Swisscom AG (OTC:SCMWY), Switzerland's leading telecommunications company, has announced its Q2 2024 results, indicating that the company is on track to meet its full-year guidance. The company reported a 1.8% increase in top-line revenue, with a notable 7% growth in Italy.
Swisscom also confirmed the sale of its FiberCop stake for €439 million and the acquisition of Vodafone (NASDAQ:VOD) Italy. The company's strategic priorities for 2024 focus on customer satisfaction, innovation, cost savings, and collaboration. In Switzerland, the emphasis is on improving customer experience and launching new products, while in Italy, the strategy revolves around quality and expanding offerings beyond core services.
Key Takeaways
- Swisscom's Q2 2024 results show a 1.8% increase in revenue, driven by 7% growth in Italy.
- The company sold its FiberCop stake for €439 million.
- Swisscom confirmed the acquisition of Vodafone Italy.
- Strategic priorities include customer satisfaction, innovation, cost savings, and collaboration.
- Fastweb, a Swisscom subsidiary, is performing well in the Italian mobile market and expanding its coverage.
- Swisscom expects to close a transaction with the Italian Competition Authority in Q1 2025.
- The company maintains its full-year outlook, including net CHF50 million savings.
Company Outlook
- Swisscom reiterates its full-year guidance, expecting revenue growth and EBITDA in line with the first half of the year.
- The company is focused on expanding its fiber network in Italy, aiming to cover 16 million households by 2024.
Bearish Highlights
- The company mentioned some churn as a result of repricing TV offers.
- Intense competition in the Italian fiber market continues to pose challenges.
Bullish Highlights
- Swisscom sees growth opportunities, particularly in the Italian wholesale segment.
- Fastweb launched a successful energy offering, indicating diversification beyond telecommunications.
Misses
- No specific misses were mentioned in the provided context.
Q&A Highlights
- Executives discussed the fiber rollout in Italy, competition, and engagement with the Italian Competition Authority.
- The transaction with the Competition Authority is expected to close in Q1 2025.
- Swisscom confirmed net CHF50 million savings and reiterated its FTTH targets.
Swisscom's commitment to its strategic priorities and the positive results from its Italian operations highlight the company's robust position in the telecommunications market. Despite the competitive environment, Swisscom's focus on quality, customer satisfaction, and expansion into new markets such as energy demonstrates the company's adaptability and drive for growth.
With the acquisition of Vodafone Italy and continued fiber network expansion, Swisscom is poised to strengthen its presence in the European market. The company's executives remain confident in their strategies and the potential for further growth, as reflected in the earnings call and the company's steady progress towards its full-year targets.
InvestingPro Insights
Swisscom AG (SCMWY), with its recent strategic moves and solid Q2 2024 performance, has shown resilience in a competitive telecommunications landscape. To further understand Swisscom's financial health and market position, let's consider some key metrics from InvestingPro and a couple of InvestingPro Tips that may be of interest to investors.
InvestingPro Data reveals that Swisscom has a market capitalization of $31.97 billion, indicating its significant presence in the market. The company's P/E ratio stands at 16.14, suggesting that investors are willing to pay a premium for its earnings, possibly due to the company's strong historical dividend payments and consistent profitability. It Is also worth noting that the company's stock is trading near its 52-week high, at 98.38% of this peak value, reflecting investor confidence.
An InvestingPro Tip highlights that Swisscom's cash flows can sufficiently cover interest payments, which is a reassuring sign of financial stability. Additionally, the company has maintained dividend payments for 26 consecutive years, which is not only a testament to its financial health but also an attractive point for income-focused investors.
To gain a broader perspective on Swisscom's performance and potential, there are over 8 additional InvestingPro Tips available at https://www.investing.com/pro/SCMWY. These tips could provide further insights into the company's valuation, debt levels, and earnings predictions, which may be particularly relevant given the company's recent acquisition activities and growth initiatives.
Full transcript - SwissCom AG (SCMWY) Q2 2024:
Operator: Good morning, ladies and gentlemen. Thank you for joining the Swisscom Q2 2024 Results Conference Call, hosted by Christoph Aeschlimann, Eugen Stermetz and Louis Schmid. Louis, the floor is yours.
Louis Schmid: Good morning, ladies and gentlemen, and welcome to Swisscom's Q2 '24 results presentation. My name is Louis Schmid, Head of Investor Relations, and with me are our CEO, Christoph Aeschlimann; and Eugen Stermetz, our Chief Financial Officer. Our CEO starts the presentation with Chapter 1 and a quick overview on the highlights, the operation, and financial performances of the second quarter. Then, in Chapter 2, Christoph presents a business update for Switzerland and Italy. In the second part of today's results presentation, Eugen gives a short update on the Vodafone Italia transaction in Chapter 3 and then runs you through Chapter 4 with the second quarter financials, including the confirmation of our full year guidance. With that, I would like to hand over to Christoph to start his part. Christoph?
