Bart Morselt – Head, IR Carsten Schloter – CEO Mario Rossi – CFO

Usman Ghazi – Berenberg Michael Bishop – Barclays Luis Prota – Morgan Stanley Sasu-Petri Ristimäki – Merrill Lynch Jakob Bluestone – Credit Suisse Michael Studer – Bellevue Alex Grant – Macquarie Georgios Ierodiaconou – Citi Jacques de Greling – Natixis Hannes Wittig – JP Morgan Nicolas Cote-Colisson – HSBC

Good morning, ladies and gentlemen, and welcome to the Swisscom First Quarter Results 2013. Now, I will turn the conference over to Bart Morselt, Head of Investor Relations. Bart, the floor is yours.

Yes. Thank you. Good morning, ladies and gentlemen. Welcome to our call. With me are CEO, Carsten Schloter; and CFO, Mario Rossi. I’d like to quickly introduce the agenda for today, which is on page two of the presentation. The title of today’s presentation, Decellent, is a merger of the words decent and excellent. And what follows, we would like to address the trends during the first quarter. Financially, it has been a decent quarter, if looking at the underlying performance. And operationally, Q1 has been excellent with record net adds across the board. Carsten Schloter will start presenting these two chapters and then conclude by looking again at why we think the willingness and capability to proactively invest in our business is the key driver for sustainable, superior free cash flow generation. Following that, Mario Rossi, our CFO will present the Q1 results in more detail. And finally, we will get into a Q&A session to address any outstanding issues you might have. Please also note that we have added an attachment with more backup information. Before I hand over to Carsten, let me point out that we’ve communicated the restatement of the 2012 numbers last week. We’ve convenience the explanation of what now has been attached, as I said before, at the end of the presentation, where we’ve also added a few slides with other interesting statistics around the TV and mobile handset market. With this introduction, I would now like to hand over to Carsten Schloter. Carsten?

