Recorded. Good morning, ladies and gentlemen. Welcome to the 2023 Q1 result conference call hosted by Christoph Aeschlimann, Eugen Stermetz, and Louis Schmid. Louis, the floor is yours. Good morning, ladies and gentlemen, and welcome to Swisscom's Q1 23 results presentation. My name is Louis Schmid, Head of Investor Relations, and with me are our CEO, Christoph Aeschlimann, and Eugen Stermetz, our Chief Financial Officer. Our CEO starts the presentation with chapter one and a quick overview on the highlights, the operational and financial performances of the Q1. In chapter two, Christoph presents the B2C and B2B operational results, an update on our network activities, and the financial results in Switzerland before discussing Fastweb's Q1 results operationally and financially. In the second part of today's results presentation, Eugen runs you through chapter three with the Q1 financials, including the confirmation of our full year guidance. I would like to hand over to Christoph to start his part. Christoph? Thank you, Eugen. Welcome to the Q1 results call from my side. I am very pleased with the results we have achieved in the Q1 with revenues and EBITDA growth in the Q1 and also excellent results in Italy with the 39th consecutive quarter of growth with Fastweb and the appointment of a new CEO with Walter Renna, 1st of October. Q1 had many different highlights which we will see throughout the presentation. I think the most noteworthy probably, we won the best connect Hotline test. We again won the CHIP mobile test. We were able to finalize the Salt access agreement in the fiber term. All in all, a very pleasing Q1 leading to solid financial results at the end of March 2023. Moving to page five, we have a quick look at the Q1 market performance. On the Swisscom Switzerland side, we can see that mobile continues the growth story on the post-paid side of 30,000 net add or increase in RGU base. We have a slightly decreasing RGU base on the broadband and TV side, which is partly compensated by increasing RGU base on the wholesale side. Fixed voice is continuing the decline we've seen, usually, over the past years with less and less people using fixed line telephony at home. On the Fastweb side, we have very positive results. On the mobile side, we were the second best performer in the market and managed to increase our mobile base with 144,000 RGUs, bringing us to 3.2 million mobile subscriber or 4% market share. You can also see the effects of our value strategy on the B2C wireline side with a slight loss of 21,000 on the broadband side, but largely overcompensated by the increase or growth on the wholesale side with 40,000 RGUs, bringing our wholesale business to nearly 500,000 lines. Overall, I think a positive picture for Fastweb and Swisscom Switzerland. Moving to page number six. We can see the financial impact of these market developments. We had stable revenue of CHF 2,747 million and a growing EBITDA of CHF 1,164 million. Mainly, the growth is coming from Swisscom Switzerland. You can see on the right-hand side with CHF 13 million increase Q1, also an increase of CHF 3 million by Fastweb. The big effect on the pension side that we talked about already, the results in February, due to IFRS accounting effects, and I think Eugen can detail this a bit more than a slightly negative currency impact, bringing us to CHF 1.164 billion EBITDA in the Q1. I move to the business review, moving directly to page eight. I'm also happy to say that we are continuing our management transition and the renewal of the executive committee. We have Gerd Niehage, who started two months ago as our new CTIO, and his onboarding is running very positively at the moment. We are excited that Iza will join us in three weeks as the new Corporate Strategy and Corporate Development Officer. I think this shows that the continuous renewal of the ExCo is well managed and on the way. I think you've probably seen in the last month, we appointed Walter Renna as the new Fastweb CEO starting 1st of October. Walter is a long-standing member of the Fastweb management. He knows the company very well. He's part of the current growth story and knows precisely what it takes to keep Fastweb on the growth track. I'm convinced that he will successfully succeed Alberto as the next CEO in Fastweb and continue to positively develop our Italian subsidiary. On page number nine, you can see our business priorities on the group level. I think overall we can say that the priorities and the strategy are largely unchanged. Why is that so? Because it is a successful strategy. It creates positive financial results and returns. We continue on our proven and successful track. The main strategy or main focus on the B2C market Switzerland B2C side is to maintain our market position to maximize value creation and focus on a value strategy. We are super focused on improving even more the customer experience, investing in our brand to make sure that customers are happy and stay with Swisscom. On the B2B side, we are very much focused on retaining value on the telco business, slowing down the ARPU decrease, and so leading to or trying to slow down the decrease of the B2B service revenue. This is a main priority, and at the same time, continue to invest on the IT side to compensate the revenue loss by increase in our IT service business and expand our position as number one IT provider in Switzerland. On the network side, we continue our high investment strategy to make sure