Swisscom AG (SCMN) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Swisscom's full year results presentation here in Zurich. My name is Louis Schmid, Head of Investor Relations. After the short introductory movie with impressions on our activities and our core belief in behavior of being ready, we now start the presentation with the program and a quick introduction of today's speakers on Slide #2. Urs Schaeppi, our CEO starts with Chapter 1, achievements '19, where he dives into last year highlights, commercially, operationally and financially. Then Urs gives a short strategic update and elaborates on our priorities for this year to keep our high competitiveness and sustained value. In Chapter 2, our CEO gives you a short overview on our '19 achievements within Swisscom Switzerland, before updating on our network rollout ambitions and explaining our roadmap of activities along our strategic framework for B2C and B2B. Alberto Calcagno, CEO of Fastweb, will discuss in Chapter 3 the industrial and financial performances of our Italian business and its plans going forward. After Alberto's presentation, we will have a short coffee break and continue at 3:00 p.m. with the chapters presented by our CFO. Mario Rossi will discuss first in Chapter 4 the operation's excellent results and plans. Then in Chapter 5, he will present in detail our financials '19, including the outlook '20. And then lastly, in Chapter 6, after the presentation, some final remarks from our CEO, Urs Schaeppi. Thereafter, we move into the Q&A session. For this chapter, Dirk Wierzbitzki, Head of B2C; and Urs Lehner, Head of B2B, will support in case of specific questions. May I kindly ask you to keep all your questions until the forcing slot at the very end of the presentation. With that, I would like to open the conference and hand over to our CEO for his part. Urs, the floor is yours.

