Louis Schmid - Head of Investor Relations Urs Schaeppi - Chief Executive Officer Mario Rossi - Chief Financial Officer

Frederic Boulan - BofA Merrill Lynch Luis Prota - Morgan Stanley Jakob Bluestone - Credit Suisse James Ratzer - New Street Research Josh Mills - Goldman Sachs Georgios Ierodiaconou - Citi Saroop Purewal - Redburn Usman Ghazi - Berenberg Bank Vikram Karnany - UBS Luigi Minerva - HSBC

[Operator Instructions] Ladies and gentlemen welcome to the Q3 results conference call presented by Urs Schaeppi, Mario Rossi, and Louis Schmid. [Operator Instructions] Let me now hand over to Louis Schmidt. Louis, the floor is yours.

Thank you, good morning ladies and gentlemen and welcome to Swisscom's third quarter results presentation. My name is Louis Schmid, Head of Investor Relations and with me are our CEO, Urs Schaeppi, and Mario Rossi, our Chief Financial Officer. The first part of today's analyst and investors presentation hosted by our CEO consists of three chapters. First, a quick overview of the highlights, net adds performance and financial results of the first nine months. Then an update on our priorities 2016. And finally, some explanations on our Q3 operations both in Switzerland and Italy. The second part of the presentation, Mario runs you through the financials and the unchanged guidance for the full year 2016. With that, I would like to hand over to Urs to start his part of the presentation.