that our networks are the most reliable but the most innovative and they remain competitive both in coverage and quality, speed, to make sure that we continue to win all the required or relevant benchmark tests in mobile and on the wireline side. On the Fastweb side, we have a similar strategy focusing on the value on the B2C side, continuing our growth in B2B, both in telco and IT segments, and continue our growth on the wholesale side, maximizing our investments we do on the infrastructure side and scaling up our 5G mobile business. Now moving on to slide number 10, we can have a quick look at the Swisscom Switzerland B2C. Next to many new product features we launched mainly on the main brand but also on second brand, for example, 5G for Wingo customers or multi-device options. The most notable, I think change is probably the successful implementation of the adjusted terms and conditions we announced in March, which includes CPI-linked pricing optionality. You have also seen probably yesterday the announcement of Sunrise with the new prices. I'm pretty sure that you will ask us some questions about this. In anticipation of this, I think we can say that inflation obviously also concerns Swisscom mainly on the salary side and the energy cost side. We are trying to compensate this inflation by cost reduction. We are obviously also looking at this topic of price increases in several months, but no decision has been taken on the Swisscom side in this regard. What is also very pleasing on the B2C side is the service excellence that we are bringing to the next level. We were able to win the Best Connect test or Best Hotline in the Connect test, bringing us to sort of the triple leadership, Best App, Best Shop and Best Hotline, demonstrating our service excellence that we want to achieve for our customer base in the B2C area. Moving to page number 11, we can see a summary of the most important numbers. You can see on the Wireless side, we have the growing RGU base of 3.288 million subscribers. Stable ARPU on the blended side, obviously the growing RGU base comes at a slight ARPU cost on the postpaid value side with a continued shift to the second and third brands. Slightly, the decline is slightly lower in Q1 this year than it was in the previous year. On the wireline side, we are roughly stable RGU base, slightly lower on the TV side, mainly linked to a bit lower attachment rates on the second brand side. You can see that we still have a quite a low second and third brand share. Also on wireline, the second brand share is now increasing, but not obviously still far away from the shares we have on the wireline side. What we see on the wireline side in the market are very aggressive second brand promotions from our competitors. We are currently also next to inflation, also looking at scaling back promotional activity on our second brand, on our second and third brands. Especially also looking at lifetime promotions because lifetime is not really promotion anymore but in effect a new price point. We are thinking about how we could better deal with promotion on the wireline side rather than offering lifetime promotions on the second brand side. Moving to page number 12, we have a look at the B2B side of the business. We have roughly a decline in on the service revenue side by -CHF 12 million, which is completely in line with our guidance we gave in February this year. We continue to execute our value-oriented strategy. We keep the RGU base stable on the B2B side, but have an ongoing price pressure and a slightly decreasing ARPU. On the IT services side, we had a slight growth which was not entirely in line with our expectations, mainly due to a lower project business on the IT services side, which was a bit sluggish, with some of companies and customers hesitating due to the macroeconomic environment and some of the projects are slightly delayed. We expect continued growth in the IT services side in the following quarters. On On page 13, you can see the update on our network side. As I mentioned already, we won the CHIP test for the eighth time in a row, and we continue to heavily invest both on the mobile and the wireline side. I would say we are continuing as planned, now covering over 75% of the population with 5G+, over 43% with FTTH, and we are fully on track to reach our year-end target and the 2025 targets. Maybe noteworthy also, in March, we announced the signing of the Salt deal, as we already talked about in the full-year results in February. This has now been executed and implemented in the previous month, bringing us a nice new contract on the wholesale side. Overall, on page 14, you can see the Swisscom Switzerland financial results. Revenue slightly down by CHF 12 million to CHF 2.044 billion in the Q1, and EBITDA slightly up by CHF 30 million to CHF 943 million EBITDA. I think Eugen will give us a bit more details later on in the financial sections also about free cash flow. I'm moving on to the Fastweb side on page 15. As I mentioned before, I'm very pleased with the development of Fastweb in the Q1. We had another quarter of growth, bringing us to 39 quarters of continued growth. I think most noteworthy is we grew both in customer base, in revenues, and in EBITDA. We were the second best performer after Iliad on the mobile side with a 22% percent RGU growth in mobile. Also the enterprise and wholesale business performed very nicely with 6% top-line growth on the enterprise side, both due to telco and