Swisscom Ag Ittigen R/Shs

Good morning, ladies and gentlemen. Thank you for joining the Swisscom Q1 2025 results conference call hosted by Christoph Aschliemann, Eugen Sternmetz, and Louis Schmidt. Louis, the floor is yours.

Good morning, ladies and gentlemen, and welcome to Swisscom's Q1 results presentation. My name is Louis Schmidt, Head of Investor Relations, and with me are our CEO, Christoph Aschliemann, and Eugen Sternmetz, our Chief Financial Officer. Let's now move to page number two with the agenda of today. As you can see, our CEO starts presentation with chapter one and a quick overview on the highlights, the operational and financial performances of the first quarter. Then in chapter two, Christoph presents a business update for Switzerland and Italy. In the second part of today's results presentation, Eugen runs you through chapter three with the first quarter financial, including the confirmation of our full year guidance. On page three, some brief remarks in our financial communication this year, explaining the focus of the presentation, which is the comparison of 2025 figures with pro forma 2024 figures as Iguodafone Italia had been consolidated from 1st January 2024, adjusted based on Swiss Consent counting and reporting policies and unaudited. This comparison ensures that we provide a meaningful comparison on a life-for-life basis. With that, I would like to hand over to Christoph to start his part. Christoph.

Thank you, Louis, and welcome also from my side to this Q1 2025 fall. I will start on page number five with some group achievements. Overall, I'm pleased with the financial results in the first quarter. We are spot on and on track to achieve the full year guidance, and as you have seen, we are also confirming the full year 2024 guidance with revenue between 15 and 15.2 billion Swiss francs and maybe down around 5 billion Swiss francs. I'm also very pleased that we have successfully started the integration in Italy with FASO and Vodafone. The execution is in full swing and progressing very well. as we are executing our plan, and the new EXCO is in place and executing all required and planned integration actions, and maybe some more words on this later on in the Italy section. In Switzerland, we have been awarded again, according to Brand Finance, the strongest telco brand worldwide, being a testimony to the strength of the Swisscom brand in Switzerland, building on the best experience and the best network. We also won, again, numerous awards for our network and the service we provide, especially on the B2C side. And we have launched in Q1 a new multi-mobile offering we are calling We Are Family to build the next level of convergence, not only between wireline and wireless, but especially increase the household penetration of mobile on the main brand Swisscom. In Italy, you will see that we are driving the value focus and taking first steps to drive differentiation in the Italian market and stabilize the telco business. Now, moving to slide number six. Sorry, I need to drink some water. Sorry. Sorry for that. I'm slightly cold. Our RGU base is overall broadly stable in Switzerland and Italy. If you look at post-pain, we had a slight growth of 51,000 net adds to 5.5 million RGUs. While on the broadband side, we have a slight decline of 14,000 net adds in the first quarter and correspondingly a slight decrease also on the TV side as the new net adds broadband come more from second brand with less TV attachment. On the wholesale, we were able to continue our growth. We have seen during 2024, also in this year, by adding 11,000 lead ads on the wholesale side, nearly compensating the decline of 14,000 on the B2C side. In Italy, we have a stable R2 development on mobile, albeit with very different trends in B2C and B2B. As you will see later on, B2C R2 loss is around 400,000. compensated by an equivalent growth on the B2B side, mainly driven by a large government contract leading to an overall exactly stable RGU base at company level. The broadband RGU base was declining by 67,000, mainly driven by our value approach, trying to keep ARPU high and focusing on high-quality sales in this area, suffering slightly from still higher churn on the Vodafone side, which I will explain a bit later. But as in Switzerland, we are also continuing our wholesale growth in Italy with plus 63,000, bringing our wholesale RQ base to nearly or close to 1 million. So, hopefully, we can report in Q2 that we will overpass the 1 million mark either next quarter or the third quarter of this year. So, if you look at the overall group financials on slide number seven, you see that we are on track to achieve the full year guidance 2025. Revenue at the group is standing at 3.75 billion Swiss francs, slightly down by 1%, mainly driven by a decline in Switzerland and some strengthening of the Swiss franc against the Euro, whereas in Italy, overall revenue has been roughly stable. On the EBITDA side, we have a decline of 6.6%, bringing it to 1.27 billion, driven by a decline in Switzerland and the declining EBITDA in Italy based on integration cost and some weaker telecom service revenue performance. Eugen will dive into the details also of CapEx and operating free cash flow later in the financial section. So, I will leave this to Eugen later on and move on to the business update of Switzerland and Italy. On page number nine, we will start directly with P2C in, sorry, with the overall priorities for both countries before we dive into the details of each individual country. So, as we outlined in February, When we announced the full year 24, it does. We have a very clear roadmap for 2025 to drive the value creation. In Switzerland, it's all about cementing our number one position in the country, managing the telco top line, making sure that service revenue erosion is as small as possible, and at the same time, execute the cost transformation to achieve more with less cost, and at the same time, drive profitable IT growth. growth. In Italy, the priorities are similar, but slightly different. Of course, the main priority is to integrate the Vodafone and FastWeb business and capture the synergy potential, which leads to substantially lower cost base in the coming years. And at the same time, we are also very much focused on stabilizing the B2C service revenue, which I will talk a bit more in detail later on, and at the same time scale up new revenues in wholesale, in IT, and in the B2C energy business to create compensating revenues and EBITDA in Italy. Now, moving on to B2C Switzerland on page number 10. You can see that overall the B2C evolution is actually very pleasing in Switzerland. We can also see some first signs in the market of easing tension at least on the mobile side. So there is still, let's say, some aggressive promotions in the market, but they are slightly less promotional. Instead of seeing minus 70, minus 75% discounts, we are now at around minus 50, minus 60. So tension is slightly decreasing. We have also seen that several brands have increased the prices. We have followed this on the Wingo side. We've also a plus one Swiss franc price increase. and we will now see how the mobile market evolves further in Switzerland over the year. Overall, on the RGU base, we had a nice growth of plus 94,000 RGUs, bringing the RGU base to 3.47 million, and broadband was slightly down by 25,000 lines on the B2C side. I think one important priority this year is really to increase the multi-mobile convergence and household penetration. This is why we launched this new We Are Family offer, which offers up to discounts for household penetration of up to five mobiles. We are very pleased with the start in the market in the first quarter, and we will continue to push this throughout the whole year to really accelerate the inflow on the main brand on the mobile side and make sure that our offerings are positioned on an affordable basis in the market. At the same time, we are investing heavily in defending the customer base, customer value management, and at the same time pushing sales. So we are experimenting with different new store formats, pop-up stores for the second brand, like Wingo you see on the slide, but also strengthening other channels online or the M-Budget and CodeMobile sales points, which is an important piece to defend and at the same time attack in the market to create enough inflow overall for the B2C business. On page number 11, you can see some other actions that we are taking to further enhance our B2C business. So, we are very focused also on upselling the existing customer base into higher value tariffs, especially linked to the fiber rollout in FTTH