Swisscom Ag Ittigen R/Shs

Good morning, ladies and gentlemen. Thank you for joining us in this Q22026 results hosted by Christoph Aeschlimann, Eugen Stermetz, and Louis Schmid. Louis, the floor is yours.

Louis Schmid, Eugen Stermetz, Christoph Aeschlimann, Dirk Wierzbitzki, Eugen Stermetz, Christoph Aeschlimann, Eugen Stermetz

Sandy?

Yeah, I can hear you. Okay. Sandy? Hello? Hello, I can hear you. Hello, can you hear me? Hello, can you hear me? Hello, can you hear me? Hello, who can't hear me now? I have the feeling Louis can't hear me.

Sandi? Yes, I can hear you. Hello? Not anymore.

Who can still hear you? Can you hear me? Yes.

Hello? Can you hear me?

Hello? Can you hear me now?

Can you hear me? Yes, we can hear you. Now it's fine. Okay, then we start.

All participants' lines, listen only.

Good morning, ladies and gentlemen. Thank you for joining the Swisscom Q2 2026 results hosted by Christoph Aeschlimann, Eugen Stermetz, and Louis Schmid. Louis, the floor is yours.

Good morning, ladies and gentlemen, and also a warm welcome from our side to Swisscom's Q2 2026 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. Let's now move to page number two with the agenda of today. As you can see, our CEO starts the presentation with Chapter 1, Achievements. A quick overview on the Q2 highlights the operational and financial performances of the second quarter. Then in Chapter 2, Christoph presents the business update for Switzerland and Italy. In the second part of today's presentation, our CFO Eugen runs you through Chapter 3 with our Q2 financials, including the confirmation of our full-year guidance. With that, I would like to hand over to Christoph to start his presentation. Christoph?