Christoph Aeschlimann: Thank you, Louis, and welcome everybody to our first year -- half year 2024 results. I will move on directly to Page #4 detailing the highlights of the first half year. Overall, we can say that the Q2 financials are on track to achieve the full year guidance. Our top-line was up by 1.8%, mainly driven by the 7% growth in Italy, which is the outstanding achievement giving the market context in the Italian market. Our EBITDA is in line with Q2 consensus, and we confirm our full year guidance for 2024. In Switzerland, we have unchanged business trends compared to Q1, but slightly better Telco service revenue evolution, thanks to the measures that we started implementing in the last quarter. We also recorded appealing IT service revenue growth in the second quarter, mainly driven by AI, and cloud offerings extensions and also our FTTH rollout is going on in full swing. On the Italian side, we are continuously successful with Fastweb. We launched a new product energy offering in -- for our B2C customer base, which we will talk about a little bit later. And we also launched an AI sovereign infrastructure as well in Italy and with an Italian LLM offering for our Italian customers. One of the highlights was also the attractive sale of our FiberCop stake for €439 million. The acquisition of Vodafone Italy is on track. Eugen will talk a bit in more detail about where we stand. Overall, we secured the financing, we received the first approvals, and today, we communicated that Walter Renna is a designated CEO of the new merged company. Moving on to Slide #5, you can see the operational performance of Switzerland and Fastweb in Italy. In Switzerland, we have improved momentum both on mobile and broadband. I can see that the measures that we implemented in the past quarter are starting to show up in the numbers. We've increased postpaid subscriber base of plus 22,000, and still a slight decrease in broadband with minus 9,000 but substantially better than what we saw in Q1. TV, as well as broadband, is slightly impacted by the ongoing measures that we are executing with regards to phaseouts of older products and our more-for-more approach with our customer base which leads to temporarily slightly higher churn both on broadband and on the TV side. If you look at the Italian numbers, you can see that we have a strong growth -- or strong continued growth on the mobile side with plus 113,000 net ads, bringing us to over 5% market share. On the mobile side, we are the second-best performer in the market just behind Iliad. On the broadband and wholesale segment, we see the same trends as we had over the past quarters. Wholesale overcompensating the loss we are having in broadband due to our value strategy, but overall still a combined growth of 33,000 net adds if you accumulate broadband and wholesale. On Slide 6, you can see the overall financial results. Second quarter revenue growth of 1.8% to CHF2.75 billion, leading to a stable revenue of CHF5.45 billion in the first half year. EBITDA was slightly lower by 1.3%, CHF1.12 billion, mainly driven by the EBITDA decline in Switzerland where we saw softer results on the cost savings side, which we'll talk about a little bit later in the presentation. But overall, I would say, both on the revenue and EBITDA are roughly in line with our expectation and with the full year expectations. Now, we will move on to the business update of Switzerland and Italy, starting with Page #8. Our strategic priorities for 2024 are unchanged and we continue to execute on all four pillars simultaneously. The most important are starting with delighting customers. We are very much focused on our value strategy both in Italy and in Switzerland, improving customer experience, investing in customer experience both in the shops but also the brand and the call centers. We also launched many new products in the past quarter in Italy and in Switzerland, as you will see later on in the slides. So, we continue to invest in innovation for -- to generate growth in the future, both on the Telco side, but also the ICT market. An important pillar despite the softer cost savings in Q2, achieving more with less remains an important pillar of our strategy execution and remains a top priority of the company, improving -- or at the same time improving customer experience and reducing our cost base, which will be one of our main focuses also going forward in the second half year of 2024 to achieve our full year targets. Last but not least, we also work on our skill base on our collaboration to increase the overall performance of the company. Now, starting with the Switzerland, the B2C Telco business on Slide #9, you can see that we continue to execute our value strategy and our focus on NPS lead. Although competitors have been slightly improving in the past quarter, we still have a very substantial lead on the NPS side and we continue to invest in the satisfaction of our customer base, because this leads to an exceptionally low customer churn. You can see just below, slightly increased on roughly stable on mobile and slightly decreased on the broadband side, but we continue to see very low customer churn, which is mainly linked to this high customer satisfaction that we have. And overall, we also see stable ARPU development on the broadband side which is, I would say, an exceptional achievement, giving the market aggressiveness that we see today. And on the mobile side, we have stable ARPU on the main brand, but a different brand mix leading to a slightly lower postpaid value ARPU, which is also a great achievement in light of the promotional intensity that we see on the mobile market. How did we achieve this? We continue to invest in our value and brand orientation. We managed to secure the content rights for football which is important for our TV offering until 2029 and we are now a new partner also of the Swiss national football team going forward for the next years, which will help us to position our brand in the market. Next to this, we invest a lot on ARPU evolution, new offerings to upsell and cross-sell to our customer base. We remodeled the blue TV room Max option, we introduced some new wingo offerings, and we are certainly working on phasing out the older products which have lower ARPU [indiscernible] and replacing these customers with -- or moving these old product customers to the new blue portfolio in the same for -- more-for-same or more-for-more approach, driving up our average ARPU. On Page #10, you can see that we are also working on sales measures as we talked already about in -- after Q1, when we had quite a weak net ad performance and we increased our intensity on the sales side, making promotions more visible, modifying the shop layouts slightly and really pushing more sales activities. Also in terms of advertising, increasing the convenience, making it easier to buy from Swisscom, and we can see that these measures are already showing some effect and stimulating the net adds in the market. We don't intend to increase promotional intensity and we'll certainly continue our price followership and do not intend to amp up discount levels, but really working more on the sales side and the promotion advertising push to stimulate the market. We also launched or expanded our insurance portfolio in Switzerland, which was well-received by the market. Overall, we have a slightly increasing RGU base in postpaid with year-on-year plus 74,000 and slightly decreasing on the broadband side with minus 21,000. On Page #11, I will move on to Swiss B2B Telco and IT. So, in both market segments, Telco and IT, we continue to invest in new product offerings. On the Telco side, we launched a new security -- sorry, a new security offering, SCION GATE. And on the IT side, we also launched new cybersecurity offerings and launched our new AI platform, which is based on an NVIDIA (NASDAQ:NVDA) offering, to enable AI sovereign compute in Switzerland for our B2B customers. Overall, you can see the Telco service revenue evolution was down minus 2.6% year-on-year, achieving CHF375 million in revenue, mainly driven by steel price decreases in the market. So, you can see that the ARPU wireless has decreased by CHF2 to CHF26, driven by the promotional intensiveness in the market. On the IT side, we were able to drive very appealing growth of plus 7%, mainly driven by Cloud Security and the platform business, but also some in M&A we executed over the past month, leading for the first time to revenue over CHF300 million revenues in a quarter. On the network and IT side, you might have seen in our press release today we announced a new CTIO, Mark Düsener, who was previously managing our mobile and B2B Telco technical division, will take up the CTIO role starting 1st of September. So, I'm very pleased that we were able to promote an internal talent to this important position and we have -- we continue to execute the current strategy. We don't plan any strategy change, but we'll focus on continuity and execute our current priorities that we are working on since a number of years on the network side. First of all, this will be continue to increase the mobile coverage as we were able to increase the 5G plus coverage by 6 percentage points year-on-year and we now stand at 83% population coverage with 5G plus, and also we made a substantial progress on the FTTH rollout. Our rollout speed is now 2 times higher than it was one year ago and we added 5 percentage points of FTTH coverage and now stand at 49% FTTH coverage for Switzerland, meaning that, in the next quarter, we can most likely report that more than half of Switzerland is built with FTTH connection. We are also