Turf, where we are very successful in bringing our customers from the lower end subscription S or M level up to the L gigabit type speed subscriptions that leads to higher ARPUs. And you can also see this on the wireline ARPU chart on the right-hand side, where the wireline ARPU average has continued to increase by plus 1%. This is driven by these upsetting activities, but also, More value-added services sold, more TV packages, more entertainment value-added services that we are quite successfully bringing into the customer base, and we will continue to push also in this year. And one important piece that we will bring more to the customer base is also around security. So we already have quite a lot of security offerings on the B2C side, and we will further push this now this year to continue to drive ARPU development on the fixed side. Another important piece of the puzzle to keep churn at the low level it is currently is to further invest in our benefits or in the Swisscom benefits program, really making sure that loyal customers profit from their relationship with Swisscom and they get additional benefits that customers On the mobile side, maybe one word around ARPU. So, you see that the mobile ARPU continue to decline. This is mainly due to the brand shift from main brands to second brands, but also driven by the new, by ongoing optimizations of customers, for example, by using the VR family discount, which is also likely or creating a small ARPU erosion effect. Now, moving to B2B in Switzerland on slide number 12, you can see that we have been, in general, still facing quite a high price pressure in the market, especially in the SME segment, which is driving the average ARPU erosion that you can see in the top left of the slide. On the wider side, minus one Swiss franc, which is mainly driven by the SME segment. where we face quite stiff competition from salt and sun, and we expect this to continue throughout the full year. To mitigate this, we are putting up attractive offers. We are investing a lot in customer base management and upselling campaign to mitigate this price pressure. And on the corporate side, we are focused on finalizing our SD1 migration. to protect the wireline business going forward. So you can see that we have nearly completed the contractual migration of migrating all customer contracts to the new SD-WAN product base. So we stand at 95% completion, and our aim is to finalize this by the end of this year and have all customers on the new SD-WAN contract. The technical migration is lagging behind the contractual migration, so we migrated roughly two-thirds of the cultural base from the MPLS product onto the new SD1 product, and we aim to finalize the migration by end of next year, so by end of 2026. And until then, we will still see structural revenue erosion due to the shift of technology from MPLS to the SD1 product base. As by then, all the customers, by end of 26, all the customers will be on the new products with a lower price point, and then we should see also some easing on the service revenue erosion on the wireline side in B2B. One product news I'm excessively excited about is what you see on the bottom left. So, in two weeks' time, we will launch a new, a fully modular four times convergent product offering. It's the biggest product launch in B2B in the last decade, which will over time replace most of the offerings we have today, which will really bring together connectivity and security, as we believe that security is at the center of B2B connectivity in the future. And we really can bring a new, very highly differentiated product offering to the market. And we will launch this and announce this to the press in exactly two weeks. And I'm really excited to see the impact of this. Revenue-wise, this will not create a big impact in 2025, but I do believe that it is a very important move going forward for the B2B business in 26 and especially beyond 27 to create a more differentiated positioning on the market and protect or differentiate against sort of the regular pure plain connectivity business. And I think we will talk a bit more in detail about this offering at the Q2 call once we launch the offer in the market and also give you an outlook of how we evolve this in the coming years. On the IT side, we have some revenue growth, 2.4%, still slightly below expectations on the organic side. But anyway, up by 2.5%, so it's a good progress. And we are further looking how we can accelerate this year. We are facing some headwinds on the IT side due to macroevolvement on the, let's say, economic outlook. As you obviously know, the Trump administration is creating some uncertainty with their approach to tariffs and other aspects. which is also slowing down investment in Switzerland on the IT side. You have many companies that are currently holding back with investments or scaling back slightly on IT projects to face or to deal with this uncertainty. And we can already see this slightly slowing down our IT business. So, I'm happy that we managed to continue to grow this in Q1. And we also established a new dedicated unit for customized solutions to serve and special customers which have special needs and critical infrastructures like the army or police first responders such as police forces, for example. Okay. So, I would move on to network on page number 13 and wholesale. We further invested heavily in our mobile and wireline network. Wireline 5G plus coverage is up by 4%. whereas the wireline coverage is up by 6% moving or bringing us to 53% FTTH coverage overall. Another noteworthy news is the win of the chip award. We won it for the 10th time in a row. And you can see the chip performance measured, the share, basically what you can see on the chart is the share of connections with over 100 megabits performance. where Swisscom achieved 93%, and Sunrise and Salt were at 71% and 76%. So there is really a huge gap in performance of the network, and I think we can say that our network is really forming another league, distancing the other two networks in download speed very, very clearly. And we will continue to invest in our mobile network to make sure that we keep this quality lead also going forward for our customers. The FDTH rollout is completely on track. As I said, we are up by 6%. We are on track to achieve our full-year target of 57% coverage. And as you can see on the right-hand side, it also drives our positioning in the wholesale market. So we are currently gaining market share with this extended FDTH footprint. And we can also monetize the technology advantage or the build-out of the network. You can see that our access service revenue has increased by 11% from 44 to 49 million in Q1. And you can also see that already 45% of our wholesale access business is on fiber. So we have nearly half of the wholesale connections on fiber connectivity. It is up from 40% to 45, and we expect this fiber share to continue to grow over time as we are now successfully phasing out copper and customers are moving more and more to the fiber connections as we continue to increase our footprint. And I think this is a very pleasing result to show that we can also monetize the FTTH rollout, not only in our own B2C business, but also on the wholesale side. So this brings me to the last slide concerning the Swiss business, page number 14. You can see some examples of initiatives we have in place to reduce our cost base, but not only to reduce the cost base, but also to improve the customer experience. So, for example, we are experimenting with different new formats in the shops, for example, self-service cabins to provide better experience or better support in shops on, let's say, specialized topics where you don't always have an expert onsite in the shop. We have self-service screens that are really combining also the physical elements with the digital elements and creating sort of what we call a digital shop. It's a bit of a strange word, but I think it symbolizes well that we try to get the best out of both worlds and create a great customer experience in the store and at the same time reduce the cost of service by bringing in digital or centralized elements as it is called a self-service cabin. At the same time, we are obviously also very focused on deploying automation and AI internally in our operations, not only in the call center, but also in the IT rollout, in the IT operations, network construction, network operations, to really improve customer experience, reduce meantime restore, fault detection, CapEx efficiency. And we have launched several projects several projects that are ongoing in this area. Do you see that we have delivered 