightly higher than CHF 2.3 billion. And now I hand over to the operator for the Q&A.

[Operator Instructions] We have the first questions coming up, Matthijs van Leijenhorst.

Yes, good morning. Matthijs van Leijenhorst, Kepler Cheuvreux. Can you give some more color on the dynamics in the mobile market? What are the trends through the quarter? And can you also give some more color on the minus 10 subscriber intake in Switzerland?

Good. As I mentioned, we have a saturated mobile market, over 120% penetration. That means that the whole market in 2015 declined by approximately 80,000 subscribers. And the shares, the market shares of Swisscom are stable. If you look to the - also to the status of our competitors, you can see that we have stable market shares. So what kind of dynamic we have in this market? We have, let’s say, more competition or, let’s say, a kind of a washing machine at the lower-end of postpaid market. But we have good churn figures. We don’t see really a big problem in our mobile business. The main dynamic we see in our figures is that through roaming the ARPU is slightly decreasing, but on a revenue generating unit I’m happy with the development of the market in these conditions where we are today.

Okay. And regarding the - if I understood correctly, a big customer left in Q1 to Sunrise? Am I right?

That’s an old - the migration was. But this deal, the Post deal that’s already long time decided. And now there was the last part of migration of the SIM cards. And if you would take out this big special effect, a lot of these customers which churned are low ARPU customers because there were some special connections in it.

Okay. Thank you.

I’ll move on to the next question.

Hi. Good morning. It’s Frederic Boulan from Bank of America Merrill Lynch. I have two quick questions, please. Firstly, on the - just to follow up on the previous question on mobile, are you - so you seem pretty happy with the current development. So I assume we should not expect more commercial efforts to offset a small gradual erosion of market share. That’s a development you’re happy to see in the next few quarters, the next few years. And secondly on Italy, if you could comment on the competitive deployments we are seeing from TI and also Enel now. Is this something that could potentially derail the very good momentum you’re currently enjoying or are you not expecting any materialization for the foreseeable future? Thank you very much.

Development on the mobile market, Mario?

Again, I think, as Urs explained, it’s one of our key targets and priorities to defend our high market shares. And you saw now we received all the numbers for last year, we were able to keep the market share. We are convinced also in Q1 market shares were more or less stable. And going forward, I think with the new positioning of infinity, where we have 70% of our customer base on the infinity plans, we are in a good position to keep this high market share. But you cannot expect an increasing number of things in this saturated market, that’s clear, with a market share of 60%, and that’s one point then. And the other point, if you see our new product offering, we implemented additional value in it, and it works. That shows that not the whole market is driven by price. And then also, if I look to our importing, outporting ratios, I’m not worried, no. But we have more competition in the mobile business, that’s clear, because the market saturated.

Maybe one last remark, we should not show so much anymore the number of SIMs, because you know all the second SIMs - many of second SIMs are being turned off because with the new handsets you just use tethering. And that means that these second SIM cards, with a very low ARPU, they will over time disappear in the market. So it’s more important what kind of value we take out of this market, and there we are convinced that with our high margin strategy, we take out the same share of the Swiss mobile market. Some remarks to the Italian market competition from TI and Vodafone. As I mentioned it before, we were able to have a good momentum on the net adds. Net add market share in Italy in Q1 were good for Fastweb. And we were also able to decrease the churn, so that shows that we are in a good situation. For the future, it is important that we perform on quality and customer service, and that’s our strategy. And then we are convinced that we can have a strong position in the Italian market. And Enel, yes, some words to Enel, they announced their fiber plans. Actually, they want to go to 224 cities, that’s certainly not a risk. That’s also a chance for Fastweb, because we could - in specific areas, we would have a second wholesaler for fiber to the home, which is good for the position - whole position of Fastweb.

Okay. Thank you very much.

I’ll move on to the next question coming from Prota Luis at Morgan Stanley.

