Welcome to Swisscom's full-year results presentation 2025. My name is Louis Schmidt, Head of Investor Relations, and with me are CEO Christoph Eschliemann, our CFO Oegen Sternmetz, and Walter Renner, CEO of FastWeb Vodafone. Let us now start the meeting with the agenda for today on page two. As you can see, Christoph presents the first three chapters, Achievements, where he dives into some of last year's highlights, commercially, operationally, and financially. Strategy update, where he presents Swisscom's framework, lead, innovate, perform to grow free cash flow. And the review of our business in Switzerland, covering achievements 2025 and our focus 2026. Then, Walter Renner, CEO of Fastweb Vodafone, reviews our business in Italy. He will talk about the integration of Vodafone Italia and the industrial performance of our Italian business and its plans going forward. After Walt's part, Oegen Stermez, our CFO, will present the financial result 2025, including the guidance 2026. And in the wrap-up chapter, some final remarks from our CEO, Christoph Eschlimann. After the presentation, we will move directly to the Q&A session. With that, I would like to open the meeting and hand over to Christophe for his part.
Thank you, Louis. Welcome to our 2025 results presentation. From my side, I will directly move to page number four. So 2025 was quite an eventful year for the Swisscom Group, both in Switzerland and Italy. We put in place a new lean group organization, put in place a new group-wide sustainability strategy and for the first time in over 10 years we have confirmed that we will vote at the AGM for a dividend increase of 18% to 26 Swiss francs per share. Despite the integration of Vodafone Italy and the new debt financing we were able to maintain a sector-leading credit rating of A2, which I am very pleased about. We achieved strong results both in Switzerland and in Italy. In Switzerland, we were voted strongest telco brand according to Brand Finance. We won all service tests both in shop hotline and on the network side. And with Beam, we launched a successful new B2B connectivity portfolio. The highlights in Italy are obviously linked to the integration of Vodafone and FastWeb, where the integration and synergy realization is in full swing and ahead of Plan. We also announced a round-sharing agreement with Telecom Italia a couple of weeks ago, about which Walter will talk a bit more in detail. Another major milestone in Italy was also the alignment of the go-to-market portfolios. So while we still have two brands in Italy with FastWeb and Vodafone, the B2C product portfolio has been completely aligned and we have exactly the same offering on mobile and on wireline under the FastWeb and the Vodafone brand, which creates a great momentum in the market. Now moving on to the next slide number five, we can see an overview of the net ad trends both in Switzerland and in Italy. i think we have a stable development in switzerland if you look at the postpaid side we had plus 44 000 net ads in q4 bringing us to 185 000 net ads on the mobile side pretty stable performance throughout the year whereas on broadband and tv we were able to improve the negative trends we had in q1 and q2 to uh still slightly negative in q4 with minus four and minus 6 000 but very much improved compared to q1 at the beginning of the year if you combine the broadband evolution on the retail side with minus 29 000 with the performance on the wholesale side of plus 37 000 you can see that overall we have a net positive effect on the broadband penetration in switzerland on the fixed voice side we have the usual mobile fixed voice substitution which continues and which we expect to continue also in 2026 on the italian side i will start with the the broadband picture so you can see that the wholesale side we have a very pleasing performance with q4 being roughly at the same level as q1 after a bit weaker q2 and q3 with a total of plus 221 000 net ads and also on the retail side we were able to substantially improved dynamics in the market with continuous slowdown of the b2c erosion over the the four quarters bringing us also to a net positive effect of plus 37 000 net ads in the market on the mobile side we have a slightly or a different evolution q as you know we are executing a strategy change in the market and moving from a volume to a value strategy on the B2C retail side. And you can see some of the net ad effects in Q4. So Walter will give you a bit more details on the execution of this strategy. So far, it goes exactly according to plan and we are pleased with the results. The negative net ads are basically linked to three effects. we as you know we have increased front book prices which led to a slightly lower order intake we are aligning back book pricing to front book pricing which created some incremental churn effects but the most so this brought us a bit more negative net ads on the b2c side but the most important effect is actually the slowdown of tm9 contribution on the b2b side where most of the sims of the tm9 government contract have been onboarded until q3 And in Q4, there was no more growth coming from that contract. So now you can see mostly the negative B2C contribution in the overall numbers, whereas in Q1 and Q2, there was still a positive counterbalancing of the TM9 ramp up in the overall numbers. On slide six, you can see that we have achieved the guidance with a stable operating free cash flow in switzerland and also stable operating free cash flow in italy despite the transition year and many moving pieces in italy this is something we are especially pleased about and eugen will deep dive in great detail into the financial numbers so i will not go through the the revenue numbers on this slide but we will do this later in the section of eugen sternets so i move on to the strategy update i will go directly to page number eight i think after the stability or transition year of 2025 where our main goal was to provide stable free cash flows both from italy and from switzerland we are now ready to grow free cash flow on the group level we will do this with several means we have a proven strategy and now a new scale in Italy. We will continue to invest in best network and services. We will continue to innovate mostly in security, AI and cloud. And we will, of course, perform in the market, striving to be the number one customer choice in both countries, continue our transformation both in Switzerland and in Italy to remain a high-performing organization so that overall on the Swisscom Group level, we can generate growing free cash flows in this year but also in the future one word around our strategy we have a proven strategy framework that we put in place a couple of years ago it is centered around four pillars first and most importantly is to consistently delight customers by providing best experience, best network, best hotline and great shops or shopping experience. I think this is really the key cornerstone of our success in both countries, while at the same time constantly innovating and delivering new products and services to the market, being it in the core mobile or fixed, but also in adjacent markets around energy insurance or entertainment and tv services which allows us to also be competitive in the future and as you know telco is also under price pressure so achieving more with less and constantly driving operational excellence delivering better quality service at higher automation rates with higher digitization is one of our key focus also to achieve further cost savings in switzerland and in italy and at the same time we are constantly upskilling our employee base so that we can continue to improve the overall performance of our employee base going forward as we have really high transformation work going on with the digital and ai transformation driving a lot of the change going forward overall with this strategy we can deliver on the group ambition as you can see on slide number 10 We want to be a trusted leader in the digital life of our consumers and in the business of our SME and corporate customers. This is based on a couple of key cornerstones. As you know, we are very adamant on having the best networks because we do believe that either on the IT side, but also obviously on mobile and fixed side, You need the best networks as a basis of providing or having satisfied customers both in B2C and B2B. On the B2C side, we are very much focusing on a premium positioning on the telco space. We have a multi-brand offering trying to segment the market in the right way. Whereas on the B2B side, next to the premium positioning, we are also focusing very much on a comprehensive telco and IT product portfolio centered around security, cloud and AI next to connectivity. Wholesale helps us in both countries to increase the utilization of our infrastructure assets to get more out of the infrastructure that we are building with by leveraging additional brands reselling our connectivity in different market segments. overall this will lead to rock-solid financials leading to a long-term value creation based on stable free cash flows from the Swiss business growing free cash flows from synergies in Italy and this will allow us to deliver an attractive and growing dividend in the future years in line with free cash flow evolution next to delivering higher dividends to our shareholders we obviously do not forget our bond investors we also focus on a strong balance sheet good rating and continue to de-lever the Swisscom Group balance sheet now one part of leading in both market is also having the required scale to make the necessary investments and you can see this on slide number 11 we have now achieved number one or number two position both in both markets and in both in both countries and both markets mobile and fixed i will not go through all the numbers i think they're quite clear on the slide but this allows us to have the relevant scale to drive investments in both countries and continue to improve customer experience and we also have a very well diversified revenue mix, both in Italy, but also in Switzerland between the different segments, B2B, B2C and wholesale, but also between telco and the IT side, which continues to grow in both countries. And I think this is an important aspect going forward also for the coming years, positioning Swisscom and Fastware Vodafone as the integrated, comprehensive telco and IT player, delivering sovereign infrastructure and products to our corporate customers. On number 12, you can see our ambition on leading on the network side. So you see that in 2025, we continue to build out FTTH in Switzerland and also increase our coverage in Italy. So interestingly enough, we have exactly the same FTTH coverage in both countries, 56%. Our target in Switzerland is to continue the FTTH rollout and reach 60% coverage by year-end with still the same ambition 2030, roughly 75% to 80% and our long-term ambition 2035 when we end the fiber rollout of roughly 90% fiber coverage. In Italy, as you know, Open Fiber and FiberCorp continue to roll out FTTH. This also increases the faster Vodafone FTTH coverage. If everything goes according to plan, the target is to reach 65% FTTH coverage in Italy by end of this year and roughly 90% at the end of 2030. Next to the FTTH side, we also continue to roll out 5G in both countries. So we also have exactly the same 5G plus coverage in both Italy and Switzerland standing at 89%. We target roughly the same percentages for next year with 91% coverage in Switzerland and 92% coverage in Italy with the long term 2030 ambition of roughly 95% 5G plus coverage. In both countries, we are constantly winning network tests, demonstrating that we do indeed have the best networks for our customers. Networks is the basis of what we do, but obviously you also need to sell and