Swisscom AG
Q4 2021 Earnings Call Transcript

Published: 4 Feb 2022

[Louis Schmid:]

Good afternoon, ladies and gentlemen. And welcome to Swisscom full year results presentation, again online. My name is Louis Schmid, Head of Investor Relations. We now start the online meeting with the program and a quick overview on Page number 2. In the first chapter, presented by our CEO, Urs Schaeppi, he dives into some of last year key highlights commercially, operationally and financially. In chapter Swisscom 2025, our CEO presents shortly an update on the group strategy and elaborates on our ambitions '25 and focus '22. In chapter number 1 in Switzerland, Urs gives you a short overview on our '21 achievements within Swisscom Switzerland for B2C and B2B, updating on our network rollout ambitions and presenting the operational excellence results and plans. Alberto Calcagno, CEO of Fastweb, will discuss in chapter "Leading challenger in Italy" the industrial and financial performances of our Italian business and its plan going forward. After Alberto's presentation, Eugen Stermetz, our CFO, will present in chapter "Rock-solid financials" in detail our financials '21, including the outlook '22. And in the wrap-up chapter, some final remarks from our CEO. After the presentation of approximately 90 minutes, we move directly into the Q&A session. We will start at around 3

[Urs Schaeppi:]

Yes. Thank you, Louis. And a warm welcome from my side. And I would like to start with our highlights in the 2021. So overall, we had a very strong year from an operational side, commercial side but also from a financial side. And we are -- have well strategic positioning. And if you look to our results, they are slightly above or above previous year. Highlights -- and that's not the highlights which are quoted by Swisscom. So these are highlights which are quoted from third parties -- shows that Swisscom is in a lot of dimension a leading telecom operator. So on the Net Promoter Score, we have excellent values, customer satisfaction values. On the network side, we won, I would say, all the tests, relevant tests, which shows that we have a leading technology position. And also, on the service side, customer service side, we have excellent results, which leads at the end to this higher Net Promoter Score which we have. In the B2B market, certainly to mention is that we have a broad positioning in the product portfolio which differentiate ourselves strongly in the B2B market. Fastweb is a successful and innovative challenger in Italy. And we were able to grow in a very competitive market by 5% EBITDA, which is an excellent result. Financially, we are solid. Eugen will come later to it. The words of Eugen are "rock-solid," so he can explain it later. And maybe the last point on this chart is the -- let's say, our ambition in corporate responsibility. So we have ambitious targets to be '25 net-zero neutral. As the first operator, already today on scope 1 and 2, we are net zero, so that means -- or that shows that sustainability was also in the past a very important thing for Swisscom. To our market performance, good, strong market performance in Switzerland; but also in Italy. In Switzerland, you can see that on the wireline business we are approximately stable from the net adds. So it means slightly -- very slightly positive on the net adds. And that's a very good contribution if you look to the competitive dynamic which we have in the Swiss broadband market. On mobile, we were able to grow by 128,000 postpaid subscribers. You see also the market shares, which are on a high level, approximately stable. In Italy, we have a picture where we can show strong growth in the Italian mobile market, 511,000 additional subscription on mobile. And on broadband, where we have a value strategy in this very, let's say, promotion-oriented market from the last months where we have a value strategy, we are approximately flat, but if you take in account all the wholesale customers, you will see that we have also in the wireline market decent growth. On this slide, the key financials. So net revenue approximately stable; EBITDA with a growth of CHF 96 million, so at CHF 4.48 billion EBITDA, which is a strong contribution. Half of this growth is coming out of Switzerland, and the second part of the growth is coming from Italy. You see it on the right side of the chart. So CapEx are approximately stable at CHF 2.28 billion or CHF 2.3 billion approximately; as a good, stable CapEx. And overall, this leads to a high operating free cash flow proxy of CHF 1.9 billion. On the net income, 2 remarks. The first one is an -- it's 20% higher than previous year. Main reason are some financial effects which we already communicated in the last quarters. And then certainly also the better operational performance leads also to a higher net income. So overall good and strong results. And you can also see that we were able to decrease our debt. To Swisscom Switzerland, some remarks to our unique positioning. On the UBB attractiveness of the Swiss market, you see that Switzerland is leading. So we have very good networks in Switzerland with a very good coverage. So that means 99% of Switzerland has a coverage above 100 megabits per second. Also, on NPS side, Swisscom has strong contribution. These are from the retail market. On B2B, we have even higher net promoter cores. And our, let's say, advantage to our competitor is even bigger. What is also interesting to mention is our market share on the service revenue. So you can see it on the slide, on the right side. So we have 67% market share on revenue share -- as on the revenue share base. Strong total shareholder return, you can see it also. We are a reliable stock or -- yes, reliable stock with a good dividend. Some remarks to our environment. So the environment is a challenging one, on the one side, but on the other side, we show that we are able to perform in this environment. The market is certainly or will certainly be under pressure on the service revenue side in Switzerland. And in Italy, we are facing with more competition, more competitive dynamic in the broadband market, especially in the retail segment. And on the other side, there are a lot of opportunities in the IT business, so growth opportunities. And efficiency in this environment keeps extremely relevant and is key for Swisscom. On the customer side, what we see is that -- also driven a bit by COVID, that digitalization is accelerating. And customers are asking for good online services which are combined with the physical environment. Also, shops remains important, but to have a good customer experience, seamless customer experience over the different channels is a differentiator and important. On the stakeholder side, certainly ESG is becoming more relevant, where we are very well positioned. We are certainly also facing with more cyber attacks. Just to give you one example

[Alberto Calcagno:]

Good afternoon from my side. Also, if you can start with the next page, please, that I can see it. I don't see it in my screen -- hello. Can you hear me?

[Louis Schmid:]

Yes, we hear you.

[Urs Schaeppi:]

Yes.