IT business. Also the wholesale side delivered a very pleasing growth, offsetting our negative evolution on the B2C wireline development. If we look at it in a bit more detail on page 16, you can see the consumer numbers. We had a slightly decreasing RGU base on the broadband side. The positive news is that we are currently executing a price increase due to inflation across our whole customer base in Italy. So far, this works out very nicely with no increased churn on the broadband B2C side. On the mobile side, as I mentioned, we have a very nice growth. We have a 22% increase in RGU base, it's bringing us to over three million mobile subscribers as of end of Q1, and also an increased FMC penetration rate with bringing us the benefit of higher ARPU and lower churn. On page 17, you can see the details of the enterprise and wholesale business, which are our main drivers of top-line growth. Enterprise grew by 6%, bringing us to CHF 261 million in the quarter. The first time over a quarter billion revenues in B2B. In the Fastweb side, many new enterprise contracts. You can see some of the new logos we have won in the past quarters. I think the B2B business is performing very, very well in a difficult Italian market, and the management team is doing a great job. Also, on the wholesale side, we were able to increase revenues by 16%, mainly linked to the increase in wholesale lines. We managed to sign several new contracts over the past month, for example, with Sky and WINDTRE. We now profit from their market entry and growth on the wireline side and can book the higher wholesale revenues to offset our declining RGU base on the B2C side. On page 18, you can see the aggregate financial results of Fastweb. I think what is especially noteworthy is that not only did we grow by EUR 28 million in revenues, we were able to grow in all segments, not only wholesale and enterprise, also on the consumer side, we were able to grow the business by EUR 4 million, mainly linked to the growth on the mobile side. This brought us an EBITDA growth of EUR 3 million. I think we can confirm that this is in line with our full-year guidance, both on the top-line side, also the EBITDA guidance. Full year is 2%-3%. We are a bit at the lower end for the moment, we are confident that we will achieve our EBITDA full-year guidance on the Italian side of our business. This was it from my side. Now I hand over to Eugen for the financial results. Okay. Thanks, Christoph. Good morning and welcome, everybody, also from my side. I think I could quickly summarize our Q1 financials with just four words. We are on track. Obviously, nonetheless, I'll be happy to give you some details and some color on the results. I'll start as usual on page 20 with group revenue. Net of currency effects, revenue was up underlying by +CHF 17 million. Swisscom Switzerland down by CHF 12 million and Fastweb up by EUR 28 million. On the Swisscom Switzerland side, B2C, if we walk through the individual segments. B2C basically flat with +CHF 5 million. The individual component service revenue close to flat with -CHF 5 million. Hardware revenues and other revenues up a bit, so that all adds up to a flat B2C revenue. B2B revenue down -CHF 18 million. Service revenue down as expected, as Christoph already explained. Also, hardware revenue was down a bit. We had a very strong hardware revenue quarter in the previous year, so that makes for a negative year-over-year difference. Wholesale is flat, as expected. As you already heard, Fastweb up CHF 28 million, 4.7%. We had a very good quarter in Italy, which is in line with our full-year revenue guidance. Maybe even a bit better driven as Christoph already explained by growth in all segments, consumer, enterprise and wholesale. As usual, the strongest contribution came from the enterprise segment. Moving on to page 21. Swiss revenue components starting with service revenue. B2C minus CHF 5 million, B2B minus CHF 12 million. You may remember in the full-year conference, we talked about the B2C service revenue outlook, and I said it's flat service revenue is achievable, but not to be taken for granted. We are squarely in that category with the Q1 results, and also B2B minus CHF 12 million is in line with the guidance we gave you in February. IT service revenue up by CHF 2 million, so we had a somewhat sluggish growth, a sluggish quarter in IT service revenues. There is no big single reason behind that. One of them is that the Q1 last year was particularly strong, and we do expect further growth from this segment. Probably not as high as last year. You might remember that last year, about half of the growth was from non-organic sources, so it will be a bit lower this year. Hard and software down by CHF 5 million. That's a mix of B2C up. We had some hardware availability issues last year, and so hardware sales are a bit higher this year in B2C. B2B down by a bit because it was seasonally quite high last year. We had other revenues plus CHF 7 million. It's a couple of smaller items combined, one of them higher cinema revenues in the Q1 compared to last year. Top right, service revenue evolution over the last couple of quarters. First of all, the development from Q3, Q4 last year into the Q1 of this year looks certainly worse than it is. First of all, it's very small numbers anyway we are talking about. And also, as I mentioned in the full-year conference, Q3 and Q4 last year were distorted somewhat to the upside due to an uptick in roaming