So thank you, Louis, for the introduction and a warm welcome from my side. And I would like to go first on a very high level on our main achievements in 2019. So overall, I would say, we were delivering what we announced. And on the infrastructure side, we pointed out that we are the clear #1. So if you look to the mobile tests, as an example, so we won every important test. We had all-time high on the score in the connect test. I think we delivered on the network quality. In mobile, you see also that we were able to improve our footprint on ultra broadband. And I think an important step in 2019 was also the regulation or to avoid the regulation on fiber -- on fiber to the home. So overall, on the infrastructure side, good development. For Fastweb, we were able to grow in all segments. Alberto will give you later some more flavor on it. Important is also our initiative on these converged products where we made big progress and where we have a good momentum on mobile. If you look to our B2C business, we had a major, let's say, new tariff plan, which we introduced. It's our inOne mobile go, this -- or the inOne mobile, the second-generation mobile where we included roaming in our product. And this is the most successful product we ever launched if you compare it on the level of subscribers. So in only 10 months, we were able to get 1 million on this tariff plan. An important innovation in the B2B market was certainly also our launch, the launch of the new TV platform. We call it today, not TV platform, we call it Swisscom -- Swisscom Box because it's much more than just TV. It's an entertainment platform. It's a smart entertainment platform, which has more and more functionality of smart home in it. We'll see it later, a bit more on this topic. And then with second and third brand, we are on the way. So in the more price-sensitive market, we are able to gain some market share with second and third brand. But just to mention it here, the main topic is -- or the main priority is to push our main brand, Swisscom, and not second and third brands. Then on the operational side, we were certainly -- we had success on our cost initiatives. We were able to decrease our indirect costs by CHF 127 million, the indirect costs only. And with all IP, so we are through, so we made the migration of all IP in the retail market. 99% of our customers are now really migrated to IP, and we are in the phase of decommissioning now the old infrastructure. B2B is certainly one of our challenges. We have in the B2B segment, a lot of price pressure, mainly in the connectivity business. On the other side, we are very well positioned in the B2B market. We have a really differentiated product portfolio, and we have a very good order intake in our B2B business. We are able to grow on cloud, we are able to grow in the security space. And so I think there is potential in the IT solutions business to create some growth. And then we have more an organizational topic. We actually merged the SME department with the corporate department, so we can get more synergy out of it on the product side, but also in the go-to-market side. So overall, at the end, we delivered our guidance. We fully met our guidance. We have an underlying flat EBITDA. I think that's a good result in the market where we are, to have a flat underlying EBITDA. And so we will also pay out the dividend of CHF 22 after the general assembly. So overall, I would say, a solid good year in a tough market. Here's some information to our net adds. You see in Switzerland that we are in a saturated market. And we have small, small growth -- let's say, small growth or stable, stable market shares in broadband. We have slightly increasing market share in TV. We are still able to grow through our superior TV platform. We have now a market share of 36%. On fixed voice, you see a bit less dynamic in the cancellation of the voice lines because also the all IP migration is done. So there is a bit less cancellation on fixed voice. And on mobile, you see that we are able to have some growth on postpaid. And overall -- on -- overall, approximately stable market share. So I think that's a good result. I will come later also to the churn figures, but the market is saturated. In Italy, there is a bit another picture. We are able to have a better growth dynamic on mobile but also in our broadband business. And this is important because if we combine these 2 products, we can have a much better ARPU and lower churn in Italy. Coming to the key financials. So you see that our revenue is at CHF 11.45 billion, slightly decreased. There are different elements in it. The majority of this decline is coming out of the service revenue decline in Switzerland. And then a higher net income. Mario will explain it later. These are more booking topics from a new tax reform in Switzerland. But the main message is more on the left side -- or on the right side of this chart. If you look to the, call it, area in the middle of this chart, you see that we have an underlying EBITDA, which is stable, plus CHF 4 billion, with a different dynamic. In Switzerland, the reduction of CHF 23 million. That means the majority of the service revenue decline was compensated through cost reductions. So we were able to compensate the majority of the impact on top line through efficiency measurements. And Fastweb is growing, is CHF 41 million EBITDA. So overall stable. And the EBITDA -- reported EBITDA is CHF 4.38 billion. On the bottom of the chart, you see our free cash flow profile. So in the CapEx, in this CHF 2.4 billion CapEx, there is also the spectrum of 5G included, approximately CHF 200 million payout for the spectrum is included in this CHF 2.4 billion CapEx. So we have a solid operating free cash flow of CHF 1.6 billion. And this shows also that we have a dividend coverage, which is in the region of 85%. Maybe the last comment on this chart is our leverage ratio. So it's stable. We have a stable average -- leverage ratio, 2.0. And if you take out all the IFRS effects, it would be 1.7. What is our strategy? So the strategy is unchanged. It's proven, and we were successful in defending our #1 market position across all the segments. And what's really the basic of our strategy. Three pillars. The first one is to deliver a superior customer experience. One of the example for this is our Swisscom TV product. I would say, really, that's one of the best TV platform certainly in Switzerland, but I would say, even across Switzerland, in the world. And our strategy is to be an aggregator in this content world, which is becoming more and more complex. So we have an aggregator approach to deliver our customer the easiest way to the content which he likes, and that he also can use it in a more simple way, so through voice interface, as an example. So customer experience is the important pillar. That's product on the one side. But on the other side, it's also our network. It's extremely important to have a performing network and this out of the perspective of the customer. So that means if we build out networks, we don't just call for drop cost or speed, but we are optimizing our networks. As an example, that you have low latency on your content. So that at the end, it's the end-to-end customer experience, which counts. And there we have the ambition to be clearly better than our competitors. Second pillar of our strategy is operational excellence. Mario will come later to it, to deliver the savings. We delivered in the last year savings above -- on the indirect cost level above CHF 100 million. We have also the ambition to deliver savings in the next year in the region of CHF 100 million. Mario will show you a bit more on this later. And then the third pillar of our strategy is just to invest in a very focused and selective way in new areas around our core business to create some new growth. But at the end, for us, it's clear, the prosperity of Swisscom is coming out of the core business. And then that's why it is so important that we perform on the customer experience level. This is -- these are the main elements of our differentiation strategy. So we want not to be the lowest in price. We want to be the one who has a superior product portfolio or a superior offering. And you see on what we are working, the base of it is what I explained before, to have a performing network. But on the network side, even it's more important to have a good coverage than just only a lot of speed. I think coverage is extremely important, certainly on mobile, that's a no brainer, but also in the positioning of Swisscom also on the broadband space to have a broad coverage. And then on it, a high-performing infrastructure. Product, I explained; customer service, I also explained. And then it's a question for what our brand is standing. What's the brand? What's the root of our brand? And our brand is a premium brand, quality-oriented brand. Our brand has a superior premium experience. So that means also customer focus. Customer focus is an important topic. And innovation. If -- and that all should be in -- received in the market as a premium brand. And I would say we made our business in a good way. If the customer in Switzerland, if our stakeholder in Switzerland, tell us Swisscom is a sympathetic, customer-oriented, successful company. If we are able to create this, I would say, then we are in a solid situation, then the political people likes us, then the customer likes us and all the stakeholder have a good stickiness to our company. Key success factor in 2020. So the first and the most important pillar is we have to do all that we can strengthen our core business. That means, I repeat it, that means network quality. That means also using the potential of converged offerings on a value-based approach, not on a discount approach. And then to do our transformation in the B2B business. That means also putting together the SME and the corporate department and standardizing the products in the B2B area so that we gain more scale. And then realizing some growth areas where we can grow in the smart ICT part, IoT part also. But this is not the biggest plant at the end, but it's an important plant. And cloud, cloud is certainly important, security is important. But strengthening our core business is the main pillar, our main priority. Second priority, very important priority, is to bring Fastweb to the next level of growth. There, we have the potential, Alberto will explain it later, to use the potential of the partnership with WindTre, where we can enter into 5G market. With 5G, we will be able to be an innovative fleet and to use the convergence. And the advantage of it is clear at the end. Churn levels are better in a converged offer, substantially better. And also that the ARPU is better. So that means we can create more value out of a converged offer in Italy. That's why we push also these converged offers. And then generating some new businesses in the wholesale market, but also in the B2B market. In the B2B market, Fastweb has a very strong position. And we are increasing our market share in the B2B market. And then the third priority is certainly working on our cost measurements, not only for 2020 but also for 2021 and '22. So we have to fill the pipeline with initiatives that our costs are going down in '21 and '22 by this CHF 100 million. Some words on Switzerland -- Swisscom Switzerland. If you look to our commercial performance in the B2C market. I would say we were really successful with launching our new mobile generation, I explained it before, a very good take up. Net Promoter Score is better with the new product than before, and should also the debundling. It's a debundled product that we were able to save also direct costs. Market share defend. We were able to defend our market share in a market where -- which is very promotion oriented, where we have a kind of washing machine. And in the lower end of the market, yes, I would say we have a kind of washing machine. Through promotion, we were able to defend our market share and have low churn figures. Our churn figures in converged offer is 6%. Churn figures in mobile is 8% and the churn figures on broadband is 9%. So that shows that we have a stable customer base. And we were able to differentiate ourselves additionally through the new TV platform. So overall, a good market performance in B2C. In B2B, we have a promising development on security, cloud, IoT. We have acquired a small company, United Security Providers, which strengthens our portfolio in the cyberspace. Cyberspace is a big challenge, certainly also for the SME market, where we have a very strong position. And so we are able to differentiate our product portfolio in the SME market through cybersecurity solutions. And then there were a lot of different products, which strengthens actually our positioning in the B2B market. Here on this chart, some figures. I don't want to go through -- through each of them. But some of the figures in 2019, which shows that we had a good momentum. We have a market share in TV of 36%. We have fixed mobile penetration in the broadband customer base of 44%. And then this churn figures, as I mentioned it before. And the blended ARPU, which is stable in mobile and in fixed. In the B2B market, we have these challenges, as I mentioned it before. So we have this price pressure on mobile. You see that we have an ARPU of CHF 26. And this ARPU went down by 13%, that's the result actually of aggressive price moves of our competitors. But on the market share side, we are approximately stable, approximately stable on the market shares. In wireline, we are still a bit suffering through the all-IP migration, of the consolidation. If you do an all-IP project, that's always a chance to actually clean up your voice lines. And that's the effect what we see here in the results -- in the fixed business. Solution business has diverging dynamics. So up growth on security and cloud and stable or slightly down in workplace also because of some dynamics, I explained it before. But -- and that's the good message, CHF 3.1 billion order intake in 2019. Network side, I think, impressive is the increasement of our ultra broadband coverage. So we were able to increase the ultra broadband coverage, where we have speeds above 80 megabits per second to 74%. 