[Alberto Calcagno:]

Okay. If you just can -- otherwise, I will use my presentation, but I will -- seen the presentation and now I don't see it anymore. Okay? Yes, okay, that's it. So basically I think that 2021 has been a terrific year in terms of performance. We exploit another year of strong operational momentum. As you remember, we have been concentrated on infrastructure over-the-top strategy. That means to roll out, to own and to develop the best infrastructure but also to have it available through scalable platform, available for the retail business, available for the enterprise business and available also for your self business. As a consequence, we can say that in the wireline we had a very strong increase. We'll see in a second, but overall we almost reached 200,000 new customers, with one objective. First, we don't want to follow the price war that is happening even before the Iliad entry, yes, in Italy. And we want to remain at premium if compared with our competitors, yes, and also based on superior quality of our services, but on the other side, we want to exploit the really good opportunity that a lot of new entrants are giving us for our wholesale business. So a very strong momentum in the wireline but also very strong momentum in mobile. We are exploiting also -- we have exploited actually in 2021 a very strong growth. We are the second best market performer, after Iliad, while in enterprise we continue to be the leader in growth. During the year, clearly we've done a lot of innovative launches related to the offer, not only the 2.5 giga offer but also the new 5G FWA service. I remember that we are the only one that are combined real 5G frequencies. So the millimeter one together with 3.5. Then we launched NeXXt, our new Internet box that is the only one in Europe to have Alexa integrated. We also launched the 5G mobile in our enterprise business. As you know, we have today reached 35% market share in the enterprise business, so we have a very strong opportunity to increase our share of wallet and start to be also a relevant player in the 5G mobile in this market. For the enterprise also, as you know, we are really focusing on cloud and in security. We have built a new data center in Rome. We have built a second security operational center in Bari, coupling the one that we have in Milan. And also we struck an agreement, a partnership with Amazon web service. And finally, as it concern the network, all our rollout are on track. Today, we have already a very strong ultra-broadband infrastructure with roughly 90% coverage of family and business in Italy. The setup of FiberCop is completed. The plan and the ambition plan, yes, is still the same and to roll out as soon as possible a fiber coverage up to the -- almost 60% of Italy by 2025. Also 5G

[Eugen Stermetz:]

Okay, thank you, Alberto. Hello, everybody, also from my side. I am happy to walk you through the numbers in the next 20 minutes or so. I'll start on Page 58 with group revenue. Group revenue was up by CHF 83 million; underlying, plus CHF 64 million, net of some currency effects. As Alberto already explained, we had a very impressive growth again at Fastweb with plus CHF 94 million compared to last year. That's a plus 4%, the lion's share of these CHF 94 million coming out of the enterprise division with a very impressive growth of plus CHF 72 million. Swisscom Switzerland revenues, more or less flat with minus CHF 17 million year-over-year on a basis of CHF 8.2 billion or so. B2C revenue was up, plus CHF 31 million. That's a mix or our usual mix of service revenue decline, on the one hand. There was an increase in hardware sales, on the other hand, and also a compensating increase in other revenue. And I'll spend a few words on other revenue when we get to Swisscom Switzerland revenue at the next slide. B2B segment, CHF 44 million down; also here a well-known mix, service revenue decline on the one hand but very nice growth of the IT solution business on the other hand. We'll also get to that on the next page. Let me spend a couple of words on some noteworthy quarterly developments. You see, in Q4, B2C minus CHF 15 million. That's mainly due to lower hardware sales. We did have, as others, some supply chain issues on some handsets, et cetera; and that showed up in lower hardware sales in the fourth quarter. Margin impact is negligible of this development. Also one word on the quarterly development in Q4 of the wholesale business

[Urs Schaeppi:]

Yes. Thank you, Eugen. So very short final remarks. So we are well positioned. And then we have a solid strategy and clear goals; and a very good alignment in the management team, what we have to do and what are our targets. And I think that's important to get a strong momentum on execution. The second point is the priorities. They are clear on the operational side but also on the financial side. And we have a strong commitment, as already Eugen mentioned, on the dividend. So let's close this, the presentation, but I would like to say some words to our new CEO, Christoph Aeschlimann. He will take over the role on the 1st of June. He has an -- 15 years experience, management experience in the IT business. He was coming out of different IT departments. He was a developer, so his background is actually really an engineering background. He has an engineering degree and then made an MBA, so he has a good mix between technique and business. Before his role in Swisscom, he was CEO of ERNI Group. ERNI Group is a company which developed IT solutions, software solutions; and so he knows really the software business. And since 2019, he's the Head of IT and Network in Swisscom. And he has a good reputation in Swisscom and also a good backing in the management team. So with this, I'm convinced that Christoph will be a good CEO of Swisscom and also shares the value and the strategy which we have today. So this will also give a bit, let's say, certainty that not everything will be changed. So he will certainly be a guarantee for development and develop Swisscom in the future. So with this, I would like to hand over to you, Louis.

[Louis Schmid:]

Thank you, Urs. And now it's time for the Q&A session. And as highlighted previously, Dirk Wierzbitzki and Urs Lehner are available for specific business questions in Switzerland. Some remarks to the people being registered for raising questions. [Operator Instructions] And lastly, third point, please indicate your name and institute you're representing.

[A - Louis Schmid:]

Let's now start the second part of today's meeting conference, with the first question coming from Polo Tang, UBS.

[Polo Tang:]

Can you hear me? Just check...

[Louis Schmid:]

Yes. It all works.

[Polo Tang:]

Okay, great, good. I just have a few different questions. The first really is just about a clarification in terms of the Salt joint venture. So you said that in a worst case scenario where you have to use point-to-point architecture. Can you explain why it takes 2 to 3 years to get the Salt partnership restarted? What actually needs to change if you change the technology in terms of your rollout? Second question is really just about inflation. Can you maybe just talk about how you think about the impact of inflation on your business both in terms of the top line -- is there any potential in terms of opportunity to take pricing either in Switzerland or Italy? But then actually how should we think about inflation in terms of costs? So for example, wage inflation, energy costs. Or is there anything else that might be impacted by inflation? And my final question is really just about Italy and M&A. So if KKR does acquire Telecom Italia, how does this change the market dynamics? And then separately, would Swisscom be willing to engage in Italian M&A? And would you ever consider divesting Fastweb? Or are you more focused on driving M&A and potentially doing mergers?

[Louis Schmid:]

Thank you, Polo. I think the first question, on the Salt JV, is for Urs. The second one, on inflation, is for Eugen. And the last one, M&A, Italy and consolidation, whatever, is again Urs.

[Urs Schaeppi:]

So maybe that was a misunderstanding. These 2 to 3 years would take the whole process with COMCO to get clarity over the whole process, but if we would have switched to point to point, we certainly would try to find, foster an agreement with Salt. That's clear. We don't -- we wouldn't need 2 to 3 years. So it's on -- it is 2 to 3 years is correlated to the process with COMCO. If we don't find an agreement with them, then that would be the normal process.

[Eugen Stermetz:]

Okay. Then on inflation, we are not -- to say very brief, we are not too concerned about inflation at this point on the costs side. And we also don't see too much upside on the revenue side. Talking briefly about Switzerland

[Urs Schaeppi:]

Then on the question of merger or consolidation of KKR, just a general statement then. So Fastweb -- or our strategy is to develop Fastweb on a stand-alone base. And we think that we can do it, so Fastweb don't need a merge. So we can develop and increase the value of Fastweb. And the team of Alberto always showed that they are capable to handle different conditions in the market. And then to M&A, that was always our strategy. We have a pragmatic view to the market. We observe what will -- happening and then we will judge it if this would make industrial sense for us, but overall I think Fastweb is not directly touched. But maybe, Alberto, some words from you on KKR, your view on this.