we had in Q3 and Q4. There is really not much of a change in the underlying dynamic. We expect, as of today, a similar picture for the rest of the year. I'm not going to talk about the drivers of service revenue at the bottom right, because they are very much stable and look very much in line with what we had in the previous quarters. I move on to page 22. Group EBITDA. EBITDA is up by CHF 27 million. My big component here is the +CHF 24 million of our pension reconciliation. I highlighted this topic when I talked about the guidance at the full-year conference. That's CHF 24 million in the Q1. It will add up over time for the full year, to between CHF 90 million and CHF 100 million for the full year. It's important to really focus on the operating business. Swisscom Switzerland, up CHF 13 million and Fastweb up CHF 3 million. On the Swiss side, B2C EBITDA is basically flat, somewhat lower service revenue, but that was fully compensated by lower costs. B2B down CHF 7 million, obviously driven by the lower service revenue and somewhat compensated, but not fully by lower OpEx, both direct and indirect. In infrastructure and support functions, the plus CHF 19 million are the reflection of the cost savings we had in the Q1, due to lower workforce expenses and lower costs for maintenance. Fastweb, plus CHF 3 million or plus 1.6%, so in line with our guidance as Christoph already explained. Obviously driven on the one hand by higher revenue, but we also had quite some higher direct costs. As the mobile share of our consumer business goes up, our direct costs go up. There was also price increase by the regular of the regulated WULA price by Telecom Italia, which hit our direct costs. On the other hand, we could compensate part of that with lower indirect costs from marketing and also a bit from energy. I move on to page 23. Swiss EBITDA up CHF 13 million. Not really much to mention here. We had somewhat higher SAC/SRC expenses. That's also more related to the previous year, where we had some hardware availability issues and couldn't do as much as we wanted. Obviously, the most important part on this slide is the +CHF 27 million in indirect costs. We had significantly lower indirect costs and quite a strong quarter when it comes to cost savings. It does include some seasonal items to be fair, and it's important to note that the salary increase of 2.6% will only hit from April onwards, so that has not affected the Q1. I emphatically ask you not to multiply these +CHF 27 million by four when doing your forecast for the full year, but rather stick to our guidance in that regard. Moving on to page 24, CapEx. CapEx with +CHF 23 million, a bit higher than in the previous year, in particular in Switzerland, with +CHF 30 million. If you look at the individual components, wireless is essentially flat, fiber slightly lower due to the completion of the FTTS rollout last year, we had a bit higher investments in our backbone and transfer infrastructure and in IT and others. It's clear we just look at one quarter here, most of that is seasonal fluctuations. All in all, we are fully on track to reach our full year guidance also here with regard to CapEx. On to page 25, free cash flow bridge. Starting with free cash flow proxy at CHF 546 million, +CHF 3 compared to last year, also stable. Stable is very much the theme of this quarter. The free cash flow itself was higher by CHF 146 million compared to the previous year. That's due to higher income taxes paid in the previous year, which were a bit high in Q1 2022, and a bit low in Q1 2023. That's the main effect. As I said, the most important point here is Operating free cash flow proxy, which is flat compared to last year. Moving on to page 26, net income. Net income, again, flat, CHF 442 million, that's -5 compared to the previous year. The +27 from EBITDA do not fully translate into net income because the financial result was CHF 30 million lower than last year in the Q3 of last year. We had a pretty high financial result. This year is normal, this is why the EBITDA plus CHF 27 million do not fully translate into net income. Otherwise, nothing special here on this page. I move on to page 27, the financing side. Q1 very much confirmed our strong balance sheet, so we did two refinancings at very attractive terms. Our rating review meetings with Standard & Poor's and Moody's went very well, and even resulted in an upgrade of one notch by Moody's. Moving on to page 28, given the results, obviously we do confirm our guidance for the full year on re-revenue, EBITDA and CapEx and also obviously on the dividend. With that, I hand back to the operator. Thank you again. Ladies and gentlemen, to sign up for questions, please press star 14 on your keypad. I repeat, star 14. To withdraw your request, press star 15. Thank you. We already have some requests. I will now open the lines one by one. Please introduce yourself and then ask your question. Thank you. First question coming. Yeah, hi, it's Polo Tang from UBS. I just have three different questions. The first one's just about Sunrise and their announcement of a 4% price increase. In addition, they've also included the option of annual CPI increases in their contracts. Were you surprised by the move, how do you think this will impact the broader Swiss market? In your earlier comments, you mentioned that Swisscom would consider price increases. What are the key indicators that you're focused on that would make you more likely or less likely