Yes. Hello. It’s Luis Prota from Morgan Stanley. Two questions, please. First, on your mobile ambitions in Italy, I’m looking at the pending decision from the European Commission and the potential remedies that might arise from the - for the Wind-Hutch announced merger. You’ve just mentioned on several occasions that you are keen to strengthen your mobile position in Italy, but I wanted to get a sense on whether if, as part of those remedies, the European Commission would be forcing a new network player to be created, whether Fastweb would be interested in buying some spectrum or some towers or both, if those become available as part of these remedies? This is the first question. And the second question is on the dynamics that you are expecting for the next three quarters in Swisscom Switzerland as following this very good first quarter with EBITDA growth, if I compare with the full-year guidance, which is implying a clean 5% decline year-on-year. You are definitely expecting some deterioration, either on phasing of costs or dynamics, which I would like to understand. So any help there would be much appreciated. Thank you.

Okay. I will take the first part of the question for mobile Italy, and then Mario will go on this dynamic in the Swiss market. To Italy, mobile business in Italy, so Fastweb is interested in remedies out of the merged Hutch-Wind, because it is our ambition to strengthen our position in the mobile market. It’s now a bit too early to say what kind of strategy we will go for. It’s very important what kind of conditions are related to these remedies. But we will ask for remedies out of this merge, with the idea to get a stronger position in the mobile market. Now, maybe on the second part, Mario, on the dynamic.

On the dynamic, what do we see differently in the coming three quarters compared to Q1. So if we see more pressure on the roaming, with infinity 2.0 the added value to these infinity customers. That means we’ll have a lower roaming margin in the coming three quarters. Then, in Q1, we benefited especially in the residential segment still from growing number of revenue generating units in the past year, that will be coming down. If you look at the dynamics in last four quarters in 2015, the growth came down after Q1, so this impact will be lower on the revenue side. And then I see, but there that always depends also on the dynamics in the market, I see or we see higher acquisition costs in Q3-Q4 compared to 2015. On the cost side, as we mentioned, we will deliver the CHF 50 million, and there are going to be different dynamics.

Okay. Thank you.

Move on to the next question coming from Vikram Karnany from UBS.

Yes. Thank you. I’ve got two questions. Firstly, on your infinity mobile adjustment with this more-for-more strategy, I know it’s still early days, but have you seen any impact in terms of churn level on the back of it? And also, is there a mix effect happening within the base that people are now going towards some of the low-end bundles, like XS and S, where you have increased the content within the bundle, and that is probably explaining the ARPU pressure that you saw in infinity recently, or is it mostly roaming? And secondly, on the cost savings, I think from the already announced plan there is also a lower subscriber acquisition cost, which is coming on the back of the lower volume and saturation in the market that you’re talking about. And Switzerland, as you have talked about in the past, is a heavily subsidized market. Now, is this a new trend emerging that we see lower subscriber acquisition costs, which will be the main driver in terms of EBITDA going forward, and then that probably will support despite the headwinds you face in terms of roaming? Thank you.

I’m taking infinity 2.0 and Mario will come then to cost savings. On infinity, the new product portfolio shows that we don’t have a down migration or a specific dynamic of down migration, so our infinity customers are quite stable. We were even - we were capable to have more upgrades than downgrades with these moves. But overall, we have the biggest impact on the overall dynamic is the roaming, the roaming pricing impact. The customers are stable on this infinity product portfolio. And the cost saving?

And on talks-SLCs [ph] they are slight - in Q1, they were 3 million below Q1 2015. And looking forward, we don’t see that now all new customers come to the SIM only offerings. The market is still used to have the subsidized handsets, but for us it was important to give the customer also the possibility to get a SIM only offer. Maybe the trend is midterm to lower the acquisition cost, but for 2016 we don’t see a change of the trend. And again, the CHF 50 million, they are only on - the CHF 50 million savings is dedicated to indirect costs.

That’s helpful. Thank you.

I’ll move on to the next question.

Yes. Good morning. It’s James Ratzer calling from New Street Research. I had a few specific questions on Fastweb, please. So the first one is you mentioned that the new rollout program will cost you about €500 million over 2017 to 2020, but your current CapEx rate in Switzerland - or, sorry, in Italy, is actually about €500 million per annum. Does that mean your Swisscom - or, sorry, Fastweb CapEx can actually fall over time during the following few years? Secondly, you also mention then on Slide 14 about your FTTC CapEx being compatible with FTTH. Does this mean you’re actually thinking about deploying FTTH in Italy? In the past you’ve talked about G.fast, so I was just trying to get a feeling of what next steps you see in technology in Italy? And finally, quick one. Are you actually interested in joining the Enel open fiber initiatives, or do you see yourself still going it alone on all your infrastructure build in Italy? Thank you.