Thank you very much, Bart, and good morning, ladies and gentlemen. I would like to start the presentation by looking at the big numbers first. In Q1, we generated more than CHF2.7 billion in revenues and over CHF1 billion in EBITDA. Compared to last year, these are declines of CHF68 million and CHF67 million, respectively. I will come back to those dynamics shortly. But I’d like to state already now that only CHF30 million of that is coming out of the recurring telecommunication business. Most of it is seasonality. In terms of what Q1 brought as a percentage of the full-year results, I would like to draw your attention to the second graph of this page. We may have been slightly below the four-year average in terms of revenue during the first quarter, I will show it, due to seasonality. However, we are okay on the EBITDA performance. In Q1, we generated 24.3% of full-year guidance whereas, on average, we generated 24.1% in the last four years during the first quarter. This makes us confident that we can deliver the guidance which we provided back in February of this year. Before looking again at the full-year guidance, let us study the EBITDA on a like-for-like base on slide four. First line in this table shows the reported EBITDA result for the first quarter, as well as the 2012 actual performance compared with 2013 guidance. On a reported basis and after the restatement of 2012 as it was communicated last week due to IAS 19, we expect EBITDA for 2013 to come down by a maximum CHF230 million. To make the numbers comparable, we have inserted the items which are different in 2013 compared to 2012. As mentioned at many occasions, we have significant changes in the pension fund accounting which causes the 2012 restated result to be inflated by CHF157 million and, at the same time, makes 2013 CHF49 million more expensive than last year. CHF10 million of that has been realized in Q1. And given the nature of this impact last year we will have an extremely strong seasonality on pension fund in quarter four this year. Last year, we had restructuring costs of CHF9 million in the first quarter. Now we have a release of CHF8 million in this quarter. For the full year, I currently do not expect new restructuring costs whereas last year, we booked CHF78 million of those. Important asset this quarter is that we have three working days and two GSM days less than last year. This, together with the shift in the publication of new directories, had an impact on EBITDA of CHF35 million during this quarter, which I expect to be mostly compensated for – during the remainder of this year, which makes this a one-off effect during Q1. Last year, we have not yet introduced the new mobile tariff plans called Infinity. In a year-over-year context, the initial ARPU dilution has had an CHF11 million impact on EBITDA. Duty tax will fade away also because we see – that we have seen most of the ARPU dilution by now. All of this makes that on the comparable basis, the EBITDA decline in the first quarter was CHF28 million, which is around a quarter of what we expect comparable EBITDA to decline for the full year. That decline of around CHF100 million is going to be caused mainly, as we mentioned already in the guidance, by higher tax, subscriber activation cost, handset cost and cost related to maintenance related to the ongoing network rollout. If I now, on page five, conclude in terms of full-year guidance then the clear message is that nothing has changed compared to the guidance provided back in February. Group revenues can be expected to touch around CHF11.3 billion, with a small decline in Switzerland and a stable performance at Fastweb. Group EBITDA comes down by CHF230 million on a reported basis, however, by CHF100 million underlying as I pointed out in the previous slide. Also here we expect Fastweb to deliver a stable result compared to 2012. Finally in terms of CapEx, we still expect to spend around CHF2.4 billion. The increase is mainly driven by our investments into fiber connectivity mainly in Switzerland but also in Italy. With that, I would now like to discuss the first quarter results in more detail starting on page six. Here we have plotted the changes in quarter one revenues compared to one year ago. Firstly, we have isolated and allocated the seasonal assets in the first quarter due to the lower number of calendar and working days compared to last year. What’s that? It’s the 29th of February last year 2012 and the fact that Easter last year was in second quarter versus first quarter this year. The revenue effect of that amounts to CHF44 million, CHF15 million of which go on the account of Fastweb and the remainder on Switzerland. Secondly, you’ve seen the continuation of price erosion effects. In total, revenues in Q1 would have CHF75 million higher, prices would have been stable. CHF62 million of that price effect can be allocated to the mobile business, whereby CHF32 million of that relates to the roaming effect. Thirdly, we have seen two counter-effects on the volume development. Due to the ongoing substitution of fixed line by mobile and migration into bundle, the decline in single play fixed products impacted revenues year-on-year by CHF44 million negatively. On the other hand, we saw growth on single play mobile subscribers, driving the revenues up by CHF11 million and significant growth of bundle-exclusive revenues by CHF95 million compared to last year. A little bit later in the slides, I would try to show you how these CHF95 million distribute between wireline and wireless. Finally, hubbing at Fastweb continues to come down as per business plan. This makes the category other on the slide shows a negative with CHF111 million year-on-year performance despite a positive impact of currency of CHF8 million. If we look at what all of this means for single play versus bundles, then you can see from the table at the top right of the graph that single play mobile revenues have gone down by CHF59 million, including seasonality and by CHF51 million excluding seasonality. Single play fixed did minus CHF67 million, respectively, minus CHF57 million without seasonality. And bundles grew by CHF95 million. In conclusion, volume growth has been good at CHF62 million. However, not yet high enough to compensate for a price erosion decline of revenues by CHF75 million, the delta being the CHF30 million I mentioned initially in the core Telco business. And CHF30 million, including wireline and wireless effects, is we think a good performance taking into account that we made this disruptive move on mobile pricing in the mid of 2012. Moving from revenues to EBITDA on slide seven, we have profitability development for single-play products versus bundles. Out of CHF51 million revenue reduction without seasonality in single-play mobile, we saw a gross margin reduction of CHF49 million. In single-play fixed, the margin reduction amounted to CHF50 million on a revenue decline of CHF57 million. Reversely, bundles’ profitability grew by CHF84 million on CHF95 million revenue growth. On balance, this makes that the additional margin of bundles cannot yet also entirely compensate the decline of revenues, although we are not that far away from breakeven. Together with higher subscriber acquisition costs and handset costs, as well as the seasonal and pension effect I discussed before, overall decline of EBITDA has been CHF67 million, 6% compared to previous year. Correcting for the seasonality and pension effects, the underlying comparable EBITDA decline was some 2% only. In order to better understand some of the dynamics behind the revenue development at Swisscom Switzerland, we have presented on the next slide a price and volume discussion. And we have taken out in this – on this slide the seasonality element, which I discussed before, to look just at the underlying trends. Starting with single-play mobile revenues, it is clear that the good growth in mobile subscriber, which caused higher revenues of CHF11 million, could not compensate for the substantial price declines I discussed before. Part of it being roaming, almost the half of it, and the rest being Infinity. With CHF62 million lower revenues on the back of these two triggers, overall, single-play mobile revenues came down at CHF51 million or some 6% year-on-year. Single-play fixed came down by CHF57 million or 8% year-on-year. However, here the decline was mostly driven by volume effects worth CHF44 million. Another CHF30 million revenue decline was caused by lower average price. In total, revenue decline in single-play without seasonality amounted to CHF108 million. This could not entirely be compensated by volume-driven growth in bundles worth CHF95 million. The interesting observation to make here is that higher bundles, for example, bundles which contain more products, also generate higher growth. I will discuss later why this is so important to us. Basically, because the larger the bundle, the higher customer lifetime value is. On a net total basis, we see that price erosion overall has caused revenues to come down by CHF75 million, whereas volume growth resulted in CHF62 million more revenues. The net decline of CHF30 million represents just 0.2% year-on-year decline on the underlying basis. Another way of looking at the revenue dynamics is by fitting these into revenues from usage, so-called metered revenues and those from non-metered products. Clearly visible is the strong migration towards subscriber products of fixed product. These are monthly excess charges which include all or a lot of volumes within the product. The metered revenues in the single-play products where we still charge per call or SMS are rapidly coming down. These revenues were CHF467 million in the first quarter of 2013 compared to CHF773 million three years ago. It now represents 29% of revenues compared to 48% three years ago. Inversely, the access products have grown especially from bundles which now represent 22% of revenues compared to 4% three years ago. This trend as we have discussed in numerous occasion is here to stay until the point where we basically have no metered revenues left, which is why it is so important that the industry finds tariff and pricing logic which do not depend on the traffic generated. We have achieved that in mobile through the Infinity plan and are working on something similar in the fixed line for later this year to come. Next on page 10, we have made an attempt to allocate the same CHF30 million net revenue decline to mobile and fixed business. This is, of course, not a bookkeeping exercise as there are assumptions one has to make when allocating mobile uptakes to combine bundles that carry both products. Nonetheless, we see that within the bundled product, we think that around CHF41 million of the CHF95 million revenue growth has been created through the mobile component and the remaining CHF54 million though wireline products. Here, I’d also like to mention that roughly 70% of the bundles that we sold in the first quarter include a mobile component which is significant in terms of convergence evolution in the industry. The trend here is that wireless within bundled is going faster, so we expect an even more balanced situation between revenue to be allocated on mobile and revenue to be allocated on fixed in those bundles going forward. In total, out of the CHF30 million decline, some CHF10 million comes from mobile revenue reduction. This will also come down as we think that most of the price decline in single-play mobile products is through with the Infinity offer reduction fading out. I will discuss in more detail this in the next chapter. All in all, I believe we’ve seen increasingly balanced outcome of revenue dynamics between mobile and fixed products. I would like now to move on the second chapter to discuss operational performance in the first quarter starting on page 11. The first and most important observation on operational is that – is the performance in terms of revenue-generating units as over the past quarters. And here, I’m very pleased the development over the past five quarters. We are clearly witnessing an acceleration of goals which goes on the account of both high growths in bundles, as well as on the back of single-play mobile customers after the introduction of our Infinity tariff plans last July. As a result, the year-on-year growth in the quarters has doubled to 1% from around 0.5% before that. This development is important to us as this further strengthens our position in the marketplace. We are firm believers of creating sufficient mass in order to amortize the fixed costs and CapEx over larger customer base. We’re still to make key factors in this business strongly characterized by fixed cost. And also certainly believe on page 12 is that we try to convert as many single-play products as possible into bundles. Ultimately, we do this as customers who buy bundles are far more sticky than those who only buy a single-play product. Once customers move into bundles, the churn goes down significantly. The more the products there are in the bundles, the longer customers stay with us. It is, therefore, important that we measure the penetration of given products within a bundle. The ultimate aim should be to have 100% penetration of products in a bundle. For example, as can be seen from the graph on the left side, out of all TV subscriptions, we now have 66% which is