service our customers. So investing in service excellence and sales excellence is an important aspect of our strategy of delighting our customers. So in both countries, we continue to invest in our customer loyalty programs, if happy in Italy or Swisscom Benefits in Switzerland. These programs are highly appreciated by our customer base, and we will continue to add value to these loyalty programs going forward. We also continue to invest in our sales and care network to make sure that it is of high quality, highest excellence, but also expanding the footprint as we will see a bit later, especially on the Swiss side. We also have many or multiple brands in both markets, which we intend to continue to use as it is an important aspect of tiering the retail market and being able to offer premium products up to like the no thrills, no frills offering in the budget segments of the market. Next to networks and sales and service excellence, an important aspect of the strategy you've seen is to continuously innovate and bring new products to the market. I think Swisscom and Vodafone, FastWeb are innovation powerhouses. We never stop bringing out new ideas and new products to our customer base. At the moment, the most important aspects of these innovations are centered around network renovation internally to make sure that we have state-of-the-art networks in the core in Italy and in Switzerland. And then a lot of it is centered around AI and cybersecurity, making sure that our customers can not only connect, but also connect securely. So this is done through the Beam offering in Switzerland, for example, which we launched in the last year. And in both countries, we invest heavily on the AI side to provide sovereign AI infrastructure to the market. Next to these, we also expand our cloud and application offerings. And especially in Italy, we are focused on the energy market, which is liberalized, which allows us to grow on that side. And you have seen that we have already managed to win over 100,000 customers, which is an excellent result and very pleasing. Also encouraging for this year, as we expect quite a lot of growth coming from the energy space also in 2026. So you can see innovation is really at the core of Swisscom in Italy and in Switzerland. And we will continue to focus and invest heavily in these topics as we believe that this is the only way to constantly bring more value to our customers and also generate new revenues and compensate in some form or the other, the price erosion that is happening on the, let's say, classic connectivity in mobile and the fixed space. Another important topic everybody talks about is obviously AI. And we cannot conclude this analyst presentation without talking about AI. So AI has many important aspects. One of them is obviously generating new revenues with new product offerings. So for this, we have offerings in both markets that allow us to sell professional services, helping our customers using AI and implementing AI solutions. So we have offerings both in Italy and Switzerland to do this. We help customers working on LLMs, on new models, on tuning models. We rent models as a service, or we go up to the infrastructure level where we have an NVIDIA infrastructure in both countries, allowing to run AI workload in a sovereign mode. So you can really see that on the B2B space, we cover the full value chain from consulting up to infrastructure to really help our customers use this new technology. And hopefully for us, this brings new revenue for the company. We also use AI internally for two purposes. One is delivering a better customer service at a lower cost, being it in network or in customer care, for example. but also to drive up and cross-selling, churn reduction, churn prevention and stimulate sales with the right message at the right moment for the right customer so that we can trigger the best conversion rate in upselling and cross-selling and customer value management or customer base management around which we are experimenting a lot with AI initiatives to drive sales in our core market segment mobile and fixed. So we have overall three elements on the AI which are important, driving sales on our existing offerings, becoming better and more efficient, and selling new AI-dedicated services to our B2B customers, but also in the B2C space. Last but not least, on the innovation side, I want to talk about sustainability. sustainability today from my point of view is not optional but it needs to be very well integrated with our group strategy so we really want to be at the forefront of sustainability because we believe that it not only is obviously good for the planet but at the same time it also helps us to drive business performance if we take care of our environment but especially if we also take care of our society, about suppliers, employment conditions, and act with the right governance, especially behaving in a trusted, ethical way, which from our point of view is absolutely mission critical for our brand positioning in the market and being able to sell to our customers digital services like cloud, cyber, or AI services, which are rooted in a deep trust that we treat the customer data in the right way, which is very tightly linked to behaving in the right way from a governance perspective. So you can see that the ESG topics tie very neatly together with our business strategy and is really sort of underpins or helps us to drive business performance by at the same time doing something good on these dimensions. So we are committed to continuing our path. For the first time in the history of Swisscom Group, we have a group-wide sustainability strategy which we put in place now post Vodafone acquisition so this is something I'm very happy about and for the first time also we have an integrated annual report which tackles all the financial and ESG topics under a simplified CSRD framework so you can also see that we are making progress on the financial reporting side which I'm very pleased about so we're coming to the performing side so what will be the result of all of these actions we talked about or the priorities in this year so for switzerland it is clearly managing the telco top line slowing down the service revenue erosion by working on new levers with new products or the price increase we announced a couple of weeks ago we continue to work on telco cost aiming at delivering cost efficiencies again in 2026 and of course we want to continue to grow profitably on the it side and overall if we manage to execute these three priorities properly we will have stable free cash flows from switzerland in this year on the italian side the most important topic is obviously to continue to drive the integration and capture the synergy potential that we announced when we signed the deal. And Walter will talk a bit more detail about what we intend to do this year. We will continue the telco turnaround that we started last year to stabilize service revenue in Italy, both in B2B and the B2C space. And as in Switzerland, we will continue to scale the IT part of our business, but also the energy business to create new revenues and go back to top-line growth in Italy in the next quarters. Upon executing those three priorities, we will also then have growing free cash flows from Italy so that overall on the group level, we also have growing cash flows coming out of the group. This was it on the group strategy update. I will now move to the next chapter, which is the business update in Switzerland. I will start with slide number 19, where you can see the 2025 achievements. So I think we really successfully reinforced our position as number one customer choice in Switzerland. We had a lot of activity around delighting our customers. we worked a lot on our branding our positioning we had a big brand update in the swiss market which we executed with very positive feedback we continued to expand our shop footprint to reach our customers even better and we we managed to to win all the services as i already mentioned before at as we improved and delighted customers we at the same time optimized our cost base so you can see that we delivered another year of telco cost delivery of over 50 million of cost savings that were delivered and we started to work more intensively now also on capex efficiency that we continue to improve also this year going forward overall we invested over 500 million swiss francs in the ftth rollout and we are fully on track to achieve our targets by 2030 and we are also focusing quite a lot on the fiber monetization and you will see some numbers later on that we made really great progress especially on the fiber penetration side. The IT growth continues it was slightly lower than expected in 2025 but we continue to be committed to the IT growth and continue to invest both in the cloud and security space bring out new portfolios to really drive also this the revenue growth in this year and what i'm really pleased about is that we were able to further improve the profitability of the it business and we also plan to further improve profitability in this year now what does this mean for b2c you can see on the b2c overall we have like a dual strategy in the market we need to defend our core market at the same time we attack with the second and third brands to overall keep the value as high as possible. You can see that the blended ARPU is still declining in Switzerland roughly one Swiss francs. This is mainly linked to the fact that we still have a brand mix shift from the main brand to the lower brands with Wingo and Cope and MicroMobile. essentially the prices on the individual brands are roughly stable we have executed a price increase last year on wingo plus one swiss francs and you have seen that we announced now a price increase also on the swisscom main brand and we will see the impact of this going forward in 2026 really i think highlight also on the b2c side is the increased fiber penetration which went up by seven percent last year on the one side linked to the increased fiber footprint of course that we built but we are also very actively working on the copper decommissioning so that we can shift customers over to the fiber network wherever there is a fiber network and the copper network in peril and you can see the effects of this now going quite impressive uptake of plus seven percent This will be one of the main priorities also in this year, continue the rollout, continue penetration and counter the ARPU pressure with the best service, the best products so that we can keep the NPS high and churn low. this you can see in the middle we have quite a big nps lead in the market compared to our competitors and we continuously work on this to make sure that our customers continue to be happy which they seem to be as we have record low churn you can see on the right hand side 7.3 percent on mobile and 8.5 on on b2b on the broadband sorry not b2b on broadband and we continue to work on keeping this lower churn level, one by customer satisfaction but obviously also by extending things like the Swisscom Benefit program to make sure that the customers which are with us remain happy and loyal to the brand. Overall, we managed to win 100,000 RGUs accumulated over the year. You can see that the second and third brand penetration slightly increased on the mobile side went up to 36 percent and on the wire line side we had a slight decrease of 17,000 net ads whereas the the second brand penetration increased also by two percent points to 30 percent and we do expect a similar movement again in this year now on page number 21 you can see also some more information on the b2c business we continue to grow in entertainment sports and streaming so we have another year of growth on the blue sports subscription side by plus three percent and we will continue to invest in this adjacency