9 million cost savings in Q1? So we are on track to deliver our full year target of 50 million for this year. Okay, now I would close Switzerland and we move over to Italy on page number 15. So as I said in the introduction, the integration is on track and in full swing. We have built the connections between the FastWeb network and the Vodafone network. We have completed this sort of all the technical work and have migrated the first thousand SIM cards. And starting mid-May, new customer activations on FastWeb will happen on the Vodafone network. And we will now pick up the migration speed, which will happen to Q3 and Q3 until the end of the year. On the savings side, you will see most of these migrational savings in the second half essentially are very much backloaded into Q4 as the migration is slowly picking up speed. You will have not so big effect in Q2, obviously, and most of the financial impact will then come in Q3 and mostly Q4. But I am happy that this is on track as this will deliver 200 million of cost savings in 2026 or one-third of the full synergies planned with our deal. So, it is very positive and good that we are completely on track to realize this important piece of cost synergy. Also, another piece of, another important piece of the integration is the design of the new organization. So we have completed the design up to the entry level, and we are now finalizing the last layers of the organization until end of June. So we are completely on track there as well so that we have a full and consolidated organization in place where everybody can really concentrate on their job instead of asking themselves who will be their boss next month. I think this is a really important and essential piece of our integration that we finalize this as quickly as possible. And we have also, or are doing a lot of work on cultural integration, making sure that people behave in the way we want them to behave, that we can create this combined culture going forward, focusing on the important elements that we want to keep from both the cultural board of phone and fast web. And as you will see later on, also synergy delivery is still small in Q1, but it is completely on track. and we are confirming that we will deliver the plan synergies in 2025. Now, moving on to B2C on page number 16, you have seen that we have had 35 million of service revenue erosion in Q1 in B2C, mainly driven by B2C mobile. This is at the upper end of our expectations and clearly not where we want to remain in the long run, and we have taken number of actions to start working on the stabilization of the telco top line in the first quarter. So some examples are we have increased the price on the FastWave mobile subscriptions. We have increased the price of the Vodafone broadband subscriptions. We have stopped some telesales activity to improve the customer or the net ad inflow. We have also stopped the repricing of the Vodafone customer base. to get churn down in the customer base of Vodafone and improve the NPS or start working on improving the NPS, which we think is an important element going forward, working on reducing the churn and then getting a high quality NetApp in to stabilize the ARPU development over time. And then this will over time also stabilize obviously the service revenue. We have also launched a couple of new products. like FastWeb Protect or . And we have started cross-selling FastWeb Energia across the Vodafone base in April. So you don't see this yet in the Q1 numbers. But we can already say that the FastWeb Energia this year is performing very well above our expectations. And so we are excited about bringing this product also into the Vodafone customer base to make sure that all our customers can profit from this great product, and I think this will also already deliver some compensation of service losses this year, so we can compensate part of this with the new energy growth. But overall, if we look at the telecom market in Italy, it's obviously still a competitive market, and the market has quite, or historically has had a very high focus on, or was very volume-focused driven, with targeted below-the-line offerings, to gain customers, and we believe that Vodafone, FastWeb, and the market should more move into a value-based approach. And we are now taking the first steps to making these changes in our strategy to drive a change from volume back to value across our whole customer base. And you can see on slide 17 what this means. So we have or want to position FastWeb and Vodafone as premium multi-product conversion brands, and then clearly separated from home as a mobile-only, no-thrills, sort of smart shopper brand. And we really want to reposition both the Faso and the Vodafone, or not reposition, but reinforce the positioning of Faso and Vodafone as a quality leader with the best network and the best shops and the best service in Italy, and then focus on our stabilization in these two brands. One other aspect which would be important going forward is really driving the convergence benefit, not only on fixed and mobile, which is the obvious part of the convergence that we can drive now with the merger, but also the multi-mobile convergence and really work as we do in Switzerland on the mobile or household penetration on the mobile side, and at the same time, scale up new beyond core products such as the fast web energy. We will further refine this B2C strategy now going forward. The teams are working on this to make sure that we have a great plan in place, and we will for sure talk a bit more about this with the half-year results, and we still plan to deliver a new completely integrated product portfolio in autumn this year, sort of to implement this new value-based strategy going forward. Okay, moving to page number 18 on the B2B side. So, you've seen we have quite a high growth on the mobile side, up by 12% to 4.2 million RGU's. This is mainly driven by the TM9 contract, which is basically delivering mobile connectivity to the federal government, and this is still ramping up in the course of this year, whereas the overall wireline side was roughly flat in RTU base. On the B2C side, we're also finalizing the organization, the pieces and bringing sort of a combined product portfolio to our customer base so that we can really unlock the unique potential of FASO and Vodafone as we are the only provider within network infrastructure in Italy. offering both mobile and wireline services. So we believe we have a really unique product portfolio and opportunity. And we are now equipping our sales force across both FastWeb and Vodafone with all the tools they need to really accelerate sales on the B2B side and bring all these great products to our customers. On the IT side in Italy, you see we had quite pleasing growth, plus 9.2%. bringing the revenue for the first time over 200 million in Q1 25. So we are very happy about this growth, driven mostly by cloud cybersecurity and other IT products, but also we are sort of wrapping up our AI pieces in Italy, which is I think an important offering going forward. Also the sovereign cloud of everything that is going on currently in the world, sovereignty and local solutions take a bit more place in or a bit more space in the mind of our B2B customers. So, the offering with fast cloud pushing really the sovereign cloud solutions is an important aspect going forward and will drive some of the revenue growth going forward. Now, on page 19, a couple of words on network and wholesale. Also, in Italy, we continue to invest in the best network of Italy, and we brought 5G coverage up by 5% to now 78% of population coverage on track to achieve our full-year target of 2025. And also, FTTH expansion is progressing well. We now stand at 52% FTTH coverage in Italy, so pretty similar to what we see in Switzerland, actually, quite similar coverages of the country. And in this footprint, we have about a 50-50 active passive fiber split share. We continue to drive our wholesale growth. So, you've seen we had an amazing growth of another 34% of access line growth, bringing us to 968,000 access lines in the first quarter. And we expect it to continue pretty much at the same speed this year, also increasing our wireline service revenue by 10 million. Overall wholesale revenue was slightly down because we had some non-core low margin revenues, which were also linked to the Invit contract that we can explain a bit later, which were down by 19 million. So, overall, you've seen a small decline in wholesale, but the important pieces, the wireline and the mobile piece, are both continuing to grow. That was it from my side, and I will now hand over to Eugen.