part of bundle with other products inclusive. The higher penetration, the lower the risk that the customer moves to a competitor to buy the product or even the bundle there. On the right side of the slide, you see how much difference there is between single-play products and bundles in terms of churn. And higher bundles are more valuable than lower bundles. It is evident that offerings some discount on the bundle typically less than 10% compared to the price of the individual components within the bundles. And this discount pays off very easily, therefore, in terms of increase of customer lifetime. For example, if the quadruple-play bundle customer churn is 2.6 times less than a single-play customer, this implies that this customer lifetime value is 2.6 times higher minus the discount offer. Additional value is then served much higher. And therefore, bundling is extremely important to the value of the business. : Differentiation factor between the five plans is the speed offered for data usage. For higher speeds, customers pay a higher price and vice versa. At the end of the first quarter, we had over 1.1 million customers who were on the new plans which imply a penetration on the postpaid customer base without corporate accounts of 37% in nine months’ time only. Whereas most of these customers were on other Swisscom tariff plans before, it is also fair to say that we have seen new inflow from customers who were with competitors before. To illustrate that, let’s have a look at the net adds market share on page 14. Here you can see that our overall market share is around 62%. To keep it there, we must therefore at least also have 62% share in net adds. Before the introduction of the new tariff plan, our share of net adds was a little lower than our market share, although not so much lower that it would really affect the market share. Since the introduction of Infinity, we have seen our share of net adds go up, as can be seen from the light blue bars. The line indicates the spread of net adds over on the 62% market share. And here, you see that in quarter four of last year, we actually had a 15 percentage points more share in net adds than we had in market share. Our market share should move up a little bit if we can continue to perform this way. Unfortunately, we do not know the results for the first quarter yet as our competitors have not yet disclosed their quarter one numbers. However, looking at how many customers we acquired in the first quarter, and also, I would show you on the next slide the number porting dynamics, I feel confident that we also had a very good quarter in terms of net adds’ market share. Let us now look on the next slide on these number portability data. Here, you can see the net number of portings for each of the past five quarters. Net porting is the difference between customers moving in from competitors to us and those moving from us to competitors. This is a number that leaves aside new customers who are not yet mobile customers, also customers moving from one operator to another without keeping the number. But it’s a very solid indicator for the respective churn between the different operators in the market. In theory, a company like Swisscom, if we had the same churn as our competitors, with nearly two-thirds market share, should lose two customers while winning one if we have the same churn rate as our competitors. And in reality, the performance has been a lot better, with each and every of the quarters displaying always a net inflow of customers from competitors to Swisscom. Remarkable is the significant increase of net inflow that started in Q3 2012 immediately after the launch of the new Infinity plan. We added a net 7,000 customers in Q3; 15,000 in Q4; and again 12,000 in Q1. This is one of the reasons why I think we had a share of net adds in Q1. And again, this is not all – these are not all customers moving from our competitors to us. It’s only those customers that keep their number. There are also customers moving between the operators but don’t keep the number, but in relation, this is a very good indicator. Equally interesting on Infinity is to watch the progress in terms of ARPU development. As we pointed out upon the launch of these tariffs, there will always be initial significant dilution to ARPUs of customers who change plan. This is because, typically, the first movers are those customers who can make and obviously improve on their monthly bill by moving to a new tariff plan. As a result, we saw the quarterly ARPU of changes to Infinity in the third quarter of last year moved down by CHF6 from customers who were not on the XL plan and by CHF8 including those who moved to XL. We have distinguished in these two lines as the XL customer base started with around 100,000 customers who were automatically consumed hour sales from the previous non-XL free plan. Now, that these customers are on XL, they have freedom to change plans. And changes from XL can only mean a downgrade. Therefore, the proportionate effect of these customers is now representative for the base. The customer base who are not on XL have gradually improved over time. Whilst we witnessed the fixed trend decline on the third quarter last year, this has improved to minus 2 in the fourth quarter and to minus 1 in the first quarter of this year. We expect, as we announced previously, that over the whole of 2013 we can see this trend to turn positive as more customers start upgrading their subscriptions to higher-speed plans. Most of the dilutionary effect is now through. It has a cost, as I showed previously, of some CHF11 million. And this is a good price to pay for gaining so much more customers while making ourselves invulnerable against the IP alternatives that otherwise replace voice and SMS revenues of free wireline that would substitute data traffic on cellular networks. Finally, in this operational chapter, some words on Fastweb. Mario will spend a little bit more time to discuss some of the Fastweb results in his part of the presentation. The key message I want to give you is that we are very happy with the commercial performance in Italy. Fastweb seems to be the only operator who has been and is still able to grow its customer base. Q1 of this year was extremely strong with 94,000 net adds on broadband. The commercial partnership with Sky is very instrumental in being the number one in terms of net adds in the Italian market. And one of the consequences of this, and Mario will come back to this, is that revenue dynamics in Fastweb – on the consumer segment has now turned around as we see now in the consumer segment growing revenues and gross margin add. At Fastweb, we will follow a similar strategy in Switzerland in regards to investment philosophy. We believe that ultimately higher investments pay off through higher market share and better pricing. Let us look and just believe again in chapter three starting on page 18. Throughout the mid and long term, superior free cash flow is the ultimate aim of not being shy to invest. We may be a little bit lucky to be in Switzerland where customers are open to pay for quality. Price is definitely not the first item for many customers to look at but rather quality of network services and also brand. As can be seen from the graph, Swisscom has a subscriber market share of around 62% in the mobile market. If you look at our revenue share in the Swiss market, then this is significantly higher at 71%. It becomes even more interesting to look at the EBITDA share in the Swiss market where Swisscom has 78%. The fact that this is so much higher than the market share has everything to do with scaling of a fixed cost business. Extra customers come at a very healthy margin once the network and service platforms are in place. Despite the fact that we also significantly invest more than the others, both absolutely and relatively, it still means that we can generate a superior free cash flow proxy. Here, we have a share of an estimated 77% compared to a market share of 62%. And as I said, we will continue to do what it takes in terms of investment to keep a strong market position in place as we will be capable of generating sustainable free cash flow going forward. One of the key investments projects nowadays has been posted on page 19. Our efforts to bring fast broadband to large parts of society can be seen here. Fiber to the home is – next we’ve just started fiber-to-the-street initiative, an important element of future competitiveness, especially against cable. Before we can roll out service and sell a higher bandwidth, it is clear that we need to roll out. So far, we have a fiber-to-the-home footprint of 576,000 homes or buildings where fiber passes the building and can easily be brought into it once an order is done by a customer. This represents a penetration on all buildings of 12%. As you may remember, we aim to reach a 30% penetration on households by 2015. We will add another 50 percentage points to reach 80% of households with high bandwidth by 2020 by applying more cost-efficient technologies. Fiber-to-the-street. Here we go with fiber-to-the-manhole which are typically within some 150 meters of the end user. From the manhole, the existing cathodes could be used. And with current technology, this enables us to bring at least 100 megabits of bandwidth to the customer. And we believe this number will go up to roughly 400 megabits with new technology within a few years. The big challenge for the next few years is to increase the adoption of file by the end customers. It will still stand at a modest 21%, implying that 21% of footprint or some 100,000 households are physically connected to the fiber-in-the-basement. And the other chances then to make these customers buy a fiber product so that we can also reap the benefits on the product. Today, we have a few 10,000 of customers but growing strongly as the growth dynamics have almost doubled since the beginning of the year. And the drive is to focus on increasing number significantly over the month and, of course, years to follow. On page 20, we have printed some statistics related to the fiber of the mobile – to the fiber-to-the-mobile world, meaning LTE. Before moving to LTE, delivery and mobile bandwidth, I’ll start with having sufficient spectrum. Last year, we acquired a significant amount of spectrum across all bands. Swisscom actually has the highest spectrum availability in Europe, both in absolute terms, as well as per customer of a square mile. Immediately after the auction, we have started rolling out LTE to deliver better speed experience to our best customers. We have initially clearly focused on covering the most important cities. Today, we are at 160 locations, covering one-third of the population already. We expect to reach 70% pop coverage by the end of the year. We don’t know exactly what rollout speed our competitors will adopt. However, we have not seen their services yet launched. Today, at Swisscom, already 300,000 customers can use the new LTE network as they also have LTE-enabled handsets. This is a timing advantage against competition as early adopters tend to be very good customers; again, a reason to be proactive on investment on this new technology. With that, I would like to conclude my part of the presentation but not until I have summarized it. Chapter one, on financial performance, I hope I have made clear that we are still on track during the first quarter to deliver on an unchanged full-year guidance. Some of the lagging behind has to do with one-off effects such as seasonality caused by a lower number of business and calendar days. This will mostly fade away over the coming new quarters. In terms of the underlying revenue dynamics, it is clear that price erosion continues. However, volume growth has been excellent and is improving, making more and more up for the price erosion decline. Bundles are a key complement to achieve this. And as I mentioned, the net result was a CHF13 million revenue decline in the quarter compared to previous year. In chapter two on operational performance, the key takeaways are that we have had very good growth on all accounts in terms of customers and bundles. By the way, I forgot to mention that we also doubled the order intake within Swisscom IT service in the first quarter compared to last year. And this performance applies both to Switzerland and Italy. The increasing trend to bundle adds to drive customer value significantly and that bundles create far lower churn, and this also applies to Italy with customer lifetime value. On our HomePack bundle with Sky, it’s significantly better than on stand-alone broadband. The new mobile Infinity tariff plans have worked out very well so far. Adaption has been rapid and will continue a decent pace. It has helped us to fortify our position in the marketplace. Also, at Fastweb, we are quite pleased with the result especially on how it performs on the market, being number one in Italy on that now since a number of quarters. And finally, I hope to have shown that the rapidly high level of investment pays off. It already starts now, but it is even more important for the months and years to come so that Swisscom can continue to deliver a very attractive cash flow as a fundament for a stable return to its shareholders. With this, I would now like to hand over to Mario Rossi to start his part of the presentation. Mario?