Yes, good morning ladies and gentlemen. If you go to slide 4, you can see that we have - that we are in line with our expectation. We have a solid operational performance. Fastweb was able to grow. Our nine-month financials are in line with the expectation and therefore we confirm our guidance. We are on track concerning our cost-cutting program, and also our operational figures, our operational KPIs are stable. So we were able to keep our market share. We have stable churn figures, stable ARPU overall, and really a solid performance in the market. Important is also if we look to the dynamic in the Swiss business, the Swiss market is still a market which is a value-driven market where quality counts. You can see this in the strong figures of Infinity 2.0. We were able to grow our customer base on Infinity and we had a very good result on the bundling business. If you go on slide 5, some information to our market performance. The mobile business, overall if you compare the market share on the service revenue levels, revenue-based market share, you can see that our market shares are stable. We were able to grow in Q3 by 17,000 postpaid customers and these are mainly Infinity customers. So solid business from subscriber side on the mobile business. The fixed business, there you can see a mixed picture. The business of fixed lines is declining. The main reason is substitution and it is interesting that the biggest majority of the customers which leaves or which cancel their voice connection from Swisscom leave the market. So we have only - or less than 30% which is churn, the rest is really leaving the market and they chose the substitution, the fixed business. Broadband business was increasing by 3% and also the TV business, strong momentum. In the TV business, we were able to grow by 40,000 net adds, which is 13% growth in the TV business. Fastweb, strong acquisition in Q3. If you go on slide 6, the service revenue or the net revenue actually, reported net revenue is overall stable. But you can see that if you take out the exceptionals - and these exceptionals are M&As and exchange rate effects - you see that we have an adjusted revenue which is going down year on year by CHF27 million. But overall that shows that we have approximately a stable revenue. On the EBITDA level reported, we have - and if you take out the special effects of the sanction from the anti-trust body which we booked last year, this CHF186 million, if you take out this, you see that we have a reported EBITDA which is plus CHF22 million. And if you take out all the additional exceptionals, litigation from Fastweb, foreign exchange effects, you see that our EBITDA adjusted on a yearly base went down by CHF55 million. The main impact is coming from Q3. I will come later to it. The main effects of the lower Q3 figures are roaming and higher subscriber acquisition and subscriber retention costs. So this is really - was really the driver of Q3, roaming and subscriber acquisition and retention costs. If you go to slide 7, there you have some information to our margin dynamics. On the left side you see that EBITDA adjusted of Swisscom, so this CHF55 million, and this is the result. You can see CHF102 million is coming from Swisscom Switzerland. Fastweb increased by CHF32 million and then we have some other effects of CHF15 million which has a result both for this CHF55 million EBITDA. Swisscom Switzerland, you see in Q3 minus CHF102 million and we will have also in Q4 an impact mainly driven by price, by roaming, but the effect will be a bit lower than in Q3. Fastweb, we have a good and strong development of the EBITDA. On slide 8, you see the dynamic of the service revenue and the EBITDA. If you take the service revenue in Swisscom Switzerland, we have a decline of CHF99 million, and in the bubble you see which are the effects. It's roaming which has an impact of CHF68 million, then some opting out of fixed voice telephony, which leads to a decline of CHF12 million, and then the airtime surcharge which has an impact of CHF10 million. So this leads to this CHF99 million, the majority is from roaming. We have growing Solution revenues from the Enterprise business, CHF37 million. And then you see that the highest subscriber acquisitions and subscriber retention costs of CHF25 million. So overall, this leads to CHF102 million decline. The majority of this decline is coming from roaming and higher subscriber acquisition costs. On the other side you see that with the cost incentives we can save CHF37 million. Let us go to our priorities, our five priorities for the business on slide 10. We have these five priorities, as we had them already in the last call, somewhat to maximize our core business. The main chart is to defend our market share, which we were able to do it, and retain our price levels through a differentiated project portfolio. On slide 11, you see what we were able to deliver on our network side. So we have today the Wireline business, an ultra-broadband footprint of 3.4 million households, which has a bandwidth of 50 megabits per second. We implemented also G.fast, as the first operator in the EU, which will bring faster speeds on our network. We will be able to deliver up to 500 megabits per second speeds on our fiber-to-the-street footprint. The goal in the Wireline business is to have a coverage of 85% with a bandwidth of over 100 megabits per second in the year 2020. 4G coverage we improved, we increased, we are now at 99% coverage of 4G. So we are committed to technology leadership and an excellent customer experience. On slide 12, some information on our Wireline business. So we are ready to defend our strong position in the Wireline business. You see on the left side there are actions which we have taken, and on the right side the results. So stable market share, certainly a strong performance in the actual market condition. We are gaining market share with our TV product. We have also attractive offers for the Christmas business, which is coming. So we are optimistic that we can deliver a good performance in Q4, and defend also our market share in the lower end of the market. With All-IP, the migration or the phase-out of the TDM networks, we are on track. Actually, we have 65% of our customers, our retail customers, which are on All-IP. Page 13, shows you the dynamic or our actions and our results in the Wireless business. So we are back to postpaid growth and the main majority is coming from Infinity in Q3. We have a good upselling from pre- to postpaid. And we have in our Infinity customer base stable prices, so no downgrading. We have a slight dilution of the Infinity ARPU but this is driven by roaming and by lower-end customers that are migrating to Infinity. But I will come to the ARPUs later. So we have a strong position in the mobile business. On page 14, you see that we are on track with our cost targets. We were able to save CHF37 million year-on-year and through a basket of initiatives. So on track with our cost program. Fastweb on page 15, shows you the effect of our ultra-broadband networks. If we have a customer - or if we are in the ultra-broadband footprint, we are able to increase the sales penetration, reduce the churn, and this leads to a better lifetime value of our ultra-broadband customers. Page 16 shows you our ambition on the footprint for ultra-broadband in Italy. The target is to have 13 million households in 2020 on ultra-broadband. From the 13 million, 8 million is coming out of the footprint of fiber to the street and 5 million with a footprint - with the technology fiber to the home. From this 5 million, 2 million is the rhetorical fiber to the home footprint of Fastweb, and 3 million will come through the partnership Flash Fiber with Telecom Italia where we plan to build out the fiber to the home network in 29 cities. The commercial launch will be in Q3 2017. This initiative with Telecom Italia will fully leverage our existing investments in the networks because we are only building let's say the last 250 meters with fiber. On page 17, you see our ambition in the ICT business. The ICT business is a potential in the enterprise market to increase our share of wallet. As I mentioned before, we were able to increase our solution revenues in the enterprise business. Page 19 shows you our service revenue dynamic in Q3. We have a reduction of our service revenue in Q3 of minus CHF53 million. You see that the majority of this plan is coming from roaming, where 50% of the impact is from the retail market and 50% is coming from the enterprise market. Growing access revenues, CHF33 million, because our bundling strategy and Infinity, but this leads certainly - clearly to a reduction of the traffic revenues. On page 20 some KPIs to the wireless business. So solid KPIs in the wireless business. Net adds are increasing and the ARPU - and this is a strong performance - the ARPU in 2016 is approximately stable. But there is as a small impact from roaming. But overall the ARPU in our Infinity business is stable. The revenue-generating units of mobile, and that is interesting, is postpaid, driven 70% of our RGUs in the mobile business are postpaid customers and from this 70% are Infinity customers. That shows that our postpaid customer base is strongly Infinity driven. Page 21 shows you some KPIs for the Wireline business. Fixed business we have a mixed picture, growing earning-generating units from TV and broadband and declining revenue-generating units from our voice business. As I mentioned before, this is mainly structured consolidation, so a substitution by voice over IP, or fixed to mobile substitution. The ARPUs in the fixed business are stable. If you go to slide 22, you see our bundling business. Very strong Q3 net adds in the bundling business, 220,000. ARPUs in 2016 approximately stable, we have a slightly lower ARPU, and the main reason behind it is roaming, is out-porting of fixed voice and some loyalty discount in the quadruple-play offers. Slide 23 shows you the service revenue dynamic, this minus CHF53 million in Q3. And you see that the decline is ARPU driven. The main factor behind this is roaming but if you compare it to previous quarters, we were able to compensate the declining ARPU by growing revenue-generating units. And we, in Q3, because of the strong decline of voice, we have more or less stable revenue-generating units and can't decline the reduction of the ARPU. Direct costs on page 24, you see that for Q3 we had higher direct costs. The direct costs, there are three factors behind it why they are higher. The first one, with CHF14 million is driven by out payment the roaming. If we have more let's say outbound roaming traffic, we have also higher out payments in roaming. The second factor is the subscriber retention costs on mobile. In Q3, we had a lot of retention on the mobile business, which is certainly also good news because the customers are protected. We have low churn figures, stable churn figures. Then you see also increased subscriber acquisition costs in the fixed business which are CHF8 million. This leads to the higher direct costs in Q3. Fastweb on page 25, shows the strong performance, increasing customer base and the revenue which increased by 3% in the first nine months. Fastweb financial performance is solid as you can see on page 26. Revenue increase by 3%, as I mentioned before, EBITDA increased by 21%. If we take out the exceptionals from TI, which we get from TI, we have adjusted EBITDA which increased by 7%. So also a good industrial performance of Fastweb. And we have a positive free cash flow. Now I would like to hand over to Mario which gives you some information about our financials.