Thank you, Christoph. Good morning, everybody. So, these are our first quarterly results, including our new segment, Italy, which I'm happy to present today. As we pointed out at the start, the focus of the financial comparison will be compared to prior year pro forma numbers on all the main financial KPIs, so revenues, if they are operating free cash flow for groups, Switzerland, mostly Italy, obviously. So, this will be the focus, however, on free cash flow and net income. I will compare to prior year reported, because we believe this is the more useful number in the end. Net income is net income, and cash is cash. So, I'll start with the main financial KPIs on the group level. Revenue was down 47 million in the group. Euro-Swiss franc surprisingly stable year-over-year, as Christoph already mentioned, so that net of currency effect at the minus of 41 million. Switzerland was down 24 million, a combination of service revenue decline and lower hardware and software revenue. Service revenue decline was relatively benign this quarter, as we shall see. Italy almost stable at minus 8. a combination of service revenue decline in telco on the one hand, but also strong growth in the IT and the hardware revenues. APTR was down 90 million reported, leaving aside some positive one-offs in Switzerland last year that is an adjusted minus 57 million. Switzerland was basically stable with minus 3 million adjusted in Italy. minus 50 million , very much revenue-driven and revenue-driven as we shall see in a minute. I move on to page 22. CapEx was lower by 118 million. We put the chart upside down here in order to show the impact of CapEx operating free cash flow. So positive impact of 118 million operating free cash flow. on an adjusted basis that's plus 84 million, so CapEx down by 84 million, both in Switzerland and in Italy. In both cases, driven by exceptionally high CapEx in Q1 2024, rather than some extra low numbers in this quarter in 2025. In Switzerland, this accounted for 22 million. In Italy, the effect was more pronounced, as I'll explain in a minute, with a plus on operating free cash flow of 58 million. The end result, operating free cash flow reported up 28 million, both from Switzerland up 19 million and Italy up 8 million, basically stable. So, in Switzerland, it's a stable EBITDA combined with a somewhat lower capex. And in Italy, it's a combination of clearly lower EBITDA, but also clearly lower cutbacks. That's the overview over the group. I now dive into the individual segments, starting with Switzerland on page 23. So revenue in Switzerland down 24 million. If we go into the individual segments, B2C was almost stable. on the back of a quite moderate service revenue decline with this quarter, so with minus 6 million in revenue overall. B2B was down 25 million, also a combination of lower service revenue, but also lower hardware revenues, which were only partially compensated by higher IT business revenue. Wholesale was marginally up, but that was mostly due to roaming in this first quarter. On APTR, APTR in Switzerland, down 21 million reported, but on adjusted average stable at minus 3 million. Going into the segments B to C, minus 6 million, basically reflecting the lower revenue. B to P, minus 13 million, so compared to minus 25 million on the revenue side, you see that we have some cost savings, both direct and indirect costs that soften the service revenue. and there was always a small contribution positive from the IT business year over year. In the segment ISF, the infrastructure and support functions, plus 11 million, so this is where the cost savings typically show up, and they also did so in this first quarter of 2025. I move on to page 24, a deep dive into Switzerland. a couple of things here. On the top left, you see the service revenue broken down into B2C and B2B. So B2C was down just 10 million this quarter, B2B down 16 million. So we are exactly, with total of 26 million in the quarter, we are exactly on track towards the guidance service revenue decline of about 100 million for the full year. On the same chart on the top left, you see the change in indirect cost, which shows a plus of 9 million year over year, so a positive effect of 9 million year over year. This is a bit below the quarterly run rate that we need for 50 million cost savings for the full year. But as you know, and as I never stop to repeat, there are lots of quarterly fluctuations that go into these numbers, so we are fully on track for the 50 million cost savings and confirm this guidance also this quarter. On the top right, for the first time, we split out the IT business in Switzerland. We hope that provides some additional transparency on that topic. The P&L shows that yes, the IT business is indeed a source of growth. In this quarter, 7 million plus, driven both organically and inorganically. and a source of profitable growth, but obviously the profit margins are quite different from the telco margins, which will not come as a surprise to you. On the bottom of the chart, as usual, bottom left, the service revenue evolution over the last couple of quarters, as I mentioned in Q1, relatively benign with minus 26 million, in particular from B to C, just minus 10 million. However, to be fair, if you look at the time series here, bear in mind that last year we had a positive effect on the B2C numbers of about 4 million per quarter out of this VAT effect. We always said last year that this is just an effect that impacts 2024 and will be gone 2025, and this is obviously part of the quarter-over-quarter improvement that we see here. I'll move on to page 25. CapEx in Switzerland bound 22 million. We had some non-recurring CapEx in Q1 2024. So the end result on operating free cash flow is very, very important. Reported plus one stable free cash flows from Switzerland and on an adjusted basis even up. So this is obviously a major KPI that we are very much focused on to deliver stable operating free cash flows from the Swiss. and we were successful at that in Q1. And now move on to Italy, page 2026. Revenue, we heard it essentially stable at minus 8 million year over year in the quarter. Let's look at the individual segments. So B2C revenue was down 23 million. Behind this number, there is a service revenue decline of minus 35 million. which was partly compensated by growth in the energy business. B2B revenue was up. There was a debt-to-service revenue decline of $12 million, but the IT business grew, as Christoph already pointed out, by $17 million and also hardware revenues grew. So in total, B2C in Italy is still a source of revenue growth. Hotel revenues were down $7 million. However, the core business, both in wireline and in wireless, is growing very nicely. So, these minus 7 million year-over-year is sort of an artifact because in the prior year in Q1, we had some significant and very low margin non-core business in the wholesale segment on the waterfront side. So, this gives us year-over-year a negative effect, but by no means an indication of the growth potential of the core business in wholesale in Italy. I move on to EBITDR, same page. So, EBITDR reported down minus 58 million. We did not have significant integration costs yet. So, just 6 million that we show in adjustment. There is more to come, as you know, from our guidance. So, the adjusted number in Q1 is minus 52 million. All very much driven by B2C, and here very much driven by the service revenue. It's not the only effect, but it's a major effect. There is one second effect in there. Just to remind you, we show here contribution margins of the individual segments and indirect costs that add up to EBITDA. So, we're talking about contribution margin B2C in that column with minus 35 million. So, it's driven by service revenue decline mostly, but there is also an increase still in mobile COCs because the FastWeb brand is still growing on the mobile side. So we have a higher number of subscribers on the FastWeb brand. And with these FastWeb mobile customers, we still have higher COGS associated to that because these customers so far are on the Telecom Italia and Winslay Network, and we are paying COGS for these customers. So that's the second effect that affects the contribution margin here. Obviously, as Chris pointed out, towards the end of the year, all these customers will be migrated, and we will see the major part of the positive impact of this migration next year and also a bit this year as I've explained when I talk about the synergies. B2B contribution margin down minus 5 million against an increase in revenue of plus 22 million. This is an effect that you already know from the FASB times. So, despite growth on revenue, we have a lower contribution margin. This is due to the revenue mix because service revenue that drops out in particular on the byline side is obviously very high margin. And at the same time, the IT revenue that comes in is at a lower