Thank you, Louis. Welcome to the Q2 call also from my side. I'll start directly on page number 4. with the quarter highlights. You have seen from the numbers that we delivered a solid performance and we are operationally and financially on track. I'm very pleased with the first half year results and based on these results we have also confirmed the full year guidance. In Switzerland we were able to again win the Mobile Connect We also announced a couple of management changes in Switzerland. We decided to put in place a dedicated Swiss CEO and CFO. All positions have been nominated by internal successors, ensuring continuity and allowing more focus on the Swiss market and the ongoing AI-based transformation in Switzerland. We also nominated a successor of the B2C business with Michael Siegenthaler, who is a long-standing member of the B2C management team. And also on that side, we have ensured continuity and full focus on executing our current strategy. As a Group CEO, I will continue to provide strategic leadership across Switzerland and Italy and Eugen will hold overall financial responsibility for the Group as Group CFO. Our strategy remains exactly the same and is unchanged both for Switzerland and for the whole Group of Swisscom. Now moving to Italy, we are fully on track on the integration, integrating Vodafone Italia into FastWeb and Synergy Realization is going on faster as planned, and we are ahead of budget and plan on the integration side. We're also leading with innovation in Italy. We launched numerous products, one which is noteworthy is ROS, our AI app for consumers, and we also enhance the energy portfolio, and I will talk a bit more about energy later on during the call. Now, moving on to slide number five, you can see the Q2 financials have a consistent operating free cash flow increase, reaffirming our full year guidance. Revenue is still slightly down by 2%, posting 3.6 billion Swiss francs in revenue, driven by lower service revenue, both in Italy and Switzerland, and lower hardware in Italy. And Eugen will give a bit more color on the revenue development later on in the presentation. ABCL is up 6.1% to 1.269 billion Swiss francs, driven by synergies in Italy and strong cost savings in Switzerland. We had seasonally lower capex, down minus 6.3%, leading to a high growth on operating free cash flow with 608 million, which is up 23.9% compared to previous year-on-year comparison. On the right-hand side, you can see the operating free cash flow bridge, which I will not comment as Eugen will go into detail through these numbers later on in the finance section. But overall, I think we can say that we are very pleased with the Q2 and H1 results. And we have posted a solid and good performance in the first six months of 2026. I will now provide an update on our business in Switzerland and Italy. As you know, we have clear priorities to grow the free cash flow by ensuring stable free cash flows from Switzerland. So I'm now on page number seven. Ensuring the free cash flows or stable free cash flow, sorry, in Switzerland, we do this by managing three things. First, managing the telco top line. We are working on boosting efficiency and delivering cost savings and achieving profitable IT growth in B2B space. Second, we are ensuring growing free cash flows from Italy. This is achieved by three actions, driving the integration and delivering the synergies. Delivering the telco turnaround is specifically on the B2C side and also growing IT business but also the energy business in Italy. And I will now go into a bit more details how we are doing according to these three objectives both in Switzerland and in Italy. Now diving into Switzerland we start with B2C on page number eight. You can see that we are operationally on track and we have successfully implemented the price increase. As you can see on the right-hand side, this has led to a temporary increase in churn numbers in Q1, and this churn is now coming down again to, let's say, the seasonally normal churn figures. You can see that in Q2, churn has come down substantially. It is still slightly elevated to the historical churn levels, but we are confident that churn will now normalize over the coming quarters in 2026. We still had some negative impact on the RGU side, especially on broadband, while the mobile side is working quite nicely with plus 10,000 RGUs in Q2. Broadband was also better than Q1, but still slightly negative with minus 8,000. And this will be one of our main priorities going forward, working on making sure that also on the broadband side we can achieve stability on the RGU side. require additional measures on the Wingo side as we want to strengthen Wingo also as a broadband provider. This is one of the reasons why we launched the Wingo brand refresh to position Wingo more strongly in the market. And we also executed a price increase on the Wingo side with a more for more approach with plus one Swiss franc from September 1st going on. And we did the same on the Migros mobile side on our third brand. So you can see that we are working on various levers to improve the service revenue evolution and make sure that we deliver the most value out of the B2C business. Another important pillar next to service revenue is working on all the value added services. So we are very pleased that we were able to confirm or continue to work together with UEFA Champions League until the end of the decade. which strengthens our Blue TV proposition but also we see very good momentum on the security side with strong net ads and also the AI proposition for consumers is developing a very positive traction overall and we will continue to invest both on the AI and security side as this is important to positively impact ARPU over time and counteract the brand switches and deliver new revenues Overall for our B2C business. Maybe one last comment before we move on. On the ARPU side, you can see that ARPU is slightly up, impacted positively on the one side by the price increase of own brands and then some negative effect due to continued brand switching from own brands to Wingo. But overall, you can see that for this quarter, we had a positive impact, roughly driving up ARPU one Swiss franc. both on mobile and on wireline. Now I'm moving on to B2B, where we're starting with the telco business. The operational trends are roughly in line with what we've seen in previous quarters. So losing R2s both on mobile and on broadband, while ARPU is also slightly up, also due to selected pricing measures that we took in the past quarters. So it's sort of stable, slightly improving on the ARPU side, but still