Thank you, Urs. Good morning also from my side. I'll give you some additional information on the segments mainly related to Q3. Let's go to page 28. You see there on the left-hand side, residential customers that we lose CHF34 million service revenue in Q3. 50% comes from roaming and the other half comes from the impact of the voice line losses. In the first half or the first quarter, we were able to compensate that with a growing number of revenue-generating units, which is not anymore the case. In enterprise, customers we lose in Q3 CHF19 million service revenue, again here around 50% is the roaming impact. The rest comes from pressure of mobile pricing. I'd like to point out that we don't lose customers in these segments, it's just the impact on competition on mobile pricing. Solution business is still growing, we showed minus CHF3 million in Q3. That's because we had in Q3 2015 high revenues on hardware. Fastweb, Urs mentioned it already, steady growth on revenue then later also on EBITDA. On the next page, on costs, on OpEx in Switzerland. Urs explained the direct costs. I would like to point out the higher retention costs which we have in Q3. Overall, in the first nine months, we were able to retain 12% more customers than in 2015, that shows that we do quite a good job in customer base management, which is essential in a saturated market. On indirect costs, we are on track with our operational excellence program. We are on track to deliver the CHF50 million cost savings. On other, we had an increase of CHF19 million in Q3, that's mainly IT costs, set up costs for future cost-saving programs which we have to do in the IT area. Then of course you have to take out the exceptionals in Q3, that's the provision for the ADSL sanction - that's more or the less the main part. On EBITDA, in residential we lost CHF60 million in Q3 compared to prior year. The roaming impact CHF31 million, the impact from SAC/SRC is CHF16 million and corrected, we had had less savings in Q3 because of the different phasing on the cost side, mainly on marketing. On enterprise, the reduction of CHF28 million comes CHF10 million from roaming and the rest from price pressure as I mentioned. And if we look at the EBITDA in Switzerland, we lost in Q3 CHF81 million compared to prior year. I would like to repeat the impact of roaming. Roaming has several impacts on our P&L. First, we have lower revenues from reduced prices on the packages. Secondly, we have lower revenues because we are including roaming in Infinity Plus and in Infinity 2.0. Third, we have higher costs of goods sold, because of the increased volumes of our outbound customer. In Q3 on the revenue side, we lost in Swisscom Switzerland CHF26 million on roaming revenue and we have CHF16 million higher out payments. That makes CHF42 million impact on Q3, that's more than 50% of the CHF81 million we lost in Q3 compared to prior year. On net incomes, there is nothing special to mention except for net interest on page 31. The cash out for net interest in the first nine months was because of the low interest rate, CHF35 million below 2015. On CapEx, page 32, CapEx are in line with our expectation and strategy. You see in Switzerland, on fiber, we invest 28% of our CapEx volume. That means CHF360 million in nine months. That's in line with our FTTx strategy. Second remark on IT systems, we invest - in all IT, we invest CHF19 million - 19% or CHF245 million. That's 10% less than prior year. The first part of our operational excellence program to reduce our project CapEx. On free cash flow on page 33, there is only one exceptional item, which we already had in Q1 and in Q2. That's the extraordinary prepayment of the sanction [indiscernible] for CHF186 million. On the financing side, page 34, we had one very successful transaction, you see it on the left-hand side, in Q3. 80% of our debt portfolio is fixed and the average interest rate of the portfolio is 1.8%. You see we have two quite high maturities in 2017 and 2018 and we assume that the interest rate will remain around today's level and that will help us to further reduce our cost of interest or our cost of debt. On outlook, there is nothing to mention, Urs already confirmed it. We confirmed our guidance, CHF11.6 billion net revenue. EBITDA around CHF4.25 billion, CapEx CHF2.4 billion, that brings us to a free cash flow proxy at around CHF1.85 billion. And with that I hand over to the operator.