also going forward in this year to make sure that customers not only buy broadband but also tv and other adjacent services in the in the entertainment space something which i'm very pleased about as well is the launch of a new ai offerings for consumers in switzerland so we launched swisscom my ai which is basically a sovereign chat gpt for customers which we launched a couple of months ago and we were able to attract 67 000 users on this platform so this year our focus will again be to expand capabilities of this AI solution for consumers and continue to accelerate the growth and make sure that as many customers as possible start using our AI solution. So this year will not be so much about monetization of this offering, but rather growing the customer base. And then we will look into monetization a bit later down the road. Another key topic that we are driving this year is security as a differentiator so we not only want to have the best network but also the securest network so we launched a couple of products like a security dashboard or identity monitor last year and we will continue to launch new security features also going on this going forward this year to really make sure that security becomes like a new growth avenue for us as you can see that last year we were able to grow revenues by four percent and we will continue to invest and launch additional security features for consumers going forward as we do believe that next to connectivity having a secure connectivity is absolutely crucial for our consumers the more they are in the digital space the more they use digital services the more cyber security and protection will becoming will be more important. Now moving on to B2B on slide number 22. First you can see is ARPUs are down by minus two percent so there is still quite a lot of price pressure in the market. This has two effects I would say. One is really the competitive pressure in the market both in corporate and SME but also So still ongoing technology shifts such as MPLS to SD-WAN, which allows customers to substitute high-value connectivity with lower-end connectivity that basically drives down our average ARPU per product. The RGU base is roughly stable, slightly increasing overall, whereas it's growing on wireless. it was slightly declining on wireline as we lost a couple of bigger corporate customers in 2024 and over the last year these locations have been migrated that led to a slight decline on the wireline side in the last year. We talked already several times about Beam and I think we will talk about Beam every quarter this year because it is really a key cornerstone of our new connectivity proposition on the b2b side really unifying connectivity with cyber security so we launched it about half a year ago we managed to bring nearly 40 000 users and nearly 1 000 locations onto the new platform we are very pleased with these numbers they are ahead of our expectations and we continue to drive sales now going forward in this year to really ramp up as much as possible the number of users and locations onto this new and very innovative service. And as you can see, there is quite a big market demand. There is good response we see from our customers, both in the corporate but also on the SME side. And we will continue to invest in this product, bring out new features, new capabilities, which are especially important to our bigger SME and the corporate space so that we can really fulfill the full breadth of cybersecurity offerings so that we can drive revenues with Beam not only this year, but especially also in the outer years, 27 and onwards. One important aspect to drive the Beam take-up on the wireline side is the SD-WAN technical migration. So this is something you see at the bottom of the slide. We now stand at 67% of all wireline connections which have been migrated from MPLS to SD-WAN. And we strive to complete this migration by end of this year. So reaching 100% SD-WAN base in our wireline business of B2B. This is also the necessary requirement so that you can move on to the Beam offering because on the Beam side, everything is software-driven. So this is an important aspect that we will focus on this year so we can finish these technical migrations. And once this is done, also ARPU effects from MPLS SD-WAN movement should start to fade out. You will obviously still see them in 27 as you have the year-on-year comparison with 26. But going forward, at least this sort of structural technology effect will fade away over time. On the NPS side, we had a successful year in 25. We have a great NPS both in corporate and SME and we're able to keep it stable overall. I'm moving on to wholesaler page number 23. We are the leading wholesaler in Switzerland and we want to defend this position. I think we are doing a great job on the wholesale side. We have high customer satisfaction with many, many customers that we are serving. What is important or especially important with regards to the fiber rollout is that we can continue to drive the access service revenue on the wire line side. So you see this on the bottom left of the chart. We had a 9% growth in wireline revenues from the access side, going from $186 million to $203 million in 2025. And we intend to continue to grow this access revenue as the fiber footprint continues to grow and as we continue to monetize our infrastructure. What is also especially pleasing is that on the wholesale side, we already have more than 50% or precisely 51% of all active connections are already on FTTH. 49% are on our copper network. And we expect this FTTH share to continue to grow throughout 2026. and what this means is that basically the service revenue you see this 203 million are generated already by over half by the fiber side meaning it is future proof it is protected also going forward and I think this is an important aspect of making sure that the wholesale revenues we have on copper are migrated to the to the FTTH side as we continue to build out the network now next to revenue obviously cost is also an important topic in the telco space so you can see on page number 24 what we are doing on the cost side so we have many different levers that we are pulling on to decrease our cost base so one of them on the in the service center side is increasing the nearshoring share of our workload. So you see the advancement that we made in the last year and we will continue to nearshor more of the outsourced workload also this year to generate cost savings or like a factor cost savings. And at the same time, we are also working on the digitization of customer service where we have very encouraging results on the chatbot side. So you can see the automation rate or basically the number of incidents that the chatbot can really successfully autonomously solve, which has gone up from 30% to 53%, meaning that we can serve much more customer incidents through the chatbot channel, making it a much more effective channel and allowing us to generate more cost savings in the future. Now, with agentic AI and progress in AI, we do expect this 53% to further increase over the coming years and making this chatbot and also increasingly voicebot, so voicifying the chatbot service a much better and more effective channel going forward on the hotline side. We're also experimenting with digital features in shops. We are trying out or experimenting with new lean shop formats. So we want to increase our shop footprint, meaning having more shops throughout Switzerland, but at the same time decreasing our cost base in the shop side so we do this by digitizing shops on one side by having new leaner formats so one of them is for example we have like pop-up stores which we only have on weekends in shopping malls and so we are experimenting with different aspects to to always optimize the cost of sales in the physical in the physical channel we are not only doing this on the b2c side we are also obviously working on workload or a call center workload on the b2b side so you can see at the bottom then the achievements we have on the b2b side workload reduction by simplifying our product portfolio moving to ftth we have less calls also on b2b and overall this allows us or allowed us to decrease the b2b telco cost base by 4% year-on-year in 2025 and we will continue to work on our telco cost base also or b2b telco cost base going forward this year now on page 25 you can see some highlights linked to the network where we also focus on generating cost savings so one of the structural cost savings that we will see also going forward is obviously the copper phase out so at the peak we had two million copper active copper connections inside Swisscom today we stand at 1.6 million active copper connections that's minus 20 percent over the past two years we reduced by 200,000 the number of connections in 2025 and expect a roughly similar decline also this year by again a drop of around 200 000 copper lines so you can see that we're making good progress on the copper phase outside and we are completely on track to achieve our phase out target of 2035 we're not only working on the access networks we're also working very heavily since many many years basically since i'm at swisscom in 2019 we are working on modernizing our core platforms so you can see that in 2019 we We had 57 core IP optical platforms. We are now standing at 35 platforms and we continue to modernize and phase out older legacy platforms. And our ambition is to reach 18 core platforms within the next two years, meaning a 70% reduction compared to 2019. And this is obviously also generating continuous cost savings as we are able to turn off certain platforms both in fdes but also electricity maintenance costs etc so going forward we are focused to deliver more telco efficiency our guidance for this year 2026 is 50 million cost savings in switzerland working on the same levers as the past network and it simplification and phase out data and ai leaner and more agile organization factor cost optimization with nearshoring and more and more digital customer interaction on b2c and b2b now last topic on the swiss side b2b it on page number 26 sorry just need to have a quick drink so we are the leading swiss it provider in switzerland and we want to lever this position to unlock more growth you can see that in 2025 we were able to grow plus two percent which is slightly below our expectations but last year was not an easy um year in in switzerland on the it side with all the the tax uncertainty with the us with macro other macro uncertainty leading many of our customers to delay some of the IT or redimension, some of the IT investment. So I'm pleased that we still managed to generate a small growth of 2% in these market conditions. At the same time, we worked on our cost base on the IT side. We improved our EBITDA margin to 6.5% and we are intending to further improve this margin also going forward in this year. We do this by continuously also automating and digitizing service offering on the B2B IT side. And as I already mentioned before, we will continue to push the AI side and the private cloud, sovereign cloud offerings at the same time as leveraging our strategic partnerships with several different vendors in the in the it space now to summarize all of this before my voice completely stops working we focus on managing the the telco top line trying to slow down the service revenue erosion by growing wholesale the wholesale access by at the same time working on the best products and care we will continue to generate telco cost savings with high discipline, both on OPEX, but also working on CAPEX efficiency. And as mentioned previously, we are working on our IT side to, on the one side, grow the IT business and make it more profitable and achieving all of these three objectives. Overall, we will deliver stable free cash flows in 2025.