negative on the NetAd side. So one of our main focus in B2B is also working on the RGU side, making sure that we stop the continued loss of connections. We do this by working on several aspects. First, we do a lot of actions on the customer value management, increasing retention, and Value Realization, especially on the SME side. We are executing numerous activities. We are scaling up further the sales of BEAM, so basically delivering more value and different products to our customers on the security side to make sure that our offers are more sticky, combining security with connectivity. And we are also working on strengthening our partner strategy, especially in the mid-market to further scale BIM and the IT platform reselling. Maybe one note on BIM. We see quite positive numbers on the growth side of BIM. The mobile business is delivering very well. We already have over 100,000 users. And on the broadband side, pickup is also picking up. Slightly lower numbers with 1,200 locations being secured. And we will continue to focus On the beam scale up in the ongoing quarters this year and especially also next year as we believe that delivering secure connectivity will be one of the key topics going forward in the B2B space. On the IT side there is a bit light and shadow. On the one side we have a software revenue top line mainly driven by lower volumes for Workplace and UCC. which we were not able to compensate with the higher demand that we see for sovereign cloud and AI. So overall slightly lower revenues and we expect this to continue for the full year. Probably IT service revenue will come in slightly lower on a full year basis than last year and also the market is quite demanding at the moment. So we decided to focus on the profitability improvement and making sure that we can deliver more EPITEL despite software revenues and you can see that already in Q1 and Q2 we were able to deliver an increased profitability with strict cost discipline and better project execution and we expect this to continue also on a full year basis bringing up profitability of the IT business to a much better and more profitable level. At the same time, we are also working on new growth avenues for B2B. So we are further investing in the Swiss AI assistant as we see increased demand on the AI front, especially in the SME, but also the corporate side. And we are working on many opportunities in the defense sector where we have a lot of multi-year contracts in place now, which should allow us to deliver new growth going on coming in in the coming in the coming years. Now moving on to network and wholesale on page number 10 you can see that we continue to invest in our network 5G plus coverage is up 2.5% now covering 90% of Switzerland and FTTH coverage is up 4% now covering 58% of Switzerland with FTTH connection. We're also making good progress on migrating our mobile customers to the new and 5G Standalone Core. We have over 1 million customers now on the new core infrastructure, which is important for our tech renovation and moving to a fully cloud-enabled technology basis. On the spectrum side, we expect the final communication by the regulator until the year end in the coming months. And we expect the auction to happen somewhere in summer-autumn 2027. So still roughly one year to go until the auction will finally happen or should happen. And we will know the exact timing once the regulatory communication has happened. So hopefully we can update you more on this topic in the Q3 call early November. Positively is I think positive news we have on the wholesale front so you can see that we have consistent RGU growth on the broadband side again plus 14,000 net ads exactly the same as in Q1 so we have substantially better and higher run rate now than in 2025 when you compare this on a yearly basis and we expect this to continue for the full year and this is continuously delivering service revenue growth on the wireline side. You can see that we deliver 5 million more or plus 10% service revenue growth and we also continue, we expect it to continue in the next quarters as we continue to gauge market share and drive up penetration in the FCTH footprint that we are building out. Now page number 11 is the last slide on Switzerland. Some words on our cost savings. So you have seen in the results we have delivered 42 million Swiss Francs of cost savings. A lot of the savings this year are front loaded and we also have some seasonality in telco savings. So we are fully confident that we will deliver more than 50 million of cost savings, but please do not extrapolate The Q2 number to the full year. We will not deliver 84 million of cost savings this year. I mean, it would be very nice, but our guidance is to stick to the at least 50 million for the full year. We also announced the opening of a new nearshoring center. So as you know, we have nearshoring centers in Riga and Rotterdam, and we are opening a new center in Lisbon next year to better balance I will now move on to page number 12 in Italy. So the integration of Vodafone Italia is proceeding very positively and according to plan, actually slightly ahead of plan. You see that we have delivered 89 million euros savings in Q2, bringing synergy realization to 166 million for the first half. So we are fully on track to deliver the 300 million on a full year basis. The integration or synergy realization is driven this year very much by the transitioning of the Vodafone Group Services, which we are insourcing back into Italy, and this is going as planned. And at the same time, I think we can say that the integration costs are under control, even slightly lower than we expected them in the first half of year. But we will significantly ramp up integration costs in the second half year. as we have some larger IT and network investments coming up in the second half of the year. Now on page number 13 you can see B2C. We are continuing to execute our value focus on the telco side and delivering growth in the energy business. Now the back-to-front book alignment has been successfully completed on the mobile side, and it's still ongoing in broadband. And you can see the different effects this has on churn, RGU, and ARPU. So on the wireline side, the net ads are improving versus Q1. So we are 66,000 better, still negatively impacted by the value strategy, but much better in Q2 over Q1 as the repricing effects are phasing out. Also, churn is coming down. So you see that we are now standing at 16% Tchern, which is materially better than where we were one year ago. And for the first time since the merger, we also have a slightly increasing ARPU