74% of Switzerland has speed above 80 megabit up to 10 giga. And this is -- you see that there is actually a big change to the last year. And actually, each day, we are building out one village or one community with new ultra broadband offer. But also on mobile, we were able to increase the footprint on 4G+. 4G+ is actually a more speedy 4G solution. We are able to do with 4G up to 500 megabits per second. And on this technology, we have a footprint of 72%. And last year, we were 32% lower. So you see that there is a big dynamic in rolling out also our 4G network. So 5G, we get spectrum. We have a good spectrum amount, a good market share on spectrum. We get the spectrum for a good price, I would say, approximately CHF 200 million. If you compare this with other countries, I think we get it for a good price. And we are doing our rollout on 5G. We are ahead on 5G. Today, we have a coverage on 5G in Switzerland of 90%. This is on dynamic spectrum sharing, is dynamic spectrum sharing footprint. But 90% of Switzerland is covered with 5G. And now in the next month, there will be handsets on the market, which has the capabilities to use dynamic spectrum sharing and then you can use in 90% of Switzerland the first version of 5G. That's not the end. 5G has different evolution passes. But the first step is actually -- has already a good coverage. We have challenges in Switzerland to roll out the 5G networks. There is a bit -- sometimes also a kind of blockage to build new sites, but that's for everybody, for every competitor the same. So I hope that we get more rationality in this topic. Today, it's very emotionally discussed in Switzerland. And I think -- I don't think, I ask for it or I demand for it that the parliament is now really challenged to give some guidance because they sold us the spectrum. They gave us the goal to make a fast rollout of 5G. Now they have to help us that we can construct the network. But not everybody sees it in the same way in Switzerland. But I think in 2 years, we will have another discussion because everybody will be using 5G. And so all the emotional topics are forgot. On the financials. So you see the revenue on the left side. I think important to mention is, that's in Switzerland, is to mention the service revenue decline. You see that we lost CHF 290 million through price reduction or price erosion in Switzerland. That's a lot. That's a lot. Mario will explain it later. I think we will be able to get in a better position. But in 2019, we lost CHF 290 million. And on the bottom of the chart, you see that it was CHF 178 million in the retail business and CHF 110 million (sic) [ CHF 112 million ] in the enterprise business. On the right side of the chart, you see our EBITDA. And the graph on the bottom of the line shows the dynamic of this EBITDA after this IFRS adjustments, lease expenses. So you see that we lost CHF 41 million through fixed voice line reduction. That's -- a part of it is also all-IP driven, the other part is just substitution, fixed to mobile substitution. We lost some revenue of CHF 59 million through fixed converged offers. On the other side, we have the benefit of a much better customer lifetime value. And then we have some RGU mix erosion of this CHF 58 million in the mobile space. And then B2B, this CHF 112 million, which I already mentioned. And on the other side, some positive momentum on wholesale. This is CHF 52 million. That's broadband -- on the one side, broadband, it's -- a part of it is MVNO. But there is also some inbound roaming revenues or other wholesale revenues in it. But positive momentum mainly here showed on wholesale. And then the indirect costs. And this leads us at the end to this CHF 90 million reduction of EBITDAaL. If you come to our network strategy. So our ambition for '25 is actually to doubling the footprint of fiber to the home to 50% to 60%. So that's the one topic. The second topic is that we have the ambition to have 99% of Switzerland covered with 4G/5G in a combination. And then we have also a converged approach, so we will not have one and the other network, which are isolated, so we really take the advantage of these 2 networks. That means, in some areas, we will do bonding, that means combination of fixed and mobile network. And in some areas, in some selective areas, we will do fixed wireless access. But our view on fixed wireless access, that's more -- it's more a technology for very specific areas, more rural areas, where you -- where it would be very expensive to roll out a fiber network. The majority of the business will be done through fiber. And we believe in the positioning of the fiber networks. So you see our ambition on fiber to the home, so doubling the footprint to 50% to 60%. And second message on wireline is to also ramp up our fiber-to-the-street networks so that we are able to have speeds 300 to 500 megabits per second and this in a footprint of 30% to 40%. So you see that in 2025, we will have really a very strong fast network in Switzerland. Important is, certainly, what does this cost? What is happening with our CapEx? Are the CapEx going up or not? And the main message of this slide here is, we believe that we can execute this network strategy from before with CapEx in Switzerland in the region of CHF 1.6 billion. So that means, approximately stable CapEx in Switzerland. And in the chart, in the pie chart on the right side, you see actually what is changing. In the inner circle of this chart, you see the mix of CapEx from 2015 to 2017. Around, you see the mix of 2018 further on. So you see that we will invest 55% in our networks, wireline, fiber investments and wireless. We will have less investments, less CapEx on IT and project. And maintenance is approximately stable. So a change in the CapEx mix, shift in the CapEx mix. But overall, stable CapEx at CHF 1.6 billion. And here, you see the result of this strategy out of the perspective of the coverage. On the right side, you see where we are today, what kind of speed profile we have in Switzerland. So as an example, 74% has a speed above 200 megabit today. And in '25, you see that we have this fiber-to-the-home or 10 gigabit of 50% to 60% and then this fiber-to-the-street, 300 to 400 megabits in 30% to 40%. So at the end, there is only a very small part in Switzerland who has speeds in the region of 80 mega. So a very performing network. Some words to our mobile network. So we are proud that we were able to win all the different network tests. We had the score on the connect test of 974%, that's the best ever achieved score in a connect test. And I think we don't have to say that we don't have a good network. Overall, we have an excellent network, and our ambition is clearly to perform also in the future on this topic. On the right side, you see the spectrum auction of 5G. I think here, important is to say that we have 45% of the spectrum, which was available for 5G, was won by Swisscom for this CHF 196 million. So with 45% of the spectrum, we will be able to construct excellent network. So we have enough spectrum to have best 5G networks. Some words to our B2C business. Here is more an overview of what I would like to touch in the next slide. You see about broadband, entertainment, branding, 5G, some words on it. And I would like to start with broadband. On broadband, it's not just important to have a good network, as I explained it before. It's also important to have strong products, a strong Internet box. And we launched in the fourth quarter of 2019, the new Internet box, outstanding high-performing box. If you look to the different tests, you see that this is really a very, very strong product. It's important, it's important also in a -- an important part in our broadband strategy. Also, WiFi indoor coverage is normally a challenge in bigger houses, and there we have also strong products for in-house coverage. Interesting is to see that if we migrate the customer from a corporate technology or a hybrid technology to a fiber technology that we have -- or a more speedy technology with G.fast, that the Net Promoter Score is going up by a factor of 1.6. Entertainment. Some words to our TV business. You see what are the building blocks of our TV business. We have the basic features, which are superior compared to our competitors. I don't want to read all these features which we have, but this is a broad portfolio of different features, basic features. Then we have our own content. Through Teleclub, we have exclusive sports rights, as an example, UEFA Champions League rights. And then we have also the -- we have integrated third-party content because our strategy in the B2B business is to be an aggregator. The world in the entertainment business for our customer is becoming more and more complex. It's -- today, it's not a problem to have content. The problem is to find the right content. And normally, if you are looking for the content, you lose your whole time, then you don't have time to watch TV anymore. So it's important to get features, usability, which gives you fast access to the right content, what you like. So personalizing TV box, TV experience, is an important part in our strategy. So that's also why we implemented new feature in this new TV box. So we have voice assistance. So you can call, hi, Swisscom, TV on, and then you get your TV or James Bond, and then you get James Bond. So -- and that's only the first phase, and this voice assistant is only the first phase. We will go much more to personalize the home screens and also more to a smart home environment. I see that here we have a lot of potential to differentiate ourselves in the future. And maybe if you have time, you can talk during the break with Dirk, our head of the B2B business, and he's actually the father of TV. So he can give you some more flavor on it. Smart home, why do we talk about Smart home. Smart home is certainly not the biggest margin contributor for us, but on the other side, it's an element to differentiate ourself in the retail market. And that's why we also enabled our Internet box with smart home functionality. So we have a smart home app, Swisscom Smart Home app, and you see that we have a nice growth in this area. So 120 -- 130% growth on connected devices. And we think that in 2024, half of the Swiss households will have smart home solutions. So that shows the potential of this market. It's a hardware-driven business, that's clear. But on the other side, it's an area where you can differentiate yourself. So that's why we are pushing also smart home products. On our mobile proposition. I don't want to go deep in it, but that's a recapitulation of our hero product in mobile, where roaming is included in the whole EU. On -- maybe more on the performance side, this slide shows you that we have a penetration, in one penetration of -- in mobile -- in the mobile space, of the mobile revenue-generating base in postpaid of 69% -- so -- 67% of our customer has a inOne product. And on broadband, it's also the same, actually the same figures. 68% of broadband revenue-generating units are customers of the inOne proposition. And you see on the right side that we have a good momentum on growing. That's clear, once it's a bit flattening out, but we will have also in 2020 growth momentum on our inOne product. Fixed mobile convergence is important. We are at the penetration level, in the region of 40% in mobile and broadband. And on the right side of the chart, you see the figures -- or you see why fixed mobile convergent offers are interesting. So you see that we have the red bar on the bottom of the right side. You see that we have a 6.3% churn rate, so substantially lower than single-play offers. Second and third brand, I mentioned it before. That's more around in -- for our product portfolio. We have 3 brands, Wingo is our own brand. And then in combination with big retail -- with the biggest retail store in Switzerland, Migros and Coop. We have also third brands, and the momentum on mobile is good. You see it on the right side. We have 14% customer base share with second and third brand. And it's also interesting to see that second and third brands are mainly working in mobile. So the success of second and third brand in Switzerland today is not really on broadband, it's more on mobile. That shows the chart on this side. It's too complex normally for second and third channels to sell broadband offers. Customer interaction is an important topic. Customers want to have a multi-channel approach, maybe in some situation, they want to go mobile. In the other side, they want to go in a Swisscom shop. So it's important to work on all these different channels and to integrate them in a good way that there is no channel gap between the different channels, and that's why we are working on it. It begins with apps, continues with the communication on bots, but it's also customer care and Swisscom shops. How much time do I have still?