[Alberto Calcagno:]

But again, I think you have been very clear. I think that Fastweb, at the end of the day, has all the ingredients to continue to perform growth also in the future, as long as we are focused on infrastructure. We have all the balance that we can exploit, as I said, through wholesale, through enterprise. At the end of the day, we have been able to grow in a market that has been already, I think, very, very competitive, so I think that any consolidation that could happen in the future for our competitors is just something good for us. Because if we can lead a market that is extremely competitive, we can be in a better position in a market that is less competitive.

[Louis Schmid:]

Next question comes from Ulrich Rathe.

[Ulrich Rathe:]

Can you hear me?

[Louis Schmid:]

Yes, we can hear you.

[Ulrich Rathe:]

Yes, I have 2 questions and 1 clarification -- sorry. It's Ulrich Rathe, Jefferies. Sorry. My camera wouldn't work because it needs to be rerouted to New York, at my employer. So on the fiber situation, you mentioned that there's now a market testing going on for the virtual layer 1 offer. And you mentioned the support you have from Salt and Sunrise, I believe. And obviously [7] talked against it, I mean, in public already. I'm not entirely familiar how such a market test would be decided. Can you give a bit of color how such a process can conclude in Swisscom's favor when one player makes specific arguments against that? Is market testing essentially some sort of get everyone's view together and then make a decision what is sensible to do? Or is opposition, strong opposition, from one player already a difficult situation in these processes? And also, on the P2P situation, I was wondering. COMCO, in the court case certainly -- in the court decision, it looks COMCO is arguing that Swisscom has called the extra costs for P2P as less relevant in the past, in the first 30% rollout; and that this comes back now to bite you in the sense that COMCO argues, well, if it wasn't so relevant in the first 30%, why should it be relevant in the second 30%. Could you comment on that particular point, what your counterargument to that would be? So that will be my first question. The second question is, at Fastweb, you're talking about not wanting to participate in the price war. What retail share loss would be acceptable? Is there sort of a limit at which you would say, look, we've got to make sure we have enough retail presence in the market? "And this is now getting wrong. And we have to sort of enter that market," I mean that retail market, "in a stronger way." My last question is just a clarification on the other revenues. Obviously there are sort of moving parts, and it seems to be a bit lumpy from quarter to quarter. Would you -- how do you look at the second half other revenues now? Is that a normal level, or was that an elevated level when we look into 2022?

[Louis Schmid:]

The first question is for our CEO, Urs. The second one is for Alberto. And the third one, I think, is for our CFO, Eugen.

[Urs Schaeppi:]

To the first question, on fiber market tests. So what COMCO made is actually -- they made a test. Or they ask competitors how good or how suitable this product is for their need. So they test the demand for this product. And we don't know the final results of this market test. But there are companies who support this product and other ones which don't support it. And in it -- Swisscom will never support a solution, in my view, beside a dark fiber access. So that's -- it was clear in the beginning that these remarks will have different colors. But the big ones, the really the big players, they were actually positive and they're also positive to point to multipoint architecture. But at the end, it's the decision of COMCO how they judge these results from the market test. And today, I think that this is enough for having a good competition in Switzerland. That's -- there will be the judgment of COMCO, and we don't know the result today. On this additional costs, when we built -- or the first wave of our fiber strategy was rollout in the cities. And in the cities, normally the ducts are bigger than in rural areas. And that means in cities, we could make a point-to-point rollout without actually doing construction work on the ducts. So that means in the cities that there is difference between a point-to-point rollout, and point-to-multipoint rollout is small. But if you go in more rural areas, in smaller communities, these costs are increasing because we have approximately 80% of the ducts, which we have to open because the fiber needs more space. And that's why we will have additional costs of 30% to 40%. And in the discussion with COMCO, we showed them the facts. Now the question is how they judge it? And if you read the paper, you can also see that the cost argument could be a strong argument. Eugen? No Alberto, Alberto?

[Louis Schmid:]

Alberto, yes.

[Alberto Calcagno:]

Yes. And thanks for the question. Again, the WLAN nmarket is not really as volatile as it could be mobile market. We do think that we will be able to retain our market share. We have 2.7 billion fixed customer. I think that we will be able to retain more or less this number. And actually, we still hope to grow this market based on our superior NPS. The only thing that I say that I think that today, there is a not sustainable price situation. If our competitors want to lose money and also trigger dynamic movements in their customer base, happy to do it. But for what concern us, we remain extremely very, very logic and rationale. And as I said, we will continue to deliver the best infrastructure, the best services, and we do think that we will be able to hold our market share.

[Eugen Stermetz:]

Okay. Then on the other revenue line. So going through the 3 items that made the big difference year-over-year in the second half of the year. IFRS15, my best guess would be that it's an elevated level. So you asked is it elevated? Or is it kind of -- it's an elevated level, IFRS15? Because simply all the hardware promotion that we did this year will come back with negative balances in the next year. So that's certainly an elevated level. The refund from the insurance, I would also say elevated lever. The cinema will hopefully stay with us. But as you saw in the EBITDA bridge, I also didn't mention the other revenue component. So that's my best guess for now.

[Louis Schmid:]

The next question comes from Jakob Bluestone, Crédit Suisse. Okay. Obviously, it looks like he is not available. So we are going through, the next one is Georgios from Citi.

[Georgios Ierodiaconou:]

I hope you can hear me. A couple of questions from my side.

[Louis Schmid:]

Sure. I don't know why, but you have to turn the camera, I think.

[Georgios Ierodiaconou:]

Okay. I don't know which side it is. Is it okay now?

[Louis Schmid:]

It looks better, much better.

[Georgios Ierodiaconou:]

Okay. I'll try and ask you like this. I have 1 double question on fiber and 1 double question on Fastweb. So fiber, I was curious if you could share with us some of the other participants in this process. I'm guessing the government and maybe local authorities may have a view about the extra cost of rolling out, particularly in the, I guess, less dense areas and what that could be long term, whether they are on your side and whether there has been any debate on that front? And then the second element to that is in the event that some compromise is reached on point-to-multipoint, is it fair for us to assume that you could recognize more than the annual impact you guided last year just because of all the preparation you've done over the last few months, and therefore, you will deliver a lot more in the next 12 months than what you are initially planning? And then on Fastweb, just a follow-up what Polo asked earlier around M&A and options there. I'd be curious just to hear roughly what the balance sheet capabilities are of Swisscom in the event that something would become available? Like what are your limits in terms of how you can participate? And then the second element to that, if I could ask, is on the network slicing agreement you have with Wind Tre. I'm curious how it works. So if you were to get more spectrum, do you get a bigger slice, so can you effectively scale up your network without having to commit to higher interest with higher companies is the question I'm trying to ask.