on the mobile, with ARPU now standing at 8.3 euros overall. The broadband side of Q2 is still affected by the ongoing value focus and the back to front book price alignment that we are currently executing. Tchern is only slightly up. So this is, I would say, the good news. Roughly stable churn, but on the inflow or sales side, I think it is the continuous value focus makes it harder to generate more gross ads. So overall we see a slightly softer net ads, but also slightly increased ARPU versus Q1. Now we are sharpening also our brand positioning while we are clearly positioning FastWeb and Vodafone as a premium brand. We position Ho Mobile much more clearly as an attacker brand so that we can serve the market with our dual strategy branding on the one side, the premium approach under the fast web and Vodafone umbrella and a more smart shopper approach, attacker approach on the Ho Mobile side. And last but not least, we are continuing to invest in our energy business So we have successfully launched a new enhanced converged proposition, which is delivering very encouraging results. We now have 141,000 ARTUs, and this will deliver slightly over 100 million in top line in 2026. So very nice growth compared to the previous year. Now moving on to B2B on slide number 14. We continue to maximize value in telco and drive IT and energy growth. So you can see that the RGU developments are slightly negative both in wireline and in wireless, but wireless is impacted by the fading out of the TM9 framework agreements, but the RGU base is growing on a year by year comparison by plus 75,000 net ads. Broadband net ads are broadly in line with previous quarters, but are affected by lower gross additions due to challenging market environments, especially in the SME space where the market is quite challenging at the moment. But we are working on further portfolio optimization, working on new portfolio elements so that we can make our portfolio more attractive and hopefully improve these trends in the coming quarters. Now we are, I think on the IT front, we have good news. We are scaling up our proprietary AI solutions and cloud services where we see very good demand to strengthen our sovereign cloud offering for enterprises and public administration. Also, the energy business is scaling up. Double digit top line growth expected also on the B2B side, driven by both RGU and ARPU improvements. thanks to the convergent offers and the strong sales performance. On the network and wholesale side on page number 15 you can see that also in Italy we are continuously expanding and investing in our network so 5G plus coverage is up 3% standing exactly at 90% as the same as in Switzerland and we have again been awarded numerous Network Awards, being the best network in Italy. Also, FTTH rollout is advancing steadily. It's up 8%, bringing us to 61% FTTH coverage in Italy, with a balanced 50-50 passive active fiber sharing that we are using from Open Fiber and Fiber.com. So we have maybe seen also that we have launched a pilot with Starlink to test how we could improve mobile coverage in rural areas. So this is a technical pilot, it's delivering encouraging results, but still a lot of work required and also a regulatory approval required to be able to launch this as a full commercial offering. Now some words on the development of the wholesale side. So you can see that, as we announced previously, the post-mobile migration is now completed and you can see the full RGU effect of roughly 2.6 million ROs in the Q2 figures. Some of it is partially offset by the performance of Coboche and other MVNOs, but still we have a net reduction of RGUs by minus 2.3 million. This net reduction will continue in the second half of the year as Tim announced the winning of the Leica MVNO and the migration is now fully ongoing and this represents another roughly 1 million of RGU's that will be migrated away from our network over the next half years. This will of course generate some losses on the wholesale MVNO revenues but it also alleviates Quite a lot of traffic on our network and we can counterbalance some of these effects by delaying some network or not required capacity investment on the mobile network side due to less SIMs on the network. On the other side, broadband is developing very positively. You see plus 49,000 net ads plus 22% on a year-on-year basis. We are driven by solid demand and expanded partners in this space and we are continuously working on acquiring new partners to continue to drive our broadband wholesale business. Okay, so final slide from my part for me on page number 16. One word around AI and strategic infrastructure initiatives. So we are continuously bolstering our AI footprint in Italy. We have launched a new files of AI suite and managed, which is basically a managed inference solution. And we're able to win over 10 projects since the launch early this year. And we will continuously invest into this offering as we believe that AI inferencing will be a major growth drivers in the years We also launched the ROS proposition for consumers which is basically an AI agentic app for consumers and we will see how this delivers in the coming quarters and years. I think more importantly on these slides are the strategic infrastructure initiatives which are progressing very well. So you have seen that the court of Milan has rejected in with interim measures and basically confirmed that our termination is fully lawful and in line and we can proceed and our preparations are fully on track for the migration starting on 1st of April 2028 to maximize flexibility and we will provide you with more detailed update probably in the Q3 results how we intend to migrate off the InVis grid. We are also progressing on the Tower JV with Telecom Italia, which is the initiative to deploy roughly 6,000 sites. And we are currently working on the long-form agreement, which we expect to be completed by year-end. And we are also working on the run-sharing agreement with Telecom Italia to accelerate 5G deployment or 5G coverage in low-density areas. This is currently in the regulatory process where we are making progress. So the antitrust review is ongoing and we expect it to be completed also next year and we will update you as soon as we have more news on this topic. So overall very pleasing progress on the infrastructure side which is important for us to make sure that we can on the one side accelerate investment in network, make sure that the networks become better in Italy and at the same time reduce our cost base in the years to come. And I will now hand over to Eugen for the financial results.