Now, Walter will explain to you how we will grow free cash flows in Italy. thank you thank you krishna welcome to everybody also from my side we are at page 29 um i'm very happy to say that uh true this has been a transition year for italy as kristo said but we are very happy about the results why for three reasons first of all we delivered on promises especially on synergies you will see that we are ahead of the plan we also deliver a stable free cash flow despite all the challenges of this year and last but not least we set the foundation for the future growth from this year onwards so let me enter into the main achievements of this year of course integration is uh the first one we started very early in 25 to integrate two organization and now we have a fully integrated single team that is driving the business we also aligned the go to market and the product portfolio of the two brands fasto and vodafone and as said we have delivered over delivered on synergies this is a very important for us because this shows that the the rationale is confirmed and even reinforced another important strategic project for the year is the run sharing agreement with tim is a preliminary agreement still subject to authorization but is extremely important for us because this will bring us additional value in the medium term why for three reasons first of all this will accelerate the 5g rollout in the low density city areas, namely the towns with less than 35,000 inhabitants, therefore will bring more value to our customers. A better service, a wide 5G coverage, so good for our customers. Second, this model allows us to be totally independent from a commercial and technical point of view, so we can bring our own innovation on those areas. Last, but not least, again, the efficiency gains because we'll save electricity we'll save maintenance and this will bring additional value to the company I said the other priority for us was a continue to be the stabilization of our telco service revenue we have started the year with main KPIs going in the wrong direction but we were able to change this trend all over the year so we are very happy or now we're executing our value strategy value strategy which means we bring more value to our customer and we can continue to work with them with new products but there is not only you know stabilization of revenues we have worked also to develop new growth areas so wholesale is one of those both on fixed and mobile we are continuing to grow and we'll discuss in a second but also energy is growing very well together with the it in the b2b market page 30 i will uh deep dive the integration i said for us was key and crucial to start working together as fast as a modafone so we achieve to have a single team already in place by mid 25 and then we worked to align processes hr processes but also to set a new framework for the new culture of the company. So in 26, looking forward, we are working to optimize our organization. There are still areas of efficiency that we want to gain, but we need also to establish and implement the new winning culture that we are designing together with the old employees. Another important aspect is related to the integration of our product portfolio but also of our sales force but on fixed mobile but on b2b and in b2c as you can see from the slide already all our shops have been changed to a dual branding image so in all shops you can find both fast web and vodafone products this is a an improvement and a boost of the sales of the two brands and then our operating model our operating model is changing since january this year we have completed the legal merger between vodafone merged into fastweb but this will bring massive simplification for our processes so we need to work along this line also in 26 for simplification of processes consolidation of location all over italy and also aligning hr policies for all our employees next page synergies i said we are progressing very well we are very happy about the progress on the synergies especially on the migration of the faster mobile sims the 4 million sims on the vodafone network this has enabled us to reach the 200 million synergies up and running for 26 so we completed this migration i'd of plan so we are very happy for what we did we'll continue to work on synergies in 26 we need to work on fixed network because we need also to optimize the access cost by leveraging on the best of breed of footprint we have in faster than vodafone which will bring additional efficiency but also new technologies to our customers another important element is that we are working on reviewing our tower strategy the current terms of conditions of our contracts are not sustainable especially in light of the telco market that is very competitive and with strong pressure on margins so we will work on that front we unfortunately cannot say much as you know this is a very sensitive topic so please understand that we will not answer any further question on this topic i can only say that as usual we try to work with our partner to find a win-win solution but at this stage we will investigate all the options that we have on the table to maximize the value for our shareholders another important piece of the synergies that we realized in 25 is the disentanglement or the sourcing of some services that are currently provided by vodafone group so we worked very hard with our teams to define migration plans and to start executing on those. Just to give an example, we are very proud that at the very beginning of the year, we've been able to introduce our Wi-Fi 7 modem on Vodafone customer that is completely managed by us. This has brought simplification on processes and efficiencies on cost. So we will continue to work on new services to insource, but we will also continue to collaborate with Vodafone Group, where we see that there is a value in working together. So all in all, in 2025, we overachieved the synergies by 35 million. Very happy about that. And we are on the right trajectory to reach the 600 million at 2029. So now we are working on consolidating it on consolidating the networks and to further optimize the external spend page 32 b2c as you know consumer market is very complex is highly competitive but we decided to exit the volume strategy which focuses only on promotion so we moved on a value strategy Value strategy means bringing value to our customers in a more formal approach. For this reason, we worked very hard on our product portfolio, on our pricing, to bring to our customers the best products on fixed and mobile. It's not only that, we also worked on quality. We are increasing the customer experience to our customers, and this has turned into a very satisfactory trend of the ARPU in outflow gap, which has been reduced by 60% but on fixed and mobile during the 25% if compared to last year. So if you look to the customers, you see that on mobile, the customer losses are 2.7%. True, that you don't see improvement there. But to be honest, in that losses, most of them are related to low value customers. we are talking about tourist sim, we are talking about second sims, we've been able to keep and develop our customer base, our high value customer base. On the B2B is more evident the result of this strategy, as you can see, the losses on fixed are reducing quarter on quarter. We are very happy about this development, which again set the trend for 2026. another important pillar of our value strategy is also to deliver transparent and simple offer to our customers and this is extremely important because if you treat well the customer then they will stay with you and this is very evident if you look to the churn reduction in mobile and fixed which is which has been very satisfactory to us last but not least we continue to work on the enhancing the customer experience we have seen the MPS growing in all the brands both on fixed and mobile and this is crucial because customers starts to understand that we deliver value to them and they recognize our brands as premium better premium brand with quality if I look at 26 we need to continue on this trend we need to continue to deliver value to our customer we need to continue to deliver quality to our customer, to bring new products to our customer that are in line with their expectation. But it's also a matter of being transparent with our customer. This is the reason why we are continuing to align the front book and the back book prices to reduce the in-out spreads and therefore also reduce the churn and then extend the convergence benefits because the more the customer buys new services the more they are loyal last but not least we need to work on optimizing sales structure we need to work on increasing the mps by continuing to improve the customer experience and during the course of this year we will also introduce new aid aid driven tools which will help us both on churn reduction but but also on cross-sell and upsell of our services. On page 33, we talk about B2B in 25. We know very well how to manage this segment. We put together immediately the best of the two in terms of a product portfolio. So we can deliver the best of fixed thanks to the fast web experience. We can deliver the best of mobile thanks to Vodafone experience and skills. we are combining all this and bringing it to our customers. And this is extremely important because it's allowing us to gain traction in the order intake, especially on the high value customer. The order book is growing very well. This means that we deliver value to our customer and they are continuing to buy from us. The churn is also very important. So we started immediately to renegotiate the contracts that were going to expire. We did in advance and we did with a different approach, which is a value approach. So we started to offer to them more value in exchange of a longer contract. So this is working because we see the trust table that you can see also on the RGUs that are growing on mobile thanks to TM9, pretty stable on fixed thanks to this strategy. Also, MPS for us remains key. Also in the B2B, we are number one on fixed with the faster brand, number one on mobile, thanks to the Vodafone brand. We'll continue to work and bring innovation to our customers. Also working on some initiative like the mobile private network, which shows how we can deliver also a complex project to our customers. On 26, again, we need to continue to work along this line, order intake will continue to grow also in 26, we will continue to simplify our product portfolio in order to offer always the best products to our customers. We need to work on churn, but also to optimize and maximize the value of our complementary public sector tenders. Again, also for B2B, customer experience is key. will introduce AI in the operations also in the B2B and this will bring us additional value for this segment. Wholesale for wholesale was a great year 25 both on fixed and mobile. You see on this page the growth that we did on fixed over 200,000 lines but also mobile over almost 2 million lines added to our network thanks to the co-op voce migration on our net this shows the superiority of our proposition the quality that delivered through our network but as you can see we are not only working on the network we are also delivering operational excellence you see a couple of kpis that are improving significantly the activation process is shortening and also one-day resolution is improving considerably so in 26 will continue to grow in the ultra broadband market leveraging on our strong customer base we will try to drive up the ftth because we see more value on those customers and so we will continue to strengthen the operation on that front we will also continue to work on mobile we would like to minimize the post losses that will happen this year and we are also working to find new customers one of those is kai that will launch in the course of 2026. energy another important key driver of growth for us both on consumer and B2B. We launched Energy in May 24. And now after one year and a half, we are very happy about the development of this service, especially in terms of growth of customer. You see, we are over 100,000, but we are growing also in terms of new acquisition. We did 141,000 acquisition in 2025. So we will continue to scale up this service, this business. We open the Fast Home Energy offer to the Vodafone customer base. We still see space of growth on that front. We are also opening new, continuing to opening new sales channel to Fast Home Energy. We are very happy about the development of the B2B, especially in the small and small business, where we see still space for growth so we will continue to work to increase the customers on that front but we will also work on the value creation as we want to evolve from a pure reseller towards a market operators this will increase the margins that we do on those services and energy is also very important to strengthen our convergent proposition because we will push more and more on what we call superconvergenza fixed mobile and energia together this will bring additional value additional loyalty from our customers b2b it is another important driver of growth in the b2b market we are working on three main products one is cloud over the course of 25 we have invested in building a strong product portfolio which is based on sovereignty but also on the capability to offer multi cloud proposition to our customer so you as you can see from the picture we have our own proposition fast cloud is hundred percent build from us so is bringing sovereignty sovereignty and under percent but we have also significant partnership with AWS and Oracle that are growing very well in the cloud market cyber security is another important element of our proposition we offer network security but also cyber security services to our b2b customers we will introduce ai also in that front to enter also the sole sme market where you need more automation in order to have a proposition that is compelling with this segment last ai ai is key as christophe said in our strategy we have developed internally in italy an end-to-end solution for our customers. From the infrastructure, we have a supercomputer in Milan, which we can leverage. We have our own LLM models. We are developing a new application on top of that. We want to bring all this to our customer to offer them a sovereign proposition, but also compliant with all the regulation in Italy and in Europe. This business is developing very well as you can see we have over 25 000 licenses sold in 25 mostly to so smae but we are very happy the result of this new segment so in oh in 26 we need to work to expand these services to continue to grow on that front and to bring more value to the overall company Last slide from my side. Again, we are very happy about what we did in 2025. We are working very hard to integrate two big companies. We are now already have a single organization working. We need to have a single culture, a successful culture and a future-proof operating model. This is the focus of this year, but we need also to accelerate on synergies ramp up the target of this year is 300 million we are fully on track to deliver on that uh so we are uh we will deliver on that front second priority is to the continue the technical turnaround you have seen uh kpis changing direction in the right direction so we need to continue to execute our value strategy and we need to continue to grow on the wholesale business despite the the losses of post. Last, but not least again, scale growth, thanks to energy and IT, new businesses that are growing very well. We have a good product development in place. So we think that with these three pillars, we can continue, we can start to generate growth in the midterm.