making great progress in our internal network modernization. We were able to migrate the full mobile traffic to our new internal core network called [Titan] (ph). This is an important milestone because it generates more operational stability, resilience, and also energy cost savings. And we will continue to execute the next core migrations over the coming two years to finalize the ongoing network modernization within Swisscom Switzerland. Overall, you can see on the right-hand side that the NPS of our customers regarding to stability is very high and stable. On Page #13, a quick highlight on our cost saving where we stand on cost savings or achieving more with less. As I already mentioned, this remains an absolute top priority, although we had a weaker Q2, driven also by seasonal effects and some one-off costs that we had in Q2. But overall, we continue to work intensively on delivering cost savings. And you can see some examples on this slide on achievements we had in the last quarter, especially in the B2C side, we launched our new Gen AI-based chatbot which delivers very encouraging first results both in resolution rates, but also in terms of customer satisfaction, and also continues to drive what you can see on the right-hand side and move to more self-care and an increased -- sorry, decreased workload on the call center side which then helps us to overall reduce our cost base. We also celebrated the five-year anniversary of our DevOps centers or the first one we opened in Rotterdam five years ago. We now have over 500 people working in our DevOps centers and we will continue to expand these centers over the next years to continue to increase our work we can deliver in assuring mode versus Switzerland or Swiss-based cost base. Now moving on to Italy, I can also start with a personal highlight. You have seen that Walter Renna was confirmed as a designated new Co-CEO. I'm very much delighted about this confirmation. Walter is doing an outstanding job with his management team at Fastweb in Italy and I am convinced that with his inspirational and caring leadership style, he is the perfect CEO to work on the integration of the two cultures, the two companies, and bring together both Vodafone Italy and Fastweb and form a strong number two in the market in Italy. Now on the B2C side of Fastweb, we continue to execute our strategy in focusing on quality and pushing or expanding our offering beyond the core services. So, we are also working on AI-driven activities on the Italian side. One of the examples is we introduced AI support for call center agents, which helped us to drive down the average handling time by 20%, while at the same time increasing the NPS of the customers calling our call center and this also delivers -- is a good example of achieving more with less in the future. We were also on the mobile side, again, awarded with the fastest network for the fourth time. And as you've seen, we managed to gain 113,000 net adds in the second quarter, which was the second-best performance in the market just behind Iliad. The second quarter was also the start of our new energy offering, which allows our customers to buy energy with a fixed price or quite an innovative monthly tariff approach where we are reselling energy and we can say that the start was very well perceived and registrations are ahead of our expectations and we will continue this offering in the next quarters until year-end as it is a very nice effect on our ARPU uplift. You can see that 81% of the customers are also broadband or mobile customers and generates a 45% ARPU uplift with regards to customers, which are only buying Telco services from us. Okay, on the core side, we can see that the conversions is up by 40 -- is up by 1.4% to 43.4% and we continue to drive conversions in our customer base as it also has positive effects on ARPU and overall churn. Overall, the RGU base on mobile is up by 11% and we now stand at 3.7 million mobile customers, and the UBB customer base is slightly down by 0.3% and stands at 2.3 million customers. Moving on to Slide #15, you can see an overview of the Fastweb B2B and wholesale. Two business units, which have excellent market momentum and produce amazing revenue results. B2B is up by 11% in revenues, now stands at €295 million in the second quarter. We have won many new contracts and the revenue increase is mainly driven by Cloud and Cybersecurity services. We also launched the new, what we call, NEXXT AI factory, which is an NVIDIA-based AI compute infrastructure to offer a sovereign AI infrastructure in Italy. We also released an Italian LLM, or large language model, and entered into partnerships with primary editors and contact providers to improve the value of the LLM with our partners such as Gruppo Mondadori, Istad, or EB, so that the LLM is really of high value to our Italian customers. On the wholesale side, you can see that we have quite high growth of plus 37% to €97 million in the second quarter, driven mainly by the increase in UBB lines and reselling of wireline connectivity by our partners, such as Iliad or Enel (BIT:ENEI), and driven also -- yeah, driven by Enel and Iliad. As I mentioned before, we were also able to sell our 4.5% FiberCop stake for €439 million. This represents a capital gain of €189 million, which is not recognized in the P&L as it was booked directly in our equity and we will use the proceeds of these sales to execute the deleveraging in light of the transaction, which I think is also good news for our bond investors. Now, I'm handing over to Eugen to provide the transaction update on Vodafone Italy.
Eugen Stermetz: Thank you, Christoph, and welcome and good morning, everybody, also from my side. Brief update on the transaction in Italy. Obviously, I'm on Page 17. Obviously, the strategic rationale has not changed at all. We create a leading converge challenger in Italy based on improved scale, based on improved conversions, and owning our own infrastructure with [acquiring owner] (ph) economics in the mobile segment. The transaction will create substantial value through high intangible synergies. We will increase the dividend and we have a clear deleveraging path. So, this is the basic framework that most of you know quite well by now. Let me talk a little bit about the good progress we are making on our way to closing. First of all, the regulatory approvals that are required for closing are coming in one after the other. So, we very quickly got the Golden Power approval by the Italian Presidency of the Council of Ministers. We got the approval of the Swiss Competition Authority. The UK listing rules have changed as expected by everybody, so no Vodafone shareholder votes will be required for the transaction to close. So, this leaves us with exactly four remaining closing conditions, most important one certainly detailing Competition Authority. We have appointed a new CEO, as Christoph explained, and we have successfully completed the financing of the transaction, as I will set out on the next page, which is Page 18. So, we fully financed the transaction with a mix of syndicated bank loans of €3 billion, Swiss Domestic bond issuance of CHF1.1 billion and a multi-tranche euro bond issuance a couple of weeks ago of €4 billion. In total, the incremental interest expense out of these financings for the Vodafone transaction will be below CHF250 million per year, and therefore, below our assumption that we presented in the March 15 business case. And therefore, the financing fully supports the business case and the free cash flow evolution due to the transaction. That's it for the transaction. After that, I move on to the financials of the first half of the year. Go directly to Page 20 with the group overview. I'll start with revenue. Revenue was -- underlying revenues was CHF42 million above prior year. Q2 much better than Q1 with plus CHF55 million. Switzerland in the first half year was CHF56 million down, but also here the second quarter much better than the first one with just minus CHF4 million in revenue. Service revenue decline has been a bit more benign than in the previous quarter and the revenue increase from the IT business was able to almost compensate the decline on the Telco side. Fastweb with a very strong quarter of growth again plus CHF53 million after CHF35 million in the first quarter. We'll get to the sources of that when I talk about Fastweb later. EBITDA evolution underlying EBITDA was down CHF26 million, but also here second quarter, a bit better than the first quarter with minus CHF8 million. Swisscom Switzerland was down CHF43, Q2 pretty similar to Q1 a bit worse with CHF24 million after minus CHF19 million in the first quarter. The cost savings have been a bit lower due to some extra costs, I get to that later. That's the main driver here. Fastweb another quarter of growth with CHF2 million more in EBITDA compared to prior year after plus CHF4 million in the first quarter. Obviously, the incremental margins or the margins on the incremental revenue are quite low, which has a lot to do with the mix of revenues that changes over time, and I'll also explain that on a later page. So I'll move on to Page 21, still on the group-level CapEx. Group CapEx was up CHF44 million. That's still mainly the effect we already talked about in Q1. Our fiber rollout in Switzerland has achieved cruising speed this year, which wasn't the case in the first and second quarter of the previous year. You might remember that last year, 2023, we switched from the point-to-multipoint to the point-to-point rollout, which cost us a bit of rollout speed and therefore also lower CapEx in the previous years. So, this is the main effect