[Operation instructions] The first one is from Frederic Boulan from Merrill Lynch. Please go ahead.

Hi, good morning gentlemen. Thanks for taking the question. Two questions, if I may. Firstly, on the cost side. So you were saying you've now reached 65% on All-IP. Can you explain what benefits you're seeing versus the initial cost-cutting that you described for that? And if you could comment on the CHF19 million increase in other costs that you said, I think, are linked to IT? So to what degree is that recurring? Secondly, if we could talk a bit more about what's happening in the SME and enterprise segments. Both segments saw a pretty sharp drop in revenue in Q3 after solid trends in H1. So can you clarify to what degree this is pricing, revenue related, and how we should think about those trends going into Q4 and next year? Thank you very much.

I will take the question to the enterprise and SME, and Mario will come to the costs. First, on the SME business. So the SME business from the performance side is stable. So we have a good performance in the SME business. But also, the SME business is impacted by roaming, so this has a small impact on the SME business. But on the other side, the business in SME is quite stable. If you compare the revenue to previous years, we have stable revenues in the SME business. And Q3 was weak because of roaming, because of this typical seasonality. A bit - another dynamic we have in the enterprise business. There we are faced with the one impact of roaming, but on the other side also with strong competition or price pressure on the Wireline business and wireless business. The main effect there is competition, but also pressure from our enterprise companies which negotiate or renegotiate their contract. That's the big - the price dynamic we have in the enterprise segment.