About 10 minutes.

He told me I should talk a bit longer. Normally, I'm too short. So I tried to explain a bit more. Yes, he always gave me some advice, Louis, but that's his job, actually. Good. On 5G, we think that there is potential to have some opportunities beyond the core. That's clearly -- the biggest part of 5G will be mobile broadband. That's where actually the most of the money will come out. That's why it is so important to have the right pricing on 5G. I think there, our industry should be more intelligent on the pricing on 5G, but because our industry is not the most intelligent one, I'm not too optimistic that we will be able to have an additional -- that we can additionally charge for 5G. But it's certainly the ambition of Swisscom to charge a bit more for 5G. But we are not alone in this business. But besides, there are other opportunities on 5G. In the B2B part, certainly on smart entertainment, I think we will see a lot of innovation there in the future, entertainment, virtual reality, 4K. I think we have to be close and have a watch on smart entertainment. Cloud gaming will be also an opportunity for 5G. And then consumer IoT, as I explained it before. And I think also augmented reality. Augmented reality and virtual reality is a big topic. It's maybe hard to judge all the different applications, which are coming, but this will be a big topic in the media market, but also in the B2B market. So we should -- we have a watch on these 4 different subsegments to create some additional revenues. On B2B, just as an introductory remark, Swisscom Switzerland makes CHF 2.2 billion in the B2B market. And if you look to the revenue distribution, you see approximately 50% is coming out of the solutions business. This is CHF 1 billion -- CHF 1.02 billion solutions business. And then you see the connectivity business, wireless and wireline. So these are CHF 399 million and CHF 520 million -- in wireless and CHF 520 million in wireline. So approximately 50-50 IT and telecommunication revenues. Solutions business are slightly going up. Telecommunication revenues will also continue to go down. We have to do all that the decline is not so fast as in 2019. And in the combination of these 2 different market segments, we are able to keep -- or to differentiate ourselves in the B2B market, I think it's important. With the positioning of Swisscom, we have market shares in the B2B market, it depends on the segment, of 75% to more -- much more than 90% market shares. So for us, it's important to differentiate ourselves through a broad product portfolio. On wireline, in the B2B market, you see on the right side of the chart, the broad product portfolio, which we have. I think we are very well positioned, a full-service portfolio on wireline. Also around it with security solutions. And in this area, we will have also some structural changes. The IP migration is actually already done. We are mainly completed. But now we are coming in a Phase of virtualization. So the software-defined networks, the software-defined OTT solutions, that's a new dynamic which we have. This brings advantages for our customers, and we have to do this migration in a clever way that we can -- took the revenues, which we have in the wireless, let's say in the MPLS networks, in the new product structures. So we are well prepared for doing this. But there will be a transformation, a structural transformation in the B2B market. On wireless, only one remark on this chart, you see that -- you see the dynamic on the left side, on the mobile ARPUs. So we had a strong dynamic in 2017, '18, '19. Now we are on an ARPU, I would say, which is comparable to Europe. Europe was approximately flat. So we had this negative dynamic in the last year in Switzerland. But you see that also there is some hope because the ARPU is already low. On 5G -- also on 5G, in B2B, there are opportunities. Certainly, also in mission critical communication, mobile private networks, there are a lot of opportunities. Industry 4.0 are opportunities. We have the Olympics Youth Game in Switzerland, just as an example, and we made the whole timekeeping through 5G -- private 5G network. And the advantage is phenomenal because you don't have to really put the wire on it, you can just do it all over the air, and it was working very well. And they actually saved, the organization of the games, they say -- I would say, they saved approximately 50% of the costs through doing it through 5G instead of on wireline technologies. And that shows that there is a lot of potential on 5G on a project base. ICT business, only some very small remarks. On the left side of the chart, you see which segment in the IT market in Switzerland are growing in a region of 5% to 10%. The whole market is growing at 4%, and some segments have a growth of 5% to 10%, and Swisscom is well positioned in a segment where we have growth of 5% to 10%. On the right side of the chart, you see our product portfolio. So it's a holistic product portfolio of horizontal and vertical solutions. And here, the last chart, actually, that's the combination of the 2 departments, SME and corporate. And you see what kind of advantages we will have out of this reorganization. So Louis, now, I think I'm through.

That's correct.

And I would like to hand over to Louis -- not to Louis, to Alberto.

Louis, do you want to do it?

No, no. Next time.