[Louis Schmid:]

Thank you, Georgios. I think the first question on fiber is split between Urs and thereafter, Eugen. On financial impact and then on Fastweb delivery potential, Eugen. And for Wind Tre slicing, Alberto.

[Urs Schaeppi:]

Good. On this fiber topic. We have actually a lot of supporters for this point to multipoint architecture. I mentioned it before, the big players in Switzerland, they support it. They see it as the right solution because at the end, the impact would not only be to Swisscom, the impact would be to everybody who is building fiber networks. So we have support from the big players in our market. Second point is, certainly, rural areas on a political level, they are support for this architecture because they see the consequences and the political people, they also see actually that this could lead to a lower rollout speed and a better coverage in Switzerland. That's why they are certainly not -- they certainly don't support this process. But at the end, it's a running process and political people. They don't involve them in a process. That's a bit the situation. That's why it's up to Swisscom to find a solution with COMCO.

[Eugen Stermetz:]

Okay. Georgios, I'm sorry, I have to ask that because I understood, if the compromise was found, could be recognized more than we guided last year? But I didn't hear or understand what recognized revenue or CapEx?

[Georgios Ierodiaconou:]

The revenue and the CapEx benefit just because you've done a lot more preparation, I guess, so you can't deliver a lot more coverage earlier on to sort than what you've guided in terms of the phasing, basically.

[Eugen Stermetz:]

Yes. Sorry, sorry. Yes, out of the Salt agreement. Now I understand. I'm sorry. That's super hard to predict, that's super hard to predict because first of all, for that -- to answer that question, we would need to know what the compromise exactly looks like, and we have no visibility as to that. And once you know what that compromise looks like, you would need to know what is the rollout plan that follows from that and how does it impact the Salt agreement. So as much as I would like to answer the question, I can't today. I'm sorry, I'm getting the non-answer question because the second one is a bit similar. It's a different question, but it's always a non-answer. Obviously, I cannot talk about the balance sheet potential we might have in the event of the consolidation in Italy. What you do know is that with a leverage of 1.7, we are on the very conservative side compared to our peers and obviously have quite some flexibility if ever some opportunity that presents itself. That's probably a thought as much as I can say.

[Louis Schmid:]

Thank you, Eugen. Then on the second question, faster deleverage potential, and Alberto hold on to that question regarding...

[Alberto Calcagno:]

Yes. I think that our co-investment with Wind Tre is fully scalable. So as long as we have additional spectrum, we can clearly put it available, make it available for the co-investment and for leverage it and exploit it the best for us, for our customers.

[Louis Schmid:]

Thank you, Alberto.

[Georgios Ierodiaconou:]

Congratulation, Urs. Well deserved, and thank you for all the insights you provided us over the years.

[Urs Schaeppi:]

Thank you, Georgios.

[Louis Schmid:]

Next question, we try again comes from Jakob Bluestone. Hopefully, it works. Obviously, it does not work. Okay. Then we move to Andreas Müller, ZKB.

[Andreas Müller:]

Do you hear me?

[Louis Schmid:]

Yes. We here you.

[Andreas Müller:]

Okay. I've got a question also on the 30% extra feeder cost with the P2 -- point-to-point investments. Can you give us more color on that and the ability also to pass that on to competitors if they went for this network of this dark fiber -- feeder? And then will, in case of the negative composition, the fiber CapEx being increased, being mitigated by other declines of CapEx, for example, in the mobile networks, so the question is then, of course, the overall CapEx bracket is going up also CHF 150 million per year for these 3 years.

[Louis Schmid:]

Thank you, Andreas. I think the first question is for Urs. And the second part on CapEx, Eugen can take over.

[Urs Schaeppi:]

Good. It will be certainly a challenge to charge additional costs of the network rollout to the competition because we have a wholesale market -- in Switzerland, prices are more national prices. And then you have the other topic that you have always to take into account the price squeeze. So the wholesale market is not independent to the retail market. That's my message. And in Switzerland, the pricing is a nationwide same price, so we don't have local prices. So I think it will be quite a challenge to charge additional costs per region. But I don't know it, maybe the market will be another one in some years. But today, it wouldn't work. So that's why we have to make more a kind of cherry-picking approach, it would be for everybody the same, that's for sure. We have to take a kind of cherry-picking approach, taking the bigger and more attractive locations. And that's exactly my message. At the end, we would have a divide from cities to rural areas because we have to invest in a less efficient technology.

[Louis Schmid:]

Eugen?

[Eugen Stermetz:]

Yes. Maybe on the CapEx, just a minor clarification for the start. So the CHF 150 million extra CapEx is the worst case compared to the best case. So the important comparison to make is to the status quo today to the CHF 500 million of the day. So compared to the CHF 500 million of the day, in the best case, our fiber CapEx envelope would decrease by about CHF 100 million. And in the worst case, our fiber CapEx envelope would be flatter, go up by maybe CHF 50 million. So would CHF 50 million -- would we be able to compensate an additional CHF 50 million of CapEx per year in an overall part of CHF 2.3 billion? Probably yes, just given the size. Whether it will be done? We need to see once we are there. I think the important message is this extra EUR 50 million compared to today is in no way a threat to our overall financial policy.

[Louis Schmid:]

Thank you, Urs and Eugen. Thanks Andreas. The next question comes from Simon Coles, Barclays.

[Simon Coles:]

Can you at least hear me?

[Louis Schmid:]

Yes, all good.

[Simon Coles:]

Excellent. And so the first question is just on Fastweb. So we've got the 5% growth guidance. Just wondering if you could give a bit more color on sort of the individual lines? So consumer, it's looking a little bit tough now, but you're saying you're going to defend your base. So how should we be thinking about that sort of outlook in '22 to flattish revenue in line compared to what we've seen in the past. And then enterprise, you obviously have done a very good job over the years, but now your market share is sort of 35%, you said. What's the sort of growth driver in '22? There is more market share? Or is it the EU recovery fund? And then how should we think about wholesale? Because it's very difficult for us to have too much of an idea of what's going on there. So you said 2,000 sites were connected with fiber. Is that going to be sort of steady level again in '22? Or does that start to come down? And is that offset with your sort of wholesale business? So just some more color around those moving parts would be great. Then in Switzerland, if I could just dive into sort of the Swiss service revenue dynamics. You said CHF 200 million service revenue losses. Should we just assume that Q4, those impacts that you detailed in the slide very helpfully, is that the sort of trends you are expecting to continue? Or should we maybe expect some changes, maybe B2C wireline is going to see a bit more pressure given we've seen Sunrise UPC, expanding Yellow offering and things like this? So just wondering how those moving parts play out? And then finally, just said on the guidance on the EBITDA bridge, which was super helpful with CHF 20 million, CHF 30 million, I think you said from Cloud Solutions, how much of that is organic? And how much is the acquisition you announced at the end of last year? I'm just wondering what's driving that there? So that would be great.