Thank you Christoph and good morning everybody from my side. Let's dive directly into the group numbers on page 18. Revenue was down 225 million year-over-year. Net of currency that's 147. In Switzerland revenue was down just 27 million, most of which was in the first quarter. The overall equation is telco service revenue down, also IT service revenue slightly down, but higher hardware and software revenues in B2B, in particular in the second quarter. And also the service revenue decline was lower in the second quarter, so this is why Q2 is better than Q1. Italy down 111 million, basic equation here, telco service revenue down, also hardware and software down, but energy up. Q2 also here was much better than Q1. The year-over-year development was driven by lower telco service revenue decline in the second quarter among other factors. On the APDR side in the group, we're up 83 million, adjusted 92. Switzerland is slightly up, plus 10. We had strong cost savings in the first half of the year with a bit of phasing. Christoph already did my job here of managing expectations for the full year, so I'm not going to add much on that topic. There was another factor in play in the second quarter, which was a better IT result, despite lower revenues. Also here, Christoph already commented very much to the point. Italy, EPTR was up 92 million, obviously driven by synergy, but also here some in-year phasing in indirect costs helped. So all in all, we are clearly on track to meet the EPTR guidance for the full year. Page 19, CAPEX was down 131 million in the group. In Switzerland, down 70 million. The main reason here is different phasing of FTTH between the years. In the first half of 2025, we had very high FTTH volumes, so there will be some CAPEX catch-up to be expected in the second half of the year. For the full year, we confirmed the guidance of CAPEX slightly down in Switzerland. In Italy, CapEx was down 67 million, so that's CapEx adjusted. Integration CapEx was actually up. You don't see it here on this chart. We'll see it on the Italian pages. For the full year, we confirmed the guidance of reported CapEx in Italy roughly stable, with adjusted CapEx down, which you already see here on this chart in the first half of the year, and integration CapEx up in the full year. Then operating free cash flow. Up 214 million, obviously driven by higher EBITDA and lower CAPEX both in Switzerland and in Italy. Also here for the full year, we are fully on track to deliver as guided stable free cash flows from Switzerland and growing free cash flows from Italy. I move on to Switzerland, page 20, revenue first, down 27 million, B2C minus 23, pretty equal in the first two quarters. The service revenue development was better in Q2 than Q1. You don't see it here in the total revenue numbers because there was a change in hardware revenues quarter over quarter. But we'll see the service revenue on the next page. B2B down 11 million with Delco service revenue down, also IT but hardware up as I mentioned already. On the wholesale, you see quite nicely in the second quarter plus 5 million wholesales. For once we have a quarter where roaming is not bouncing around much year over year. So what emerges is the steady, slow but steady growth from the wireline access business that will continue to go on for a very long time due to the fiber roll-up. Ebitda in Switzerland, slightly up 13 million, adjusted to 10 as we saw on the first pages. B2C down 10 million, so Delco service revenue partly compensated by cost savings, we had some Shifts of advertising from Q1 to Q2 compared to prior years, so this is why the improvement in Delco Service Revenue doesn't show up in the APTR number this quarter. B2B minus 8, here also Delco Service Revenue partly compensated the cost savings and in particular the improvement in IT business APTR due to the factors that Christoph already mentioned shows up here also in the sequential evolution of year-over-year numbers. Infrastructure and support functions, cost savings flowing in as expected. I move on to page 21. You see it here on the top part of the chart. CapEx was down 70 million. It's almost entirely due to lower CapEx in the wireline access network, meaning in the FTTH rollout. This is mostly phasing as mentioned. Just to be clear, we confirm the 60% FTTH coverage target for the end And with APTR slightly up and capex down, operating free cash flow is up 83 million. Page 22, deep dive on the Swiss numbers. On top right, the Telcorp P&L. You see here the plus 42 million that we delivered in the first half of the year. I'm not going to comment any further on the phasing. We already did that. Top left you see the Stakehold Service Revenue Development very nicely B2C in Q1 minus 16 million and year over year and in Q2 only minus 3. So this is the price increase that works as planned. APU effects are improving both in wireless and in wireline. Now there are a couple of more moving pieces than just the price increase also going ahead into the third and the fourth quarter particularly roaming in the third quarter so we don't expect this minus three million of Q2 to be the run rate for the coming quarters rather for the second half of the year we expect the B2C service revenue decline roughly in the range as in the first half of the year so total service revenue decline B2B and B2B for the full year we still expect to be in a similar range as 2025 which was around minus 120 million maybe slightly better given the recent development here on B2C on to Italy page 23 revenue down 118 million in euros B2C minus 56 million which is essentially the service revenue decline you see in the Quarterly evolution that service revenue decline improved significantly in Q2. We'll see it on the next page. B2B, down 82 million, mostly driven by lower hardware revenue with low margins, but also lower delco service revenue. Q2 a bit better across all revenue categories. And in wholesale, you see in Q2 the flat year-over-year number, zero compared to prior years. So this is the posted loss kicking in, also in the financial. In Q2, it was possible still to compensate the POSTE loss by other MVNOs ramping up over the last 12 months and also the year-over-year positive development of our wireline business. This flat development will not be the case in the coming quarters as the POSTE loss fully kicks in and also the Leica loss that Christoph mentioned will play a role. page, every day are up 104 million, adjusted 98. It's mostly driven by the contribution margin in B2C, which is obviously in turn driven by the MVNO synergy ramp up. Contribution margin in B2B, minus 15, reflects the lower revenues, given also the revenue mix of the revenue decline. Contribution margin wholesale is flat. There's also a different mix of revenues as wireless revenues. drop out with Boste and Weyerlein revenues come in with a lower margin. And then indirect costs were lower by 50 million five zero. In particular, Q2 was impacted by in-year phasing. So that's not the number to use our favorite phrase to be extrapolated into the second half of the year. On to page 24, cutbacks. Lower 52 million overall. Adjusted CAPEX lower by 71 million across all categories as you can see mostly from Q1. Q2 was much more in line with prior year. Under adjustments you see the higher CAPEX from the integration. It's a bit masked by two or three other factors but the integration CAPEX was higher than prior year but 27 million. It's still ramping up. For the full year, we expect up to 200 million CapEx integration costs or up to 100 million higher than in the prior year. So operating free cash flow is up by 156 million in the first half of the year, but with the bulk of the integration CapEx yet to come. Page 25, Service Revenue Evolution in Italy, similar picture to Switzerland. So finally on B2C we see the value strategy at work also in year-over-year service revenue numbers. We have been talking for a while about the impact on operationals and on quarter and quarter figures. Now with mathematics at work it also shows up in the year-over-year numbers. Q1 B2C service revenue was down 35 million, now in Q2 it's just minus 22 million. with a positive impact from the upweigh effect both in wireless and in wireline where in wireless we have completed the backbook to frontbook alignment and in wireline as Christoph explained it's still going on. On B2B also Q2 better than Q1 but obviously B2B is always a bit more volatile with some one-time revenues that we had On to page 26. Synergies on track. We reached a quarterly run rate of 80 million, so we are on track to deliver 300 million plus for the full year. Integration costs, 51 million so far. We still expect up to 250 million in total, out of which up to 200 in capex. As I mentioned already, the bulk is yet to come, also prior year 2025 was quite back loaded when it came to integration, CapEx and Wix stayed the same for this year. I'll now move back up to the group, page 27, free cash flow bridge. Free cash flow was up by 221 million in the first half of the year, fully in line with operating free cash flow. Just two moving pieces in between. On the one hand, Delta Networking Capital is always negative in the first half. of the year this year with a positive deviation compared to prior year of plus 85 million. On the other hand, we had a second moving piece, which is higher tax payments in Q2 of almost equivalent size. So all in all, free cash flow increase is simply in line with operating free cash flow increase. Also, page 28, net income quite uneventful. Net income is up by 43 million, simply driven We are now starting the Q&A session. To ask a question, please press star 1-4. I repeat, please press star 1-4 to ask a question.