So good afternoon, everybody. So for the first time, in Italian, we talk less than Swiss. But in Fastweb, we are used to execute in order to get to the results. So we will be on time. So very quickly, I would like to spend also some minutes on strategy and how we think we will develop operations in the future. And then, we will do the usual classical set of information. Maybe we start with the market, where we really think that there are 2 main streams that are emerging and that are very, very clear. One -- the first one is that customers actually, in their perception, don't measure quality, quality anymore by comparing telco operator. But they have in mind, at least in the consumer space, an over-the-top type of experience. And clearly, bear in mind that it's true that this is mainly for consumer, but also big decision makers in big enterprises are at the end also consumers. So this is something that is now already through in the consumer space, but in the future, we will see it also emerging in the enterprise. Second, what is important is the performance. Customers could care less about technology. So you can connect them through fiber to the home, fiber to the curb, 4G, 5G, WiFi, FWA, what is important is the performance. And so I think it's important, given these 2 big inputs, that the market is delivering to operators or to service provider. It's important to share with you how we want to tackle it. So basically, we have 2 layers. And the first one is the classical one. So the ultra broadband game is related with the infrastructure. As you can see, we don't talk anymore about mobile, about fixed, about fiber, about 5G. What is really important is to, let's say, concentrate on ultra broadband. Technology is not relevant. What is relevant is the performance. And the second, the most important layer, where we do think that we will build a strong competitive advantage. [ FVS ] could be heavy, the one on infrastructure is the over-the-top platform. We do believe that the operator, service provider in the telco should become platform companies, not only infrastructure companies, which entails specific features, which needs to become important KPI for companies and also, I would say, attitude and culturally. So if we explored a little bit this layer, we start with, let's say, most complicated one for companies, which is, what do you mean for over-the-top platform? As you -- if you think about the over-the-top offers, they have key features that are similar to all the over the top. They have a few standard offers. They have just inbound channel. They have unique web interface regardless the market, the segment that they are covering. They have very stringent KPI. And clearly, they are digital. They are digital native. And so the only language that they talk is digital. And that basically, I think, the main challenge, but also the main opportunity. And in Fastweb, we believe that this is going to be the opportunity to build, as I was saying, a strategic advantage. Because if we speak, for instance, for onboarding and activation, I think clearly we will be never ever in a situation where we can match the onboarding, let's say, process in terms of timing of Netflix, which takes minutes or Amazon, which takes minutes. But definitely, as a telco provider, we should be targeting 1-day activation, for instance. And clearly, this target can be perceived as very, very ambitious. But for instance, technology is greenfield, like FWA, you can get to this target. All in all, big role also in becoming a platform company. It would be, again, extremely important all the network virtualization, for instance. But also the attitude to enter more and more in the -- into the services. So the company and Fastweb has this ambition, we'll be much more code-oriented in order to have an hands-on approach on the main features or the services, namely software and firmware of our CPEs, for instance, just to give you an example. If you take all these ingredients together, clearly, you can easily reach NPS maximization, cost optimization of the network, clearly shorter time to market. And if you put all these 3 things together, clearly, lean and efficient organization. This is something and is a trend that I believe it would be a common, I would say, pattern for the company that will be successful in the future. It requires a huge transformation, but I think that Fastweb has shown that we are very good in surfing even highest waves. Coming to, let's say, a more classical vision. We do intend to continue to invest in our ultra broadband infrastructure. The first bubble shows basically the situation in 2020. So the coverage of 30% of Italian population with our fiber technology. But in the future, we will add 2 important streams, the one very close, the FWA, with which we will cover an additional 30% of Italian population. We do think that FWA is a perfect technology, very solid with fiber-like performances and is the perfect technology to address second, third-tier cities, where it's very, again, difficult to deploy fiber classical technology, fiber to the home, whereby with FWA, it will be very, very, let's say, cost-effective and also time-effective. And then when clearly on -- in a parallel scale, but it will take more time, in 6 years from now, we will be able also to reach the 90% of the Italian population, thanks with our 5G mobile network. In order to gain time, in order to accelerate on the rollout of such important project, we adopted the strategy to partner with the best-in-class for each respective technology. And so vis-à-vis, let's say, fiber to the home. As you know, we have done the partnership TIM. For what concerns the 5G mobile, we selected WindTre. Already today, WindTre, in terms of voice and throughput is the best network in Italy with a consistent, let's say, differentiation if compared with the other MNOs. And this is extremely important for us because, as you know, Fastweb has been always focusing on high-quality rather than price. And today, with Wind, we have, as I said, the best partner, the best MNO in terms of quality. Third one is Linkem, that has the -- has a very good frequency package for FWA, we will see in a second, but we can use already their FWA network and then co-invest in order to expand it to reach the 30% of Italian population coverage that I mentioned before. That was the part of the strategy, which, again, we really think is something that will build a strong competitive advantage. We don't see all our competitors to be on this page. And probably, they will not be in this page for a lot of years. So we have a lot of time to develop and be in a strong position. That was the future, but let's have a look also at the past. If you take net revenues, I think that Q4 has been a very, very strong quarter. But also, if I look the whole year results, nobody in -- I think, in Italy, but also in Europe, can show such growth. The good thing, we will see in a second, in all the recurring market, we have been growing. So also wholesale that today -- that in this chart shows a decrease, in reality, in the core services, is increasing extremely well. The Q4, as I said, has been extremely strong, particularly in consumer, thanks to the new offer. During 2019, we have increased our offer, moving from 699 to 999. And this, with all the customer base that is growing, is finally showing up. And therefore, we do expect also this growth in 2020 onwards. Also, if I look at the service revenue dynamics, as you can see, clearly, mobile is growing extremely well, but also the wireline and the value-added services are posting consistently growth over the years. If I look at EBITDA, also there, plus 5%. I believe that also this is an extremely good sign of a company that is in a good shape, not only in terms of revenues growth but also in controlling the costs. And as a result, since our CapEx envelope is quite stable, also our operating free cash flow is increasing significantly over the years, especially in 2019. If we look -- if we move from financial results to operational results, and we start with the B2C performance. I think also this year has been -- actually, 2019 has been extremely successful. Overall, if I look broadband, we have been -- we've grown 4%, but for what we said until now, we don't look actually at broadband, we look at ultra broadband growth. And also, that has been extremely, extremely robust. It's pretty much clear that ultra broadband is the focus in Q4. The percentage of ultra broadband on the gross adds of the quarter was almost 90%. So it's not a trend, it's a certainty. For what concerns mobile, also there, I think, very, very strong growth, despite increase in prices. But also, there, there is a very good reason because if you look at the mobile market, these are just 9 months because we don't yet have the, let's say, data of all the others and so of the market. But you can see that even if today, we are still, at the end of the day, a full MVNO, but still an MVNO, we are growing extremely well, even if we don't have the remedy package that Iliad is exploiting since 2 years. And they also did very good news, is that these results are based, at the end of the day, on the quality of the services and the consequent satisfaction of our customer. If you look at the Net Promoter Score, our Net Promoter Score is constantly increasing. It's the only one positive in Italy in the wireline. And since we are constantly increasing, we are really moving away from the typical telco service provider and even energy provider and really moving towards champions in the satisfaction of customers are -- like big retails, big international retails. And this is extremely important also in terms of churn dynamics. The other interesting stuff is that while in fixed, you can clearly assume that this is a logic since we invested a lot in the network. In the mobile, it could be for you surprising that we are the second best in Italy with such a high Net Promoter Score. But the reason for that is not only related to the quality of the network, but also for our service -- sorry, positioning on the market. We have been -- at least 18 months before Iliad, we have been positioning our mobile services as, I would say, the champion for the customers. So very, very, very transparent, very, I would say, aggressive in terms of prices and also very good in the giga allowances. So as a consequence, our churn rate and overall, the satisfaction of customers is extremely, extremely high. And that explains the results also in terms of net adds. Iliad still has a little bit premium on us on the Net Promoter Score. Basically, this Promoter Score is, I would say, for the 90% based on the very, very low price of the French, while for us, it's also, I would say, quality of the network. If we move to the B2B performances. Also here is a recurring story. Very, very clear that we are getting market share since basically the last 15 years. We got another 2% market share. The revenue has grown at 11%. And our, let's say, growth comes from both PA, but also -- public administration, but also value-added services. This is also something that will continue definitely in the future because here if I look at the Net Promoter score, we are at the level of almost 60%. So it means that the customers are crazy, positively crazy for our services. And in fact, here, I will say that our churn is basically equal to 0. Also on wholesale, we have done a very good year, as I said if you focus on core services. And of course, services are driven, especially also in Q4 by the fact that we started to connect all the BTS backhauling of WindTre and Iliad. We are accelerating on this. And also on our ultra broadband, let's say, wholesale, in terms of access, where we are exploiting all the Tiscali customers’ activation. As you can see, also in terms of lines, we are basically double our, let's say, performances in the years. And this is extremely important because, for us, newcomers on the fixed market are not an issue, are rather an opportunity. Because also, as you will see also in the future with Sky, eventually with Iliad, at the end of the day, yes, it's true, maybe we can suffer from the retail point of view. There is an increase in competition, but we can anyhow do business and increase our margins from our wholesale. So I think, for us, in a balanced view, actually, wholesale is an opportunity and newcomers are an opportunity. So all these to, I would say, tell you the story on 2019, very, very successful. But 2019 is over, and so let's focus on 2020. On 2020, basically, clearly, for us, 5G is the target. And there, we have this very, very strong agreement with WindTre. We will start both rollout of 5G. Actually, we have already started. And in terms of customer base migration, we will start around March to move customers on the WindTre network, which, as I said, it will be extremely positive experience because the new customers and old customers will be lending on a very good high-quality network, actually the best in Italy. In terms of 5G FWA, also this one, we are in execution as the 5G mobile. And we are just already starting the rollout by upgrading the current BTS of Linkem and identifying the new rollout in order to achieve the 30% coverage of Italian population. On the corporate space. We want to leverage on the huge, let's say, market share that we achieved on, let's say, traditional services, connectivity and also some value-added services by expanding our offer. What we want to do is to do monitor and scout the market in the cloud and in the security space, which becomes every day important, much more important for our customers. And here, the idea is maybe not only accelerating the growth of revenues but also increasing the margins attached to such revenues. And I think that this is something, an opportunity that cannot really be exploited very quickly. In terms of wholesale, also there, 2020 is going to be a year of all the opportunity because we will start to onboard and to activate also WindTre customers, Sky customers. And also the FWA technology in second half 2020 will be an additional opportunity to do wholesale business with existing clients. If we do a deep dive on the agreement, on the network agreement, on the 5G mobile, as I said, the customer base migration on 4G network will start in Q1 for the 5G deployment, sorry. In this year, we have a relatively easy target, 500 macro-sites over the next 12 months. This is extremely important for the future. That's why we did it by moving from a full MVNO, let's say, status to an infrastructure operator. We will have significantly better cost structure with cost that will decrease not next quarter but at regime level by 70%. And this is because we will offload a lot of traffic into our 5G network. If we move to 5G FWA, that for us, as I said, is the first target because it will be on -- we want to launch services by mid-2020. For us, it's extremely important, the agreement with Linkem, which is already operational in a vast majority of Italy. We have, as I said, now to build basically 2 network. We will use 2 different set of frequencies, the 3.5 gigahertz owned by Linkem, and they will develop and upgrade their network in this respect and also the millimeter wave, the 26 gigahertz set of frequencies that we bought in the last bid. And so we will develop on the same sites, their network at 26 and it will be managed by us. This is clearly an infrastructure game. So it's a multiyear agreement. Thanks by the combination of 26 and 3.5 gigahertz, we will be able to deliver fiber-like performances. As I said, in second-tier cities that today can exploit very, very, very poor performances. So that's why we think it will be a strong -- there will be a strong acceleration in our growth, also thanks to this technology. Also there, by getting with this technology that is much more effective, much more quick in deploying, we will need 50% of the investment that we could have planned with fiber to the home direct. If I look at the growth in B2B. Clearly, the ICT value-added services remain and will be even more in the future the -- a growth engine. Already today, our order, 50% comes not from traditional services like connectivity, voices, but directly to value-added services, so security, cloud, data center, managed services. But we do see also that this trend will increase and so in the future probably this percentage will grow up to 5%. As I said, we were really look into expanding our offer because we do believe that with the credibility that we achieved today with the enterprise market, we can have, let's say, a broader hands-on approach also on adjacent market to the telco. In terms of wholesale, we will try to push activations of our customer as much as possible. As I said, Tiscali is already an active customer since the last 8 months. WindTre and Sky will start very soon. And so even if -- basically, we want to exploit the same path of growth in connected lines because, in 2019, we doubled the performance of 2018. And in 2020, we want to more than double the performance of 2019. So there, we definitely allocate a lot of effort, but I think this market is a very strong opportunity. On top of that, when we will have the 5G network available, we believe that there will be an extraordinary opportunity in terms of wholesaling it to existing clients. So just to conclude my story positively. Revenues for 2020 will be at least 3%. And EBITDA in a, let's say, window between 4% and 6%. And the reason also there that EBITDA can grow more than revenues is also because for all -- with all the projects that we said, we will improve our margins and our cost structure by investing and becoming more infrastructure. Clearly, the OpEx will be lower and therefore, EBITDA higher. CapEx, nevertheless, will remain stable. What is going to happen also in the future, we will maintain the same level of CapEx, but the reallocation within the same envelope will change, so less fiber to the home, more 5G and FWA. Also, we do confirm the long-term targets. So in mobile consumer, we do see this 4%, 5%. And every, I would say, month, every quarter, we see it much better, much cleaner, and we are very confident to get to this result. Also in wholesale, our ambition to be a player or at least a 10% market share is very, very tangible because as you saw, the performances of 2019 shows this opportunity. And also on this, we are confident. To close, with the corporate, where today we have 33% market share, including everything, and there, if you look, we have been statistically consistently growing 2% each year. So I think those targets are very, very -- let's say, we are very, very confident with this target. Thank you.