to increase pricing? Second question is really just about what you're seeing in terms of competitive dynamics in the Swiss market in Q1, and what have you seen thus far in Q2? If I look at your Swiss net adds, in terms of postpaid and broadband, they were slightly softer in Q1. Can you maybe talk through what happened and how we should think about those subscriber trends in the coming quarters? The third question is really just about Italy. What's your view on the potential for consolidation in the Italian market, and would Swisscom be willing to participate? Thank you. Okay. Thank you, Polo. I'm gonna take your questions in sequence. First, about the Sunrise announcement. I think, yes, we were to some extent, surprised. We didn't expect this move at this timing. With regards to the impact on the industry, I would say it is too early to tell. We will see in the coming weeks and months now what the reaction will be of the market, the different participants and how this will evolve over time. What is for sure, I think we can say it is probably not negative for the development of the market and it is somewhat a change in, you know, after 20 years of declining prices, it's basically the first time that headline pricing, prices have been increased. We will see if this sort of is really a trends change now or, if it is a one-time event. We could probably talk about it in a couple of months again when we have a better view on the picture. In terms of competitive dynamics, we can say that, you know, headline prices is one thing, but promotions is another thing. On the promotional aggressiveness side, we see no change in our competitors' stance. They are as aggressive as ever with promotions going sometimes even beyond 70% discount and in many cases for lifetime, which is effectively not a promotion anymore, but sort of a new price point in the market which somehow contradicts, let's say, the inflationary price move on the announced as a general move. This is, I would say, the situation, very, very aggressive promotional activity. The result was a bit softer numbers on our side. This is also why we are thinking about, also removing or reducing promotional aggressiveness on our second brand. We definitely need to look into this topic to see how we can deal with promotions going forward. I mean, 70% discount is not really sustainable, and it is not desirable as a market because it somehow affects the value perception of the product by the customers if you offer such high discounts in a, on a very long time basis. On the Italian side, situation pretty much unchanged, I would say on our view on consolidation. I think we are happy with our involvement of the Fastweb standalone, and we will continue our standalone path. As we already discussed in the past, obviously there is a lot of value also, in the consolidation, and we will, look at any opportunity, that, can create value. In the absence of concrete, opportunities, I would say we continue our successful standalone path to continue to grow Fastweb, along this year. Could you just maybe comment on what would make you more likely or less likely to increase prices? What are the key indicators you're looking at? Well, I think, you know, it's too... We don't really want to discuss this in public, obviously one aspect is, you know, evolution of prices. I mean, as Sunrise, Swisscom is also confronted with rising energy costs, with rising wages. That's one thing. Question is, how much can you offset this with cost savings and when do, or what kind of actions are required on the, on the pricing side? We will see this a bit more in the... You know, we didn't take any decisions on that side. We will see in the coming, in the future how this evolves. Thanks. Thank you, Paulo. Next question. Yes, good morning. I hope you can hear me. It's Georgios from Citi. Just a couple of questions on pricing. The first is a follow-up on the previous question. Perhaps if I could ask it a bit differently. What we've seen in the Q1 and what you show on slide five is the fact that you have a bit of a decline in retail but a bit of growth in wholesale. I'm guessing, especially as far as broadband is concerned, that could become a bit more extreme in the coming quarters with Salt getting access to your network and so on. I'm curious if you are willing perhaps to cede a bit of market share in retail, if that's something you can live with in your efforts to improve pricing over time, or whether that's really the limit of losses you can take. Just curious to hear how you're thinking about that. The second question is around pricing on business, which is less transparent as a market for us. If you don't mind just giving us an indication from what I can see in the Q1, there is no real encouragement in terms of pricing. Whether what we are seeing in the consumer market from some of your competitors is also similar to what they're doing in B2B. They're perhaps becoming a bit less promotional. Just curious if you have for me on that. Thank you. Thank you, Georgios. On the, I mean, on the B2, sort of regarding market share versus pricing and value orientation, I think we have a clear, value-oriented strategy. We are losing market share or slightly declining market shares in the past years. I think overall the strategy is successful, protecting value at the expense of slightly declining market shares. This is our strategy and so far, and we intend to keep this strategy as we believe it is a better strategy rather