If you wish to withdraw your question to speak, please press star 1-5. 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 and name and company before asking your question. First line is open.

Hi, it's Paolo Tang from UBS. Thanks for the presentation. I have three questions. The first one is really just about Swiss So you raised pricing on the Swisscom brand by I think 3-4% in April and by 1-2% on the Wingo brand that will take full effect by September. So I'm just curious what's been the reaction from your customers and given your competitors are also trying to land price rises have you seen any changes in terms of behavior or promotional activity in terms of the market? That's the first question. Second question is really just coming back to the software So you mentioned that you're still expecting 120 million of decline for Swiss telco revenues for the full year. But given that Q1 was 25 million, Q2 was I think 19. I mean, I'm just trying to understand why you've left unchanged. So can you maybe talk about Some of the headwinds and tailwinds to consider over Q3 and Q4. I know you flagged the roaming drag in Q3, but is there anything else? And my third question is really just a bigger picture question in terms of satellites. So how should we think about satellites in terms of impact or not in terms of the Swiss and Italian markets? And is there a difference in terms of how you think about the impact on broadband versus mobile? Thank you.

Thank you, Paolo. So on the price increase. So overall, I would say reactions from customers were as expected. So you've seen that we had slightly elevated churn figures in Q1 and now churn is normalizing again. But the price increase did generate incremental churn from our customers, both on mobile and on broadband. and we also saw some increased down trading from the main brand to Wingo which I think also highlights that the room for further price increases on the main brand is somehow limited. Although our competitors also reacted with price increases, the market remains very promotional especially on the M&O front but also the main M&Os are still out there with very aggressive promotions. So on the one side you have increases on the back put and front put, but at the same time executing very aggressive promotions. And so this sort of counterbalances or affects some of the price increase. And we expect this to continue also in the coming quarter.

Okay, I'll take the second question on the service revenue guidance. So as you mentioned, our initial four-year guidance was in a similar range to prior year, about minus 120. And I think the split last year was roughly minus 70 on B2B and minus 50 on B2C. Now, if B, we are in the first half of the year, we are at minus 35. So this is very much in line with what we gave as a full year guidance. Yes, B2C is better. So the current figure of minus 18 would not be in line with minus 50. This is also why I said, you know, we expect something similar to the first half of the year and the second half of the year, maybe slightly better than the 50 million we gave at the beginning of the year. And so also maybe slightly better than the minus 120 for B2C and B2B taken together. So what prevents telco service of you for the full year to be something like, you know, minus on B2C minus 16 first quarter, Three second quarter and then another two minus three in Q3 or Q4. There are a couple of pieces. One I mentioned is the roaming dynamics in the third quarter. There's also packages for international calls, which goes a bit in line with roaming and the geopolitical situation, which impacts travel patterns. And then finally, there is the cross-ad dynamics as we still recover from the price increase that Christoph mentioned with cross-ad quite weak. I think it was in the past, but crosshairs still have to discover and this will also have an impact. So these are the three things that we see. Obviously, there might be things that we don't see. So we came to the conclusion the most plausible forecast, if you like, for the moment is the minus 120, but maybe a bit better on the B2C side.

So coming to your question on satellites, I would say in, I mean, Probably the impact is one very hard to predict because technology is developing very quickly, consumer perception is changing quickly and at the same time we have the ongoing fiber rollout and very different dynamics both in Switzerland for mobile and broadband. So I think it's not so easy to give like a single answer to your question, probably require some more, you know, I think on the Swiss side I believe the satellite impact will be quite moderate because the broadband infrastructure we already have today is very performant and we are progressing well with the FTTH modernization and then the migration to the FTTH network so satellite we see mostly as a complement on the broadband side for sort of extreme rural areas where We will most likely not build out fiber infrastructure. And on the mobile side, at the moment, the networks in Switzerland are so good that we don't really see meaningful competition on the mobile side from satellite. We also rather see it as a complement, delivering more resilience, especially for emergency communication, or should a mobile tower sort of break down for a couple of hours. I think in Italy, broadband situation is slightly different. There you can also see already quite a big pickup from satellite services. I think Starlink is quite successful in Italy, especially in the rural areas where there is no fiber and also the copper infrastructure is not that strong. So that's why it's very important in Italy that the ongoing fiber rollout is really completed and that we reach 90% fiber coverage by end of the decade. but also not only building out the coverage but also starting to focus more on migration of copper to fiber infrastructure because we do believe that once the customer is on fiber this product is far superior to what satellite can deliver and delivers a much better customer experience so it is the best way to ensure that there is not too much erosion on the broadband side or a loss of market share to the satellite services. Like on mobile, as we said, we are testing mobile services to complement our mobile coverage with satellites. So this could be an interesting avenue, but also the mobile development on satellite will be very heavily impacted by the European regulation, which is still under discussion. So depending on what you regulate, ultimately on the division of the MSS spectrum, It will have either a higher impact or mobile or a negligible impact depending on how much spectrum is really available to deliver services over a satellite in the coming years.

Leo, thank you.

Okay, have a look at the next slide for Christian.

Hi there, it's Morris Patrick from Barclays. Thank you for taking the questions. Just a couple from my side. The first question, and you alluded to it in your prepared remarks, around the spin-down from main brands to discount brands in the Swiss market. I think historically you have given some specific data points very helpful on this spin down from main brand to discount brand you highlight I think in this presentation that continues but I'd love to get a sense in terms of if that sort of two to three percentage point annual swing is still at the same pace and maybe if that's going to continue through the rest of 26 and 27 And the second question just on AgCom and InWit in Italy. So AgCom, the regulators come out proposing license extensions or spectrum extensions in exchange for higher quality delivery of mobile services. Clearly very helpful to get a cost tailwind if that comes through for you. But you remain in deadlock with InWit, if I'm not wrong, having won the latest court case which they're going to appeal. I'm just curious to understand if those two processes can go in parallel, i.e. the extent to which you can agree or negotiate with AgCom guaranteed improvements in mobile service whilst planning to remove your entire infrastructure from InWit. Thank you.