Thank you, Alberto. I suggest we stop the presentation, the first part of the conference here, and have a coffee break of around 15 minutes. Outside this room, there's coffee and some cakes to enjoy. And let's restart at 10 past 3 sharp. Thank you. [Break]

Okay. Welcome back. So before coming to the financials and the outlook, a few remarks to our cost programs, operational excellence. As you know, OpEx savings and the CapEx efficiency are 2 important pillars to protect our cash flow, which is under pressure due to the negative growth of the Swiss service revenue. Maybe looking back, what did we deliver in the last 4 years, and these numbers are net savings. You can do the calculation. In the last 2 years, we delivered CHF 250 million net savings on indirect costs. I think the organization was very disciplined and did a great job on this side. The CHF 127 million saving in 2019 comes CHF 94 million from workforce cost reduction, CHF 69 million from personnel and CHF 25 million from reducing external workforce. And the right-hand side, you see the areas of savings in 2019. I think it's impressive. The improvement of the number of customer field cases, minus 26%. That's thanks to stable networks, stable platforms, low call rates after installation of the route of the set-top box, it's really impressive. That shows if you can optimize the end-to-end chain, you really can reduce the cost level. Of course, it will not stop in 2020. We think that we will be able to reduce indirect costs in Switzerland for the next 3 years of at least CHF 100 million each years on a net basis. And a few areas where we think that we have room to attack. In the B2C, it's certainly push the online channel. That does not mean that we'll close stores, but we must transfer easy cases to online and follow a multichannel approach, streamlining the portfolio. That means lower number of interventions, lower number of calls. And then the field service integration, we did this integration in our construction units. There, I think, we will see some relevant savings in '21 and '22. In B2B, again here, streamlining the portfolio, it takes a bit longer in the B2B area than in the B2C area. First, we have put the product end of sales. In a few years, you can take it out of your portfolio because the customer still use those products. And then the benefit of the one B2B organization, which was mentioned, we don't only expect more revenues from that side but also savings, and I think they will kick in, in '21. And on the network side, I think we will do our homework on the supplier side, working on the optimization of the IT costs, where we were quite successful in the last 2 years. And then automation of network monitoring, there you can do, with RPA, robotic process automation, cases in the network. And then, of course, throughout the organization maybe for us, work on the overhead. Coming to financials '19 and the outlook 2020. On the financial, I just give some additional remarks because Urs and Alberto, I think, have explained the most important elements of 2019. So if we compare 2019 with '18, we have to do some adjustments. On EBITDA level, it's certainly this lease adjustment of CHF 226 million coming from IFRS '16. And 2019, we need to correct for the impact of the exchange rate, CHF 90 million on the top line and CHF 29 million on EBITDA. And then we have these restructuring costs, which we booked in Q4 this year. So overall, we have a flat EBITDA. I think that's a strong result, and we fully met the guidance 2019. On the revenue side, overall, we saw the same dynamics in Q4 as we discussed together in the first 3 quarters. Overall retail customers, the revenues decreased by 2.8%. The details I will explain later. Also, Urs gave you already some elements. Enterprise costs, we saw a decrease of 4%. The negative thing is, service revenue decreased by over CHF 100 million, 11% on wireless and 10% on wireline. Wireless is pure price impact. And on wireline, it's 50-50 price pressure and the effects of the All-IP migration. Positive element is certainly the wholesale business with a growth of total CHF 88 million. There we benefited from the CHF 44 million from higher broadband connectivity from our competitors in the retail area, then we delivered fiber infrastructure to both operators. And on the MVNO, positive impact of close to CHF 30 million. These are the clients, which we moved -- the UPC clients, which were moved from the Salt network to our network. This positive impact, we won't see any more in 2020. I think the excellent performance of Fastweb was explained in detail by Alberto. On the cost side, the overall OpEx of Switzerland CHF 220 million below prior year. And on the direct cost side, we have CHF 194 million lower acquisition and retention costs. That's related to the decoupling of the handsets in the new inOne mobile go portfolio. Then we have higher costs for goods purchased. That's practically no margin impact, around CHF 70 million. And then we have close to CHF 20 million higher cost for sport content in -- for our TV proposition. On the right-hand side, the indirect cost reduction of CHF 127 million. I think I explained that before. And then we tried to plot the whole dynamic of Swisscom Switzerland of one -- on one page. Overall, we lost CHF 23 million EBITDA compared to prior year. On the left-hand side, you see the elements which Urs explained to you already, the impact on the service revenue. Fixed voice line losses prior year we had -- as in 2018, we had CHF 60 million impact coming down as expected to CHF 41 million. On fixed mobile conversion, that's the discount on the bundles. We had the peak in 2018 with CHF 85 million negative impact, now coming down to CHF 65 million. And then that huge exchange of revenue-generating mix, that's the optimization of the customer in the customer base. And then, as we saw before, new customers are coming at the low end of the portfolio into our customer base. That's this impact, CHF 58 million. Then we saw -- we already saw this CHF 112 million service revenue, negative growth in the B2B area. That was -- a year ago it was below CHF 100 million. Part of that negative impact is compensated by indirect costs. And then you see in the middle, SAC/SRC and device decoupling. That's the positive impact of the new inOne mobile portfolio, that's CHF 70 million. Then we have the impact from wholesale, included in the CHF 102 million. Then we have some elements in hardware and the other direct costs. And we will discuss it later at the guidance, which elements will also show an impact in the future. On group EBITDA, just some remarks on Q4 because we reported or discussed the first 3 quarters in detail. On retail, we had a quite strong EBITDA compared to prior year. We had over-proportional cost savings and very low acquisition and retention costs. And in 2018, they were quite high. In B2B, also better performance in Q4. We had less service revenue decrease than in prior quarters, combined with a small growth in the solution business. You remember, in the first 2 quarters, we had some problems on the solution side. We always said, towards the end of the year, we will improve this performance. On -- in the middle, the wholesale IT network, we had a bit less savings in Q4, that -- no surprise, that was as planned. And then on Fastweb, we had this nice growth through all the 4 quarters in 2019. The elements below EBITDA, for the EBIT, came down by CHF 159 million. If we take out restructuring and currency effects, we have a comparable decline of CHF 91 million. That has 2 main elements, depreciation in Switzerland, CHF 44 million higher. The main reason is the change in useful lifetime of the copper network that resulted in higher depreciation of CHF 25 million. And then the second point is, we have about CHF 50 million higher depreciation in Italy in Fastweb. Interest costs, I think, there we reached the bottom, only CHF 62 million for that portfolio of over CHF 6 billion. I think it's not possible to become much lower. And then we have this extraordinary impact on taxes, which we already mentioned in the Q3 earnings call. These tax expenses include a one-off impact of CHF 269 million from the corporate tax reform in Switzerland. This positive one-off effect is not cash positive in 2019. That will be distributed over the next 10 years. So we had to book it just because of IFRS rules. And the tax rate in the future will be at 19.5%. On CapEx, only one remark to Switzerland. So the CapEx, excluding spectrum, well below prior year, CHF 55 million. We didn't stop any rollout, that's also primarily thanks to further CapEx efficiency. Not only OpEx efficiency, also CapEx efficiency is quite important. Fastweb, as Alberto mentioned, more stable. On free cash flow, I go directly to this slide. You see the free cash flow proxy, CHF 1.6 billion. Then we have these interest -- the low interest paid, CHF 63 million, and taxes paid CHF 370 million, with some changes -- positive changes in the net working capital that brings us to a free cash flow of CHF 1.35 billion. That means the dividend coverage is still well in place. We distribute 85% of the free cash flow. Below free cash flow, we have one, let's say, material impact is M&A. These were not transactions we did in 2019. So we have CHF 240 million were paid for the takeover of search, the call option we executed end of 2019 for the remaining 50% of search that's related to the PubliGroupe transaction. We paid that in Q1 2019. And then also it included the payment of the price for the Tiscali acquisition, which was also executed in '18 and paid in '19. And then there were some small acquisition in the IT area in Switzerland. Only a few remarks on the debt portfolio. Still stable credit ratings. The credit rating review will take place in March. You see the refinancing activities in 2019. Close to 80% of the portfolio is fixed. So no problems in the case of the hike in interest rates, and the average interest rate is 1%. I would say, it's well distributed also over the next few years. The next big refinancing will be the Eurobond of CHF 500 million in 2020. That brings me to the guidance. Revenue at around CHF 11.1 billion. EBITDA at around CHF 4.3 billion and CapEx around CHF 2.3 billion. That means EBITDA minus CapEx CHF 2 billion, considering CHF 0.3 billion for the total lease expenses, we expect the free cash flow proxy of around CHF 1.7 billion. Then we expect payments for interest and taxes of around CHF 400 million. That brings us to a free cash flow of CHF 1.3 billion -- around CHF 1.3 billion, which is more or less in line what we produced in 2019. Maybe a few details on revenue. To the group, top line will be down by CHF 300 million. CHF 100 million is because of the stronger Swiss franc. And Swisscom without Fastweb at around CHF 8.7 billion, a decline of service revenue between CHF 250 million and CHF 300 million. Would say, 50% of this decline will come from B2C and the other 50% from B2B. Alberto explained the expected growth in Italy around north of 3% on revenue. On EBITDA, group EBITDA, as I mentioned, around CHF 4.3 billion. Currency impact is minus CHF 30 million in that guidance. Swisscom without Fastweb at CHF 3.5 billion. The negative impact from the top line will be partly compensated with cost savings, CHF 100 million, I mentioned. And then we will still have positive impact from the debundling. We expect around CHF 80 million positive impact from debundling. CHF 40 million, you will see in other revenue and CHF 40 million, you will see on SAC and retention costs. Fastweb, as mentioned, an organic growth of around 5%. CapEx, Swisscom without Fastweb around CHF 1.6 billion. This includes all rollouts. This includes 5G rollouts. This includes the new fiber strategy we have and Fastweb stays at around CHF 0.6 billion. And as was mentioned, the dividend story remains in place. When we meet these targets, we will propose again a dividend of CHF 22 paid in '21. With that, I hand over to Urs for some final remarks before coming to the Q&A.