Thank you, Carsten. Good morning, ladies and gentlemen. In the next few minutes, I’ll present to you the group’s financial results and the segmental results. On slide 23, it becomes evident that group revenues decreased by CHF68 million or 2.4% in total. As already explained by Carsten earlier in his presentation, two-third or CHF45 million is seasonally driven. And including the exceptional effect of CHF8 million, ForEx appreciation of CHF8 million and hubbing of minus CHF16 million, there remains a revenue cut compared to the first quarter results of last year of CHF15 million. This year-over-year decrease reflects a nearly stable development on the revenues. Fastweb’s underlying revenues decreased year-over-year by CHF15 million where we had in Q1 2012 seasonally high-margin revenues in the wholesale and enterprise business. For Swisscom Switzerland, revenues came down by CHF38 million year-over-year. This has the following reasons. On the one hand, we have seen that an overall seasonal effect of CHF18 million due to less working days which explains half of the decline. On the other hand, this has out-of-season one-off impact in the residential segment. Directories delivered CHF11 million less of revenue in Q1 which will be compensated later in this year. The remaining decline of CHF9 million is primarily a net result of the continuing price erosion which the volume growth is not able to fully compensate. On the next slide, we can see that group EBITDA decline of CHF67 million, 6.1% year-over-year, was influenced by three non-operational elements with a positive impact of CHF9 million. Lower restructuring cost of CHF17 million, the strengthening of the euro against the Swiss franc has a positive impact of CHF2 million, and higher pension cost of CHF10 million due to the IAS 19 amendment. The operating result exceptionals decreased by CHF76 million compared to Q1 last year. Fastweb’s EBITDA contribution came down by CHF14 million and is primarily top-line-driven but also influenced by higher subscriber activation costs due to the commercial success. The margin of Swisscom Switzerland without exceptionals came down CHF63 million, mainly as a result of the previously discussed revenue declines of CHF38 million and higher direct cost of CHF18 million mainly due to higher subscriber activation and handset costs in 2013. Coming to net results, compared to last year, net income of the group went down CHF55 million to CHF390 million. The decrease is driven by lower EBITDA, CHF67 million, and higher depreciation and amortization. Depreciation amortization increased slightly by CHF10 million to CHF490 million mainly due to higher amortization at Swisscom Switzerland relating to the mobile licenses required in the previous year. Net interest, the CHF56 million, is almost at the previous year’s level. And finally, the net income tax expenses of CHF91 million led to an effective tax rate of 18.9%. Compared to last year, tax expense is CHF11 million lower and, in the long run, we calculate unchanged with a corporate tax rate of 21%. : A few words regarding accounts receivable. The level of accounts receivable was the same per end of March 2013 as end of March 2012. But the accounts receivables stood per end of 2012 CHF154 million below 2011. We see now this effect in operating free cash flow when you compare 2013 with 2012. I expect that most of these – both effect, inventory and accounts receivable, will even out over the next three quarters with a positive impact on free cash flow. : The remaining revenue gap of CHF2 million is driven by price erosion effects. The contribution margin decreased to CHF710 million or 57.7%. The increase in direct cost relates to higher tax, CHF9 million, and the higher loan book of sold smartphones around CHF8 million. On the operational performance, we see a further good momentum on the wireless and TV market. The Infinity price plans led to a higher number of mobile postpaid subscribers, an increase of 4.4% to nearly 2.5 million subscribers, and the number of TV subscribers increased by 31% to 832,000 subscribers. On the SME segment on slide 21, on the top line of SME, we see a similar effect like in residential. Lower net revenue of total CHF8 million and higher direct cost of CHF2 million, also higher tax and handset costs explain the lower contribution margin, too, which decreased by 4.5% to CHF213 million. Two highlights on the operational performance, we see ongoing broadband growth with now 201,000 lines, and the ARPU – the wireless ARPU decreased by 12.5%, mainly due to right-grading effects of Infinity customers. On the corporate segment, net revenue decreased by CHF9 million to CHF439 million, especially the wireless business shows a mixed revenue contribution. On the one hand, the revenue from wireless access increased by CHF12 million, especially thanks to more bundle subscribers. And on the other hand, the revenues for wireless traffic growth declined by CHF18 million. Contribution margin 2 came down by CHF10 million. Two points on the operational side. The number of wireless subscribers went up by 10%. Around one-third of this increase is M2M driven, machine-to-machine driven. And the price pressure in the wireless business in the corporate segment led to an ARPU erosion of about 15%. Few words on the wholesale segment. Net revenue decreased by CHF4 million due to lower roaming rate and lower revenue from data services. Those drivers also impacted the direct cost which came down by CHF6 million to CHF135 million. Contribution margin 2 increased by CHF2 million more or less. On slide 31, network and support functions, two words on that. Compared to the previous year, lower costs mainly driven by lower restructuring costs led to an increase of contribution margin 2 by CHF10 million. And CapEx in network spend at CHF225 million which is below the level of last year, but we will catch up until the end of this year. Now, few words on the operational performance of Fastweb. As Carsten mentioned, in the volume market representing the consumer segment, we are the only operator with a positive net adds development in each quarter 2012. This trend has now been confirmed also in the Q1 2013 results. It is obvious that Fastweb’s position with net adds of 94,000 subscribers is much ahead of all other Italian operators. It’s primarily driven by our successful partnership with Sky. Their contribution is 74,000 net adds or almost 80% of all Fastweb net adds in Q1 2013. In the executive and wholesale segment, we also can recognize solid signals, with a 54% win rate of corporate negotiations, new contracts with interest in corporate customers and then order intake equaling previous-year level. All in all, our first quarter commercial performance in Italy was solid across all segments and confirms our expectations. On the next slide, a couple of points underlining that Fastweb is mostly in line with expectations. Commercial performance in the volume market, consumer segment, improved steadily. This led to a top line increase of €4 million year-over-year in a very difficult environment both from an economic and political perspective. Also gross margin in the volume segment did a lot positively. Also in the value market, enterprise and wholesale segment, with some seasonal impact in Q1 2013 shows a good momentum. I mentioned order intake, win rate and interest in new corporate customers. Financially, Fastweb is on track. Both EBITDA and CapEx are in line with expectations and signal that Fastweb is well-positioned for further operational move. On slide 34, some words on Fastweb from the finance perspective. Excluding the – by this higher managed reduction of low-margin hubbing revenues, net revenue came down by €12 million to €384 million. And without seasonal effects, net revenues at Fastweb are about in line. And important that to mention, consumer revenue grew by €4 million compared to 2012. Reported EBITDA reached €97 million which is equal to a margin of around 24%. EBITDA decreased by €12 million partly driven by higher growth-related costs in Q1 2013. Without the FTTS rollout, explained in €40 million of the increase, CapEx is stable despite €7 million increase due to higher commercial performance. We have more than 30,000 more activation of new customers compared to the prior year. The last segment that I would like to touch upon is the segment other. The top line is external customers decreased by 2.6% to CHF223 million; 2.6% from Swisscom IT services; external revenues up by CHF9 million mainly due to lower other revenues. Swisscom participation external revenue went up to CHF74 million as trend of Q1 mainly due to higher revenue for construction services. EBITDA of the segment other of CHF73 million increased by CHF3 million, and CapEx stood at CHF38 million for the first three months. With that, I would like to conclude my part of the presentation and hand over to the operator to start the Q&A session.