here. And obviously, all as expected and in line with the guidance we have given. Operating free cash flow minus CHF70 million in the group, mainly driven by Switzerland. And here, again, out of the minus CHF91 million, about two-thirds is the pickup in fiber CapEx that we expected and guided for. I'll move on to Swisscom Switzerland, Page 22. Again, revenue, as I said, minus CHF56 million, but just minus CHF4 million in the second quarter. If we quickly go through the segments, B2C in the second quarter, just minus CHF19 million after minus CHF59 million in the first quarter. Hardware revenue evolution was much better in the second quarter than in the first. Service revenue evolution was a bit better. So that yielded overall a better evolution in the second quarter than in the first. B2B, up CHF28 million, CHF24 million out of which in the second quarter, also better than the first quarter. Basically, all revenue categories better than in the previous quarter. So, strong IT service revenue growth. Service revenue decline on the Telco side, a bit smaller than in the previous quarter. And we also had some growth in hardware revenues. So that's the mix. Onto EBITDA, on the Swiss side, underlying EBITDA minus CHF43 million. As I said, Q2 pretty similar to Q1. You see it on the B2C side, minus CHF6 million Q1, minus CHF4 million Q2. So, same thing, but different. In B2C, we had the typical mix of service revenue decline. On the one hand, lower subscriber acquisition costs, and also indirect cost savings on the other hand. On the B2B side, minus CHF27 million, minus CHF10 million in the second quarter, better than in the first quarter. Here, the typically mix revenue increase in IT services. On the EBITDA margin level cannot fully compensate for the revenue loss on the Telco side and this gives the typically net effect. So that's the overview on Switzerland. I move on to the always very important deep dive on Page 23 on service revenue on the Swiss side -- Telco service revenue on the Swiss side. Service revenue decline in the first half year was minus CHF54 million, minus CHF30 million in the first quarter, and now minus CHF24 million in the second quarter. Out of those minus CHF24 million, minus CHF14 million in B2C, that's CHF3 million better than in the first quarter, minus CHF10 million B2B, that's CHF3 million better than in the first quarter. If we look at the individual drivers starting with B2C minus CHF14 million, out of -- in the second quarter. Out of those minus CHF14 million, I remind you that minus CHF4 million out of these are related to the VAT increase that we didn't pass on for our customers. So, they split basically in CHF2 million and CHF2 million on the ARPU effects both on wireless and wireline. So without that move, and that's a non-recurring move, the ARPU effect in both wireless and wireline would be CHF2 million better, roughly. You can also see the levers we are working on that Christoph alluded to in his presentation. If you compare the numbers on the B2C side and the drivers to the Q1 numbers, you see the one difference is in the ARPU wireline number, which was a negative number in Q1. I mentioned it at the time that this was positive in the previous years and -- sorry, positive in the last year and helped us with service revenue evolution last year. Now, it's a zero. So, it's already become better. So, we see the results of some of the measures we have taken already in the numbers. On the B2B side, things are pretty similar to what we had in the first quarter. The drivers, as usual, RGU pressure mostly on the SME side, price pressure on the corporate side. So, where does that leave us all in all with the outlook for the full year? The outlook for the full year is the service revenue decline of roughly minus CHF100 million. You remember at the February conference I talked about the guidance for the full year about similar service revenue decline to 2023, which was CHF72 million, plus a risk of CHF20 million due to the VAT increase that we didn't pass on. And that's pretty much where we are and where we believe we will end up towards the end of the year with roughly minus CHF100 million. One other note on this page, important one as always, indirect cost savings. You will have noted that indirect cost savings have been quite weak in this quarter with just plus CHF1 million. We didn't have great expectations for cost savings in this quarter since we always expect cost savings to be biased more towards the second half of the year. And the little expectations we had for Q2 basically got diluted by some one-off effects. We had some extreme weather events in the Southern part of Switzerland in the second quarter with flooding of central offices, et cetera, which cost us a couple of millions in extra maintenance and also some higher customer care leverage due to higher call volumes. And that diluted the cost savings. But we fully confirm our cost savings target of CHF50 million plus for the full year and are convinced that we will hit it. With that, I move on to Page 24. CapEx on the Swiss side basically unchanged in Q2 and for the first half year CHF44 million up. As I mentioned before, operating free cash flow is obviously just the sum total of the EBITDA effects and the CapEx effect very much driven by the pickup in the fiber CapEx. Moving on to Page 25 on Fastweb, starting with revenue. Revenue was very positive in the second quarter, plus CHF54 million, so a very different mix by segment. So, B2C revenues were basically flat with mobile revenues growing and wireline revenues decreasing. B2B revenues up strongly, CHF23 million in the first and CHF29 million in the second quarter very much driven by growth in ICT services, lots of it rather one-off than recurring and typically with low margin as we see in the EBITDA evolution. Wholesale was up strongly, CHF27 million in the second quarter, up CHF13 million in the first. That's very nice. Very much driven by the increased UBB sales to our wholesale customers. As Christoph mentioned in the second quarter, it was a bit amplified by higher euro sales, which make up about one-third of the growth in the second quarter. EBITDA evolution on the Fastweb side, so underlying EBITDA was up CHF6 million, CHF2 million of this in the second quarter. If you look at the individual segments, you see B2C EBITDA is down compared to prior year. So, B2C EBITDA is obviously suffering from this change in revenue mix with wireless revenues going up and wireline revenues going down with very different margins. Obviously, the margins on the wireless side are low. This is one of the main reasons why we did the Vodafone acquisition and one of the major sources of synergies that we expect there, it now shows up in the B2C P&L. And we had to be fair and to explain also the change from Q1 to Q2, we had some extra cost in customer operations in the second quarter, not all of it recurring. But the underlying trend that you see here is the change in the gross margin mix from wireline to wireless revenues. B2B EBITDA slightly down despite the massive revenue growth. What's going on? What's going on is that Telco revenues on the wireline side, which are high margin, are declining. We are compensating, or much more than overcompensating actually without IT service revenue with a very different margin profile. And so, that leaves us with a small minus overall on the EBITDA side. So, the EBITDA growth from Fastweb is mainly related to the growth in the wholesale segment as you can see. In terms of outlook, let me briefly comment on the revenue side. You saw that the revenue was much -- revenue growth was much higher with 7.1% in the first half year than our guidance for the full year of 2% to 3%. That means, for the second half of the year, there will still be some growth, but most likely not in the amount that we saw in the first quarter, but rather in the range of the original guidance of 2% to 3% for the second half year. So that obviously leaves us with more than 3% for the full year, but probably certainly less than 7.1% we saw in the first half year for the full year. On the EBITDA side, you can see that the EBITDA growth does not keep the pace of revenue and also not of our original guidance of 2% to 3%, it's more between 1% and 2%. And this is what we believe you should expect for the full year rather than the original 2% to 3%. Although admittedly in absolute terms, we are talking about very small numbers and obviously exposed to volatility both on the upside and on the downside, given the small absolute numbers. Very quickly, Page 26. CapEx at Fasweb is virtually unchanged compared to prior year and so is operating free cash flow, given that EBITDA and CapEx is unchanged. Page 27, back to the group level. Group free cash flow bridge, group free cash flow was CHF109 million below prior year. That's mainly driven by the decline in operating free cash flow. As usual in the first half of the year, we have quite a significant negative net working capital effect as we prepay a lot of annual services in the first half of the year. Typically, this reverts back to normal towards the end of the year as you have seen in previous years. Page 28, group net income bridge. Net income is marginally below prior year minus CHF12 million, a mix of lower EBITDA, CHF24 million, and somewhat lower tax expense plus CHF15 million, which gives some marginal decline in net income. With that, I come to Page 29 and my last page with group guidance. Obviously, given that the results were by and large in line with our expectations, the guidance remains unchanged across all metrics, including the dividend. And with that, I hand back to the operator.