[Louis Schmid:]

Thank you, Simon. First question on Fastweb is for Alberto. Second one on Swiss revenue, I think Eugen can take over. If -- well, Dirk or Urs Lehner might add something on the service revenue or telco outlook '22. Also very much appreciate. By the way, you can always ask questions on the operations in Switzerland. We have 2 guys here, very experienced. And the last question, EBITDA, Cloud and MTF impact, I think, so this was your question, organic versus inorganic, maybe Urs Lehner or you can take over.

[Alberto Calcagno:]

Okay. Then I start with Fastweb. For what concerns the revenues of consumer, you can assume, I think, flattish revenues. Don't forget that at the end of the day, the consumer has a double phase. One is the wireline, which we said we will be roughly, let's say, basically stay in a same market share, but also mobile is rapidly growing. So mobile revenues will grow. So I would say flattish. Hopefully, we will actually try to do better than that. But let's say, for the moment, let's stay with that. In terms of enterprise, actually, the market share is not an issue at all because this 35% market share, by the way, has been increasing steadily of 1%, 2% every year, will continue to grow also because still the vast part of this market share relies, I would say, on core services and not on value-added services. So in 2022, but also for the upcoming years, you will see a lot of demand of cloud solutions, data center managed services. And certainly, you already mentioned [indiscernible] are welcome to Italy. It's not something that will impact 2022. But certainly, from 2023, 2024, we will have, I would say, a much more booster, a natural booster of the public administration needs. So we do expect also for Fastweb to take a good part of this digital transformation. So definitely, enterprise, yes, we know that 35% can look a very high market share, but history shows that we have been able to grow every year. And also, there are effect and -- effects that will be extremely positive for 2022 and going forward. For wholesale, I do understand that it's difficult to predict. But I would say that also in the future as long as the unbundled of our network and so the volumes will grow up, also revenues will be pretty much more predictable because it is just a matter of price times volume, the wholesale customers that we will connect of our telco customers. In terms of BTS, I would say that I think, yes, in 2021, we've done 2,000. You can assume something that stays between 1,000 and 2,000, depending also the rollout of the other player. But I would say that also in the future, the revenue growth will come from the ultra broadband volume business. And with that, I leave the floor to Eugen, I guess.

[Eugen Stermetz:]

Okay. And I'll start with the CHF 20 million to CHF 30 million and then go to service revenue because then I can smoothly hand over the CHF 20 million to CHF 30 million -- a very good question, actually, very good questions. The 1 acquisition that should make an impact on that number is the MTF acquisition that Urs talked about before. We can't disclose details on the transaction, but it's a double-digit revenue company and single-digit EBITDA company. And that single-digit EBITDA will, as you spot it quite well, will be in the EBITDA bridge in the solutions business year-over-year. The other 2 components in there are profits from incremental growth, organic growth. And the third component is the improvement of the profitability of the existing business. So excellent question. Then on the service revenue drivers, I'll give a quick start and then hand over. In principle, all the major factors that we monitor and that we also share with you every quarter seem pretty stable at the moment, and they will certainly not go away. So price pressure in B2B, Urs is going to talk about it, is not going to go away. In B2C, the structural effects, like fixed voice line losses is not going to go away. All our tools in the retail competition for market share like fixed mobile convergence, promotions, brand shift, et cetera, is not going to go away, and we don't see a massive tendency one way or the other. But as I said, for the fine tuning of what might be there, if one can talk about it, I'm happy to hand over maybe to Dirk and then to Urs.

[Dirk Wierzbitzki:]

Okay. Good. Thank you, Eugen. Yes. I mean, obviously, service revenue mirrors our considerations around our market share as it is subs times ARPU, if you wish. And as far as subscribers is concerned, we're going to continue the kind of 2-tier market strategy, as was explained earlier. So defending share on the own brand and attacking on the third and second brand. And we feel confident, particularly with the performance we had shown in Q3 and Q4 that we can continue that performance in the marketplace as a subscriber side of the business also in 2022. Then it comes to the service revenue effects, and then I will make a couple of comments. There are a couple of historical effects that are kind of coming to an end, like, for instance, subscribers in the broadband and landline signing off from the fixed net voice service. I mean that's kind of more or less done. Same for the effect that we have in the customer base for the convergence advantage to having mobile and broadband with us on the own brands is kind of more or less through that effect. Actually, in the home business, so in the broadband and TV business, we were actually able to manage the ARPU just a little bit up instead of down. So that encourages us that we can continue this value approach for which we have quite it's not a lot of, let's say, processes and practices into the organization. So for instance, to give you an example, it's kind of a sales objective what the acquisition ARPU is. Or it is a touch point agents objective to maintain when a customer wants to modify their offer to maintain the level of ARPU even to up or cross-sell. So we, clearly, let's say, enhanced our commercial practices at that end. And we are quite positive about that, that trend can continue. We even made good experiences last year that, for instance, phase out of products like 2G in mobile or older tariffs in landline is actually an upsell opportunity within the customer base, and we still identify a couple of opportunities into that. Then quickly on the mobile side, I think the biggest effect is a brand shift, which is that portion of second band customers that come from our first band and Urs said earlier on, we're monitoring that closely. So I think we are a healthy, if you wish, one can say that in that context, cannibalization level, we think we can continue that pace. We even -- and there is one more, let's say, reason that also gets placed into the service revenue. We even are trying to lower a little bit, let's say, our activities on promotional offers for tariffs. As you know, is almost like a market standard. Unfortunately, it is the standard that for the first like 12 months or so with us with the competition, like 24 months, people are going into a subscription at a discounted price. We have just made changes to that in January and February. We will not offer any such advantages to stand-alone customers only to converge customers. And also on the second brand, where we kind of also in promotional times played with like a CHF 20 price mark for like a mobile national flat, we want to, let's say, get that back between levels to CHF 25 and CHF 30. So we are taking a bit of let's say, commercial or promotional aggressiveness out. And we still believe that, that is successful. So overall for long answer, I think it's all these measures, we are confident to bring the plan as we presented it to you.

