Segment information

Operating segments requiring to be reported are determined on the basis of a management approach. Accordingly, external segment reporting reflects the internal organisational and management structure used within the Group as well as internal financial reporting to the Chief Operating Decision Maker. The segment information disclosed is in line with to that of the internal reporting systems. Reporting is divided into the segments “Residential Customers”, “Small and Medium-Sized Enterprises”, “Enterprise Customers”, “Wholesale”, and “Network & IT” which are grouped under Swisscom Switzerland, “Fastweb”, and “Other Operating Segments”. In addition, unallocated costs are reported separately under “Group Headquarters”.

In segment reporting, the business divisions of Swisscom Switzerland are reported as individual segments. The support functions of finance, human resources and strategy of Swisscom Switzerland are embedded in the division Network & IT. No network costs are recharged for the financial management of customer segments. The results of the customer segments Residential Customers, Small and Medium-Sized Enterprises, Enterprise Customers and the segment Wholesale thus report their contribution margins prior to network costs. Network costs are planned, monitored and controlled by the business division Network & IT. The business division Network & IT is managed as a cost centre. For this reason, no revenue is credited to the Network & IT division within segment reporting. The segment results of Network & IT consist of operating expenses and depreciation and amortisation less capitalised self-constructed assets and other income. The sum of the segment results of Swisscom Switzerland corresponds in aggregate to the operating results (EBIT) of Swisscom Switzerland. Fastweb is one of the largest fixed-network operator and a leading provider of IP-based services in Italy. It is reported in the consolidated financial statements as a separate segment. Other Operating Segments principally comprise Swisscom IT Services, Group Related Businesses, Swisscom Real Estate Ltd and Swisscom Hospitality Services. Group Headquarters which includes unallocated costs, comprises mainly the Group central divisions of Swisscom, Swisscom Re Ltd and the employment company Worklink AG.

The services offered by each operating segment are described in Note 3.16. The segment results of the segments Fastweb and Other Operating Segments correspond to the operating result (EBIT) of these units. The latter reflects the net revenues from external customers and other segments less segment expenses and depreciation, amortisation and impairment losses on property, plant and equipment and intangible assets. Segment expenses include the costs of materials and services, personnel costs and other operating costs less capitalised self-constructed assets and other income. Swisscom has amended its disclosure of retirement-benefit expense retrospectively. The segment expense includes ordinary employer contributions as retirement-benefit expense. The difference between the ordinary employer contributions and the retirement-benefit expense as provided for under IAS 19 is reported in the column “Eliminations”. In 2013, costs of CHF 17 million are included in the column “Eliminations” as a reconciling item to retirement-benefit expense in accordance with IAS 19 (prior year: gain of CHF 179 million).

Group Headquarters charges no management fees to other segments for its financial management services; similarly, the segment Network & IT recharges no network costs. Other inter-segment services are recharged at market prices. Unrealised gains and losses may arise as a result of recharging services and sales of assets between the segments. These are eliminated and are reported in the segment information in the column “Eliminations”. Capital expenditures by segment include additions to property, plant and equipment and other intangible assets.

As of 1 January 2013, Swisscom simplified its management structure, thereby striving to strengthen the management of its Swiss business and enhance efficiency within the Group. Accordingly, as of 1 January 2013, several organisation units were transferred between the segments. The prior year’s comparative figures were restated accordingly.

Segment information 2013 of Swisscom is to be analysed as follows:


2013, in CHF million
 
Swisscom
Switzerland
 

Fastweb
  Other
operating
segments
  Group
Head-
quarters
 
Elimi-
nation
 

Total
Net revenue from external customers   8,389   2,013   1,032       11,434
Net revenue with other segments   60   5   787   1   (853)  
Net revenue   8,449   2,018   1,819   1   (853)   11,434
Segment result   2,443   (120)   108   (135)   (38)   2,258
Financial income and financial expense, net                       (259)
Share of results of associates                       30
Income before income taxes                       2,029
Income tax expense                       (334)
Net income                       1,695
                         
Associates   93   49   11       153
Assets held for sale       13       13
Capital expenditure in property, plant and equipment and other intangible assets   1,516   695   244     (10)   2,445
Depreciation, amortisation and impairment losses   1,104   740   195   8   (3)   2,044
Gain (loss) on disposal of property, plant and equipment, net   (10)     13       3
Share of results of associates   30           30