On All-IP, as Urs mentioned, we are well on track with the All-IP migration to our target to turn off the TDM platform around the end of 2017. The savings - we have our CHF300 million saving program, CHF50 million this year, CHF75 million next year and then three times CHF60 million. All-IP is part of this CHF300 million program. If you isolate savings on All-IP, let's say a stable basis, the savings will be around CHF100 million, and that will build up in 2018, 2019. The IT costs in Q3, they are not recurring. Part of it is recurring, because you have always to invest something, let's say to get rid of legacy platforms et cetera, but in Q3 it was extraordinarily high. It is expensive.

Okay, thank you very much.

Okay. The next question is from Luis Prota from Morgan Stanley.

Yes, hello. I have two questions, please. The first is on the deterioration in the single-play - in the one-play Wireline revenues that we've seen this quarter sequentially. So Wireline revenues were coming down 12% in the last three or four quarters, and suddenly in the third quarter the decline is 17%. So there is a 5 percentage point sequential deterioration, which I understand is somehow having to do with migration to bundles, but the fact is that bundle revenues are also slowing down a bit. So I would like to understand whether there is any one-off or year-on-year weaker comparison in the single-play Wireline revenues in the third quarter, or what are the dynamics behind this deterioration? The second question is on the guidance reiterated for the full year. That - if my numbers are correct, that means that the reported EBITDA in the fourth quarter should be 5% down year on year, but on a clean basis should be down like 8%, which compares with down 6% in the third quarter. So definitely, there is something which is going to deteriorate further in the fourth quarter. I would like to get your thoughts on what factors are those. Thank you.

Okay, I will go to the ARPU question, and Mario will take the guidance. To single-play Wireline, so, what we actually see, if you take all this, is the single-play fixed voice and access revenue, and also broadband, we have quite stable ARPU. You can see this in the presentation on page 14. The effect which we have is actually the migration to the bundles, and this leads to a declining single-play business. And the ARPU in the bundling business, as I showed you in the presentation, is overall stable. But there are slight impacts, and this slight impact in the bundling business is driven by the out-portings of fixed voice telephony. Some loyalty impact if you go to a quadruple-play offers, and then also a slight impact from roaming. But overall, the bundle business is quite stable on the ARPU side.

And on Q4, first of all the guidance is around EUR4.25 billion, so there is some - there are some uncertainties. But if I look at the trends in Q4, we will again have a roaming impact, which will be a bit lower than in Q3 because of less travelling activities from the Swiss population. It will have again the impact coming from the voice line losses. There are two definitive line losses, or final line losses, then the voice opt-out in the bundles. That will continue, but we don't see a different trend in Q4 than in Q3. And on Fastweb, I would expect a similar growth in Q4 on EBITDA as in Q3.

Okay. Thank you.

The next question is from Jakob Bluestone from Credit Suisse.

Hi. I've got two questions please. Firstly, just could you maybe update us a little bit on what sort of ARPU effect are you seeing from customers migrating to the Infinity 2.0 tariffs? Are you seeing ARPU go up or down versus where it was previously? And then secondly, can you maybe update us a bit on what's happening in the residential wireless business in particular? I noticed that your postpaid net adds were minus 24,000 during the quarter. So maybe you could update what drove that decline in postpaid subscribers? Thank you.

So postpaid residential - postpaid or Wireline - wireless business?

That was on wireless.

Wireless. So there we can see that we were able to grow our net adds on postpaid. And on prepaid we have a decline in revenue-generating units, but these are very, very low ARPU customers and we are quite successful in upselling prepaid to postpaid. And let's say the new Infinity customers or the persons which are migrating from the lower-end postpaid or from prepaid to Infinity, they mainly go to lower Infinity tariffs. So overall there is a small upsell in it to Infinity, and I think that's the positive message. That the Infinity customer base is really quite stable. So we don't have a down migration in our Infinity customer base. The impact of roaming is actually the following. We were able to keep our ARPUs on Infinity high, even with a strong price competition, because we have also this roaming bundle thing. So the overall ARPU of Infinity is stable.

Jakob, I have one remark on the development of the postpaid residential. So on single-play we have a reduction of 28,000 customers, but we have more wireless customers in bundles that are an additional 45,000. So the net effect is positive in Q3.