margin. So, we have a negative impact year over year. On the other hand, the wholesale and indirect cost negative impact that you see on this page of minus 1 and minus 11, is mostly driven by one-offs in the prior year and is not an indication of any trend. So we certainly do not plan to have higher costs in the first year of operation. So this is more an artifact of one-offs in the previous year on the waterfront side. Deep dive on page 27, deep dive on Italy. I'll just comment on the lower part of the chart, the service revenue, because this is a KPI that we track very closely and we report on a quarterly basis as we do in Switzerland. So, it's 47 million in total in the first quarter, 35 million B2C, 12 million B2B. If you take a look at the B2C side, it's again mostly driven by B2C mobile, as Christoph already explained. So, at the moment, it's still a combination of brand evolutions. Obviously, this will change over time. For the moment, it's a combination of brand evolution. So we have year-over-year subscriber loss on the Vodafone brand, and this year-over-year subscriber loss translates also into a service revenue loss combined with still some ARPU dilution as churners on the Vodafone brand churn at a higher ARPU than those that came in over the last 12 months into the customer base. balanced to some degree by growth on the faster brand and also some growth on the whole brand. So, this is basically what is going on on the buyer side. On the buyer side, we are mainly suffering from subscriber losses. Also here on the Vodafone side, still suffering from the last repricing that were done in 2024 and also changing the invoicing cycle in 2024 that still generates Some churn and reviews is the subscriber numbers, which then obviously year over year show up in the service revenue numbers. On B2B, just one comment on the buyer list column, minus 6 million. We talked about the subscriber growth due to TMI, at the same time we have a negative year-over-year effect on medical service revenue in that segment. This is because of the very low prices on this historic TM9 contract, which adds customers, but at a very low price, thereby also impacting the output. Quickly on page 28, CapEx and operating free cash flow. I said it at the beginning, CapEx was much lower in Q1 2025 than Q1 2024. has a lot to do with Q1 2024, mainly three effects there that increased cutback in Q1 2024. On the faster side, we had the strategy change on fixed pilot access. So we stopped the rollout of the dedicated network, which shows up as a positive effect year over year. On the waterfront side, a major IT project was completed. The whole B2C stack was renovated and that project was finished over the course of the year, shows up as a positive And there were also one-time investments for a B2B EO business. So all of this adds up to quite a significant number and shows much lower complex in Q1 2025 than in Q1 2024. Entries are also on an operating free cash flow basis. Operating free cash flow in Italy up on an adjusted basis by 8%. million combination of and lower of 60 million balancing out in the first quarter. I move on to page 29. Just a quick update on synergies and integration cost even if obviously in Q1 there is not much to be seen. This is just to stress that we are going to report obviously on a quarterly basis on our Synergy performance and on the integration cost ramp up in Q1, but neither on integration costs nor on the Synergy side. There is much to be seen. So most of this is going to come. Christoph mentioned the Synergy target for 2025, which we confirmed at 60 million. So a large part of this is obviously the start of the migration of the mobile part which will take place in the second half of the year and will show up in the numbers in terms of cost savings in Q4. And we confirm also the integration cost piece for this year of about 200 million. So now I move on back to the group lever to free cash flow bridge and net income bridge. As I mentioned at the start, we compare here against reported figures prior year rather than a performer number. So operating free cash flow is 498 million in the first quarter. And the free cash flow is 471 million was only marginally below and quite strong in the first quarter. What's going on in the bridge between the two? So we had a small positive impact from change in net working capital of plus 54. and we had practically no net interest paid. So that might seem a bit awkward given that we owe the company for 8 billion. So let me explain briefly. It's a combination of two effects. We had in the fourth quarter still the investment of the funds raised for the Vodafone transaction, and they delivered still some cash interest that we received in general this year. So that's one part of the effect. The other part of the effect is simply that the financing for the waterfront acquisition started in May last year, so most of the coupons are only due in Q2, Q3, Q4, and not in Q1 of this year. So that gave us this very small cash net interest in the free cash flow bridge. We obviously see that on an accrual basis in the net income bridge, the interest expense is very much there. So Q1 in terms of free cash flow is a bit of an exceptional situation. If we compare the free cash flow to prior year, free cash flow is up at 273 million. This is essentially driven by a rather sizeable negative net working capital effect that we had in Q1 2024 and has not much to do with the performance of the business this year. I move on to page 31, the net income breach, an incredibly busy slide, so I try to clarify a little bit most of the year-over-year changes on this slide. are simply due to the fact that we consolidate Vodafone Italy for the first time. I mentioned we compare here to prior year reported. So, the simple fact that Vodafone is in the numbers now shows up in the year-over-year deviation. So, you see a higher lease expense, which is obviously due to the Vodafone inclusion into the consolidation. You see higher depreciation also here in particular on lease assets. So, I would suggest to leave all of this aside and in order understand the numbers, it's actually easier to start with EBIT, which was 519 million and was 49 million down compared to prior year, which is essentially because of the depreciation of intangible assets that we recognized as part of the purchase price allocation, which accounted for So, this is really what is driving the year-over-year deviation. Apart from this, there is a positive effect as we put into the notes from Italy of plus 52 million. Small negative effect from Switzerland of minus 30 million. And as I said, so a small positive effect overall, but then there is the purchase price allocation depreciation. which dominate the year-over-year effect. If you go further down the bridge, there is a minus 63 million compared to last year on the net financial result. This is obviously the additional interest expense. It's only partly from the added debt due to the waterfront acquisition. It's also due to the added lease liabilities we have because obviously also interest on lease is included in here, but the major part is additional interest expense on the added debt for the border fund acquisition, so all in. Net income is 367 million, down 88 million, and this 88 million are driven by DPA depreciations and the additional interest expense for the border fund acquisition. So I come finally to page 32, the guidance. You remember on February 13, we presented a preliminary 2024 pro forma numbers, rounded them to 0.X billion and also issued a preliminary guidance. In the meantime, we published definitive 2024 pro forma numbers, which we show on the left hand of this page. You received them a couple of weeks ago and except for minor rounding topics, and the finalization of the accounting harmonization. These numbers fully confirm what we published on February 13. And today, we also confirm the guidance that we issued on February 13. So, we do confirm the guidance on Switzerland. We do confirm the guidance on Italy. I would like to make one comment on Italy revenue. We confirm the guidance of 7.3 However, we talked about the service revenue decline on February 13 of about 100 to 200 million, compensated by about 100 to 200 million of revenue from other sources. We confirmed this equation, however, as you saw in the first quarter, service revenue declined at minus 47 million. We are rather on a run rate power the upper end of that range of 100 to 200 million, but also on the compensation revenue components, we are on the upper end of this 100 to 200 million. So, we do confirm the 7.3 billion. As we confirm Switzerland and Italy guidance, we confirm the guidance for the group, and in particular, the guidance for the dividend of 2016. Swiss franc per share is always subject to Swisscom achieving the financial objectives set out on this page. And with this, I hand back to the operator.