Thank you very much and i leave the floor to again thank you walter hello everybody from my side let's move on to the numbers page 39 maybe a sentence or two at the start christoph mentioned it 2025 was a new chapter in swisscoms history from a financial point of view that chapter made for very pleasant reading so i'm quite happy to present these numbers today all the numbers that we are going to see are in line with guidance and in line with previous capital markets communication. We delivered what we promised at the outset of the year, stable free cash flows from Switzerland and a transition year in Italy, which incidentally also delivered stable free cash flows from Italy. So we are very happy with the results, happy to turn the page to 2026 to grow free cash flows. But before we do so, let's dive into all the results of 2025 in the appropriate detail. As usual, I'll start with a group overview and then deep dive into the segment Switzerland and segment Italy. So let's start with revenue at group level. Revenue was 15 billion and 48 million, fully in line with guidance, 310 million down year over year, 105 million of which were due to currency effects. so net of currency revenue was down 205 million 108 million out of which from the segment switzerland mainly reflecting lower telco service revenues 77 million swiss francs lower in italy reflecting on the one hand lower delco service revenues but on the other hand compensating higher revenues from the it business from the wholesale business and the energy business on the label of EBITDA 4.9084 billion also fully in line with guidance on the reported level down 60 million on an adjusted level down 100 million. I will cover all the adjustments in the video segments it's easier to explain in Switzerland and in the Italy segment. So Switzerland was down just 27 million EBITDA on an adjusted basis. That's the net of telco service revenue down on the one hand and cost savings on the other hand and a positive contribution from the IT business. Italy was down 54 million. That's the net of the impact of the telco service revenue decline but also synergies already kicking in starting mainly in Q3 and then accelerating in Q4 and also the result of the very pleasing wholesale growth that we already heard about. We have a jump in Q4 that you see there is plus 41 million. That's partly driven by synergies, but not only. And I'm going to explain it later when I talk about Italy. I'll move on to page 40, which covers cutbacks and operating free cash flow on group level. So, cutbacks at group level was 51 million below prior year. On an adjusted basis, $102 million below prior year, both in Switzerland and in Italy, we had some one-time CAPEX item in 2024. So that helped us together, obviously, with the usual cost discipline to deliver lower CAPEX in both countries. Obviously, in Italy, there was also integration CAPEX, which we are going to talk about later, which is shown in the adjustments. But on an adjusted basis, CAPEX was down. Now, on operating free cash flow with EBITDA down and CAPEX down as well, we were able to deliver stable operating free cash flows, both reported and adjusted. In Switzerland, EBITDA is slightly down, CAPEX slightly down, stable operating free cash flows. And the same in Italy, EBITDA down, CAPEX down and stable operating free cash flows. now let's dive into switzerland page 41 revenue down 108 million b2c minus 24 so we had lower delco service revenue in b2c of minus 52 million but higher hardware sales which compensated badly we had a hardware device push in the market in the fourth quarter and this is why in q4 you see a slightly positive number on revenue. B2B down 80 million year over year. There is obviously a velcro service revenue component to that of 70 million, but that revenue decline is at least partly also by design because we also have lower hardware revenues as we try to avoid having revenues with zero margin and focus on the higher margin business, a strategy that we already explained a couple of times over the course of the year and then there was another positive effect compensating partly the service revenue decline which was moderate growth in the IT services business. On wholesale plus four million doesn't look like much but behind that there is steady growth in the wholesale wireline business. Christoph showed the impact before this was masked somehow by smaller least-line businesses and mobile backholding, and in particular in the fourth quarter also some lower termination revenues. So there are always some volatile elements in the wholesale revenue, but the underlying trend which is important is the growth in the wholesale wireline business, in particular on FTTH. Now EBITDA in Switzerland reported plus 33 million on an adjusted basis minus 27 million in between the two adjustments of 60 million now we had sizable adjustments over the course of the year which I explained in the individual quarters most of them are a wash in the end so what shows up in the end here is plus 60 compared to prior year is exactly the transaction costs in relation to the Vodafone acquisition that we booked in segment Switzerland in the prior year. Obviously, there are no such transaction costs anymore in 2025. So, we have a positive year-over-year effect that shows up in adjustments. So, if we focus on the adjusted numbers, B2C first, minus 19 million EBITDA, that's due to a service revenue decline of minus 52 million, which we could compensate partly by cost savings, indirect cost savings, but also lower subscriber acquisition costs, softening a bit the blow from the Delco service revenue decline. In B2B, EBITDA are down 44 million. That's also due to the service revenue decline. On the one hand, we had some cost savings and in particular, we had a small positive contribution from the IT business. Wholesale is up in line with revenue and infrastructure and support functions segment. ISF up 32 million. There is a number of cost savings in there, obviously, from workforce savings, IT cost savings, maintenance and energy savings. I'll dive into the Swiss P&L next on page 42. On the top left, you see the Telco P&L with the service revenue decline of minus 122 million, minus 52 B2C and minus 70 B2B. Entirely as expected and as communicated already in Q3. You also see there up on the top left in the box the plus 53 million cost savings which partly compensated the service revenue decline. Also the number completely as expected and also as expected and previously communicated a small contribution only in Q4 of 2025. Together with some other smaller moving pieces this yielded a EBITDA decline of $40 million in the Delco business that you can see on the top left chart. Top right, IT business growth of $24 million in revenues year over year and a positive impact on EBITDA of plus $13 million, which helped balance the Swiss EBITDA together with the minus $40 million from the Delco business. This adds up to the minus $27 of the segment Switzerland that we looked at on the previous page now importantly telco service revenue bottom left there is actually not much to report no news is good news we are facing a very stable situation here there are some variations from quarter to quarter for example in b2c but overall the situation is very stable so i'll go directly to the outlook for 2026 we expect a service revenue again in Switzerland in the same order of magnitude as we saw in 2025. Yes, there is the price increase that we announced in January, but obviously this price increase will have a gross effect from the price increase and after churn a net effect. And as of today, we obviously don't know yet how big this net effect is going to be or how big the churn is going to be. Number one, Point number two, important for you to understand the dynamics, already in 2025, we had a non-insignificant increase or positive impact on our service revenue out of price increases. You see it in the B2C wireline APU column of this page, where you have a small sentence that says plus 33 million value. So this is the year-over-year result in 2025 out of all the small targeted price increases that we already realized in 2024 and beginning of 2025. So in the dynamics from 2025 to 2026, yes, there is a new across-the-board price increase, but we already had price increases in the past and the dynamics, therefore, we do not expect to change significantly. I'll move on to page 43. CapEx, as I mentioned, slightly down in Switzerland with plus 33 million. We spent as planned 500 million on the fiber rollout. And so with lower EBITDA and also lower CapEx, stable free cash flows from Switzerland on an adjusted level and reported level plus 66 million. Let's dive into Italy. Starting with revenue, now that's all in euros, by the way, so revenue down 81 million in euros, mostly due to B2C. B2C revenue was down 100 million. There is a telco service revenue decline of 160 million, compensated, however, by the growth in energy that Walter mentioned before and by some hardware revenues that were growing as well. In B2B, down 16 million year over year. There was also Delco service revenue decline in B2B of minus 66 million, but the growth in the IT business of 42 million was able to compensate most of that. Very importantly on wholesale, strong growth, both in wireless and in wireline, actually much more than you see here in the plus 37 total. so wireless and wireline together was about plus 70 million but we had some other wholesale revenues with practically zero margin which went down year over year which we inherited from Vodafone so you see the net effect of all these three positions here of plus 37 obviously the margin impact of wireless and wireline will show up in the EBITDA bridge To which I move now, EBITDA reported stable, plus one on an adjusted level, minus 57 million. Now, the adjustments in between of plus 58 million, that's mainly the decrease of OPEX integration costs year over year. You may remember that last year, at the end of the year, we already booked OPEX integration costs in the amount of 176 million euros in connection with the termination of our MVNO agreements with Vintre and with Telecom Italia. This year, we also had OPEX integration costs of different sort of 109 million. And so OPEX integration costs in 25 were actually below 24. And this shows up as a positive impact here in the adjustments column. So if we focus on the adjusted numbers, contribution margin B2C down 93 million. that's obviously mainly due to the service revenue decline of 160 million but also importantly synergies ramping up so if you look at the q3 and in particular the q4 numbers so finally after talking about the mno synergies for the last two or three years we see it in the actual numbers you see these numbers are kicking in in q3 and q4 where we almost reached a run rate of these synergies on a quarterly basis and which is obviously very nice very nice to see b2b contribution margin flat there is two things driving this really one element is the shift from telco service to it services which has a negative impact and that you see throughout most of the year if you look at the individual at the individual quarters there is a second driver that shows up in the fourth quarter. This actually has nothing to do with 2025, but much more with 2024. In the fourth quarter of 2024, Vodafone had some significant negative impact from device subsidies on a large B2B or public administration contract. We don't have these anymore in 2025, so this shows up as a quite significant positive impact year over year, but it's certainly rather a one-time effect. The underlying trend is rather the shift from B2B Delco to B2B IT that we saw in the previous quarters. Together the Q4 impact in B2C of the synergies and this kind of one-time impact in B2B together these two effects explain the jump in APTR in the fourth quarter in Italy that I talked about on the very first page. Wholesale plus 34 million so that's the margin impact of the 70 million plus in wireless and wireline revenues. Indirect costs are more or less flat. That's a net effect of growing costs from the Invit MSA and from energy on the one hand and on the other hand the first synergy is coming out of the disentanglement from Vodafone and there are some quarterly variations in between but net it's a flat development. So I'll move on to Telco service revenue in italy also a very important topic also looking forward so let's start with the total number for 2025 which is minus 226 million b2c and b2b taken together