Operator: Thank you, Eugen. [Operator Instructions] Thank you. I will now open the lines one by one. As soon as your line is open, you will hear a corresponding text on your own line. Then please introduce yourself by name and company before asking your question. Thank you. We have a first question.
Polo Tang: Hello, it's Polo Tang from UBS. Thanks for the presentation. I have three questions. The first question is just really about Swiss competitive dynamics. Can you maybe talk through what you're seeing in terms of promotional activity in the Swiss market? And can you maybe also comment on what you're seeing in terms of the duration of promotions, but also the quantum of discounts? My second question is just on the Swiss fiber rollout. You've mentioned that you've hit cruising speeds, but what impact in terms of your build? But what impact is this having in terms of your broadband net adds and your B2C revenues? So, is the fiber rollout accretive to service revenues and net adds? Or is there more competition, because it also means that Salt is also entering that footprint given your wholesale deal with them? And my third question is really on Fastweb. How much of a benefit do you expect from your energy business in terms of revenues and EBITDA? Because in terms of your presentation you did highlight a big step up in terms of fixed ARPUs, like you said, 45%. So, as this business scales, how big could it be? Or maybe asking the question another way, how much of a benefit from this energy business is factored into your guidance for Fastweb for 2024? Thanks.
Christoph Aeschlimann: Okay, thank you, Polo. So maybe first on the Swiss competitive dynamics, so we see -- or I would say, overall, the market remains very promotional and we don't see a huge change. It's certainly not dialing down. It's rather contrary that we've seen a slight increase in promotional intensity in Q2, both in terms of discounts provided and duration. So, for example, Sunrise increased the promotional period from 12 months to 24 months again. And we have seen discount levels of even over 70%, for example, from Salt discounted. So, I would say, overall, still very intense activity. And that's why we also decided that we need to become a bit more pushy on the sales side and work on sort of incentives, shop layout, promotional, or let's say, advertising material that we, let's say, instead of maybe talking a bit more about brand, you talk a bit more about attractive offers to really stimulate our own net add intake. On the FTTH, build impact on our B2C business, I would say, on the one side, it offers upselling potential to move our customers from lower value subscriptions to higher value subscriptions. And on the other side, as you mentioned, it also increases competition because you have Salt entering the turf, and basically, where they were not available before because they don't sell on copper. We expect that this effect overall balances each other out. So we don't expect, let's say, an upside on the B2C. But what we should see is hopefully an upside on the wholesale business, reselling more fiber lines to our market competitors. In Italy, the energy business, I would say, it's still too early. So the benefit on, let's say, 2024 is fully factored in into our guidance that we provided for 2024. I mean, and even if the offering is very encouraging for the moment, we're still talking about quite low numbers in terms of RGUs. I think going forward it provides quite an interesting potential, especially once we have merged in NewCo and we have a much larger customer base to upsell to. But let's say, for the moment at least this year, it only has a marginal impact on EBITDA and revenues.
Polo Tang: Thanks.
Operator: Next question. Next question, please. Maybe you need to unmute yourself on your own phone. Yemi Falana? Okay, we go through the next question.
Steve Malcolm: Yeah. Hi, there. It's Steve from Redburn Atlantic. Thanks for taking the questions. Just coming back to Fastweb, thanks for the excellent disclosure on the EBITDA bridge. I wasn't quite sure on that exceptional amount of CHF13 million, did that all land in the second quarter? Or you can just clarify that? And maybe you can help us understand the margin impact of those IRU revenues, so you call them out in number six, but I'm curious to know what the margins in IRUs are. And so just going back to energy, can you just give us an idea on how the economics of the energy offer works? I mean, have you any exposure to wholesale energy price at all, or should we assume that it's a very, very low margin, sort of ARPU uplift kind of gig? That'd be great. Thank you very much.
Eugen Stermetz: Sure. Sorry, I just tried to figure out what your first question was, but it was on the CHF13 million, right? It was the exception we disclosed last year in the second quarter. It was for the four-week billing ruling, CHF13 million. So, if you need the details, it's in the Q2 report of last year. On the IRU margin, these are pretty high margins, so you can assume that most of it drops down to EBITDA.
Steve Malcolm: Any sort of -- any visibility on future IRU sales? And I know they're difficult to predict, but I mean, I presume the guidance you're giving for the second half, it seems there's nothing coming through in H2 and beyond in the immediate future.
Eugen Stermetz: Yeah, I wouldn't say that nothing comes through, but probably no major variations compared to the prior year. But as you say, it's a bit difficult to go into segment-based and revenue predictions. So, I would stick with our overall message that I gave for the second half year evolution. You may remember that Q3 and Q4 last year at Fastweb was particularly strong on the B2B and on the wholesale side. So, it will be increasingly difficult to beat that. But there is always some IRU sales in the mix. It's not that an IRU sales per se, is something exceptional. We flag it when the deviation to the prior year is significant, which was the case in this quarter.
Steve Malcolm: Thank you.