Thank you, Eugen. To ask questions, please press star 14 on your keypad. I repeat, star 14. If you wish to withdraw your request to speak, please press star 15. 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. Please introduce yourself by name and company before asking your question. Thank you. First question.

Yeah, morning. It's . Thanks for the presentation and taking the questions. I mean, I'd love to sort of start off just to dive into your first thoughts. on the Italian business. You've now owned it now for four months, having closed the transaction. In your presentation, you clearly talk about how the B2C businesses may be tracking a bit worse than you thought in terms of the service revenues and you've talked about your plans to refresh that. You know, you've showed much higher capex, although you say it's phasing. But I guess if I sort of stand back, I mean, they're going to bought Vodafone's Spain business, and they said that capex will be materially lower due to sort of lower vanity projects, I guess they would say. On the mobile side, I'm curious to understand how quickly you expect to see a recovery in the B2C series revenues. I mean, it seems like maybe it's going to be more second-hand weighted than first half. And I guess just as a small point, post the MVNO contract, you had, I think, spoken about a confidence of keeping that. It seems to have changed a bit now, given the state they've taken TI. Your thoughts on that would be helpful. Thank you.

Okay. Thank you. So, just on the second question, it's, I think, straightforward. So, the post MVNO contract, I think, was largely also debated in the press. Both POSTE and TIM announced that they will move the MVNO contract to the TIM network in 2026. The exact timing is still ongoing discussion, so there's no impact this year, and impact 2020, so the impact will be in 2026. How much it will impact 2026, we will see, depends a bit on migration schedules, and we will talk about this with the guidance in 2026. Now, first thoughts on the Italian business. I think overall we are pleased with the Italian business. I think many things are going exactly as planned. The integration is going very well, and I'm very happy with the integration progress. So I think on that side, no negative surprises and actually very good progress. As you pointed out, the mobile service revenue B2C is slightly above our expectation, or not the above expectation, it's at the upper end of what we guide it for. So, this is something we are working on right now with the new B2C strategy with implementing sort of this value focus. But as Eugen pointed out in guidance, we expect the service revenue erosion for the full year to be at the upper end. So the recovery will mainly happen in the next year. As you know, influencing service revenue is not something you can change within one month or one quarter. So although you will probably see improving trends over this year already on some aspects, really translating it into improving service revenue trends will probably bring us into 2026. But at the same time, we have also very positive news on like generating new growth, like the IT piece on B2B, but also the energy piece on the B2C side, which are actually ahead of our expectations. So we are also, that's why we also confirm compensating revenues at the higher end of the guidance, bringing up to the net zero revenue evolution overall into full year. And we will push now we started the cross-selling into the Vodafone customer base on energy, which is looking quite promising. So I think we just need to continue to work on both generating new revenues and at the same time stabilizing the service revenue on the B2C set. But we are confident that we can improve the trends. It just takes a bit of patience.

I think there was a piece on CapEx in the question at the beginning. I'm not sure I got it. Let me just briefly reiterate the guidance on CapEx. So we confirmed the full year CapEx guidance on an adjusted level of 1.4 billion. The Q1 CapEx is quite high. compared to that number. So you should not, you know, be tempted to forecast the full year CapEx based on the Q1 number, although it was significantly below prior year, it's still very strong seasonally compared to the rest of the quarters, which is driven among others by the fact that Waterfonds in the past had a different fiscal year and the end of March and always had in the first calendar quarter of the year, very strong CARPEX. So you should neither take the CARPEX of Q1 and multiply by four. You will not end up at the right number. It will be too high. Nor should you take the year-over-year decline in CARPEX and multiply it by four. You will end up too low. So I recommend to stick to our full year guidance of adjusted CARPEX of 1.4 billion and work backwards in a sense. Thank you.

Next question.

Hi, it's Polo Tang from UBS. I just have three quick questions, two in Switzerland, one in Italy. So first question is Switzerland. Can you talk through what you're seeing in terms of competitive dynamics in both mobile and broadband in April and May? So in your opening remarks, you hinted at some signs of easing tensions, but just wondering if you could expand on those comments. And could you also comment on the customer reaction to the announced price increases at Wingo? Second question on Switzerland is just on Swiss service revenue declines. So you've guided towards 100 million decline for Swiss service revenues for 2025. From memory, half of that decline is B2B. The other half is B2C. However, in your presentation, you sounded quite upbeat about easing B2B declines as you complete the SD-WAN migration, but also as you launch new B2B products. Given that you're also putting through price rises on B2C, are there any scenarios where Swiss service revenues could be closer to stable or could Swiss service revenue declines materially improve mid-term? Third question is just on Italy. From memory, I think you put through price rises in March and April. So can you remind us what the quantum of price rises was? Or another way of asking the question is, How much of an impact could this have in terms of helping to improve B2C declines? Thanks.