Thank you.

The next question is from James Ratzer from New Street Research.

Yes, good morning gentlemen, thank you very much. Two questions please. Now as we're sitting in November 2016, probably starting to form some views looking into 2017. Consensus numbers for next year are looking for EBITDA to be around stable, but yet we're probably going to be exiting the year with Swiss EBITDA declining around 6% to 8% year on year. So I was wondering if you could give us thoughts on how confident you feel about those trends improving sharply in 2017. Will less roaming drag be enough to get us back to a stable EBITDA trend next year? Then one more specific question on slide 8 of your presentation, which shows the underlying EBITDA drivers for Swisscom Switzerland. Actually, one of the biggest deltas this quarter is in all other, and your footnote says that this is due to higher indirect costs from solutions. Could you give us a bit more color on what's driven that? Is that just a one-off item that should recover in Q4, or is there something more structural there? Thank you.

Okay, Mario will take the question on costs of others, I will give you some flavor on our outlook. It's too early to give the guidance. We will give it on February 8, 2017. But some dynamics to the EBITDA; what we will have is a slight reduction in Swisscom Switzerland, and an increasing EBITDA of Fastweb. So we will have this dynamic, as we have in 2016. The Swiss business is driven by price pressure in our core business, but this will go slightly down because of the roaming effect. The roaming effect in the next year will be lower than this year. And we will have some positive effects from our cost-cutting program. So - and also a stable market position. So that's a bit my view on the business in Switzerland. And Fastweb will have an increased EBITDA. So overall for the Group, we are more or less in a stable EBITDA situation.

And on your question on page 8, it's the solution revenues that - solution and IT business that are coming from the enterprise segment. We are able to grow these revenues by CHF37 million in the first nine months. These revenues come with a cost, and these costs are personnel expenses, IT consultants et cetera. They were CHF21 million in the first nine months. These are not one-offs. These are coming on a recurring basis, on a recurring way. When we continue to grow this solution and IT business, which is our priority to compensate for the pressure we have on the connectivity business, but still, a good margin business, if you compare the CHF37 million with the CHF21 million cost.

But that cost, do you think that - so those costs continue to grow going forward in the solutions business?

They continue to grow with growing revenues, exactly.

Okay, thank you.

The next question is from Tim Boddy from Goldman Sachs.

Oh, hi there. It's actually Josh Mills here, I don't think Tim would be calling in from Vodafone. So just a couple of questions from me. Firstly, is there any change that you've seen in terms of whereabouts the subscribers are coming from? Is it still the Swisscom main brand, or is there an increasing portion from the M-Budget side as well? Then secondly, on slide 11 you've shown your network upgrades plans for 2020. 85% of homes with 100 meg speeds. I'm just wondering what portion of that will be with G.fast, which you've introduced into the network this month. Thank you.

We had introduced new tariffs in the Q3, and this gave us a positive - a more positive dynamic on our Swisscom brand customer base. So we had a stronger performance on Swisscom, and bit less performance on M-Budget. But M-Budget has also a slight growth, so that's a bit dynamic with the second brand. And G.fast, we will implement now G.fast on our fiber to the street rollout. All the new cabinets which we are rolling out will be on G.fast.

That's very clear. Just one follow up. In the presentation, you note that you have increased the speed of the Wingo product to 500 megs, which is higher speed than your Vivo L product, if I'm just looking on the website here. What's the rationale behind that? Why not just keep the faster speeds using this new technology for the main brand only?

Yes, because Wingo is an online-only brand, let's say more for digital natives, which only looks for a fast internet connection. Let's say there's a specific market. For them, we improved the performance to be competitive. Also, there's only the cities where we compete with the cable operators. We don't have to deliver that nationwide, just on these specific spots, only in the fiber to the home.

Understood, thank you.

We will also observe the market, and if we think that we have to do something on speed on our Swisscom portfolio, we will do it.

Okay, thank you.

The next question is from Georgios Ierodiaconou from Citi.