[Urs Lehner:]

And to add on the B2B side, with a few words, let's say, in the SME space, it's pretty similar. So as just Dirk mentioned it as it looks like B2B going up to larger enterprises, the upper SME segment, the corporate business. There, we see, let's say, a very aggressive mobile market on -- so there we believe there is a huge challenge where we are fighting strongly in '21, and I don't see any reason why shouldn't be similar in '22. On the wireline side, we don't have that much churn in -- non in the SME and non in the corporate environment. So mobile is for sure, let's say, the playfield where the operational competitive makes a difference on a deal-by-deal basis.

[Eugen Stermetz:]

Okay. Thank you, guys. Let me just add one thing. Let me just add one thing because otherwise Simon is going to ask me in Q1, why is this effect still there on the fixed voice line losses with 2 components. The 2 components, one is land lines only. These die out, quite literally. It's a demographic issue. But there is also customers opting out of a bundle the land line component, and that is going to stay. So in Q1, you'll see it again.

[Louis Schmid:]

All right. Thank you, guys. With that, I would like to ask Titus Krahn for the question. All right. We have to move to the next one. It's Luigi Minerva. Okay. So we go back to Titus, Bank of America. Hopefully, it works.

[Titus Krahn:]

Yes, it worked now. Sorry for joining on the phone without a video. Perhaps just 2 questions, both on the fiber side. And the first one might be a little bit of a clarification. On the CapEx outlook for 2023 and to '25 and the difference between the best and the worst case, you're talking about CHF 400 million to CHF 600 million impact for these couple of years. And just back on the envelope calculation, that's pretty much a difference for 1 million households between CHF 400 to CHF 500 and delta between rolling out with P2P and P2MP technology. Just a clarification, where do we see the savings from actually rolling out to 0.5 million fewer households? Are they set off by other elements? Or can you walk us through kind of this difference? And maybe a second quick question, just given that there would be probably 40% to 50% of households depending on the actual rollout still that after 2025. How do you look at those? And given they are probably more expensive to rollout, would a partnerships with financial investors of any adjacent countries is an actual option or an opportunity for you?

[Louis Schmid:]

Thank you, Titus. I think the first question on CapEx outlook is for our CFO, Eugen. And the second question, well, '25 outlook, how we continue is for Urs.

[Eugen Stermetz:]

Okay. So I'm happy to take the first question because Urs kept us busy for a while. So your back of the envelope is right in principle. But your assumption that there are also other factors in play is also right. And so that is exactly why we gave you an indication of the fiber CapEx envelope going forward in the best and in the worst case scenario. And I would like to encourage you to stick to that number rather than to the back of the envelope. But I'm going to answer your question because the back of envelope is the obvious thing to do it. Now what are the factors why the back of the envelope doesn't work and the compensating factors. One is, the numbers we give you for the average cost of rollout in FTTS and FTTH is a typically FTTS household. However, in particular, in the first phase of the rollout, we have a number of so-called FTTB, fixed lines, so fiber to the building. So the fiber is already in the house. They are quite cheap to upgrade to FTTH point-to-multipoint, but they cost about the same to upgrade to FTTH point-to-point. So actually, for these number of household connections, the upgrade price is much higher than the CHF 500 that we give you in the kind of typical FTTS to FTTH upgrade. That's point number one. Point number 2 is we already build a number of point-to-multipoint connections. We saw it in some of the slides. So if we ever had to switch completely to point to point, we would need to rework those point-to-multipoint connections that we already built. So that's the second factor. There are 3 or 4 others, but that's the most important -- these are the most important ones. But actually, very good catch actually. The second question, was it financial...

[Louis Schmid:]

The second one for Urs. The outlook after '25.

[Urs Schaeppi:]

Eugen wants to take every question, and that's a bit -- no, what would we do after '25? We will certainly continue to rollout fiber networks in Switzerland. It's quite hard to touch how we will do it. Because it's open, if we are in '25, if we can do it in a point-to-multipoint architecture or even then we have to do it point-to-point. So there is a lot of things open. But what I can tell you is we will continue to roll out the fiber networks, but we will do it in a way that we can digest it. And we actually don't need a partnership or an infrastructure fund, which would help us to make this rollout. As long as the whole situation like it is today. So we don't see the need for it. And even if we would have to have a high investments, we could -- we have a strong balance sheet, as Eugen mentioned it before.

[Louis Schmid:]

Thank you, Urs and thank you Titus. Then we move to the next question coming from Luigi Minerva, HSBC.

[Luigi Minerva:]

A couple for Urs probably. The first one is about, yes, staying on this 2025 theme. I just wanted to ask, you mentioned in your introduction that there's a series of initiatives which are currently small but that perhaps can become material contributors to Swisscom in 5 years from now. I was wondering if you can just elaborate on that. And if you were to pick 1 or 2 of those initiatives that in 5 years would be material for Swisscom numbers, which would it be? Secondly, on 5G, I kind of ask you the same question every year. But I'm curious to see what are you seeing in terms of products and pricing for 5G? And essentially, the question is whether 5G can really be the hope for the sector to see some pricing power in a sort of a stable way over time? And perhaps the last question for Alberto on Italy. Of course, you mentioned the deterioration of the fiber prices, EUR 30 a year ago, then EUR 19, then obviously, Iliad is there now at EUR 15.99. Now it's a fact that Iliad doesn't change their prices. So the EUR 15. 99 is there to stay. Does it mean that the Italian market is compromised without hope essentially, unless there is a change in market structure?

[Louis Schmid:]

Thank you, Luigi. So the first 2 questions for Urs on adjacent businesses in 5G. And the last one on fiber prices for you, Alberto.

[Urs Schaeppi:]

So on adjacent business, there are 2 main elements. The one is all cloud-based solutions, so software-defined networks, cloud solutions, which are quite, let's say, close to our core business. But where you could enter in new businesses. So cloud-based business, software-defined business, SaaS and all such things. I think that's one of the element. And the second element are more, let's say, fintech-oriented element. So we have a vertical where we are the outsourcer for Swiss banks. These banks, they will also go in a more cloud-oriented area. And we have, as an example, fintech start-ups, and this such startups could play a role in this vertical element of the Swiss banks. But at the end, I think it's important that the big growth potentials that are coming really more out of the IT-related business than this, let's say, internet-oriented businesses. Then the second question on the pricing on 5G. I don't know if I get the question right down -- the question right. But to charge additional -- an additional price for 5G, in my view, will be quite difficult midterm because everybody has, let's say, a strategy giving more for the same price, and so that means it will be hard to touch for 5G in addition. But 5G has a lot of other elements. You can -- in the B2B market, you can enter new spaces private mobile networks, such things, vertical solutions. So more volume, the whole IoT business. I think that is the potential. And then 5G has much more efficiency though the cost -- production cost for a megabyte on 5G is lower than on 4G or 3G, so it's intelligence to push 5G. That's a bit of my message.