Thank you, Mario. Ladies and gentlemen, you have now the opportunity to ask questions. (Operator Instructions) Thank you. There are about 10 questions. I will open the lines one by one. You can go ahead and ask your question when you hear the announcement unmuted on your line. Let’s start with the first question. Usman Ghazi – Berenberg: Good morning, gentlemen. It’s Usman Ghazi here from Berenberg. I have three questions, please. The first one is there’ve been recent press reports in April suggesting that the LTE take-up is quite strong. I think there were some reports of 300,000 subscribers, although it wasn’t clear whether those were subscriptions or just people having LTE handsets. So, I’m just wondering if you could clarify what the uptake has been so far on that. Second question was on voice-access lines, the decline seems to have accelerated in the quarter. I’m just wondering if you’re seeing any accelerated impact of fixed-to-mobile migration given the bigger bundles. And if so, I mean, how you see that evolving? Do you see it accelerating or it was just a Q1 effect? And then, the final question is just on the MTRs. Both Sunrise and Orange have said that there is a new MTR schedule that’s been agreed already at the Q2 results. So, just wondering if you could give us any update on that and what to expect. Thank you.

Going now on LTE sector, we have today 300,000 customers which have LTE-enabled devices. And what we see is we have approximately 20,000 to 25,000 concurrent data sessions on LTE, which indeed is a very strong uptake because I’m talking about improving parallel data sessions. So, it is indeed quite a strong uptake. On voice plans, you are right; we have seen an acceleration. In line losses, we have roughly 20,000 for the first quarter of 2012 and now roughly 40,000. And this is mainly linked to fixed mobile substitution. On MTRs...