Hello, and thank you for taking the questions. I just wanted to ask around the pricing schedules we've seen from your cable competitor recently, whether you believe that will stem the flow of customers to your network? Aggregate on retail or wholesale has been gaining quite a bit of traction versus cable, and whether you think that that may lead to a bit more competitive pressure overall? And following on from just the previous question, when do you expect to see, commercially, a real benefit from G.fast? In the sense that - not just availability, but whether you expect at some point that to accelerate your customer share wins in some of the areas you haven't had fiber so far? Thank you.

So on the dynamic of G.fast, what we see is actually in the footprint where we have fiber to the home, or where we have ultra-broadband connection, we are able to get better sales figures, to increase slightly the ARPU and also the market share. So G.fast will certainly change our position in the market. On the move of UPC, that's a - let's say that's a clever move from UPC, but I believe that we will be able to be competitive. With our Vivo portfolio, with our TV offering which we have, we will be able to be strong in the bundle business. I'm convinced about this. Up to now we have very good TV figures, we have increasing broadband subscribers. So we don't see actually impact from Cablecom up to now.

Sorry, if I would ask another question, more relevant to 2017. On the enterprise segment, you've faced a lot of price pressure, mainly from Sunrise in the last couple of years. Is it possible to give us an indication - earlier you gave some color as to the 2017 trends for roaming and some other drivers - whether in the enterprise segment, the headwinds ease, or whether they stay where they are this year? Thank you.

In the enterprise market we will have also the roaming pressure. But the roaming pressure in the next year will be lower than this year. That's one message. And the second message is, the price dynamic in Wireline business in the enterprise market is driven by two factors. The enterprises which are under cost pressure, and the second is the competitive dynamic of - mainly of Sunrise. If I look to our market share, if I look to the win-backs - we had very nice win-backs in Q3 - the market share in the enterprise market is stable. So actually, Sunrise don't progress on the market share side, but they bring us more pressure on the pricing side in the Wireline business, in the wireless business. I hope that they see that they don't win market share, and that they became less aggressive on price.

Okay.

The next question is from Saroop Purewal from Redburn.

Morning everyone, it's Saroop from Redburn. I just had a couple of questions on firstly, your fourth quarter. So the - your guidance basically implies the decline's going to get worse? Is that basically SAC related, given that your comments on the roaming effects being slightly lowered? And then secondly on your quad-play discounts. So basically, when I'm looking at your wireless customers, there's a relatively small proportion that actually take the bundle. I just was interested in how you market that converged discount? If you market it actively or only market it to those customers that are thinking of leaving? And the kind of risks you see to ARPU around that converged discount?

I will give you some ideas about quadruple-play and Mario will take the questions on Q4 and the guidance. The four-play business; you are right, we have still a small amount of customers which are in quadruple-play offers. But we see a dynamic or a bigger market demand for quadruple-play, and we will push it a bit more, quadruple-play. We have already introduced, in the last month, a new offer for quadruple-play, let's say a bit more loyalty, a better loyalty offer for quadruple-play. So we see a bit more dynamic on quadruple-play. But the main driver in the bundling business remains triple-play offers.

And on Q4, as I mentioned before, the general trends in Q4 are more or less the same as in Q3. Expect, as you mentioned, less impact on roaming. And then you're right, we expect some higher retention and acquisition costs, mainly due to the iPhone 7 launch in Q4.

Sorry, what was that last sentence? Sorry, I didn't get that.

Mainly due to the iPhone 7 launch in Q4.

iPhone 7. Okay, perfect. Thanks very much

Thanks.

Next question is from Usman Ghazi from Berenberg Bank.

Good morning gentlemen, thank you for taking my questions. I have three questions please. The first question I had was on SAC and SRC levels. Could you confirm that the unit-rate SAC and SRCs are stable, and the higher absolute amount is mainly due to higher renewal volumes? The second question was, just looking out into 2017, the roaming impact is just going to be, I guess, one quarter next year versus three quarters this year. On top of that, you have a bit of relief, because renewal volumes will be cyclically lower than this year. So you don't get the headwind from the higher SAC and SRCs next year, and then you have the higher cost savings. So, is that, directionally, the right way to think about it? Or should we continue to expect SAC and SRCs to be going up next year, as well as the roaming impact to be higher next year versus this year? And then my final question was just on the voice lines. I think previously it was mentioned that in - so you have 725,000 residential RGUs for voice lines, for single-play. Is that basically going to zero, or how should we be thinking about that? Thank you.