minus 160 million b2c minus 66 million b2b if we look at the quarterly evolution in q4 we have minus 60 million, so slightly improved over Q3. In B2C, it looks slightly worse than in Q3. We already heard about the increased churn due to our back book to front book alignment in B2C. Wireless, that was announced in October, so customers could already react to that in Q4. The price increase is effective in December, so what we see is the negative impact from added churn but not yet much of a positive impact from the higher prices. B2B in Q4 is slightly better than Q3. You might remember I explained that in the Q3 conference. Q3 was mainly impacted by one-time revenues that we had in Q3 2024 that we were not able to replicate and now in Q4 things have normalized a bit on the B2B delco service revenue side. Now I think it's important to understand the individual drivers because they tell us also something about how things are going to move forward into 2026. So I'll go one by one. B2C wireless. Yes, B2C wireless. RGUs were down year over year. APUs were down year over year. But as we heard from Walter before, churn numbers are significantly down. The APU decline is slowing down as the APU spread between APU in and APU out is declining strongly. So we are definitely moving into the right direction even if it doesn't show up yet in the year over year numbers. Similar story on B2C via line. Yes, RGOs are down and yes, APUs are declining year over year. However, if you look at the quarterly numbers and Walter showed it before, the RGO losses have already come down significantly over the years. So they were mostly in Q1 and Q2 due to commercial decisions taken by Vodafone in the prior year. Churn numbers have come down significantly and also the ARPU is stabilizing. So also here, moving into the right direction. So the short story is we lost a lot quarter over quarter from Q4 2024 into Q1 2025 and Q2 2025. Now things are stabilizing quarter over quarter, but here negative impact. So we'll all need to be a bit patient. And that takes me to the outlook. So the outlook 2026, very important, is clearly better than what we saw in 2025. We expect a gradual stabilization of year-over-year numbers from the second half of the year onwards. In total, we expect a service revenue decline of about minus 150 million, which is significantly improved vis-a-vis 2025. And those 105 million, we expect to be split roughly two-thirds into B2C and one-third into B2B. Sorry, that was a long explanation, but I think it's very important to understand the dynamics going forward. So quicker on this one, CARPEX, as I explained, down year over year and with lower EBITDA and lower CARPEX stable operating free cash flow in a transition year, which is obviously very positive. Page 47, synergies and integration costs. So synergies This ramped up to $95 million at the end of 2025, overachieved our $60 million target, mainly due to the faster migration of the fast web mobile customers onto the Vodafone network. Also integration costs were in line with target, $217 million. We talked about the target of $200 million. Now, overall, this doesn't change anything with regard to our plans. So the total run rate synergy that we expect is still at 600 million. The total integration cost we expect over the first three years is still 700 million. The ramp up changed slightly to the better. So the ramp up accelerated a bit both on synergies and on integration costs. For 2026, we expect an added 200 million of synergies, so plus 200 million of synergies in 2026, three quarters of which are related to the MVNO synergies, which are basically already in the bank with the migration having been essentially completed by the end of the year. And on the integration cost front, we expect another 250 million to be accrued this year with 200 million in capex and 50 million in opex i'll move on back from italy to the group label free cash flow free cash flow was stable year over year at 1.4 billion the equation is quite simple we are comparing not to performer here by the way but but to prior year as it was reported so the equation is quite simple operating free cash flow is up after the vodafone acquisition which is clear up by 168 million. At the same time, we have extra interest payments compared to prior year two and 40, 14 million. And there are some other smaller moving pieces. And so a free cash flow remained stable in the group, which is obviously an excellent result for the first year after such a large transaction. I'll move on to net income. This is a very complicated slide. Don't worry. The story is really quite simple. So net income was down 271 million year over year. I'll start the explanation at the level of EBIT because this is the simplest thing. So EBIT came in at 1.925 million, down 28 million year over year. There are two things behind this flat EBIT. On the one hand, there is the increased EBIT excluding PPA depreciation. So excluding PPA depreciation, EBIT would have gone up by 208 million. And then there is PPA depreciation, so 236 million of PPA depreciation, which leaves the EBIT basically flat. In addition to PPA depreciation, we have an additional expense in relation with the Vodafone acquisition, and this is the added interest expense. You see the minus 266 million here. Be careful, this is not only interest on financial debt, but this also includes the additional interest on these liabilities that we acquired with the Vodafone acquisition. So net income is down due to two factors, PPA depreciation and added interest. Expense, obviously, this bridge will become much simpler and much more pleasant as we go into the first quarter of 2026.
Just a few words on net debt and leverage and our overall debt profile.
So first of all, we were able to reduce net debt year over year. by 600 million. On the one hand, this is due to the spread between the free cash flow and the dividend payment of 1.1 billion that we paid out in April 2025. And secondly, the least liabilities out of the InVid agreement up until 2028 came down because the remaining life was reduced. So leverage came in at 2.4x exactly as guidance. Our ratings are still excellent and unchanged. S&P and Moody's A- and A2. Our average interest rate is still very low at 1.86%. And we managed over the year or over the course of 2025 to further stretch our maturity profile, which is very well balanced now. and we have about 1 billion to 1.5 billion of refinancings every year in the near term. With that, I come to the guidance and I walk you first through Switzerland, then through Italy and then we'll add it up to the group bearing in mind always that there is a third segment other which typically doesn't have much of an impact but in the details it can have. So let's start with Switzerland. Revenue, the guidance is 7.7 to 7.8 billion, so down 100 million. That's Delco service revenue decline in the same magnitude as in 2025, as I explained, partially compensated by IT growth. Simple bridge. Next, EBITDA, about 3.3 billion, so that's slightly down year over year. As usual, and as you know well, we will have a spread between the dead cost service revenue decline on the one hand and the cost savings of roughly 50 million on the other and then there is a small contribution from the IT business so that gives an EBITDA in Switzerland of 3.3 billion which is slightly down year over year. CapEx 1.6 to 1.7 billion Swiss francs also slightly down year over year thanks to CapEx efficiencies and that gives for Switzerland, an operating free cash flow of 1.6 to 1.7, which is stable as CapEx efficiencies compensate the somewhat softer EBITDA contribution. So this is Switzerland. Moving to Italy. Italy, revenue guidance that's in euro now, 7.2 billion euros, so down 100 million year over year. I talked about the telco service revenue decline that we expect of $150 million. There is on top the loss of the Postemobile contract in the wholesale segment, which we expect to impact negatively with minus $75 million. And those two negative elements will be compensated by growth in the IT business, in the wholesale business outside Postemobile and from the energy business. On EBITDA, EBITDA, the guidance is 1.8 to 1.9 billion. So about 0.1 to 0.2 billion higher year over year. What are the main drivers? Number one, synergies ramping up plus 200 million year over year. Number two, underlying business down 100 million. Telco service revenue decline partially compensated by the rest of the business. Number three, the loss of the Boste Mobile MVNO will actually be a wash and will not impact the reported numbers in 2026 because we do have an indemnification of a certain size, which is similar to the loss that we have in 2025 from Vodafone. So on a reported level, the Boste MVNO loss will not impact the 2026 numbers. It will impact then the 26 to 27 bridge. So, Synergy is up 200 million. Underlying business down 100 million. Boste A. Wash, that's 100 million. And then on integration OPEX, integration OPEX will be lower year over year it will be 50 million expected in 2026 after 100 million in 2025 so year over year a plus of 50 million and if we add all these elements up that's business 100 million uh change in opex integration cost plus 50 million we end up with 100 to 200 million higher epitr year over year then complex simpler story roughly stable at 1.5 billion on the one hand we will have higher integration capex by 100 million but at the same time the underlying business as usual capex will be down about 100 million so capex roughly stable at 1.5 billion so the epidural increase that we guide for in italy translates into an operating free cash flow increase of 100 to 200 million one important note as the business is going to turn around over the course of the year The operating free cash flow improvement will be backloaded towards the later quarter. So don't be surprised if you don't see too much in Q1 and Q2 out of this growth. Now, adding it all up to the group guidance. Revenue, Swiss francs 14.7 to 14.9. So slightly lower revenues from Switzerland, slightly lower revenues from Italy and a different Swiss euro exchange rate underlying these numbers of 92 cents. That all adds up to this revenue guidance. EBITDA guidance, 5.0 to 5.1 billion, thanks higher to Italy on the one hand and Switzerland slightly lower. So 100 million higher, 150 plus out of Italy and slightly lower in Switzerland. CapEx, 3.0 to 3.1 billion, slightly down year over year, primarily thanks to Switzerland. And so operating free cash flow, which is the nicest part on this slide, 2 billion Swiss francs guidance for 2026, up 100 million roughly year over year due to the synergies coming from Italy, as we always said. Now, two more words on the guidance, leverage and dividend. The leverage guidance for 2026 is 2.3x. We heard from Walter that we are reassessing our tower strategy in Italy. This reassessment will have an impact on our lease liabilities at the end of 2026, but of uncertain size. So given this uncertainty, our guidance of 2.3x only includes the in-vit lease liabilities under the current agreement up until 2028 and does not consider the prolongation of existing or the conclusion of new tower agreements which will come on top of this number of 2.3x. And we will update the guidance once there is new news on the topic. Finally, the dividend guidance for 2026 is upon achieving all the other numbers here the dividend guidance for 2026 is 27 swiss francs per share looking beyond 2026 for a second we obviously remain committed to rock solid financials focusing on long-term value creation an attractive dividend and a strong balance sheet and with that i hand over to christoph for the wrap-up thank you eugen i will wrap up on slide 54 i think we we emphasized all of these points in the presentation we strive to
be the number one customer choice both in italy and switzerland by leading the markets we will continue to create efficiency and innovate and deliver new products to our customers to increase the value we deliver to our customers and we have as outlined clear priorities in 2026 to perform against expectations our investor story is quite simple we will deliver stable free cash flows from our swiss business growing free cash flows based on the back of synergies in italy leading to overall growing free cash flows from on the group level allowing us to further increase the dividend from 26 to 27 Swiss francs upon achieving the financial guidance of 2026. With this, we conclude the presentation and I hand back to Louis.