Thanks, Paolo. So on the competitive dynamics, wireline, wireless on the B2C side. So I would say on the mobile side, we see a slight, like, relaxation. But I would emphasize slight. So as I pointed out, you know, we still have discounts of like around 50, 60% in the market. Not anymore the levels of 70, 75, so it has improved slightly, but the market is still highly promotional and aggressive. And also we see new brands coming in really at the lower end, like top 20 or sometimes even around 10 Swiss francs enabled as MVNOs on the salt and sunrise networks. So this is sort of, so there is still, a lot of pressure in the market. And I wouldn't say that we are out of the woods, but at least there are, let's say, encouraging signs. And that's why I said we will see how it evolves throughout the full year to really judge sort of if there is now, if the market is sort of shifting a bit in a less aggressive mode or not. With regards to the window price increase, so we increased prices by one Swiss franc only on the mobile side for all customers, front book and back book. And so far, the reaction, I think, has been very positive. I mean, of course, some customers are not happy about it, but the reaction overall is, I think, is in line with expectations. And we did a more for more move, so we included 5G in the offering now. So customers also get more value for the increased price. And I think we still have a very competitive offer now on Wingo, even with one Swiss franc higher prices. On the wireline side, I would say competitive dynamics are unchanged. The market is very aggressive in the wireline space. And as we are continuing to roll out fiber, we have increased competition from salt. at a very low price point and then subsequently also very aggressive offers from YALO, the second brand of Sunrise. And then this week, expect to continue in this way. So I think whereas on mobile, we see a slight relaxation on the wireline side, we don't see any change in the market. bringing me to your question on service revenue. So, we still stick to the guidance of 100 million full year. We said 50-50 B2B, B2C. At the moment, it looks more a bit like a 40-60 split. So, B2C is running at around sort of 40 million full year, B2B slightly more around 60, but still confirming the overall 100. What I was mentioning regarding B2B was mostly is concerning more the midterm. So, you know, the ongoing MPLS SD-WAN migration actually does impact the B2B revenues this year because the price points are lower on the SD-WAN products than they used to be on the MPLS product base. And this effect will continue into 26 until we have completed the technical migration of the MPLS product base. So we will hopefully see improving trends on B2B 27 onwards. So this is really sort of a midterm outlook, but obviously we, I mean, this is an ambition we have, and I don't really know precisely what will happen to service revenue B2B in 27 now. So it's like, but at least this effect, which we are currently seeing in the erosion this year, should be gone by 2027. And at the same time, we are working on this new product offering, which will increase our differentiation, which will offer us new upselling opportunities, But first, also, we need to bring the product into market, and we will see in the course of 26 how, you know, the uptake is on this new product offering. So we probably can discuss a bit more in 26 if and how this allows us to stabilize B2B service revenue, maybe sort of second half 26 or towards 27. But I think the good news is, although we don't know, you know, exactly what will happen is we have clear initiatives in place and opportunities to actually improve things. It's like, so that makes me slightly optimistic for the mid-term. In Italy, we executed two price increases. One is bringing the fast web mobile tariffs up by one euro, sort of to the idea is to bring it closer to the Vodafone portfolio prices, and at the same time, increasing sort of the ARPU inflow. And we also changed the, or we did an equivalent change on the wireline side and actually increased the Vodafone broadband offer and aligned it with the fast web entry price. I think that the impact there is like two euros or rough around two euros. Also, again, aligning the inflow ARPUs on both brands to sort of help us move in the direction of the new product portfolio, which will then come in autumn, which will be one unified portfolio for both brands. So, this should increase or improve now inflow ARPUs in the coming month. You will start seeing this in the service revenue probably only next year because, as you know, you know, the service revenue year on year also still declines based on the effect we had last year and all the, let's say, the churn coming in from prior quarters. It is an important piece of our stabilization strategy to align and to increase inflow ARPU to let's say limit the dilution we have or the delta between the outflow ARPU based on churn and the inflow ARPU from the . Thanks.

Next question.

Okay. Good morning. It's Andrew Lee from Goldman Sachs. I had a couple of questions. First question, you have mentioned in the past the potential to renegotiate tower fees with GINWIT. Wondered if you could give any updates on your confidence on that front. And then just secondly, when you talk about the recovery in Italy and the emphasis to shift from volume to value. What gives you the confidence that you can achieve that with the market in its current state, this four-player commoditized market? What are you seeing in the market that makes you believe that that's possible, where I guess we see limited evidence of that in other competitive four-player markets in Europe? Thank you.

So on the first question, the Tower Invit, we are in contact with Invit, so we don't want to comment this topic any further. I think we will update you as soon as there is tangible news, but it is a topic we are working on internally with our teams. On the second piece, so you're right. I mean, this is, there is, let's say it's not a straightforward move to make this, change in the Italian market, but we are convinced that moving the market into a value-based orientation is beneficial for all players in the market. As you can see, or we have seen in the past, like this volume-based RGU strategy basically continuously drives down ARPU and inflow for all brands in the market. So we believe that moving the market more in the value-based approach will be actually beneficial for all players. But somebody needs to start the move. So, and then to test if it works, and we decided that we will move in this direction to really focus on our strength, best network, high-quality service, high-quality products, and then really sort of focus on getting churn down, making sure the customer base is happy, NPS is high. So, automatically, with reducing our churn, we will remove let's say have less high ARPU flow out. And at the same time, we will work on the inflow ARPU by adjusting the price packages and making sure that we have the right price points in the market so that overall we can generate a positive impact. And we will see how the market reacts. And so this would be, let's say, a midterm play, not something that we will observe in one quarter. Also, the next important step is the launch of the new portfolio in autumn, and then we will see and take it from there and see how the market reacts in the course of 2026. But we do believe this would be beneficial for the whole Italian market.

Okay, thank you.

Next question.

Hi, there. It's Joshua from BNP Exam. The first question I had was just on the sub-brand penetration that you're seeing in the Swiss market in particular. I see that continuing to grow two, three percentage points a year. Perhaps you could give us a bit of detail about what the customer inflow looks like relative to the current sub-brand penetrations on both the fixed and mobile networks. So, for example, on the mobile side, 35% of your base today is coming from sub-brands. Where are the net ads coming from with that ratio? And then secondly, a follow-up to tomorrow's question earlier on the MVNO contract in Italy. Could you just give us a rough estimate of how much revenue the Poste Italiane MVNO is contributing to your Italian business on an annual basis at the moment? Thank you.

Okay. So, on your first question, sub-brand penetration, we don't publish splits between the individual sub-brands and net ads movements between all those brands. I think what you can do is the current growth rate you've seen or mentioned of two, 3%, we expect something similar to happen this year, as we still have a mix change between the main brand and the sub brand. And we expect it to continue roughly at the same speed. But at the same time, as I pointed out, we're also working on measures to increase the inflow on the main brand, such as We Are Family, I think, which is an important element to increase this, like, multi-mobile and household penetration to support the main brand and sort of, over time, slow down the second brand growth.

On the end, you know, in Italy, we cannot disclose any precise numbers because of confidentiality. quite a number of estimates for some of you guys out there and they are not way off the mark. That's what I could say on the topic today.

Got it, thanks.

Next question.

Yes, good morning. It's Luigi Minerva from HSBC. Thanks for taking my questions. I have a couple in Italy. Christophe, in your prepared remarks, you mentioned that in Italy you are now the only operator with network infrastructure. And I was just wondering if you can elaborate on how that can make a difference in practice as you think through your commercial strategy. And then when you say 52% FTTH coverage, can you remind us, the mix there, so how much is left on the FastWeb or Vodafone-owned network, and how much is just reselling access of FiberCorp and OpenFiber. And finally, so in autumn in Italy, you will launch the new product offer. When will you begin phasing out the Vodafone brand?

Thank you. Okay, thank you, Luigi. So, I think there are two, in regards to your first question, what can we do with it, or what difference does it make that we own the network infrastructure? I think we need to look at the different markets. So, obviously, it allows us on the B2B side, I think, to really be in a unique position and offer unique services to our B2B customers in terms of wireline infrastructure. dedicated offers and high quality service. We are obviously resetting also the wireline infrastructure to our wholesale arm, which allows us to generate wholesale revenues, which we couldn't do without our own infrastructure. And on the B2C side, I think it probably makes a bit less of a difference in the B2C markets. But there as well, I mean, if you own the infrastructure, you have more control over service quality SLAs and can really drive also the full network experience, mobile and fixed in a different way. So we believe it's an important cornerstone of our quality positioning in Italy, really associating the faster Vodafone brand with the best network experience, both on mobile but also on the fixed side. In terms of 52% coverage, I'm not sure if Eugen has the exact numbers, but most of this coverage is actually open fiber and fiber footprint that we are reselling, and part of it is also in our own infrastructure for the, let's say, the last mile. Everything else from the street cabinet on, like transport and backhauling, is anyway our own infrastructure, as we own a very extensive fiber net throughout Italy. So, at the end, it's sort of a mix.