Segment information 2013 of Swisscom Switzerland is to be analysed as follows:


2013, in CHF million
 

Residential
Customers
  Small and
Medium-
Sized
Enterprises
 

Corporate
Business
 

Whole-
sale
 

Network
& IT
 

Elimi-
nation
  Total
Swisscom
Switzer-
land
Net revenue from external customers   4,985   1,128   1,688   588       8,389
Net revenue with other segments   160   23   99   378     (600)   60
Net revenue   5,145   1,151   1,787   966     (600)   8,449
Segment result   2,790   859   832   384   (2,423)   1   2,443
                             
Associates   29       63   1     93
Capital expenditure in property, plant and equipment and other intangible assets   199   17   92     1,208     1,516
Depreciation, amortisation and impairment losses   108   5   75     917   (1)   1,104
Gain (loss) on disposal of property, plant and equipment, net       (1)     (9)     (10)
Share of results of associates   9       21       30

Segment information 2012 of Swisscom is to be analysed as follows:


2012, in CHF million
restated
 
Swisscom
Switzerland
 

Fastweb
  Other
operating
segments
  Group
Head-
quarters
 
Elimi-
nation
 

Total
Net revenue from external customers   8,407   2,040   936   1     11,384
Net revenue with other segments   54   8   792   1   (855)  
Net revenue   8,461   2,048   1,728   2   (855)   11,384
Segment result   2,504   (113)   97   (122)   161   2,527
Financial income and financial expense, net                       (326)
Share of results of associates                       32
Income before income taxes                       2,233
Income tax expense                       (418)
Net income                       1,815
                         
Associates   207   50   11       268
Assets held for sale       1       1
Capital expenditure in property, plant and equipment and other intangible assets   1,852   531   199   1   (22)   2,561
Depreciation, amortisation and impairment losses   1,053   715   177   12   (7)   1,950
Gain (loss) on disposal of property, plant and equipment, net   (2)     11       9
Share of results of associates   33       (1)     32

Segment information 2012 of Swisscom Switzerland is to be analysed as follows:


2012, in CHF million
restated
 

Residential
Customers
  Small and
Medium-
Sized
Enterprises
 

Corporate
Business
 

Whole-
sale
 

Network
& IT
 

Elimi-
nation
  Total
Swisscom
Switzer-
land
Net revenue from external customers   4,939   1,135   1,739   594       8,407
Net revenue with other segments   174   26   96   372     (614)   54
Net revenue   5,113   1,161   1,835   966     (614)   8,461
Segment result   2,794   878   875   367   (2,409)   (1)   2,504
                             
Associates   141       66       207
Capital expenditure in property, plant and equipment and other intangible assets   162   17   88     1,585     1,852
Depreciation, amortisation and impairment losses   92   4   70     886   1   1,053
Gain (loss) on disposal of property, plant and equipment, net           (2)     (2)
Share of results of associates   15       18       33

Disclosures by geographical regions

Swisscom’s operations are conducted mainly in Switzerland where it provides a comprehensive range of telecommunication services. Business activities abroad mainly relate to Fastweb and Swisscom Hospitality Services. Fastweb primarily provides fixed-network and IP-based products in Italy. Swisscom Hospitality Services is a provider of broadband and Internet-based solutions for hotel guests in virtually all of Europe, the United States and Asia. Net revenues and assets are allocated to regions. Net revenues and assets are allocated according to the registered office of the related Group company.

  2013   2012

In CHF million
  Net
revenue
  Non-current
assets
  Net
revenue
  Non-current
assets
Switzerland   9,358   12,726   9,268   12,053
Italy   2,020   3,414   2,049   3,391
Other countries in Europe   48   87   58   189
Other countries outside Europe   8   1   8   9
Not allocated/reconciliation     472   1   482
Total   11,434   16,700   11,384   16,124

Disclosures by products and services

In CHF million   2013   2012
Mobile access lines single subscriptions   2,874   3,027
Fixed access lines single subscriptions   4,027   4,337
Bundles   1,576   1,172
Other   2,956   2,847
Not allocated   1   1
Total net revenue   11,434   11,384

The products and services offered by each operating segment are described in Note 3.16.

Significant customers

Swisscom has a large number of customers. No individual customers accounted for more than 10% of segment revenue in 2012 and 2013.