Good. Maybe I am going to taking the question on the technology, and then Mario can then take the CapEx question. Our strategy is to increase fast the footprint of ultra-broadband in Italy, and that’s why we deploy fiber to the street. And with this technology, we will be able to be competitive in the next years, but then we have always the freedom to also make migrations to fiber to the home, but that’s not planned. So we now want to extend our footprint on fiber to the street. And you know on fiber to the street, we make these pilots and we also do the rollout now in Switzerland of G.fast, and there you have still a lot of potential. In Switzerland, we were able to get 500 megabits per second on a fiber to the street architecture with G.fast, so that shows the potential of this technology mix. On Enel, so we are open to cooperate with Enel if we have - if the conditions are the right ones, but we will go with our strategy, which we explained. So that means we will increase our ultra-broadband footprint independent from the plans of Enel. But there is certainly potential to partner also with Enel in specific areas. Question of pricing at the end.

And on the CapEx level, so we had a CapEx level in Fastweb in 2014, 2015 and 2016 of around €550 million. That included the current FTTS rollout, where we are targeting 7.5 million households coverage with UBB by the end of this year. And we expected always CapEx going down after the completion of this rollout. Now we announced a new one, additional €500 million up to 2020. That means that CapEx in 2017 will not go down, but we don’t guide the correct number for 2017 right now.

Great. Many thanks.

I’ll move on to the next question.

Yes. Hi there, it’s Maurice from Barclays. Couple of quick questions. Italy churn, down 15%. Could you explain a bit about the drivers of this, was it just higher bundling, higher speeds, about the drivers of the churn reduction? And then just quickly, on the Swiss enterprise side, I think you indicate again this quarter mobile somewhat challenging and fixed pricing, fixed more stable. Is that the same as the dynamics you stressed at the Capital Markets Day? Thanks.

First, what are the reasons behind the decreasing churn figures in Italy? So there are several dynamics. The first dynamic is if we go to fiber to the street, we see lower churn figures, and we have a higher percentage of fiber to the street customers, that’s one dimension. Second dimension is we are working hard on the net promoter score, and this also leads to a lower churn figure. And the third dimension is actually also the acquisition strategy. It depends a bit on your promotion design, and then you can also influence your churn figures. So these are the main factors. And then, on the enterprise business in Switzerland, mobile business, what we see is some competitors who are attacking our mobile business, and that’s why we have this price pressure in mobile. But overall, our mobile shares remain stable in the enterprise business. And we had a special effect also on the mobile pricing level. This was this airtime fees which were regulated away, actually. These are the main impacts on our mobile business. But churn figures in the B2B business are stable.

Great. Thank you.

Again, our next question coming up [indiscernible].

Hi. It’s Georgios from Citi. Thank you for taking the questions. Maybe the first one on Fastweb and a follow-up from one of the questions you were asked earlier. I’m just trying to understand, if we get to a point where there are some structural remedies, you also pledge that you want Fastweb to be self-funding. So I’m just trying to understand whether that is something you still stick to, even if you would need to invest in mobile. And is it the case you just need to cover the interest cost at Fastweb or is there - I’m just trying to understand how you are thinking about participating in the remedies, while maintaining the ring fence now on Fastweb? And then my second question is around the sports rights. Some of your competitors are uniting together to bid for some of this content. I know you mentioned in the past expansions in 2017, but I was wondering if you could give us a bit more detail as to what you expect from the process. Thanks.

I will start with the sport rights and then Mario can come to the remedies. Sport rights, so it’s important to know that this auction of the sport rights, we will go for this auction, but it’s not the most important thing for Swisscom, because the differentiated product portfolio of the Swisscom TV business is not only related to these Swiss sports rights. We have an extremely good content portfolio for all other sports, football content in Europe, and this is actually more important than the Swiss football rights. And therefore, we will not go for extremely high costs in this sport content auction. And the process is the following. We have to give now a first offer until the end of May, and then the process will be defined by the various sport leagues. But it’s important to note that sport rights is not really the major topic for Swiss business. And then on the remedy side, yes, we want to be self-financing, but, Mario?