Christoph Aeschlimann: And regarding your questions on energy, so we are basically reselling energy to our customers. So, we don't take any trading or pricing risk, but this is passed on one-to-one to customers. Or let's say, we've backed up with back-to-back contracts with our energy providers and we take a margin on reselling the offering to our customers. That's basically how it works.
Steve Malcolm: There is no exposure to wholesale energy prices? I would assume the margin is kind of very low kind of teens or pricing on single-digit basically.
Christoph Aeschlimann: Well, it has actually quite interesting margins. So, it's obviously like not Telco margins, but it's better than IT. But it's -- but we don't -- I mean, obviously, we don't want to take any pricing risk or trading risk on the energy side, which is really not our business. So, in that case, margins are limited because we are basically in a reselling context. But it is still, I would say, worthwhile doing, especially if you have a huge customer base, which we will have after the merger, which allows you quite substantial upselling possibilities.
Steve Malcolm: Great. Thank you.
Operator: Next question?
Ajay Soni: Hi, there. This is Ajay Soni from JPMorgan (NYSE:JPM). I wanted to ask you around the Swiss retail margins. You mentioned you're investing more in sales and marketing, and obviously, avoid being more promotional with pricing. And your Swiss retail margins have improved year-over-year. So, what kind of offset that increase in your sales and marketing? And then secondly, just on Italian business, obviously, it's quite difficult on the retail side for you guys, but what are you seeing in terms of competitive dynamics? Is there any ease-up on the pressure there? And any further details would be useful. Thank you.
Eugen Stermetz: Ajay, I must admit I'm a bit at a loss with regard to your first question. Obviously, we managed to -- we managed by and large to keep EBITDA on the B2C side in Switzerland stable despite the service revenue decline. But maybe you can kindly rephrase your question. I think we all didn't quite get it.
Ajay Soni: Yeah. So, I'm actually agreeing that you managed to kind of maintain the margin, I think, but you've also said that you are investing more in kind of sales and marketing, so which would naturally increase your costs. So, what I'm asking is, what else have you done within the business to offset that increasing cost within your sales and marketing?
Eugen Stermetz: Well, maybe I start and then Christoph adds. I think we are not -- we did not say that we increased marketing spend or anything like that. So that's not our plan. So, if you got that, that's not what we meant. What we do mean is that we increase our sales orientation in our organization across all channels. But that does not necessarily mean increasing marketing spend. That's not the plan.
Christoph Aeschlimann: Yeah, maybe just to give you some more details, we worked on, let's say, incentive structures for agents in the shop sometimes. We were -- last year, we were more focused on -- in the marketing spend on general branding activities, like promoting the Swisscom brand as such. And now we do a bit less of that and more, let's say, marketing campaigns that promote products and prices directly. So, it's more, let's say, sales-oriented-type spend, but it's still at similar levels. But overall, obviously B2C is also continuing to execute cost-saving measures. So, driving down call center costs or other costs that help balance out some of the spend that might happen in other areas, or which led to this, say, overall nearly stable EBITDA, and I think maybe even a percentage margin increase. On the Italian side, competitive dynamics, I would say, are as always very intense. Competition pricing levels remain roughly where they've been over the past quarters. But on the mobile side, we do see again like even targeted attacks on the smaller operators like Iliad and Fastweb. But I would say, overall the dynamics are pretty much unchanged, which is not surprising as the market overall is still roughly the same and everybody is fighting to gain new customers.
Ajay Soni: That's great, and thanks for clarifying my question. Very helpful.
Operator: Thank you. Next question?
Luigi Minerva: Yes, good morning. It's Luigi Minerva from HSBC. Thanks for the presentation and for taking my questions. The first one is on the process in Italy with the acquisition of Vodafone Italy. And I just wanted to clarify whether you have already filed the transaction with the Italian Antitrust Authority? And if not, what is the expected timing? And then secondly, just to go back on the -- on Fasweb energy products, which is quite interesting. I was just wondering, what is your interpretation? Why is it that in Italy all operators are now reselling energy? And whether you think that there could be perhaps a read across to other markets, say, Switzerland?
Eugen Stermetz: Okay, maybe on the process first, I would like not to give too specific data and information about our interaction with the competition authority. Obviously, we don't want to be over secretive, but it's a very delicate process. We are in full engagement with the Italian Competition Authority, so there is active exchange and given the interactions we have, we iterated our expectation that the transaction will close in the first quarter 2025. I would leave it at that for the moment, if that's okay.
Luigi Minerva: If I may, the filing hasn't been done, because that's a public statement that you can make when you do file with the competition authority?
Eugen Stermetz: That's correct. On the energy, just on your last part of the question, read across to Switzerland, no, unfortunately not. The energy retail market in Switzerland is awkwardly not liberalized. So that would be quite difficult undertaking. Other markets, I cannot judge.
Christoph Aeschlimann: But I would say, from -- regarding your question, why all operators are starting doing this, I think it has something to do also with the competitive dynamics and operators looking for new growth opportunities and telecom being quite utility-like service. It is a good question, why shouldn't you sell other utility services to your same customer base? And we can see that this is clearly somehow corresponding to customer expectation and customers are willing to buy energy, for example, from a telco provider. And it also goes the other way around. I mean, NL started entering the broadband business and is actually selling broadband to their energy customers. So it's quite logical, why shouldn't we enter the energy market and resell energy to our broadband customers if it works the other way around. And I think that's the logic you see in Italy and with other operators launching similar offerings. And at the end, it's for us interesting because it adds incremental revenue and EBITDA to our business and is not eroding anything else that we are actually providing to the same customer base.
Luigi Minerva: Thank you so much.
Operator: Next question?
Joshua Mills: Hi there, it's Joshua Mills here from BNP Paribas (OTC:BNPQY). I had a few questions, please. The first one would just be going back to Slide 23, where you lay out the different moving parts on service revenues and highlight that -- as you commented, the ARPU dilution in wireline B2C is now flat, whereas the wireless ARPU dilution is still running at minus CHF10 million. I wondered if you could give a bit more color about what kind of initiatives you've taken during the quarter to increase prices on fixed line and therefore offset the brand dilution, and whether you are doing or have plans to do similar things in the wireless segment? I'm just trying to understand how you get that ARPU dilution in wireless to improve. The second question, there was some interesting detail in the presentation about your AI initiatives, particularly regarding NVIDIA. I wondered if you could again give a bit more colour about the kind of margins you're getting on these AI-supported B2B solutions and how those margins compare to traditional Telco services, but also the other IT services which you've been selling, which I know are a lot lower margin? Just to try and understand the mix shift going forward and how we should think about the B2B revenues dropping through to EBITDA. Thanks very much.