Thank you, Mario. So the question is for -- what do we stand? And you see on the right side, that's nothing new. We are the incumbent #1 in Switzerland and Fastweb is the attacker. That's also maybe, Alberto, why you were fast during your presentation than the incumbent in Switzerland. So you see the different positioning of us. But for what do we stand? Our positioning is, we are believing in integration, we are believing in converged offers. Mobile fixed, but also IT, ICT operations. We have a clear positioning in this market. Second, belief and what actually guides our behavior is we have a long-term perspective. So that's why also we think that we have to invest in our fiber networks. On a long term, this will pay out. Differentiation is a key element in our strategy, so to actually bring a value-add to our competitors. And then the last point is maximizing our free cash flow. We know that is important, and that is also important for the third point here, we want to be a reliable dividend payer with a predictable view on it. So for this, we stand and for this, we are working. So now we will come to the Q&A, aren't we?

Thank you, Urs and Mario. Now it's time for the Q&A session. For that, Dirk Wierzbitzki and Urs Lehner are also available for specific Swiss questions. But before we start with the Swiss questions, let's focus on the Italian business, not because they are faster, simply because they have a plane to take. So let's do the first 20 minutes or so all questions around Fastweb. Alberto can take over those. And thereafter, let's open the Q&A session to all other questions. May I kindly ask you to use the microphones? Because there are some people on the webcast so they can follow our conversation, first. And second, please mention the name of the bank you're representing and also your personal name so everyone knows from where the question is coming from. Who can I give the first question? Fred, second row?

It's Fred Boulan with Bank of America. So a question on Italy. First of all, so wholesale, very strong performance. Core was CHF 87 million of revenue. If you could just explain a little bit. You talked about some of the drivers, but looking into the next year or few years, what are the drivers there? You mentioned some of the backhauling activity you're doing, but if you could expand a little bit on that segment. And second part of my question, Italy's mobile strong growth revenue. What's the margin profile of that business versus your core B2C business?

Okay. So as I said, the 2 main lines of revenues related to the wholesale are -- on the core are the BTS backhauling and the lines -- access lines basically. On BTS, 2019 has been extremely strong because of the Iliad expansion of the network and also because we started to execute also the agreement we had with WindTre that entails also a big number of BTS to be fiber to the curb, and we started to roll out especially during Q4. So also in the future, if I see also the -- I would say, the message is that Iliad is saying to the market, they will continue in 2020 to increase the number of equipped BTS. And so we do think that we have a good chance to continue to connect to the curb, the BTS with that fiber. Same thing applies with Wind. In 2020, we will continue to roll out the BTS. The second stream is related to the access lines. As you saw in 2019, we doubled the performances of what we were doing in 2018. In 2019, the only big customer related to the specific unbundling of the access was Tiscali. In the future, we will add Sky and also Wind. So also in this respect, we do think that the good performance of the Q4 we will continue also in the other quarters. Clearly, maybe not at the same rate, but it will be still a strong value engine. Then on the margin, basically, today, on the margin, we do have a very, let's say, a sustainable margin, and you can say, approximately around 20%, which is clearly lower than our core business on the fixed, which is much higher, but this is -- clearly depends on the cost structure investment versus MVNO, let's say, status, but even with MVNO status, we are -- we do think that this is very good margin.

Thank you, Alberto. Next question on Italy, Michael?

This is Michael from Goldman Sachs. And just picking up on the market share targets. So I was just wondering perhaps why you're not a bit more aggressive in terms of the mobile market share target given the success in '19 and where you are today.

Yes. Let's put it in this way. We do think that this market share is achievable. We are confident to achieve such long-term market share. It's also true, you're right, that we have a lot of good ingredients in order to sustain our growth because today, we have already very strong services. I think that after Q1, the quality will increase because, as I said, the WindTre performance are much higher than the other MNOS. We will deploy 5G. We will deploy also a very robust network. But for the moment, we stick to the guideline that we show. We can say that we are really confident to get to such market share.

Thank you. Next question, Georgios, here in second?

It's Georgios from Citi. Firstly, a question around the spectrum debate. I think there are some -- an ongoing court case, I think, going on right now regarding the status of the spectrum on 3.5 gigahertz that you own. If you can update us on what the debate is and when do you think we get clarity on that? And then I just wanted to ask something around cloud. And we've seen a couple of operators, obviously, Telecom Italia themselves also Vodafone partnering with global players, I was wondering from a Fastweb perspective, given that you are working with mobile operators around something about calling options and other things, whether it makes sense to find partners to share some of the investments, either for some of these, including on the cloud side? And then the final thing, which I was hoping someone else would ask, but clearly they haven't so far, can you give us your view of what's going on in the big debate between Open Fiber and Telecom Italia? And where you see it with our 25% stake in Flash Fiber?

Yes. So on the -- basically debate on the litigation, more than a debate, basically the -- let's say, before the sentence, there were operator that we're saying that the -- our acquisition of frequencies was not correct, the Tiscali one, that also the extension, sorry, was not correct. And third, that the price was too low, okay? And the judge said that definitely we are the -- rightly the owner of such frequencies, that we are rightly entitled to get the extension. So all these are, let's say, clear. The third thing he said that AGCOM should again judge if the prices that we paid are correct. I said again, because AGCOM has already performed this analysis, so that's why AGCOM and the Minister of Development are opposing themselves to such sentence. Because there is no need for AGCOM to redo the same analysis that has brought AGCOM to say that the price that we paid was okay. So that's what it is. I think that, as usual, in Italy, there are a lot of operators that want to do competition by litigation. But on this, they all fail. That's for sure. On the cloud, on the M&A, I think that in the last, let's say, month we have seen big names partnering. I think that in our mind we're really thinking much more in very good leader niche operator. So we want really to have hands-on approach. And so to increase our internal skills, I think that will never happen if you partner with a huge, let's say, global player. You just do kind of distribution, let's say, partner. For us, it's a completely different spin. We really want to have -- to increase our capability in the core platforms. So that's why we are looking at small niche players. The third one, I mean, I'm not passionate about, let's say, Romans, but I would say that honestly, I cannot judge in a sense that everybody can -- every company should pursue whatever belief is strategic. I just say that whatever will happen, we really need to make sure that competition is enforced, that there are no particular gift to anybody because as Fastweb is investing a huge amount of money in infrastructure, we want also to protect our investment and be able to grow as we were doing and as we will do in the future.