[Louis Schmid:]

Thank you, Urs. Alberto?

[Alberto Calcagno:]

Okay. And as I was saying, I'm really convinced that the consumer wireline is not in a sustainable situation. That's the transition. I also don't agree with you on the fact that prices are here to stay because the EUR 15.99 is a loss-making offer. Clearly, that's not a bold embrave move, but I think it's quite a consequence by the fact that the growth on mobile customers of Iliad has been flattening, and now they are exiting growth. And so they do need to find a way to get more mobile customer. And since they cannot decrease prices for mobile customers because otherwise, they will blow up because there will not be any more financially sustainable, they had to find something else. And then they come up with this, giving the fixed at cost. But as I said, this is a loss-making offer. So I really do think that this is just a transition, maybe 12, 18 months, but then prices will go out definitely because at the end of the day, you cannot stay with the offers that are loss making. And also I do believe that this move will not pop up -- bump up their mobile sales. So they will do -- need to increase profitability.

[Louis Schmid:]

Thank you, Alberto. The next question comes from Steve Malcolm from Redburn.

[Stephen Malcolm:]

Can you hear me?

[Louis Schmid:]

Yes.

[Stephen Malcolm:]

And just congratulations, Urs. You've done a great stint at Swisscom, and I hope you get to relax in June and take it easy. And good luck to the new CEO. I hope he does as well as you've done. I'm going to come back to Simon's questions on Fastweb, if that's okay, because I'm trying to sort of get my head around the revenue and EBITDA guidance for next year, given the way the numbers are trending at the moment. In Q3, I think you had a CHF 25 million regulatory settlement, which I guess will lap next year. And if I look at the Q4 numbers, I mean, the cost performance was great, but it seems like there was a few odd ones, particularly in other operating costs, which fell 14% in the quarter, having risen by about 4% or 5% in the previous 3 quarters. So can you maybe just help us understand how those maybe odd-looking moves lap out in 2022? And then just coming back to the revenue sort of picture overall, I mean if you don't grow consumer and enterprise doesn't accelerate from this point, you're going to have to grow wholesale 20-odd percent to get to 5%. Is that right? Or should we assume that enterprise can do better than the 7% or 8% you did in 2021? And also within wholesale, it feels like if you're swapping BTS revenues for ultra-broadband wholesale where you are reselling someone else's product, that's going to have a detrimental impact on margins. So I guess it all feels like the margin outlook is not so great next year, but clearly, that's not the guidance you're giving. So maybe you can help us sort of understand some of those moving parts.

[Louis Schmid:]

Thank you, Steve. I mean, in terms of numbers, we have not disclosed the concrete numbers on income from regulatory litigation '21. I would like to hand over that question to you, Alberto.

[Alberto Calcagno:]

But again, I think that the answer is going to be quite close to the one that I just gave. Again, the revenues of consumer has 2 sources of impact. One is clearly the wireline where I say that -- I just said flattish. Hopefully, we could do better than that. But I think that it's just a consequence of losing maybe some thousands of customers, but keeping the ARPU of our customer base stable. So I think, as I said, more or less flattish. On the mobile, we do think that we will continue to grow. And Hopefully, we will be able to repeat or actually do even be better since our sales are going well in terms of mobile, and this will be pure growth on top of what we deliver. So it's not -- at the end of the day, also consumer has some, let's say, growth engines, and we want to try to exploit it. In terms of enterprise, enterprise, I would say that our ability -- we outperformed our guidance in 2021. We have been growing at 8%. I think that in enterprise, we are very, very healthy. We keep going to win bids. And the good thing is that we keep going winning bids not only in the core services, we have already a good market share, but in the value-added services, actually, since we have the highest Net Promoter Score in the enterprise, close to 80%, I think is something that is one of the highest in Europe. We can leverage to have a strong NI customer -- sorry, market share in the core services like voice and connectivity to increase our share of wallet with cloud data center, managed services, security services, and that's what we are doing. I think that you can assume that also in 2022, enterprise growth will be outperforming. And wholesale, again, for wholesale...

[Stephen Malcolm:]

Alberto, can I just ask, what is outperforming mean? I mean does that mean 8% like 2021?

[Alberto Calcagno:]

Let's say that we have at company level, a 5% growth. Consumer is not growing at that level, then the growth needs to come either from enterprise and wholesale. I do -- I would bet on enterprise because, as I said, I think it's one of the market where we are a leader in a market that is growing significantly. That's my point. But [indiscernible] also that wholesale is a very healthy business as well because it's the sunny part of the street of the retail. Retail is going to be extremely competitive. A lot of new players in the market, a lot of new players that are growing their sales, like Sky, like the others, we can -- if we were able to grow with roughly 200,000 wholesales customers in 2021, you can assume that this growth will continue to increase also in the future. So that's what...

[Stephen Malcolm:]

Sorry. Are you not saying that selling fiber copper line -- reselling fiber copper line, and so the margin, if BTS goes from 2001 to 2,000, which is going to be very high margin, obviously. And...

[Alberto Calcagno:]

But BTS has nothing to do with fiber copper. Fiber copper is just lines to, let's say, consumer and BTS are our dark fiber backhauling that we are providing.

[Stephen Malcolm:]

I understand, the margins on that are very high, presumably . And I think the guide is that you would get less BTS connections in '22 than '21. So that would be marginal...

[Alberto Calcagno:]

No, I wouldn't say so. We have done 2,000, let's say, that also in 2022, we have something that stays between 1,000 and 2,000 depending on the rollout but we could be actually replicating also 2021 performance in the BTS.

[Stephen Malcolm:]

Okay. So that may be the same. And you -- the ultra-broadband is on top is the way we should think about it.

[Alberto Calcagno:]

Yes, yes, yes.

[Stephen Malcolm:]

Okay. Great. And the cost performance in Q4, the other operating costs down 14%, was there anything particularly unusual on that?

[Alberto Calcagno:]

I would say that marginality on 2022 will be very close to the one of 2021. So I wouldn't go really on the fluctuation quarter-over-quarter. I'll keep a view on a year, sometimes quarters are fluctuated also by mix of revenues. I would say that marginality should be following the trend that has been performing in the last years.

[Stephen Malcolm:]

I take Louis' point on the regulatory settlement. But I think in Q3, you had another income of EUR 25 million, EUR 30 million. Should we expect more kind of -- one-off the kind of stuff to come in, in 2022 to help margin?

[Alberto Calcagno:]

Yes. I would say that all in all, I think that, again, marginality will be more or less the same as 2021. There could be an impact of slightly one-off, but at the end of the day, marginality will be similar.