Eugen Stermetz: So maybe I give you the start on the first question. So, yes, we had a list of measures already implemented in -- at the beginning of the second quarter, end of the first quarter, aiming at improving ARPU, and most of them were related to the wireline segment, such as phasing out old tariffs, et cetera. Christoph gave some examples in his speech. So, this is why the impact was mainly on the wireline side. On the wireless side, obviously, the big impact that we see and that we have also seen in the past is related to the success of second brands in the wireless segment, which is much bigger than in the wireline segment. So, there is this ARPU dilution effect of successfully selling on the second and third brands. The change we saw here this year compared to last year is basically the first of these four columns on the B2C side. If you remember, last year, we managed quite well to balance the increased subscribers on the second and third brand with the ARPU dilution effect. And in the first and second quarter of this year, we didn't fully achieve our targets in terms of sales on second and third brands. So, the measures we are taking on the wireless side are more directed at increasing net debt and in particular, increase in gross adds because churn numbers are quite good. And Christoph gave some of the examples of what we're doing there in his talk. So the focus, I think, on the wireless side is more on increasing the number of subscription by improving sales on second and third brands. Whereas on the wireline side, where the second and third brand, card doesn't play that well, we work more on the ARPU. That would be my take. I don't know. Christoph, any...
Christoph Aeschlimann: No, I think it is -- was a good explanation. I mean, you can see that on the mobile ARPU, out of the minus CHF10 million, minus CHF9 million comes from the brand shift, meaning that the ARPU on the main brand is essentially flat. And we have -- I mean, we are also changing some of the older tariffs to the new tariffs. But other than that, we don't plan new measures on the mobile side. And on the wireline, we actually have increased ARPU and overall to compensate the brand mix impact of minus CHF4 million, which is linked also to some of the TV options that we repriced and all the tariffs that Eugen mentioned. I think on the AI initiative question, it is still early days and I'm not sure we can already talk about margins because we are just in the process of launching this offering and onboarding the first customers. So, I think we still probably need a couple of quarters to see overall what is the business demand and how is the onboarding going forward. But overall, if I look at our margins on the regular, let's say -- this AI offering is sort of a compute -- a cloud compute offering. And if I look at our traditional cloud compute offerings, the margins or gross margins are actually quite interesting if you are able to produce your -- or produce a customer on your own cloud infrastructure. So, on that side, you obviously, you don't look at Telco margins, but still it's substantial double-digit margins that you generate on the gross margin side. And much more interesting than reselling other IT services or much more interesting than professional services, which typically you are in, like I don't know, the low single-digits or the low double-digit figures. So, if this service works as we expect, it could be quite an interesting service going forward. But first, you need to generate revenue to actually book margins. So, I wouldn't -- don't want to get too excited about this service right now.
Joshua Mills: Thanks. Maybe just one quick follow-up. On Slide 10, you do give some helpful detail on the split of main brand and sub-brands in the top right, and you can see here that your postpaid is much higher than fixed, which [indiscernible] I think with what you're saying. But do you have any targets on where you're comfortable allowing the third brand -- second, third brands penetration to get to before you risk full cannibalization? Should we think about 30% of the ceiling or would you be happy to see the sub-brands grow further from here, particularly in fixed?
Christoph Aeschlimann: Well, this is a topic that we are working on internally as well and sort of what is the right level of second brand? And obviously, we would like to keep it as low as possible. That's sort of the main target. But you can see on the mobile side, it's already quite high with 32% and we expect it to continue to grow slightly over the coming quarters. But we are also implementing measures now to stabilize the main brand customer base to avoid the second brand becoming too -- taking a too high proportion. At the moment, I would say, it's still okay because the cannibalization effect is still lower than what we gain from the market net adds overall. But for sure, we don't want to see the second brand taking over more than half of our customer base, for example. So, I think that's a clear no-go. But we're still very far away from that figure. But I would say probably somewhere in the 30% to 40% rate on mobile is something that we will see in the future. And on broadband, we will see. Like, at the moment it's still at very low levels and the uptake on the second brand is also much lower -- or intake is much lower on the second brand because they are the -- I would say, the customer base is still more focused on the main brands in the market.
Joshua Mills: Thanks very much.
Operator: Next question?
Usman Ghazi: Hello, thank you for the opportunity. I just wanted to -- it's Usman here from Berenberg. I just wanted to touch base on the insurance opportunity in Switzerland. I mean, is it meaningful or is this just kind of a side activity? And also, if you could remind us of the kind of the margin dynamics of this business, is it similar to what you've described on the energy business in Italy, for instance, where it's lower than the Telco business, higher than the ICT business? So this is -- any color there would be helpful. And also if you are the only one -- Swisscom is the only kind of telco kind of selling insurance here, or are your competitors also going down this route? And the second question was just going to the Italian market, looking from the outside in, it seems like at least the mobile market seems to be stabilizing a bit on the ARPU side if I look at the market trend. But obviously, the wireline market seems to be deteriorating. If you could perhaps provide any color on what you're seeing on the consumer wireline side in terms of churn to Iliad or to other players, and if things are stable but weak or if things are deteriorating? Thank you.
Christoph Aeschlimann: So, the insurance business in Switzerland at the moment is not meaningful and rather a side element, looking at the number of contracts sold. But going forward, it really depends on how well the offering is picked up. I mean, I would say, the service has the potential to generate a couple of millions of revenue and margin. But for this, we need to substantially sell more contracts and it's still early days and we will see in the coming years how this contract will evolve because the insurance market is a very slow-moving market. So this is more sort of a long-term play rather than a quick fix for the next quarter. But we also hope that, or expect, let's say, convert customers which buy also insurance product from us having a lower churn [Technical Difficulty] delivering benefits on that side. At the moment, we are the only player in the -- or telco player in Switzerland delivering this. The others are, I think to some extent delivering sort of the easy protection we have as well, which is linked to device if it gets stolen or if you break your device, which we did in the past years already, which is quite successful. But in the other insurance space, I think we are the only one at the moment. So, I would say, we --- first we need to do some quarters of selling and then we will be able to see how meaningful the impact of this will be in the future. On the Italian side, so I do agree that mobile prices are stabilizing around sort of the €6 area. And overall, I think wireline is a bit slightly deteriorating, but I would say, overall also roughly stable to what we've seen in the past. For Fastweb, this is basically the same situation as we used to have. So, it's not a deteriorating situation for us. Our churn to Iliad on the mobile side is very low, so we are not losing a meaningful amount of customers to Iliad, but relative to the general market. So, I think overall competitive dynamics in our Fastweb context, I would say, are stable. I don't know, Eugen, if you...