Thank you, Christoph. Now it's time for the Q&A session. Some remarks for the participants being registered for rising questions. Use the Rise Your Hand feature to ask questions. The moment you get the floor, please switch on your camera. unmute the microphone indicate name institute you're representing and please speak loud and clear so that the audience on the webcast can also also follow our discussion with that i would like now to open the q a session with the first question coming from hi it's uh holo tang from ubs thank you for taking the questions um and thank you for the presentation i have three questions.
The first one is just on Swiss telco revenues. So you're expecting a decline of minus 120 million for 2026, and that's similar to 2025. But I'm just trying to understand, should there not be more of an improvement given the benefit of the 3% to 4% price rises on the Swisscom brand? Now, I know that you said there would be some offset from churn, but what level of gross to net drop through are you assuming from the price rises and can you maybe talk about what you're seeing in terms of swiss competitive dynamics in q1 and specifically on the swiss b2b revenues do you think they can grow medium term once the sd1 migration is complete the second question is really just about swiss cost savings so on page 25 you laid out a number of cost saving initiatives but can you maybe give some detail in terms of the quantum of savings from the different initiatives so for example how big will copper switch off be and more broadly what has been the biggest driver of cost savings historically and what you see is the bigger driver going forward so your net savings in the past were about 100 million per annum current run rate is 50 but do you see more or less opportunity for cost savings going forward or maybe another way of asking the question is, how confident are you in terms of your Swiss operating free cash flow? Do you think it can grow longer term? Or is the ambition in Switzerland only to be stable? And the final question is really just in terms of Italian telco revenues. So you outlined, you're expecting the decline of minus 150 million in 2026, compared to minus 226 million for 2025. But given that you've had several rounds of price rises on both the front book and the back book, why is there not more of an improvement in terms of Italian telco revenues? And can I clarify if you said that these Italian telco revenues are expected to be stable in the second half of 2026? And can you give some color in terms of what you're seeing in terms of competitive dynamics in the Italian market? Thanks.
Thank you very much, Polo.
First question on swiss telco revenue is covered by by christoph then cost by eugen and walter italy so on the telco revenue so we do expect roughly a similar order of magnitude this year compared to last year roughly again split in the same way so slightly more tilted towards b2b than b2c in terms of maybe sort of a 40-60% split between B2C and B2B as we had also in 2025 and we do expect a roughly similar split on that side. Now on the gross to net let's say impact of the cost saving it is obviously highly dependent on the resulting churn so depending on what kind of assumptions you make you come to completely different numbers on the net effect of the price increase. currently our assumptions is sort of lower to mid double digit millions in in terms of net effect and this is roughly of the same size of impact we had by taking price measures that we took in 24 and 25 so as you know we you know we worked on price initiatives especially on moving or turning migrating older legacy subscriptions to the new front book we worked on like options in the tv space, etc. And those also generated double-digit millions in terms of new revenues. I think as we progress throughout 2026 and we can better evaluate the churn impact by mid of the year, we might be able to say something different. But I think for the moment, it is more reasonable to stick to a rather conservative outlook.
Good. I'll take the next one on the cost savings. So, I'll start with the copper switch off obviously this is still some years out we are talking about the final switch of 2035 we once did a rough cut estimate that we also shared i believe at some point of what the opex improvement would be of that copper switch off and we talked about roughly 100 million at the time lower energy costs lower maintenance costs lower customer care costs etc so this is the the the ballpark number for 2035 obviously there will be a ramp up over time but it also goes in steps because you have to switch off complete central offices to gain the benefit and in the end switch off the complete network so it will be a progressive saving it will be something that contributes to our cost savings over the years but is right now at the moment not yet very significant then on the individual component of our cost savings what were over the last say two or three years the the most important contributions. One is certainly the digitalization of the customer interface, which allows us to reduce the customer care costs. Number two is the cleanup of the IT and the network architecture, which takes a lot of time and costs a lot of money in the first place, but then generates sustainable savings. And number three is clearly also nearshoring, which we haven't done much a couple of years ago and have ramped up over the last two or three years. on the one hand in IT development where we have our own nearshoring centers which produce at a lower cost and on the other hand also nearshoring customer care not our own customer care our internal customer care departments but the customer care that is being done by our suppliers instead of doing it in Switzerland goes nearshor so recently these were the three most important things I can't give you an exact number on each of those and there is also no exact number to be honest because as you know these cost savings programs also have always have hundreds of lines of individual individual measures but these are the most important buckets we are talking about confidence going forward Christoph talked about it we expect another 50 million cost savings this year in the near term it's also something that we had on the slide we see that more cutbacks becomes opex as more software becomes not developed on your own but it's being bought via SaaS models So that will increase the burden on OPEX. So it will certainly become more difficult to reach the same OPEX number because at the same time, CAPEX is kind of being morphed into OPEX. This is why we're also working on OPEX efficiency, obviously. Comfort in delivering stable operating free cash flows from Switzerland is high due to the cost savings on the OPEX side on the one hand and the cutbacks efficiency. On the other hand, confidence in growing free cash flows would not be very high from my point of view, but that's the CFO talking. Maybe Christoph has another view, but I would say stable free cash flows is for the moment the ambition we have and that is already a challenge enough.
Maybe I can just add on your first question here. You asked also the B2B service revenue, which I, sorry, I omitted the answer. I think obviously this year we still have quite a strong decline And in the year-on-year effect in 27, you will again see a decline as the SD-WAN migration takes until the year end. So I would say, you know, let's say in the short to medium term, B2B service revenue will continue to erode. But going forward, there is indeed like the SD-WAN effect will obviously go away completely 27 to 28. And depending on the ramp up of Beam and if we really manage to scale the offering as we intend, There is, I would say, a reasonable hope that we can get maybe not to a growth, but at least to a steady state evolution on the B2B side. But we are talking about 28 and beyond. So there is, you know, quite a big range of uncertainty around this, depending on various parameters, also obviously market evolution, etc. But I think we are working on the right initiatives, which should allow us to achieve it. But, you know, first we still need to deliver many, many things before it happens.
Thank you for your question. Regarding the telco revenues, I think Eugen already explained to you the dynamics of the churn reduction, allowing us to stabilize the customer base, but also the ARPU is slowing down the decrease. You see already the effect on a quarter over quarter revenue trend. And why we expect a stabilization in the second half of 26? Because all the activities related to back book to front book alignment started in late Q4 and will continue in Q1 and Q2. So you will see the effect of this maneuver only in the second part of the year. In terms of competitive dynamics in Italy, I mean, the market continues to be very competitive. there is a strong competition the good news is not deteriorating so we don't see a market that is deteriorating we see a market where there is space to play a value strategy and this is exactly what we are doing so we are maybe getting less volumes in terms of sales but we are winning a lot in terms of chain reduction so this is a customer based game for us we'll continue to work on our customer base because we really believe we have a strong value there. Thank you.
Thank you, Walter. Thank you, Polo. Next question coming from Robert Grindel from Deutsche Bank.
I've got three as well, please. On leverage, the guide of 2.3 times reflects the reassessment of tower strategy uncertainty and you say does not consider the prolongation on new towers. Is there also a change in view as to when this contract is renewed? Secondly, you mentioned CapEx savings in Italy this year, which are impressive. Is there any color as to where they're coming from and are they sustainable in nature? And thirdly, just a point of clarification on the 75 million post-mobile MVNO loss at FastWeb, offset by indemnification. I didn't quite hear, were you saying it's an indemnity from Vodafone? I assume that's just one year. And are there any other indemnities worth filling us in on? Thank you.
Thank you very much, Robert. First question will be covered by you, Eugen. Second question, CAPEX savings, Walter. And the last one, again, by Eugen.
So on the leverage guidance, as I said, it excludes prolongation or the conclusion of new tower agreements on all the rest we have no news to tell we told our story last year and also introduced the topic today so unfortunately we are not going to comment on any further contractual questions sorry for this non-answer but this is in line with what Walter said before maybe I jump to question three because then I can already do this so the indemnity yes you understood it correctly it's an intent it's an indemnity under the SBA from Vodafone and it will cover roughly the loss that we expect this year but this is it so there is no other indemnity to
be expected under this title okay regarding the capex in 25 the saving is driven by a couple of effects. On the network side, we are enjoying by sharing contracts between Fastom and Vodafone. So we are leveraging on the best condition of both. This from one side is bringing new efficiency. From the other side, we are developing our 5G on a more cautious approach. So we develop where is needed to unlock capacity needs and the third element is on it we are reducing the it spend because we are you know investing only on the stack that we will retain so we divest on the stack that we will dismiss after the transformation these are the major effects together with the fact that also the customer acquisition is slowing down a bit and this is bringing savings income in terms of customer-driven.