Looking at the financing side of Fastweb, now Fastweb standalone, including UBB broadband, is cash flow positive. That was always our target that we met last year. Now looking at the remedies, Georgios, I think it’s just too early. So we think the merging parties, they wait the end of the UK process. I think that’s due on May 19 this year, before presenting the remedies. Then you have two parts. There are either private negotiation between the merging parties and potential beneficiaries, or you have a remedy proposal without upfront agreements, that the merging entities just present the remedy without making an offer to potential partners. And now it’s really - it’s too early. Then we need to look carefully at the business case, at the risk profile, and then that gives now the input for the financing and then what the thinking behind the financing from our side will be.

But theoretically, you would be flexible to amend it if the opportunity was something you wouldn’t pass on?

If you have - if you believe in a business case, you do your judgment on the risks. Then, of course, you need to be flexible to further develop the Italian business. But it has always to be seen in the whole context of the Swisscom group and the risk profile of the Swisscom group.

Very clear. Thank you.

I’ll move on to the next question coming from de Greling Jacq from Natixis.

Thank you. Regarding the roaming pressure, could you give us an idea of what is the current volume of roaming traffic in terms of percentage of total mobile traffic, please?

No, we don’t disclose these figures, but the roaming traffic is increasing. The price is decreasing. And overall, the revenue in roaming is going down.

Okay. But to better assess the remaining revenue level, which is under pressure for the coming years, what about the size in terms of revenue? Is it still about 11% of mobile revenues?

To give you an idea on, I think it’s meaningful to have a comparison on the overall roaming margin, and the overall roaming margin is below 5% of group EBITDA.

Of group, but not of mobile.

We don’t disclose the mobile EBITDA. You can do…

Yes.

[Indiscernible] because we have the bundled products, so doesn’t make sense. But to give you an idea, below 5% of group EBITDA.

Thank you.

I think we really make the big hit in roaming. We made in 2015 and 2014 - 2014, 2015, so we made a big hit on roaming.

Okay. Thank you.

We have a few more questions. I’ll move on to the next one.

Hi, there. It’s Joshua Mills here from Goldman Sachs. Just on the mobile trends, I wonder if you could quantify how many of the Swiss Post losses were booked this quarter, and also how that’s been phased over the last few quarters. And the second question is in your full-year presentation you gave quite a useful breakdown of where your postpaid net adds were coming from, be it the M-Budget brands or the main Swisscom brands. Could you provide a similar level of color on this quarter, i.e., how much of your growth or losses are coming from M-Budget versus Swisscom? Thank you.

Okay. So if I would - the development of mobile business in Q1, if I would take out this migration to Swiss Post, we would have been positive. It would have been positive, and so we have a stable business in mobile. And the percentage of M-Budget is a bit increasing, but we have also now a good momentum with our low-end postpaid offering Natel light. And you can also see it on our figures on infinity. We are still able to increase on infinity. And that’s the good message, and if you see the percentage of our infinity customer base, it’s in the area of 70%. So we have overall a good business in mobile. The main, actually, downside in mobile is the roaming, but there we took the hit, a big part of the hit.

That’s very clear. Maybe just one follow-up on the Wingo brand. I just wondered if you could give us any update on the commercial traction that’s seeing, whether you have any plans to combine it with a mobile offer, perhaps, going forward.

Wingo is an online only product. We don’t push it up to now very hard. It’s really an offer for people who want to have an online only offer. And we have it in the fixed, an offering in the fixed market. It’s up to now it’s a niche, it’s still a niche in Switzerland. But long term, this could be more important.

Thank you.

I’ll go to the next question coming from Minerva Luigi from HSBC.