Well, on MTRs the situation is – there will be some changes but we haven’t communicated them yet. They are not very significant and the key idea behind it is to lower the asymmetries a little bit between us and our peers in the market. But that is all that we can be saying to that right now. We haven’t publicly communicated that yet. Usman Ghazi – Berenberg: Okay.

But no specific impact to be expected out of that.

No, it’s very – it’s insignificant, really. Usman Ghazi – Berenberg: Okay. Just this follow-up on the fixed mobile migration, I mean, should we expect voice access line losses to accelerate from the minus 14 of...

Oh, you should expect this trend to be rather stable over the year. Usman Ghazi – Berenberg: Okay. Thank you.

The next person, please? Michael Bishop – Barclays: Hi. Good morning. It’s Michael Bishop from Barclays. Just two questions, please. The first one, is there anything more you can say on the proposed new fixed line pricing, so, I guess to the rationale and timing? And then secondly, in Italy, clearly, Fastweb is offering some sort of up-front discounts for 12 months. Can you talk a bit about on the pricing environment, whether you’re seeing any reaction to your strong subscriber growth and whether you feel that you need to continue to discount given the underlying momentum seems to have picked up with the Sky deal anyway? Thanks.

On fixed line pricing, for obvious reasons, I can’t give you much more detail. But you shouldn’t expect any material impact out of that for this year. The second of the pricing environment in Italy remains much more rational than it had been for long years. It remains much more rational. And we have again started with very good performance in April. So, we have the similar performance than the one in the first three months. And honestly, with the price pressure that the Italian market experienced exactly on the mobile side, I don’t expect any significant change on what we have seen in the past quarters in terms of fixed line dynamics. I think the focus of the integrated operator, which is quite understandable, is in the other area of the business actually because the losses in terms of ARPU and revenues on the mobile side are enormous.

Next question, please. Luis Prota – Morgan Stanley: Yes. Hello. It’s Luis Prota from Morgan Stanley. My question is really a follow-up question on the fixed line loss and the dynamics there. You were mentioning fixed-to-mobile substitution as the main reason, but I would appreciate if you could give us also some thoughts on how Cablecom is doing? I heard of some new pricing and products there, so I wonder whether competitive pressure is increasing from Cablecom as well. What are your thoughts here and then what should we expect? Thank you.

There has been no changes all in terms of output into cable. No change in dynamics there. And as you have seen on the reported competitor’s figures, our performance both in TV and broadband in the quarter four was extremely strong. The only noticeable element in the first quarter is the fact that Cablecom has publicly – and acquired a significant pressure on the new Horizon offer. It continues to be so. And so, I don’t expect any material change in dynamics on that level compared to what we have seen in the reported figures in the fourth quarter. It’s really a fixed-to-mobile profit within our own customer base and, of course, triggered in some way by the Infinity tariffs. Luis Prota – Morgan Stanley: Okay. Thank you. Sasu-Petri Ristimäki – Merrill Lynch: It’s Sasu-Petri Ristimäki from Merrill Lynch. I have two questions on the ARPU trends from your slide 44. First would be decline on mobile ARPU roughly 10%. How much of that do you attribute to the transition to Infinity and how much is the like-for-like price erosion? And then secondly, could you say a few words on what is happening to quad-play pricing currently and why the ARPU dropped there? And then thirdly, the ARPU expansion in dual and triple plays, is that primarily a mix-driven issue? Thanks.

I didn’t get all of the questions. So, for the first one, the ARPU erosion on mobile, you should make the following assumptions. One-third of it is structural. Structural because, on the net adds that we are taking, they are a machine-to-machines and they are subscribers with lower ARPU. So, roughly one-third is structural. Another third is the roaming price decreases that we did last year, and another third is Infinity. And I’m just looking at my colleagues to just pick up the second and the first question.

Yes. I think that was on the ARPU development for quad play and then for 2P and 3P. Sasu-Petri Ristimäki – Merrill Lynch: Exactly.

Yes. On quad play, we’ve seen about 10% of a reduction which is, indeed, because the product that’s being sold there in combination with mobile has become a little bit cheaper over the last year unlike many of the other bundles where we had stability in terms of pricing environment. So, it’s a price-driven issue in the quad play whereas 2P and 3P are absolutely stable in terms of the pricing in the market. Sasu-Petri Ristimäki – Merrill Lynch: Great. Okay. Thank you.

In 3P, we were able to sell higher bandwidth from the fixed line side. That’s the reason of the increase of the ARPU.

That’s a very small increase but enough.

Yes, that’s the reason I’ve given. Jakob Bluestone – Credit Suisse: Hi. Jakob Bluestone here from Credit Suisse. A couple of brief questions. Firstly, just returning to this point on accelerating fixed mobile substitution, do you believe you need to take any measures to address it, or you consider it a small issue and not something that you need to really respond to? Secondly, you net a small acquisition today. Just wondering what the revenue and EBITDA impact was. And then, thirdly, on – if you could maybe just give us a mix of what percentage of your Infinity subs are on XL? And then finally, if you could maybe just give us an update on the – any changes in the competitive dynamics in mobile in Q1. Thanks.

On fixed mobile substitution, I think the work that needs to be done is to revalue, and I’m not looking price but I’m taking functionality, to revalue fixed line telephony. And what we’re thinking about is trying another plan that operates no longer on the fixed line phone but that operates on the mobile phone but that allows you to associate your fixed line number to the mobile phone and allows you, if you want to make it, to take a fixed line number with you. I mean, we are working on these types of functionality to add a value to the fixed line number and behind to the fixed line connection. So, it’s not some timely amount of price. It’s rather a topic of functionality that we’re thinking about. On Cinetrade, Mario will give you the details.

And to the acquisition of Cinetrade, you can expect for this year or eight months an additional revenue of about CHF80 million and an EBITDA of CHF20 million. On the other side, on the equity line below EBIT, there will be a reduction of about CHF10 million.