The SACs, you are right that the subscriber extension costs and the subscriber acquisition costs, the majority is renewal. And as Mario mentioned, it is also always a bit depending on the handset portfolio on the market. Now we have the iPhone 7 impact in Q4. But overall, I think the volume will be in the area where we have, but the overall amount of SAC or the specific price will not go up. So SACs will stay on the level, or even going a bit down. And the roaming impact for the next year will be a bit lower. The main dynamic which we have is, we have not already all the customers, the postpaid customers are on Infinity 2.0. And with the migration of customers to Infinity 2.0, we will have, also in the next year, some impact on roaming. But this will be low, because normally if you have a migration, in the first phase the high-end volume spend of roaming will migrate. Now we have the less-intensive roamers which are going to Infinity, so the impact will be lower. On the declining of Wireline voice, we will have a similar decline in 2017 on voice. But there will be a rest of customers which stay on voice. Elderly people, just as an example, will stay on voice. In the B2B mark, voice is more important than in the residential, so it's - let's say it's the address of the company to their clients. So there will stay voice connections.

Thank you.

Next question is from Vikram Karnany from UBS.

Yes, thanks. A couple of questions. Firstly, on the Swiss mobile side, what sort of take-up are you seeing with your new SIM-only offers in the market? You previously had suggested that Switzerland is a subsidy-driven market, but you still launched this as probably a defensive tool. So I just wanted to understand in terms of take-up of your SIM-only offers. Secondly, on the 5G for Switzerland program. Is there any update in terms of timing for the 700-megahertz spectrum option, and would you be able to use that for 5G deployment? Also, I would like to understand a bit more in terms of what sort of data consumption are you seeing with your unlimited Infinity offers. And if there are any capacity constraints emerging on this side, especially in peak hours, that would imply that you would be interested to have that spectrum option sooner rather than later? Thanks.

On the SIM-only offers, in the mobile market. So we have the SIM-only offers, but limited traction in the market. We don't disclose the exact figures, but very limited traction. For us it is more important to stay to the subsidized business model. On the 700-megahertz frequency -

There is no news from the regulator. We expect them for 2018, but there is no news so far. I can't give you - Vikram, I can't give you the details on the network planning, whether we will use these for 5G or not.

But the other question about data consumption, do we run in congestion problems? No, we will be able to manage it. We see it doubling every 12 months, this trend remains. But we don't have quality problems in the network.

Okay, that's helpful. Thank you.

We have the last question from Luigi Minerva, HSBC.

Yes, good morning, thanks for the questions. Well the first one is for an update on regulation, and the plan for the regulatory reforms. If you can give us a comment on the timing, and whether you still see a risk of a switch from ex-post to ex-ante. The second is on technology, and it applies to Switzerland but also to Italy. So when you're going from fiber to the street cabinet to fiber to the home, covering the very last bit, would you consider also some alternative solution, like alternative wireless solution like millimeter wave? If you have any thoughts or any experience on that, that would be great. Thank you.

On the regulation, the revision of the Telecommunications Act, this will be the next year in the parliament. And then we will have a process which last until, let's say, 2019, 2020. The change from ex-ante to ex-post, we don't see. So I think that's not a part of the revision. So we will stay with our actual environment, on the ex-ante, ex-post topic. And fiber to the street, fiber to the home, I think that the technology for the next year will be fiber to the street for broad coverage, and fiber to the home more for the hotspots for the cities. I think these are the technologies which will really be important in the market.

Okay, thank you.

Okay, there are no more questions.

Okay. Well with that I would like to conclude today's call and also thank you for your participation. If you should have any further questions, please do not hesitate to contact us. From the IR team in the course of today, good bye.