Yes. Good morning. It’s Luigi Minerva from HSBC. Thanks for the questions. The first one is on Switzerland. I wanted to ask whether your multi-brand strategy is satisfactory as it stands, or given the saturation and the competition in the market, you plan to develop it further and introduce more junior brands, for example. And the second question is on Italy. And I’m just interested in the fiber to the cabinet deployment of Fastweb and whether you would need to build your own cabinet next to TI’s one, or whether you are able to place your equipment into the Telecom Italia street cabinet, when you do the fiber to the street deployment? Thanks.

Good. To the multi-brand strategy, our target is to have really Swisscom brand is the strong brand, and in the Swisscom portfolio or in our whole customer base, the Swisscom brand should be the most important thing, that’s clear, and it’s very simple. But that means that we really design a product portfolio, which is also competitive, or which is competitive on the Swisscom brand in the low end and in the high end market. But on the other side, there are some segments, very price sensitive segments, which we want to address with second brands, and that’s M-Budget and this is Wingo. But we don’t have the intention now to introduce a lot of additional brands, it’s not our intention. We are in a comfortable - we feel today in a comfortable way. And on this cabinet in Italy, yes, we build our own cabinets beside TI, and we are able to do this.

Thank you very much.

I have two more questions, the first one is coming from Bluestone Jakob from Credit Suisse.

Hi. It’s Jakob Bluestone here. I just had a couple of questions. Firstly, just on the infinity 2 tariffs, can you just explain whether the ARPU actually goes up or down? On one hand you’re including more roaming and more international calling, but on the other hand the headline price point for most of the tariffs has gone up. So just in terms of kind of thinking about how the infinity ARPU develops, if you could maybe give a little bit more detail there on whether it’s higher or lower ARPU. And then, just secondly, was there any impact from the leap year, on your metered revenues? And if so, can you possibly quantify that? Thank you.

From what? Could you repeat it, the second part?

From the leap year, from the fact that there was an extra day in the year.

From the what?

Jakob, we can’t get your question.

February 29.

Okay, okay, exactly.

There is a - this impact is very limited, because that the amount of metered revenues is becoming more and more immaterial. So it’s a couple of millions, nothing more. And on the infinity 2.0, to the first and second part, the ARPU is flat. And as we also mentioned, we don’t see down migration so far. So we have placed this development of - the introduction of 2.0.

Thank you.

Okay. Perhaps, operator, the last question?

Yes. The last question is coming from Ghazi Usman at Berenberg Bank.

Hello, gentlemen. I have three questions, please. The first question was just on your strategy in Switzerland. In the past you’ve been happy to get RGU growth and the price increases or this more for more strategy has been kind of a secondary strategy, it seems to me. But now, with RGU growth turning potentially negative in the midterm, I mean is the focus more on extracting price? Some comments on that would be a great. The second question was on this AFP impact. You said it was CHF 6 million in Q1. Is this a margin free impact or is this coming with some margin erosion as well? And my final question was just on roaming. I think around Q4 there were some comments being made that EU operators are charging more for termination fees to Swiss operators. Have you seen that impact in Q1 on your roaming margin? Thank you.

Okay. To the first part of your question, on the strategy more for more and the revenue - the development of the revenue generating units, we have always a premium strategy. Our strategy is to give more value and to have a bit higher price, and this will remain. And we see still an ARPU growth in the TV business, in the broadband - Internet broadband business, and we think that the mobile market is saturated. There, it’s more the question how we can keep the value in the mobile business through a differentiated product portfolio and a good network quality. But as Mario mentioned, with above 120% penetration, we have to work on the value, on the customer base, and not only on the amount of SIM cards. So that’s a bit our view on this business, still growth in TV and broadband, saturation in mobile.

And then, yes, the full margin, we saw this impact in Q1 of CHF 6 million, you will see it once again in Q2, then it’s over. This was introduced July 1, 2015. And on the financial termination fees, you have to look at the business always as inbound roaming and outbound roaming. And so far, we’ve arranged to keep the impact limited during the negotiation with the other European operators. But there’s a slightly negative impact for Swiss operators. It depends on the pricing profile from each operator.

Okay?

Thank you very much. Thank you.

Thank you, Usman. Well, from this perspective, I would like to thank you to the operator, but also to everyone who participated. If you have any further questions, don’t hesitate to contact us from the IR team. Again, thank you and have a great day. Bye-bye.

The conference recording has been stopped.