[Louis Schmid:]

Thank you, Steve. Thank you Alberto. Let me move to the next question, Joshua Mills from Exane BNP.

[Joshua Mills:]

Can you hear me?

[Alberto Calcagno:]

Yes. All good.

[Joshua Mills:]

Brilliant. Yes. So 2 questions from my side. One on the cost savings and then if I can come back to this fiber debate. So going forward, you're maintaining the same level of cost cutting kind of CHF 100 million a year, and you're saying you can continue that beyond 2022. But within that mix, it sounds like headcount reduction will be less of a factor. And if you're hiring more IT consultants, et cetera, who are presumably on higher wages, where are the additional savings coming from? Is it more network side? Is it your own IT systems? It would be great to give us a breakdown of how CHF 100 million of savings this year compared to CHF 100 million savings in 2023 or 2024? And then on second question, if I just were to go back to Slide 37, where you run through the different best and worst case scenarios for point to point or point to multipoints. I think you've been very clear on the CapEx element. But what kind of revenue or EBITDA impact do you think you would see if you were only able to operate 50% of homes rather than 60% with fiber to the building? And the reason I ask is net out is good, we're talking about the piece of net promoter scores. Are there -- is actually any ARPU uplift or share gain opportunities as you rollout fiber? And sorry, one very final one, I suppose, on clarification around capitalized costs. I think they were up quite a bit this year in Switzerland. So I just wanted to understand why that was the case.

[Louis Schmid:]

Thank you, Josh. I think on cost savings, is a mix between Urs and Eugen, maybe.

[Eugen Stermetz:]

I'll take cost savings. High-level question.

[Louis Schmid:]

Okay. And then second question on the different scenarios and impact on ARPU is for you, Urs. And the third question is on capitalized cost is for you, Dirk. Yes, right.

[Urs Schaeppi:]

So let's take the cost from where are the cost savings coming? At the end, from a high-level perspective, it's digitalization and simplification. I show you in the presentation what we are doing in the technical department, consolidating platforms, phasing out all systems. So that's one element, phasing out products. And all this leads to a simplification of our product so you can operate the company with less technical people and with a smaller field service or even also a smaller customer care. So that's one element, a lot of different projects on simplification. And the second one is digitalization. So we can optimize processes also in the operation of the network. We can do a change management. We can do a lot there also in the monitoring of end-to-end solutions. And then in the go-to-market shift to online to have a good mix between physical go-to-market and virtual or online, that's what are behind this CHF 100 million. And we have there a lot of different projects, which will help us to get the costs down. So that was the one on savings. Then the second one on fiber. We have today a footprint of 72%, which has speeds more than 200 megabits per second. So that means short term, if we don't have a fiber-to-the-home footprint, we don't lose actually in the retail market short term. We will be competitive with this footprint, but not long, long term. Long, long term, we certainly need fiber to the home. And that's why we want to ramp up our fiber-to-the-home footprint. And on the one side, we see that in areas where we have fiber to the home that we can slightly increase the ARPU because of upselling, put them on higher tariffs. But at the end, it's always a question how competition will be in the turf where we made the rollout at the end. But in the existing rollout, we were able to gain a bit additional ARPU. Maybe Dirk, some words on this fiber.

[Dirk Wierzbitzki:]

Not exactly as you say. I mean, really I think wisely, we build up the fiber-to-the-street network so that we now have the 200 megabits, which at this point in time, for many households is a decent speed. You can have a couple of HD, UHD streams, do that browsing, gaming, whatever, not. So if you're not obsessed about super speed, then it's perfectly okay, really, really. And I think we also need to look at the trigger points for changes in your broadband service provider is mostly events around your household, marriage or divorce or you go abroad and you cancel the whole household and whatever, it's less so that you're like in the market and look for a better price. As long as, let's say, as you always would say, never touch a running system, particularly in terms of pandemic, we have seen -- if you look at our figures, we have seen in the last year churn in Q3 and Q4 decreasing in broadband despite of all the competitive activities that there is -- so it's really, let's make us confident that we have a good offer today, which obviously is not only the broadband line, but the whole TV service around it, the whole service proposition and so on and so forth. So I think for the time being, we are well positioned. But obviously, in the future, of course, we need to also continue to build further out.

[Eugen Stermetz:]

Okay. On capitalized -- why is capitalized cost up? The answer is simple. We have quite a substantial insourcing program going on as part of our CapEx efficiency program. So there's an OpEx efficiency program and there is a CapEx efficiency program. And we have a substantial program of in-sourcing software development. By doing so, we can reduce the number of external parties we interact with. It's cheaper, it's better controlled and it leaves a better quality. We in-source among others in our service -- sorry, software development centers in Rotterdam and in Riga. So these people that we hire for software development, first show up in those fee, show up in gross personnel expense and then get CapEx because what they do is soft development and that goes into CapEx. So that's the reason for it.

[Louis Schmid:]

Thank you, Eugen. Thank you, Josh. I suggest, we do one last question before closing today's meeting after 3 hours. [Yemi Falana].

[Unidentified Analyst:]

Firstly, judging by your 4Q KPIs, it seems like your commercial traction in Switzerland has been improving. Could you perhaps provide some color on the run rate of your traction through the first few months of this year and perhaps a wider competitive environment as well? And then secondly, following on from your comments on not needing a partner for fiber investment, while I don't necessarily want to ask the long-term guidance, is it fair to assume that, that CHF 2.3 billion level is a medium-term CapEx flow with the dividend effectively setting the CapEx ceiling from here?

[Louis Schmid:]

Thank you. I think on commercial momentum, Urs and Dirk can jointly take over this question or Dirk directly. And on the second question, the CapEx outlook, I think that is a question you, Eugen, can take over.

[Dirk Wierzbitzki:]

Okay. So with respect to the Q4 and the consumer market, as you already said it was an attempt, and I think, really good Q4 for us. And we want to operate on the full year on the business of that trajectory. Now if you compare to Q1 and to particularly January, then obviously, you can complete Q1 to Q4. We need to look at Q4 to another Q4, particularly because in Q4, you have all these like Christmas business, Black Friday promotions and so on and so forth. So business, let's say, has been a bit moderate, but as moderate as it albeit is in January. But we are -- I can say on our planned trajectory overall for the year in the first month of this year.

[Unidentified Company Representative:]

I think it will be the same in B2B.

[Eugen Stermetz:]

On CapEx outlook, obviously, it's much too early to talk about CapEx 2025 or beyond. You mentioned that the only thing I would say is, obviously, maintaining our dividend outlook is a major factor in determining the rollout program speed now or be it in 2 or 3 years, it will always play a major role in these considerations.

[Louis Schmid:]

Okay. Thank you very much. At this point, is it [Call ends abruptly]