than trying to increasing RGU gains and decreasing the pricing. We will most likely continue to see a sort of a similar picture and then trying to offset, let's say, the broadband losses through wholesale increases as we are executing in Italia. On the B2B side, I would say, yes, there is a bit less transparency on the B2B pricing side. The, I think we can say the promotional aggressiveness in the market is very high, even higher than on the B2C side. This also leads to this continued decline of B2B service revenue that we guided on the full year basis with around minus CHF 50 million. If I could ask a follow-up, in the event that the wholesale run rate improves in the coming years or quarters to years, will that make you accept maybe slightly weaker retail trends in Switzerland or, you know, 50 million, let's say, broad, 50,000 broadband losses a year is roughly where you wanna, you know, limit any damage beyond that? I mean, we, you know, we don't communicate any precise numbers where we see the limit. Obviously, you know, in an ideal world, we would gain market share or keep it, let's say, stable. We try to keep the loss as small as possible. On the wholesale side, it also depends a bit on what the competitors are doing and which types of networks they are activating their customers. We will see how much growth we can generate on the wholesale side. Obviously, you know, a customer on the wholesale side is not as valuable as a customer on the B2C side. Let's say making sure the market share loss is as small as possible is still quite a high priority on our side. Very clear. Thank you. Thank you, Georgios. Next question. Good morning. It's Yemi Falana from Goldman Sachs. Thanks for the presentation and for taking my questions. Maybe firstly, on Swiss service revenue growth trends. In the past, you said flat service revenue growth in Switzerland was achievable but should not be taken for granted. When you reflect on competition in the Q1, the headline price rises announced by Sunrise for later this year and your own plans to reduce second brand promotional intensity, do you view that flat service revenue growth as more or less achievable than it was a quarter ago? Secondly, on the Salt wholesale deal, maybe just taking a step back a bit, how are you thinking about the larger scale opportunity that presents, and how fast will that ramp-up take? Cheers. Thank you. On the Swiss service revenue side, I think the, as Eugen mentioned, you know, the situation from our point of view is pretty much unchanged. It's still, you know, it's a lot of hard work to keep service revenue flat, and a lot needs to be done in every dimensions on the ARPU base, but also on pricing side. You know, we discussed it in the past. We did some minor price changes on options or service fees, and we continue to work on topics like this to try to keep the service revenue flat. It is as we said, not to be taken for granted. As we see in Q1, you know, when you hover around the zero line, you know, CHF 2 million, CHF 3 million deviation suddenly looks like a big change. I would say on the full year, we still, I would say we confirm that it is achievable. Depending on how the quarters go, also depending how the promotional activity continues in the market has obviously a huge effect also on the B2C service revenue. The wholesale deal with Salt is a regular wholesale deal where we book revenues as the lines are ordered. The revenue uptake pretty much depends on, let's say, the market success of Salt. In any case, you know, we are talking about low single digit CHF millions. It, you shouldn't expect like a huge, sort of hockey stick development in wholesale revenues, but more likely a sort of a continued, either flat or slightly, continued growth in the wholesale. Yeah, thank you. Does that answer your question? Thank you, sir. Next question. Yeah, hi. It's Steve Malcolm from Redburn. Thanks for taking the question, guys. Thanks for the presentation. I just wanna follow up on Georgios' question quickly and ask a question on Fastweb as well as if I can. Just, I know it's difficult to be precise on this, but looking at the Q1 KPIs, you lost 10,000 broadband lines. Your churn was up in wireless and wireline by about 50 basis points in both, I think, which are kind of slightly worrying read indications, I guess. You know, when you think about the sort of the different, you know, aspects of your consumer strategy and whether or not you kind of pull promotional activity, yeah, are those numbers kind of what you expected to see in Q1, that sort of accelerated broadband loss and churn increase? Are those kind of, you know, a little bit worrying and part of the calculus for price rises and promotional, you know, decisions going forward? Just moving on to Fastweb. The numbers look a bit odd. Your gross margin appeared to go down by about 500 basis points. I think your direct costs rose by about 20%, and your indirect costs seemed to fall by about 5% or 6%. The blend was a 6% cost increase, but the sort of mix was a bit unusual with the gross margin seeming to fall very sharply. Can you just help us understand what was going on in those cost lines in Fastweb in Q1? Thanks very much. Yep. Thank you. I'll take the first question, and Eugen will answer the second question. I would say the increased churn in Q1 is very much linked to activity in Q4 last year, where we have seen very extensive promotions during the Black November. It was not really a Black November