Maybe on the first one, I'm not sure whether you were referring to the impact of the shift to the second trend on service revenue. or whether you were referring to cannibalization rates or the penetration. I'll try to cover whatever we have. On mobile, the second and third trend penetration is at the moment at 38%. On broadband, it's much lower, 15%. So that's one data point you might have had in mind. Thank you. On the service revenue, you see it on page 22, where we highlight in the up we affect How much of this app was actually driven by the change in brand mix? So you can see that there. And I don't think that we ever, you know, published anything on the topic. Did that help?

Yeah, I mean, just to, so 38% of your mobile is coming in second or third brand. On a fixed line it was how much? 15.

So not coming in, but already in the base. So that's the share.

Oh, that's at the base. Yeah I think it was I think it was sorry to jump in so I think historically you showed like a market share shift rather a market it was like a circular diagram showing the extent to which your your customer base is shifting from main brand to second brand.

Well what we what we do have obviously we show on a regular basis the penetration rate in the base and so you can deduct the change in this penetration rate Year over year the penetration rate went up by 3 percentage points on the mobile side. So the 38% was respectively 35 or whatever last year. And also in broad point it went up.

Now on your second question, Italy, Agicom and InVid. So the Agicom published the new rules a couple of days ago. Actually the details came out only This week we are still analyzing the impact of exactly what this would potentially mean in terms of service coverage, quality of service obligations and what kind of investments are required to fulfill these obligations. So I would say we can update you in more detail on the impact at the next quarter. And then we can also estimate if actually what Agicom has proposed is net positive or net negative compared to the cost of spectrum or an option. So I think this analysis is still ongoing. It looks encouraging, but it really depends a bit on the details of what is expected in terms of coverage and quality of service investment. Irrespective of what Agicom would like us to do on coverage and quality of service, we have in any case planned to continue to invest in our mobile network, both to densify the network because demand is increasing and to increase coverage. So ongoing investments in mobile are fully compatible with what we are doing on the InVid side. So that's also one of the reasons why we launched TowerJV, because it will be one of the means to actually build out new towers. And we are also in discussion with other tower operators to use existing towers for the densification. So I would say both activities progress in parallel in this situation and at the same time continuing to densify our mobile network.

It's very helpful, thank you.

Hi guys, it's Josh Mills here from BNP Paribas. A couple of questions from my side. Firstly on the Swiss price increases, it does look like, alongside the service revenue tailwinds, the impact on churning hasn't been as negative as you might have feared. So do you think that this could become more of a structural annual price increase? Or is there a specific reason why, for you, this is more of a 2026 one-off that wouldn't be repeated? I think you mentioned on the call that you don't want to test the limits of customer willingness to pay too much. But it does look like it could become a bit more structural. So some of your thoughts on that would be helpful. And then secondly, on Italy, TI is challenging some of the MSA terms, or at least having a discussion with FiberCop about them going forwards. Is that something that you're looking at doing? What does your current guidance really assume in terms of MSA costs? And can you just explain whether there's any potential upside benefit if you were to secure better prices on the fixed line MSA? Thanks.

Okay, so on the Swiss price increase, so I would say yes, churn is coming down. It was not that high, but I think every incremental churn is not something we want to see. And churn is only one aspect. I think also what we saw on the NPS side, the NPS took quite a hit from the price increase. So customers do notice the price increase and are not really happy about it. And looking at the market overall, being still very promotional and with very aggressive offers. We believe that the room to make this like a structural and having repetitive price increases is quite small. So I wouldn't bet on the fact that the Swiss market moves into a market structure where you see repeated price increases. But it doesn't mean that we can't work on pricing going forward. So I think one of the levers which is more and more for more approach is always available. This is what we are executing now with Wingo. The Swiss Parliament is discussing several VAT increases, so this obviously is also something that we need to take into account and could lead to potentially next price increases in the years to come. So I wouldn't exclude them, but we will be very careful about further price increases as the customer reaction we see is that we are We shouldn't push the customers too much, especially on the main brand. Now in Italy, I'm not sure if I fully got the question about the MSA. So obviously the Invit discussion we have is about M&A and structurally improving our cost of the towers. And so you have seen that we have won the first legal proceeding. We have the right to terminate the MSA. Migration is technically feasible and we are preparing the migration now. But we are obviously also open to continue working with Inuit if the economic conditions meet our expectations.

And maybe I think you referred to, Josh, if I understood correctly, also to FiberCorp. which is a complex regulatory situation which we rather will not give an update today.

And so can I sneak one extra one in just because in relation to Maurice's question I know you've stopped disclosing on a quarterly basis the penetration of sub-brands but it looked like at the end of last year the sub-brand penetration increased by about two percent it's now increasing by about three percent and then also the spin down or the brand mix on wireless RP has increased a bit quarter on quarter. Does that fit with the message you're giving today that there has been a bit more of a spin down versus Q1? Just to check those numbers.

I can't confirm the exact numbers and there might also be some rounding in there, but yes, Christoph already mentioned I hope the next morning?