Thank you. Perhaps, Simon, first.

Simon from Barclays. And just on the Linkem agreement, just trying to understand, so you say 2 5G FWA networks. How does that actually work? And what's the topology of how you build that network? I know in the past, you've thought about maybe using your street cabinet infrastructure to help with such a network and other synergies with the WindTre agreement as well. So can you use sites that you use for the WindTre agreement for the Linkem agreement? Just some more color around that.

Yes. No, we will use different, let's say, BTS. Basically, what we're going to do is to use 2 different set of frequencies, the millimeter wave, owned by us, 26 gigahertz, and the 3.5 owned by Linkem. So basically, what we will do on the same site, so synergy, we will develop -- we will put our antenna millimeter wave. They will put -- they will upgrade their antenna, and so we will able, from a topology point of view, in such area to, let's say, combine services with the 2 frequencies. So which means that we will have the coverage with 3.5 and the intercity with the millimeter wave. But the 2 networks at the end will be separate. You can then combine the services, but the 2 will be separate. One operate at 26 gigahertz by us and the 3.5 by Linkem.

Thank you. Next question, perhaps Luigi, if that's still the case.

It's Luigi from HSBC. First question on the network sharing agreement between TI and Vodafone, which has an active and a passive part, and I was wondering what's your view about it and whether you would expect the remedies that can help the other players in the market. And then second question in terms of thinking about competing via litigation, I think Iliad is appealing your agreement with WindTre. What's the rationale of their appeal? And does it have any leg?

Clearly, the deal between Vodafone and TIM is a deal that everybody should look at because 2 -- the 2 main players are put in and join forces. And therefore, I think European Commission is looking into this deal that has been just notified, actually after almost 12 months from the announcement. But I do think that the European Commission will look into it. We do expect that some remedies should be available, like sites available, for instance, that, as you know, is a very scarce resource, but I think we leave to the European Commission the work, but we do believe that since the magnitude of the 2 players, it will be really likely that some remedies will happen. And clearly, we will look into that. In terms of the litigation that Iliad started against the deal, our deal between us and WindTre, I think, again, it's more -- it's based on nothing. I would say that we are very confident that also this appeal will follow the same fortune as the one related with the extension of frequencies.

And perhaps, next question, I don't know, let Jakob, you still want or is it done? Matthijs?

Yes. It's on fixed wireless access. When will you launch? And could you provide some color on price points? And contrary to Swisscom, you sounded pretty confident that you will grab significant market share with fixed wireless access. Could you give some color on that?

Yes. We are, let's say, targeting mid-2020. So, let's say, close to the summer. We do believe that FWA is, let's say, a robust technology. It's not just because -- I mean, we tested many times in the last 12 months on field with, let's say, with -- directly with customers. You have all the experience of Verizon, for instance, in the U.S. The reason why you still don't see a lot of operators in Europe invest in this technology is just because these millimeter wave frequencies have not yet been allocated. So this is the only reason why FWA is not booming because for -- once the millimeter wave will be available, I can tell you that everybody, every operator will look at that. Clearly, the -- in Italy, I'm talking, the MNOs are now giving priorities to 5G investment because they have all their cash flows there. So if they don't invest in 5G, they risk to lose all their mobile cash flow. So the FWA is -- they prioritized, but just because of that, you can assume that in 3 years, all MNO will invest in FWA, because it's a very strong technology that can deliver fiber performances in area where today, customers, they serve at 10 megabit. So it's a very strong competitive advantage. That's why we want to accelerate as much as possible because we will have a time advantage of, let's say, 18 months or 24 months, and we will build a huge commercial success. There is a huge commercial opportunity there. And once you get the customer with fiber-like performances, the possibility for this customer to churn is very, very low.

Thank you, Alberto. Perhaps, Urs, you want to...

Yes. Maybe, I think, you have to look at also in a -- at another view, if you are the incumbent or the attacker. It's a totally different game, the opportunities of fixed wireless access. And if you have a broad fiber network already installed, that's another case than if you are on wholesaling. And I think you can't compare one-to-one, Italy and Switzerland.

Okay. Thank you, Urs. And I also think it is a good moment to open the Q&A session for all other questions as well. So not only anymore Italian but also Swiss. But for that, I would like to -- Roman, probably you have one very last question on Italy and then...

Roman Arbuzov from JPMorgan. Just one very last one. On the future of Iliad in Italy, what do you see in terms of their current performance in the market? And do you have any views on the medium-term role that Iliad will play in Italy?

If you look just at the commercial performances, so number of clients, I think they are doing great. I think that their challenge is more on the cost structure. So they do need to offload all this traffic that today are paying in roaming contract to WindTre, and they need to build their network as fast as possible. Now we are talking about a 4G network. So first goal to accomplish, build a nationwide 4G network. Second point is, what is going to happen with 5G? And eventually third priority, FWA, what we will do? Because also they bought the frequencies, the millimeter wave. So I think that they have multiple targets. And I think that on each of them, they are quite in delay if compared with the investment plan of all the others, also if compared with us. So as you said so, I think that overall from a strategic point of view, they are focusing on, I would say, first, on 4G. So they need to make the service right. They need to make the network. It is a big challenge because they need to run at much higher pace that they did in last year. It's an operational challenge. So if they are successful, then they need to start to think at 5G, but with a 2 years delay, if compared with all the others.

Thank you. And first row, Jakob?

Jakob Bluestone from Crédit Suisse. So 2 questions on Switzerland, please. Firstly, on your fiber plans, you obviously set new targets today for basically doubling your Fiber to the Home coverage while keeping your CapEx flat. And I was just hoping you could maybe elaborate a little bit more on what are some of the things that you're doing less on? I mean, you presented in your slides that you would be reducing CapEx on IT and projects, and that's kind of how you free up the capacity for spending more on FTTH. Maybe if you can just explain a little bit more what is it you're doing less of to be able to keep your CapEx flat, while doubling the fiber coverage? And then just secondly, on the competitive environment, if you could maybe share your thinking there. I think you mentioned that you expect the pricing pressure in B2B to ease a little bit. So maybe if you can sort of tell us a little bit what's going on there? I mean, you obviously highlighted that there's still pretty sense pressures on ARPUs. I think you said mobile ARPU down 13%. What is it that gives you the confidence that we will see this easing up in B2B and then maybe just linked to that, can you maybe also just share your thoughts on the consumer-competitive environment? Is your expectation it sort of stays as competitive as it is now with big promotions? Or do you also foresee an easing of the sort of pricing and competitive dynamics on the consumer side?

Okay. The first question on CapEx may be handled through Alberto.

I can take it. The CFO don't want to talk about CapEx. No, I think let's start and then Mario can elaborate on it. We have projects also -- projects which are phasing out, like All-IP. So there were a lot of investments in IT. So there are some phasing topics on the project side. And then also on fiber, we will work on the CapEx efficiency too, that we can do with the same animal. I think there are different effects. We feel ourselves comfortable that we can do our business with the CapEx mix and project-allocated CapEx.

And on IT and projects, with 15%, there are still CHF 200 million. And I think an organization can do enough with CHF 200 million per year. And maybe to add on FTTH. Today it's FTTx, and the main part goes into fiber to the street and that will come down after '21. That will transform to FTTH. And also there, we have this envelope and the organization has to find ways, as was mentioned, to reduce the cost per line. That means, as I did in FTTS general contracting suppliers, et cetera, maybe cooperations, you need to find ways to manage the available money to get out -- to do this rollout.

And we have a learning curve. So we are confident that we can increase the CapEx efficiency on Fiber to the Home rollout.

Okay. And then on B2B and B2C, I think the experts are sitting next to Urs.