day or week, but more sort of a month or nearly a six weeks period. This led to a, let's say, slightly increased churn on our side in Q1 that, you know, after two months notice period, the lines are switched over in January and February. Maybe on question number two, yes, indeed, it looks a bit, odd in the Q1. I tried to explain the main moving parts when I talked about Fastweb. Maybe just once more and with slightly more detail. Obviously, we had the higher revenue, but on the cost side, we had significantly higher direct costs this quarter, which has to do with two or three things. One is the higher share of our mobile customers. Obviously on the mobile side we have higher direct costs than on the wireline side. Also on the wireline side, the regulated access fee for copper went up in Italy, and that hit the direct costs. Also, the weight of fiber customers in our total customer base goes up and that also somewhat increases direct costs. There is the balancing factor, as you mentioned correctly, on the indirect cost side. We could reduce our costs. One element was marketing, another one was energy. That led to the complete set of numbers that you see. As mentioned, this is talking about one quarter. For the full year, we confirm the guidance of 2%-3% EBITDA growth for Fastweb. Okay. Eugen, just on that gross profit, I mean, I take the revenue point, but I think your gross profit fell by about 3% or 4% in Q1. Is that something that we should, you know, extrapolate for the rest of the year? Were there any sort of particularly elevated direct costs that mean that the gross profit impact for the rest of the year will not be quite as sharp as it was in the Q1? Yeah. I wouldn't extrapolate too much from one single quarter. You know, there are always cost items that are fluctuating around. I would rather stick to our full year guidance for the EBITDA than focusing too much on individual lines. Okay. Thank you very much. Thank you, Steve. Next question. Hi. Yes, good morning. It's Luigi Minerva from HSBC. Thanks for taking my two questions. The first one is just going back to the your optionality to apply inflation indexation. I just wanted to, you know, understand a bit better, you know, how that relates with your guidance. You know, in your guidance, you probably assume some kind of price adjustments, even if not directly linked to indexation. If you were to apply inflation indexation in the second half of the year, how much difference that would make compared to the assumptions you currently have in your guidance? Secondly, on Italy, just to explore in market consolidation from a different angle, wholesale has been very important for Fastweb. If the fiber footprint in the Black Areas that Open Fiber currently has was to become available on the market for acquisition, would you be interested in acquiring extra fiber footprint, particularly in the Black Areas, the large cities? Thank you. Okay. Maybe on, first on the CPI-linked question, Luigi. The clause we have put in our terms and conditions, they have as a starting point the first of June 2023, with the CPI-based index. In any case, this is not something we can apply for a price increase this year. Would probably be a first optionality next year after sort of a, you know, one full year cycle of inflation, if there is inflation next year. This is something that has probably no impact on the guidance or B2C revenues this year. It's more sort of something for the longer term. On the Italy, Italian question. I mean, this probably largely depends also on what happens with Rete Unica and, you know, all the consolidation or different NetCos carve-outs and who is buying them. Should this happen, and should there be remedies attached to such a deal, we will obviously look at those remedies. If there is a positive NPV and a good strategic rationale for Fastweb to invest in such remedies, we will most certainly at least have a look at it and analyze it. That's quite clear. Thank you. Thank you, Luigi. We have one request left. If any other participant would like to sign up for questions, please press star 14. Thank you. I'll take the next question now. Hi, good morning. Thank Thank you for taking the question. This is Nuno Vaz from Societe Generale. Three questions or three topics from my side. One is in the commercial side in Switzerland, because you mentioned there you're planning to decrease promotional activity in the second brands, which I find a bit counterintuitive because you're saying competition is increasing. In the past you've been quite successful at offsetting this competition with sort of similar price aggression in these second brands. Do you think this will not have an impact on churn if you're not, if you don't stay as competitive as before? Are you seeing this is the strongest price competition you've seen in recent times? One thing on this is Sunrise dropped from 24 months discounts to 12 months. Has this not helped the commercial momentum as well? Just final on commercial is what's the latest trends you've seen in the first months of Q2? Two quick questions, one on wholesale, because wholesale sort of turned around from last year. Last year you had declines in the number of lines, while now in this quarter you saw growth. I would be curious on what was driving the declines before and now what's driving the growth in number of lines and what's sort of the outlook there. Finally, just on cost savings, CHF 27 million this quarter. You said a part of