Hi, good morning. Thank you for the question. It's Paul Sidney from Burenburg. Just a couple from me, please. The Swiss spectrum auction in 2027 seems to be going against the trend of extending license terms that we've seen in Germany and Italy. I was just wondering if there's any reason that Switzerland is going down this route, and could the auction raise the risk that Swisscom's spectrum advantage in Switzerland is eroded, spectrum potentially reserved for new entrants, or even SpaceX looks to bid? which is obviously a sort of a spelling nightmare scenario. And then just in Italy, I was intrigued to hear your 100 million revenue from the B2C energy customers, 141,000. I just wondered, is there an opportunity to sell further services to your customer base, obviously on post day selling Insurance, Wealth Management Services and I think planning to sell those services across the TI base post the transaction completion, but great to get your comments there.

Great, thank you. So spectrum auction, yes, it's a fact that the Swiss are slightly going against the trend you see in Europe, but the regulator made it clear that they will not We will obviously make sure that we can repurchase the frequencies we have today as we believe that this is an important asset that we need to have also in the future to guarantee the quality of service of our network and looking at the number of customers we have on our network. How the auction will proceed exactly, we will see once the regulator has published the final rules, which should happen until the year end. And I think we can also comment a bit more on how we see the auction playing out. Now in Italy, the 100 million energy is not only B2C, it's including B2B, so it's the full energy business. But it's indeed encouraging to see that we can sell other products to our B2C customer base. and we are also looking into other avenues like security or insurance also in Italy to basically increase the share of wallet in our customer base. So that's something we are looking into and could be new growth drivers for Italy going forward. Great. Thank you very much. Appreciate it.

Next line is open.

Yes, Mark Burgi from Finanzenwirtschaft, thank you for the time to ask questions. I have three short questions concerning the mobile spectrum. So is it a given that it will be an auction in Switzerland? Because that's news for me, I thought it's still in play. The second question is about service revenue decline in Italy. Will we have to get used to it in the coming years? Will there always be a decline? And did you give a concrete number for Italy for this year as you did for Switzerland, this slightly less than 120 million? Is there an equivalent figure for Italy? And the last question is about the competitive situation in Italy. Do you still think that there's the chance that there will be a merger among one of your competitors and that you will have one less? I mean there still is, I think, a rumor going on about Eliott and yes, if Eliott is going to merge with a competitor. Thank you.

Okay, thank you for the question. So on mobile spectrum, So yes, it's not finally decided. You're completely right that there will be an auction, but this is our expectation that there will be an auction and no prolongation of spectrum. But the final decision is still pending and will be communicated by the regulator. But I think it's safe to assume that there will be an auction.

Question number two. So yes, there is a number out there that we mentioned in the full-year results conference. So we expect the service revenue decline in Italy of roughly 150 million, which is much improved over the previous year. And we expect for the future a gradual stabilization of that number without any specific guidance at the moment for 2027 onwards.

Sorry, on your last question, merger in Italy, I mean, there are always lots of rumors going on. And of course, we don't comment on these rumors. And I don't know if they're, I mean, you know, we don't know what other parties are talking about.

Okay, and just maybe for clarification, so you say 150 million euro was the outlook. And did I understand correctly that you're saying the service revenue decline is going to This trend is going to continue in the coming years in Italy.

It's going to gradually ease over time, but we don't give any specific timelines or numbers beyond the 2026 guidance.

Okay, gradually easing. Okay, thank you.

Thank you very much.

Good morning.

Christian Bader from ZKB.

Actually, my question has just been answered. It's regarding telco service revenues in Italy at the first quarter conference call. You said you expect 150 million loss this year.

I just wondered if you confirmed that number. Confirmed. Okay.

All right. Thank you.

That's it for me.

Next slide. Next slide is open.

Hi, it's Robert Grindel from Deutsche Bank here. I'd just like a reminder please about the accounting and cash treatment of the Vodafone compensation for the loss of the Posti MVNO. Did that come through at all in Q2 and what's the phasing from here? Is there any compensation from Vodafone for the loss of the Leica MVNO? Thank you.

Yes, thanks, Robert, for the question. So on Leica, no, there is no compensation. Yes, there is a compensation on the BOSTE deal. We're going to book it in either Q3 or Q4 in one go at 75 million, and we will treat it as an adjustment.

Thank you.

Question over.

Hi guys, it's AJ Soni from JP Morgan. Two quick questions. On the price rises, I think it's clear the main brand situation is not clear. There's caution here going ahead. On the second and third brands, do you feel more comfortable pushing through consistent price rises here, as I think you have done in the last couple of years? Obviously, this section of the market remains very competitive. And then just bigger picture on the Italian synergy, you've owned Livone for an asset for a couple of years now. Have you seen any further synergy opportunities? Where would these be and could you quantify any of them? Thank you.

Thank you. So on second and third brand, there might be more room to work consistently on price. I mean, now we are executing the second price increase in Wingo. We will see how this goes. We will gather more experience and we can then decide the next steps going forward. On the IT synergies, I think we still have to realize the other 50% of synergies. So we deliver 300 million out of the 600. So there is still a lot of work to be done. We are confident that we can deliver the full 600 based on what we see today. But we will not announce additional synergies as we first need to already deliver what we promised two years ago. OK.

Thank you very much. And with that, I would like to conclude today's conference call. If you should have any additional questions, feel free to reach out to the IR team. Look forward to speaking to you and have a pleasant day. Thank you.

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