On the share side, it’s roughly 10% of the total base. And on competitive dynamics, as I mentioned, I mean, first, the early indicator in terms of competitive dynamics are non-portabilities. And here we haven’t noticed any significant change compared to the quarter four dynamics when in terms of market share on that as we have been very strong with more than 70%. And there has been no repricing neither from Orange, nor from Sunrise in the first quarter. There are some rumors that Orange might be thinking about some form of repricing but nothing concrete yet. Jakob Bluestone – Credit Suisse: And just to ask a follow-up, just on the acquisition, fair enough, small numbers, but is that included in your guidance yet or should we put that down to rounding?

No, it’s not included in the guidance. There’ll be additional revenue and additional EBITDA. Jakob Bluestone – Credit Suisse: Thank you. Michael Studer – Bellevue: Yes. This is Michael Studer from Bellevue. One question on your TV subscriber number. Can you give us an indication how much of the TV subscribers are currently running on your, if you want, free Swisscom TV light, and if that’s been the reason for your – or what was the impact on your ARPU for the quadruple play?

Now on the overall number of TV customers, let me just – from the 860,000 customers that we have in total on Swisscom TV, 811,000 are on pay TV subscriptions, meaning there’s a total of 49,000 is using the free services. In terms of net of add, roughly one-third of the adds that we are making are on this Swisscom TV light product, meaning on the free product. And I don’t think that this impacts at all our ARPU dynamics on the quadruple play. As on the quadruple play, it’s behind not Swisscom TV that is bundled in. Michael Studer – Bellevue: Okay. Thank you. Alex Grant – Macquarie: Hi. It’s Alex Grant from Macquarie. Just a quick question on bundles and when you might see further competition particularly in the sort of quad play particularly given Liberty Global’s comments on sort of enhancing mobile services. Thanks.

I’m really struggling to answer this question because – I don’t know, I think it’s now three years that they announced their entry in the mobile market. And as we have these types of comments around, so I’m really struggling to give you an answer on that. I think we should rather challenge them because, again, it’s in the marketplace for three years now. Alex Grant – Macquarie: Okay. So, you don’t expect any increased competition from – in the quad-play market?

Not really. Really, not really because for fixed line operators that just stepped into the mobile market is not very easy if you don’t have points of sales. Because the mobile part of the business is still very strongly handset-driven. And without handset, without a point of sale rate for the handset, the impact can only be limited in our view. If they do it, if they do it again. Alex Grant – Macquarie: Okay. That was great. Thanks. Georgios Ierodiaconou – Citi: Hi. It’s Georgios Ierodiaconou from Citi. I have a couple of questions. The first one, if I’m not mistaken, about a month ago, the Competition Authority ruled out that you should make up the levels from the premium local content that you have, most specifically the incident was for – to the cable industry. Could you just update us on whether there’s any changes we should expect soon and if you think that will be relevant for the TV market? And my second question is around Fastweb. Do you think there is any product cost-cutting you should – you could implement during this year in order to try and keep the margins flat or even it’s going to be higher towards the end of the year? Thank you.

Now, on the WECO, you must be aware that the way that we manage those foothold in Switzerland is such that not only we improve our Swisscom TV offerings, but also we back-licensed part of the content to the free-to-air channels – the Swiss free-to-air channels. And by doing that, we have managed to increase the available offer to all Swiss customers continuously over the years whilst, of course, keeping our TV products more attractive. So, in fact, in the way it contributed to offering and to market dynamics, we are quite confident about this proceeding. Nevertheless, you’ll never know because this WECO proceedings or this Competition Commission proceedings are always about market delimitations. Until the final ruling, this procedure is probably going to take longer, not only probably but will – for sure take longer than the duration of our contracts. That means that you shouldn’t expect any material impact during or over the period of five years that we have now for this content. We have this content exclusively, and we are pretty confident on what we are doing in terms of commercial policy. And there will be no change on the duration of those contracts, and I mentioned them being five years, with the Swiss Ice Hockey and with the Swiss Football League. And afterwards, there would be a new round of bidding for this contract, and then we’ll see.

On the Fastweb, maybe you’re aware that last year, we outsourced the customer care and the field force services. We have reduced the number of FTEs by about 650. We see there now an impact this year, the positive impact which is overcompensated by higher cost of subscriber acquisition and marketing cost – market cost because of commercial success. Going forward, you can expect that we are working on the costs on a continuous basis, mainly in the IT space and on – in the overhead area can expect an ongoing reduction of the cost to total 3% per year. Georgios Ierodiaconou – Citi: Thank you.

Just for your information, we still have four people in the question queue. The next question, please? Jacques de Greling – Natixis: Jacques de Greling, Natixis. Two questions. The first one, regarding this – the chart you have in slide 18. Could you give us the precise figures for mobile EBITDA and mobile CapEx? Second question, regarding the roaming, there was a beginning of legal process in Switzerland. Could you help us understand what are the next steps? I believe there is a report to be published in 2014. Thank you.

On the mobile EBITDA, we don’t give anymore EBITDA between fixed and mobile because we organize along customer segments. So, it would be an area of estimates. On the mobile CapEx, this year we have about CHF250 million specific CapEx in the mobile space...

Then on the...

Which is down 10%, higher than last year.

Then on the roaming, there is no I would say legislative proceeding on roaming. It’s just that this topic is – has been years now on the continuous observation by parliament. And so, again they would like to have a reproof from the regulators on the evolution of roaming. We see danger of the political intervention of this topic as very, very remote, why? Our retail prices on roaming, for example for Europe, are – have the ones of Orange and Sunrise. So, even in this scenario where the regulator or politics would regulate end-customer prices, on the level of our actual retail prices, this would mean a – in our estimate an impact, in terms of revenue and EBITDA on each of our competitors, of around CHF100 million of around CHF100 million if politics could regulate roaming prices at the level of our actual roaming retail prices. Because those stand at 50% of the retail prices that Sunrise and Orange have. So, it’s an observation process but a very, very remote risk. Jacques de Greling – Natixis: Am I right to observe that the mobile CapEx figure you gave CHF215 million for 2013?

CHF250 million, 2-5-0. Jacques de Greling – Natixis: Okay. 2-5-0. Thank you.

You’re welcome. Hannes Wittig – JP Morgan: Yes. Good morning. It’s Hannes Wittig, JP Morgan. I just wanted to have your thoughts on what’s going on in Italy in terms of the CDP discussions. I remember you being rather dismissive, if I can say it that way, on previous occasions related to the feasibility or the likelihood of a potential network spin off. But it seems the discussions are currently very intense. What is your insight or thoughts on those developments in Italy at this point, please?