it was seasonal, so I was wondering how much of it is seasonal, roughly. You had sort of guidance for CHF 100 million of growth savings for the full year. Is this still in line? How much have you achieved in Q1? Thank you. Okay. I can start with that one. Yeah. Okay. I just speak the third question on cost savings. Yes, the part is seasonal in the Q1. I would like to repeat the guidance for the full year. This is what I would speak to. It's CHF 100 million in gross savings, as you just mentioned. This is confirmed. We also mentioned that we would have a counterbalancing factors due to inflationary pressure, in particular on salaries, which in the end will eat up about half of the CHF 100 million of gross savings delivering, you know, roughly CHF 50 million net over the full year. That already gives you an indication of the further development over Q2, three, and four up to the end of the year. That would be on question number three. Okay. Let's do them in the reverse order of question number three. Okay. Use some innovation in the call. On the wholesale side, you know, it, at the end, I mean, we have nearly, I would say all market participants in Switzerland are wholesale customers of Swisscom. At the end, the growth is driven of the market success of these of our competitors, basically. Mainly also a big impact is obviously also Sunrise being the biggest actor or after Swisscom, the biggest market participant, depending on sort of where they activate their lines on their own cable network, on if they have more success on the fiber uptake. This influences also our numbers on the wholesale side to see if there is a growth or more sort of a flattish kind of development. Mostly it doesn't depend really on us, but on the other, the other, companies in the market. The last on your first question. Yes, Sunrise reduced promotional activity, but on the main brands from 24 to 12 months. I think on the second brand, Yallo, the promotional aggressiveness is the same as ever. I mean, you're right to some extent, it's a bit contradictory to say Swisscom intends or thinks about reducing promotional aggressiveness on the second brand. Most likely this would have some kind of impact on net adds. For me, it is more also a question as an industry leader, we need to think about, you know, what kind of signal are we sending to customers. If you discount a product by 70% for lifetime, I believe that this sends a very bad signal to customers in terms of value perception of the product and the long-term sort of pricing impact this has in the overall market. This is sort of the topic that I am sort of, you know, predominantly thinking about. Okay. We have one last question, then we will conclude the call. Yes, hello, Andreas here from. I mean, I can't really say something about the, you know, the Sunrise move happened yesterday. I'm not sure that this is a blueprint for us. I think we will see in the, in the future now what this means for the market and, what it means for Swisscom and how we, proceed. I don't want to, you know, talk too much or go too much into the details on potential, pricing impact on the, on the Swisscom side. Okay. On the back book, is it possible to change here as well, given that some contracts might be on the price related, so, that is going to be difficult to increase legally, I think? Well, I mean, you can always, I, that's my understanding also of the Sunrise move is they increased front book and back book. I mean, you can always increase prices on the back book, but you need to give the customer extraordinary Termination ... termination rights. Then you can basically, also increase prices on your back book. Mm-hmm. obviously that's sort of a list. Yes. Okay. Do you hear me still? Yes. Yeah, yeah. Okay. Then, my last question on the CHF 90 million pension reconciliation. Is that also kind of a feature we see in 2024 driven basically by interest rates? If they go up, it could be more in 2024 than this CHF 90 million, is it? Or is it just a one-time effect here in 2023? It's, you know, you're right. It's driven by the interest rate development and their impact on the IFRS pension costs. What we see this year is the reflection of a significant step up in long-term interest rates in the previous year. I wouldn't expect, you know, I wouldn't expect such a significant move every year. Obviously we can't give you an exact number for 2024 right now. This is the reflection of a very strong increase last year, and it has the change year-over-year hasn't been that strong for a while. The 90 as a assumption for next year would be valid right now? No, no. The 90 is a year, or is a year-over-year effect. Mm-hmm. If the interest rate environment, you know, does not change, that everything else being equal would mean that the IFRS pension costs would remain flat and there would be no further year over year effect next year. It doesn't give us an EBITDA of CHF 90 million per year. Sure, sure. -unfortunately. Yeah. I was actually, yeah. If you look at page ten in the analyst presentation, you got all the details on the topic in there. Okay, great. Thanks a lot. Well, thank you, Andreas, and thank you, to all. With that, I would like to conclude today's conference call. If you should have any further questions, please do not hesitate to contact us from the IR team. Thank you again and speak to you soon. Bye-bye. Thank you. Thank you. Dear participant, your conference call has come to an end. Thank you for attending. Goodbye.