Eugen Stermetz: Yeah, I think the only thing I'd add is, maybe on the mobile side, what you see in terms of ARPU above the line and below the line can be quite different. So, kind of the list prices seem to coalesce around €8 to €10 for the main brands, and as Christoph said, around €6 or so for the fiber brands. In particular, there is still this practice of targeted operator -- targeted offerings. So, if you are a customer of Fastweb and you come over back to me, you get price hikes. This type of offering, which is quite widespread in Italy, which is not allowed anymore using the customer data, but which is still being done in shops, et cetera. And this creates some churn. So obviously, net, we gain a lot of customers on the mobile side. We saw that in the first pages of the presentation, but we also at times had quite elevated churn if we are the victim of this operator target attacks, if you like, below the line with super aggressive prices. So that's, I guess, the only thing on mobile side I would add. On the wireline side, we, obviously, net, do lose customers, but it's very important to note that we are probably the most expensive operator in the market based on a high-quality perception, and decided consciously to stick to that quality and high price positioning. And in terms of overall result, I think it worked out quite well for us because we are in the 30 region on pricing, compared to 24, 25 for most of the competitors and the subscriber decline is still manageable. So that's the only thing I would add.
Usman Ghazi: Got it. Thank you very much.
Operator: Next question?
Nuno Vaz: Hi, good morning. This is Nuno Vaz from Bernstein. Thank you for the opportunity to ask questions. I had three on the Swiss business side. First one is on the guidance, which from what I understood, you've said that you're pretty much confirming the full year outlook and namely this net CHF50 million cost savings and just the overall impact to EBITDA. My question is, considering you've seen minus CHF43 million of underlying EBITDA loss in the first half of the year, and the service revenue loss you expect in the second half is sort of stable, you have to see considerable cost savings in the second half of the year. So, just to understand -- I understand that the second half, as you said, is a bit bare in terms of cost savings, but this would have to be considerably higher than last year's. So, just to understand a little bit better of what's driving this stable outlook. Also, because you've mentioned a one-off impact in terms of weather. So, just trying to understand how you could have predicted this in a way that your outlook is unchanged. Then, just on the free cash flow because the working cap -- sorry?
Eugen Stermetz: No, go ahead.
Nuno Vaz: Just very -- two more very quick questions, just on the free cash flow, because the working capital movement in the second -- in the first half of the year was also a bit more extreme than last year. I understand you don't really guide on free cash flow, but would you give us the sort of idea of where the working capital might end at the end of the year? Would we still see sort of around CHF100 million net negative working capital for the full year? And then, very quickly you talked about repricing TV offers and cutting some lower-price broadband offers that helped the ARPU in fix in Switzerland. Would you expect to see some extra churn in the second half of the year on the back of those? So, what's been the customer reaction to these actions? Thank you.
Eugen Stermetz: Okay. So, I take the first and the second. The first one is absolutely fair with minus CHF43 million in the first half of the year. I would just add technically, before I get on the content, that the guidance split we give is always between Switzerland and Italy. And Switzerland for that purpose includes not only Swisscom Switzerland, but also the other segments. So there is a bit more moving parts to the whole story. Your basic reasoning is perfectly correct, with minus CHF43 million how do you end up with minus CHF50 million in the end that we guided for? And the answer is the one that you gave. We do expect significant cost savings in the second half of the year, and we do expect a slight improvement in service revenue dynamics, although we don't want to oversell it because we also see still some risks on the subscriber side that might hit service revenue. So that's on the guidance. On free cash flow, we do expect a significant swing back of the net working capital, but I will not guide to a specific number. As you know, working capital is, to a large extent, determined on the last day of the year, but there will be a significant swing back, and so that can be expected in line with what we saw in previous years. TV, there was already churn. Maybe if I take the third one, so you spotted that perfectly correctly with the repricing, we had some extra churn. And you may have noticed that the TV net adds in the second quarter decoupled a little bit from the broadband net add that's normally they are pretty much in the same range and this is exactly the effect that we saw here.
Nuno Vaz: Okay. Thank you.
Operator: Our last question for today?
Robert Grindle: Hi, it's Robert Grindle calling from Deutsche Bank (ETR:DBKGn). Just a couple from me. May I confirm on the FTTH targets, you've reiterated them, but in April you said you'd have some delays due to the point-to-point ruling. Is that because you had already factored that into your guidance? And is the whole point-to-point, point-to-multipoint thing a done deal with no further discussion? Secondly, on the FiberCop transaction, just to confirm, you actually got the cash in Q2, I heard that you didn't book it in P&L. And then, please could you just revisit the Fastweb guidance in the second half of the year? I didn't quite hear what you were saying there. Thank you.
Eugen Stermetz: Okay, so the FTTH target is actually -- I'm not sure exactly what you are referring to, but I think the guidance that we gave is factoring in the point-to-point shift. So, the 57% coverage by the end of 2025, initially, we had 60% planned when we were running or building point-to-multipoint. And this, we had to revise slightly to 57% when we shifted to point-to-point. But this is pretty much stable guidance since two years now, or since 1.5 years since we changed the rollout to point-to-point. And we still think that we will achieve the 57%, probably landing at around 53% by end of this year in the rollout. On the cash side, we booked the cash this third quarter...
Christoph Aeschlimann: In Q3. Yeah, we got the cash on 1st of July or 2nd of July. Yeah. So that's why it's not in the Q2 financials. And happy to repeat, the Fastweb guidance, sorry if you got lost in the action. So, separately on revenue and EBITDA, revenue in the first half year was up 7.1% and our original guidance for the full year was 2% to 3%. So obviously, we are already there. So, the question is what happens in the second half of the year? And what I said is what we expect for the second half of the year, a growth that is more in line with our original guidance, 2% to 3%, which gives you a total growth for the full year, certainly above the 2% to 3% that we guided originally, and certainly below the 7.1% that we saw in the first half of the year. So, that's on revenue. EBITDA, our original guidance for the full year was 2% to 3%. First half growth was plus 1.5%, and we expect the growth for the full year now to be more in line with what we saw in the first half of the year. So, the 1% to 2% rather than the 2% to 3% originally guided. However, I added, and I will edit again, we are talking about very small numbers here, so we're talking about single-digit million euro numbers. So, there is certainly some volatility still in that guidance. I hope it was clear, if not just follow up, no problems.
Robert Grindle: Got it. Thank you very much, indeed.
Eugen Stermetz: Welcome.
Louis Schmid: Thank you very much, Robert and everyone. And with that, I would like to conclude today's conference call. If you should have any further questions, please do not hesitate to contact us from the IR team. Speak to you soon, and have a nice day. Thank you.
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