There is – how should I say it? There’s a huge level of noise actually on Italy. On Hatch, TI, TI Hatch, Wind Hatch, CDP TI and Hatch I guess that this level of noise is triggered obviously by the pressure at the high-end market such as, first, because of mobile evolution and second, of course, because of macroeconomic context. What shall I say about it? I mean, the main thing is that even if there’s network carve-out on TI side with CDP investing in this network carve-out, we consider this as being neutral to us because our aim must be to have a second or third fixture of infrastructure to whatever telecom and whatever I would say legal structure data. And also, I’m – it’s very difficult to follow what different levels of potential M&As the Italian market could experience over the next 12 months. Seems that everybody talks with everybody. Hannes Wittig – JP Morgan: Okay. So, that means you’re also talking to someone or...

I should’ve said... Hannes Wittig – JP Morgan: Never mind. Thank you very much.

Everybody except us is talking to everybody except us. Hannes Wittig – JP Morgan: Okay. Thank you. Nicolas Cote-Colisson – HSBC: Well, hi. Nicolas Cote-Colisson from HSBC. Well, I came to just to follow up on the previous questions. What could be the ideal scenario for Fastweb in Italy?

On the long run, there would be a market consolidation in Italy. And you know that we are, for a couple of reasons, believers that end markets with multi-device environment, convergence is a key strategic asset. Why do we believe that? We believe that because the mobile networks in 10 years down the road will look fundamentally different. Probably, the number of cells compare to today is going to five-fold or six-fold. All of these cells need to connect it by a fiber. And if you’re fully dependent on the fiber infrastructure of an incumbent or integrated operators as a mobile-only operators, you have the significant – just had a significant cost and, therefore, competitiveness disadvantage. The second topic is the B2B business – in the B2B business, I mean, the whole technological evolution to what unified communication or managed unified communication is serving by the fixed line operators. And this will, I would say, degradate the mobile part of the B2B business to a pure data connectivity. And if you are not positioned as an integrated operator on the mobile connectivity, you’re extremely easy to be substituted. So, there are a couple of more consideration on what implication could that bring you on the market. But at the end of the day, it makes us believe that the mobile-only strategy is a much more risky strategy than an integrated strategy. And this will drive consolidation in a number of markets in Italy over the next years to come, also in the Italian markets. And somewhere it raises the questions, which are the alternative fixed line infrastructures to Telecom Italia. And therefore, of course, we will be part of kind of a consolidation process somewhere down the road. And as we mentioned often, we will not be the one acquiring a mobile operator, so this would end up, on the long run, with a strategic minority position or with an exit in the Italian market. No change on our wording on those topics. Nicolas Cote-Colisson – HSBC: Okay. Thank you. Can I just follow up on one quick question on Infinity, you mentioned a positive outflow impact if you exclude XL customers before the end of 2013?

Yes. Nicolas Cote-Colisson – HSBC: If we include now XL customers, when do you think the overall ARPU may influx?

I think it’s – if we include those XL customers that migrated out of their own initiative, it’s still the same reasoning, the ARPU reversion would be this year. The topic is that that we are roughly 100,000 XL customers that migrated back to their initiative. And some of those customers – because their way on the price plan be free which also been unlimited voice before, but they have no heavy data. So, basically these type of customers are downgrading. But most of this, I would say, downgrading potential has happened now within the XL base. So, I don’t expect further material impact of this XL down migrations, and therefore, I would consider it going forward rather as being neutral. Nicolas Cote-Colisson – HSBC: Okay. Thank you. Usman Ghazi – Berenberg: Hi, guys. Usman from Berenberg again. Sorry, I’ve got three follow-ups. The first one was on the recent Cinetrade acquisition. I was just wondering if you could just highlight the rationale for that, you’ve increased your stake in that company. The second question was again on Italy I mean in markets like Spain, we see alternative operators making a big push of it in mobile. Fastweb hasn’t really done much in – or it doesn’t seem to be a priority. But I was just wondering if we can see any strategic change in terms of MVNO aggression or something on mobile in Italy especially with MTR, it’s coming down. And then my final question was just on the new wireline tariffs. I mean, if I look at consensus, everyone is expecting an inflection of EBITDA trends in 2014. However, I mean, it seems to me that with wireline to do with potentially new wireline tariffs in play late this year, that could be a risk. I mean, I just wanted to get your thoughts and – I mean, do you expect a bit repricing impact from the wireline tariffs or not? Thanks.

Now, the rationale for the Cinetrade deal is the following. First, when we took a 49% participation in 2006 or 2005 before our entry in the TV market, it was clearly on the rationale that this wealth of content is extremely important for the attractiveness of the key proposition, which proved to be true. It is clear that, overall, through the massive growth of our TV business, Cinetrade is also profiting in terms of value. And there are some indirect value shifts from us to Cinetrade due to the very strong development in the TV business. And therefore, it’s just logic to try to capture the majority of this value creation that happens to Swisscom TV within Cinetrade. Then the second question was MVNO?

MVNO.

On the MVNO, Carsten?

In the actual context of the Italian market going completely ill on mobile, I think it would – it’s definitely not the right timing to think about moving more aggressively in this semi-annual business. But we think that there will be more and more room as network quality improves for OT&T service in the mobile space. And these are things that we’re looking at. And last on the...

On the EBITDA.

On the EBITDA guidance for 2014, we don’t expect a material impact. Of course, there will be always some dilution impact but nothing that would be disrupted to our top or bottom line. You have to be aware that roughly 45% of the holders of the voice fixed line connections are households that have inhabitants that are seven years and older. So, this is not a population that will react very strongly on a pricing move. The thinking we are doing is along new functionality, whether it’s on fixed line telephony or in TV, how we’re able to capture market share on cable due to the fact that they have an infrastructural handicap on interactivity of TV. That’s our way of thinking about this fixed line offering. Usman Ghazi – Berenberg: Okay. Thank you.

Operator, we’re going to take a final question because we’re running out of time, please.

There are no further questions.

Good timing.

Oh, good. Okay. Well, in that case, thank you all for attending this call. If you have any other questions, feel free to contact us. And we look forward to talking to you soon again. Thank you. Have a nice day.

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