I don't know, Eugen, if you have the... Yeah, in the full year presentation of March 13, you can look at page 13. There we give the split between the passive access and the active access we have. Active access obviously means that we do not own the infrastructure and passive access in the sense that Christoph just described means that we do have the primary network. We never have the secondary network to the end customer. And in 2024, this split was out of the 55... percentage points that we showed there for the full market, it was passive FTTH 15% and active FTTH 40%. Obviously, with the split changing going forward, as we want to move our customers more to the passive service where we have a better margin and more control over the customer experience.

And then the third question, phasing out Vodafone brand. So there is no decision that we have taken yet on this topic. We are currently or we have a separate project ongoing on the whole branding positioning in the market. And we will communicate more on this once we are ready. But I expect it to take another couple of months. And we are not in a particular hurry to phase out the Vodafone brand as we can use it in five years. So we want to take, you know, the time to really think it through, build the new brand, and then also have a very diligent plan of migration from the Vodafone brand into the new brand, because this is something, especially in the B2C market that I believe we need to be quite careful about so that we can make sure that we can transfer some of the brand equity and the awareness of the Vodafone brand into the fast web or to be defined brand. So this is something that requires a lot of work and diligent planning. So, but more to come on this topic, as soon as we arrive.

Thank you so much.

Next question.

Yeah, hi there. It's Steve Falcon from Redburn Atlantic. Thanks for taking the question, guys. I'm going to ask three, although one's in two parts, so you could argue it's four, but one's very easy. They're all in Italy. First on the price and equity. So can you just confirm, it's just the front book prices you're raising from what you're saying. I wasn't quite sure, but just wanted to confirm that. And then related to that, just sort of I'm trying to understand the sort of short and midterm outlook for service revenues in Italy. It feels like things might get a little worse in the short term if you lose the current benefit from the TM9 contract. Is that right before recovering? And do you have any sort of sense as to when you might be able to get back to service revenue stability in Italy? Is that a midterm goal? Can you give us any color on that? And then just looking sort of further down the revenue lines in Italy, it looks like all the growth comes from hardware and other. Is other where energy is booked? And maybe just sort of give us a sense as to how those, you know, we should expect those to move over time. And then, sorry, finally, just on the synergy, as we try and track them going forward, I guess, you know, the immediate benefits from the MD&O move are going to come in direct costs, and we can kind of look at those. Any other cost lines? I mean, is other indirect where we should be looking for savings to come through? Just help us sort of get a sense as to, as we model out, you know, where those synergies drop into the cost line would be very, very helpful. Thanks very much.

Thank you, Steve. So your first question, I confirm it's front book price only that we increase. So that's correct. On the service revenue in Italy, we don't expect the service revenue to become worse, but we expect the current trend to be roughly similar in the ongoing quarter. So that's why we also said it's at the higher end of the 100 to 200 bracket that we guided for at the beginning of the year. So if you look at You know, the 47 million we had in Q1, if you have a similar trend, you're at the high end or towards more than 200. The stability we are working on right now and all the measures we are taking, we should see first signs of improvement in 2026 on the service revenue. Until we get to really stable like maybe a zero erosion, this is really a midterm goal we have. Exactly how much time it takes, it's difficult to tell. It depends also how the measures really work, the impact of the new product portfolio. So, we will probably be able to talk a bit more in detail about this early 26 for the full year guidance 26 when we see how the different measures are actually taking effect in our customer base and we have a bit more insight into the dynamics on that side. So I will leave the third and the fourth question to Eugen.

Yes, Steve, I can confirm that the energy revenue is booked on the other revenue in the P2C segment. So that's question number three. Question number four, in 2025, you will see most of the synergies drop into the direct However, a word of caution, the direct costs are obviously a mix of Cox Mobile and of Cox Wireline and other direct costs so that there is not only Cox Mobile in there. And only Cox Mobile in particular, they will go up before they go down. As I mentioned, we saw this in Q1. As long as they're growing on the fast step, and the bulk of the FastWeb customers is still on team and Vintre. This will first go up, and then eventually, once the migration gets into full swing, will go down. There will be a small impact also in indirect costs this year. You know, we have other synergy buckets that we're already working on with a lot of energy, like the disentanglement from Vodafone. So some of this will show up in indirect costs. But the bulk this year, certainly in direct costs. For the other years, I refer to the respective page we showed in the full year presentation where we give an indication of what is direct and indirect costs, which I'm sure you know and already have in your model.

That's great. Thank you very much.

Our last question for today.

Hi there, it's Robert Grindle from Deutsche Bank. Synergy extraction seems to be going well in Italy. Were there puts and takes or discoveries for additional savings in due course? I note you've been quite quick to close down some legacy services such as the Vodafone TV platform. And you mentioned spending on cultural integration in Italy. Is there anything unusual to call out there or just making Vodafone Italy a bit more Swiss fast web like? Thanks.

Thank you. So, yeah, I mean, you know, the synergy extraction is going well according to plan. And, of course, we are constantly looking for additional cost savings that we can find. And anything we find, we immediately, you know, add to our list and execute. built into our DNA of Swisscom and FATWEB to continuously work on our cost base. And we are obviously also doing this in the combined entity in Italy. And it's also one way of, you know, compensating a bit the higher service revenue erosion to make sure that overall in the coming years, we can still make sure that the synergies drop down into the bottom line. On the culture side, we didn't discover anything, you know, unusual or noteworthy on the Vodafone side. I think Vodafone has a very good culture as well. You know, as every company, there are pluses and minuses, but has very strong also, you know, network and quality culture on the network that we really want to keep. And we are sort of focused on now combining sort of the entrepreneurial spirit of FastWeb together with the, technology leadership and service orientation of Vodafone and really create like a combined strong culture and I think so far this is going very well and we have actually just run another culture survey across the whole employee base Vodafone and Fastweb and the excitement about the merger is very very high on both sides of companies which is for me very encouraging and now Valter the CEO is very much focused on transforming this excitement into performance, and making sure that going forward, we can really deliver all our results and promises. And I think so far, you know, we have a management team in place that has a track record on delivering on the promises. And I'm confident that we will also deliver going forward on what we intend or announce.

All right. Thank you, Christoph. And again, thank you, everyone. And with that, I would like to conclude today's conference call. If you should have any further questions, please do not Thank you. Speak to you soon and have a nice day. Bye bye.

Dear participant, the conference call has come to an end. Thank you for your participation. Goodbye.