Thank you, Walter. Thank you, Robert. Next question coming from...
Hi there, it's AJ from JP Morgan. I've got a couple of questions. So, my first one is just around, you mentioned around second brand penetration potentially increasing again during 2026. I was wondering how the launch of a new brand within this obviously discount segment has maybe impacted you guys in the last couple of months. And then the second question was around the Swiss beyond core services, which I think is slide 21. You mentioned around monetizing, it may not be a 2026 story, but what do you think you could actually charge for these services? And especially with the Swisscom My AI, I mean, how will this differ from, you know, existing free AI offerings in the market, you know, do you actually think you'll be able to charge customers for this? Thank you.
Thank you, Ajay. Both questions go to you, Christoph.
Thank you, Ajay. So on the second brand, indeed, we expect again an increase in penetration of the order of the same magnitude as we've seen in the past years. Now, you alluded to a new brand impact so i assume you allude to the ch mobile brand of sunrise because we didn't launch any new brands so on that side we don't expect this launch to accelerate our second brand penetration i think this was more driven by customers coming down from the main brand and going to a lower tier offering with less less value at the lower price point and we we don't expect this dynamic to change during the course of 2026. On the Swiss adjacencies like so on the security side we are already monetizing these services since many many years so we have different security offerings and we will launch some new ones in this year so at a certain different price points typically security I think is around seven to ten Swiss francs a month so quite quite an attractive upsell possibility on the my ai side we are currently working on increasing the penetration into the customer base so it's more a question of onboarding as many customers as possible and getting them used to using our gpt versus another gpt in terms of monetization opportunities we will see probably 27 onwards if customers are willing to pay for this i think it's a very compelling proposition because it basically has the same features as an entropic you buy on the market but with swiss sovereign capabilities and looking at sort of the general gpt pricings in the market they are typically around 10 to 20 swiss francs so we do expect to be able to achieve something similar should we go into a monetization model obviously afterwards it's a question of how many of the of the customer base really buy let's say the upper tier model because probably they will always be like a free version as you already have today on the market from open ai and other
players and then you have like premium version so it becomes more questions of how much of the customer base can you actually upsell into the premium premium tiers thank you christoph okay and then what i know and see from the screen a very last question coming from it's josh melz from bmp power bar thank you for taking the questions if i can add two please um first one was just around the uh the the ran sharing agreement you've announced in could you give us any indication on the scale of those cost savings perhaps in the medium term and then also whether there's any renegotiation required with tower partners in order to deliver on those i'm not asking you to comment on the separate tower debate which um you've already addressed but just specific to that round sharing would be very helpful and then the second question is more around the capex profile in switzerland and so obviously to stabilize operative cashier this year you're reducing capex a bit there um you've got a very helpful slide 63 in the appendix where you can build a breakdown of the different building blocks in the swiss and the italian capex but um what i'd love to understand is where a kind of floor capex for you would be in switzerland and which of those capex buckets could drop down a bit further um perhaps not for this year or next year but in the medium term so we can get a sense of how much of an offset to revenue capture capex could be um over that period josh first question goes to you walter second one to you, Christoph.
Yeah, thank you. Thank you for your question. So run sharing is a strategic project for us as we can really put together the network with team in rural areas. We are talking about over 15,000 sites as a possible target for this sharing. So this will bring us the opportunity to extend our coverage as said in cities with less than 35 000 inhabitants as you may know in italy there are a lot of municipalities of this size so we will really enjoy an additional coverage an additional quality for for our customers in terms of savings we will not disclose numbers at this stage as we are still in a preliminary phase but in the midterm, I can say that we expect savings of mid double digit Euromillion range. We will let you know once we will go into more details and approval from the authorities here in Italy. So we expect to have more news in the second part of 26.
So the Capex profile in Switzerland, I think the easiest, so at the moment we have roughly 1.7 billion in capex out of which 500 million are strictly related to the fiber rollout so obviously once fiber rollout is complete these 500 million will go away so you land at 1.2 billion of capex in switzerland starting 2035 i think over the time you will see sort of a slight ramp down of the rollout capex but still at a very high level until 2030 and then probably you know starting to slightly decline in this in the first part of the 2030s now on the other buckets of the capex we obviously also work on efficiencies in particular on the it bucket which stands at 470 million so as you know ai is highly impacting software development efficiency etc so there is an ambition and some hope that we can further decrease the it bucket and as we said on the other side but this will not help from a free cash flow perspective there is a capex to opex shift on the it side so some of the it capex of these 470 million will migrate into the opex so this is basically a wash from a free cash flow perspective but will to some degree decrease capex and then if you look at the backbone and infrastructure which last year was at 121 as we as you know we are still modernizing and upgrading our core and backbone infrastructure which we intend to complete by 27 so this will also generate some savings in this bucket now that the magnitude will probably quite you know limited maybe a low double digit number but still there are opportunities to further optimize capex in the short run fiber rollout i mentioned at the beginning is obviously a very long-term topic and nothing that will change in the next three to five years thank you christoph and we have some additional new participants the
next one is audio only dialed in and thank you for your questions uh yeah hopefully you can hear me louie's justin funnel here um yeah just some um just some small follow-up questions please could you explain again the financial effects of the shift from mpls to st1 in 26 and 27 you know what does it do to revenue and have it dives and sort of broad brush it sounds like it the impact peaks in 27 um so just wondering how to model that basically um secondly the gap between inflow and outflow in italy on price there's still a gap there do you think you need to reduce that gap still you know could you do more price ups in italy on the front book uh on yeah or pricing thank you on the front book um and then thirdly you mentioned without much detail a sort of more network agnostic approach to fixed line in italy and i was just wondering what opportunities saw in moving into sort of selling fixed wireless access instead of fiber and are you also looking at uh at starlink thanks very much thank you very much i think the first
question go to you Christoph and second third to you Walter.
So on the B2B question so as you as you know the the service revenue decline in B2B last year was minus 70 million out of which wire line was minus 44 so obviously this Estivan MPLS topic only concerns these this wire line effect of minus 44 million um there is um some rgu loss in there as well so i would say you know the the effect of this transition is is quite difficult to to estimate because it has various components to spinning down from high value to low value connectivity sometimes you lose connectivity etc but it's probably fair to say okay a sort of a very low double digit number is related to this effect and you will see it again in or we have it inside the guidance or service revenue guidance again for this year but it so it has an effect but it doesn't let's say massively change the b2b service revenue erosion going forward it helps to to bring it down but it will not like half it or suddenly take out three quarters of the erosion so i think that be vastly overestimated.
Okay, thank you for your question. So we'll start with the FWA question on the network side. Yes, we are using FWA, especially to cover digital divide areas that in Italy are still between fixed five and six percent of the population. But we also offer this service where we see that there are copper lines that are uh are low quality having said that for us fwa is a marginal uh technology as for us is key to develop fiber so we always offer the best technology to our customer so we have in mind the quality and we do whatever we can to offer the best the best service in terms of price increase which is somehow connected to this we don't think we'll change pricing structure on the course of 26 but we'll work to improve the price mix in our tiering offer we have a three tier offering on fixed and the mobile so we will try to move customer from the entry level to the top level and this will allow us to increase the average ARPU inflow, therefore contribute to the stabilization of the revenues on the B2C.
Thank you, Walter. And now really the final question. The floor is yours, Javier. We can't hear you.
Okay. Can you hear me now?
Yes. Okay. Good afternoon. Thank you. Thank you very much for taking this last question. Just simply a follow-up on your price increase in in the swiss market simply just to ask you what have you noticed from your rivals mainly i mean sunrise sold or maybe the other smaller and who knows what has their what has their pricing strategy been lately in terms of their entry points in terms of their promotions and how do you expect them to react to your price announcement you think you are you're giving them some breathing room or do you think they they will play ball i mean maybe a little bit of the competitive dynamics you've seen recently in the swiss market thank you thank you so um excellent uh question which is obviously a top of mind uh um in in our daily the work in in b2c uh i think in
in in terms of you know pricing you've seen that both uh salt and sunrise have increased prices in the past uh one or two years however the market has remained highly promotional with very aggressive promotions especially centered around the black friday period and this has not really changed in in the course of the last year and we do expect sort of a similar promotional activity also going forward and we will see if it is you know you know slightly scaling down now or if it sort of continues in the same way in terms of you know custom or reactions of our competitors to the price increase i can obviously not comment as i don't know how they will react so we will see over the the coming weeks now what happens on the promotional side what what are they doing do they try to attack even more or are they choosing to do something else this will be up to them to decide and we will let's say adapt in function of what is going on but i think overall you can say promotional activity maybe slightly less but overall i would say roughly similar um over the past uh one one one and a half years all right clarify what i said before i don't want to be misunderstood so on the pricing structure i said that we will remain with this three tier approach and we will work to increase to improve the mix but in terms of
individual pricing, of course, this will depend on the market condition and the target that we have. So just to be clear, I don't want to give a forward-looking statement on pricing that I can't.
All right. Thank you very much, Walter and Christoph. Thank you, Javier. At this point, that's it from our side. In case of any follow-up questions, we are available. Thank you for your participation and have a nice evening.
