Swisscom Aktie

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

Louis, the floor is yours.

Good morning, ladies and gentlemen, and also a warm welcome from our side to Swisscom's Q2 2026 Results Presentation. My name is Louis Schmid, Head of Investor Relations. And with me are our CEO, Christoph Aeschlimann; and Eugen Stermetz, our Chief Financial Officer.

Let's now move to Page #2 with the agenda of today. As you can see, our CEO starts the presentation with Chapter 1 achievements, a quick overview on the Q2 highlights, the operational and financial performances of the second quarter. Then in Chapter 2, Christoph presents the business update for Switzerland and Italy. In the second part of today's presentation, our CFO, Eugen runs you through Chapter 3 with our Q2 financials, including the confirmation of our full year guidance.

With that, I would like to hand over to Christoph to start his presentation. Christoph?

Thank you, Louis. Welcome to the Q2 call also from my side. I'll start directly on Page #4 with the quarter highlights. You have seen from the numbers that we delivered a solid performance, and we are operationally and financially on track. I'm very pleased with the first half year results. Based on these results, we have also confirmed the full year guidance.

In Switzerland, we were able to again win the mobile connect hotline test, and we managed to secure the Champions League rights until 2030, which further strengthens our entertainment offering in Switzerland. We also announced a couple of management changes in Switzerland. We decided to put in place a dedicated Swiss CEO and CFO. All positions have been nominated by internal successors, ensuring continuity and allowing more focus on the Swiss market and the ongoing AI-based transformation in Switzerland.

We also nominated a successor of the B2C business with Michel Siegenthaler, who is a long-standing member of the B2C management team. And also on that side, we have ensured continuity and full focus on executing our current strategy. As a group CEO, I will continue to provide strategic leadership across Switzerland and Italy, and Eugen will hold overall financial responsibility for the group as Group CFO. Our strategy remains exactly the same and is unchanged, both for Switzerland and for the whole group of Swisscom.

Now moving to Italy. We are fully on track on the integration, integrating Vodafone Italia into Fastweb and synergy realization is going on faster as planned, and we are ahead of budget and plan on the integration side. We're also leading with innovation in Italy. We launched numerous products, one which is noteworthy is ROSS, our AI app for consumers, and we also enhanced the energy portfolio, and I will talk a bit more about energy later on during the call.

Now moving on to Slide #5. You can see the Q2 financials have a consistent operating free cash flow increase, reaffirming our full year guidance. Revenue is still slightly down by 2%, posting CHF 3.6 billion in revenue, driven by lower service revenue, both in Italy and Switzerland and lower hardware in Italy. Eugen will give a bit more color on the revenue development later on in the presentation.

EBITDAaL is up 6.1% to CHF 1.269 billion, driven by synergies in Italy and strong cost savings in Switzerland. We had seasonally lower CapEx, down minus 6.3%, leading to a high growth on operating free cash flow with CHF 608 million, which is up 23.9% compared to previous year-on-year comparison. On the right-hand side, you can see the operating free cash flow bridge, which I will not comment as Eugen will go into detail through these numbers later on in the finance section. But overall, I think we can say that we are very pleased with the Q2 and H1 results, posted a solid and good performance in the first 6 months of 2026.

I will now provide an update on our business in Switzerland and Italy. As you know, we have clear priorities to grow the free cash flow by ensuring stable free cash flows from Switzerland. So I'm now on Page #7. Ensuring the free cash flows or stable free cash flow, sorry, in Switzerland, we do this by managing 3 things. First, managing the Telco top line. We are working on boosting efficiency and delivering cost savings and achieving profitable IT growth in B2B space.

Second, we are ensuring growing free cash flows from Italy. This is achieved by 3 actions: driving the integration and delivering the synergies, delivering the Telco turnaround, specifically on the B2C side and also growing IT business, but also the energy business in Italy. I will now go into a bit more details how we are doing according to these 3 objectives, both in Switzerland and in Italy.

Now diving into Switzerland, we start with B2C on Page #8. You can see that we are operationally on track, and we have successfully implemented the price increase. As you can see on the right-hand side, this has led to a temporary increase in churn numbers in Q1. This churn is now coming down again to, let's say, the seasonally normal churn figures. You can see that in Q2, churn has come down substantially. It is still slightly elevated to the historical churn levels, but we are confident that churn will now normalize over the coming quarters in 2026.

We still had some negative impact on the RGU side, especially on broadband, while the mobile side is working quite nicely with plus 10,000 RGUs in Q2. Broadband was also better than Q1, but still slightly negative with minus 8,000. This will be one of our main priorities going forward, working on making sure that also on the broadband side, we can achieve stability on the RGU side. This will require additional measures on the Wingo side as we want to strengthen Wingo also as a broadband provider.

This is one of the reasons why we launched the Wingo brand refresh to position Wingo more strongly in the market. We also executed a price increase on the Wingo side with a more-for-more approach with plus CHF 1 from September 1 going on. We did the same on the Migros Mobile side on our third brand. You can see that we are working on various levers to improve the service revenue evolution and make sure that we deliver the most value out of the B2C business.

Another important pillar next to service revenue is working on all the value-added services. We are very pleased that we were able to confirm or continue to work together with UEFA Champions League until the end of the decade, which strengthens our blue TV proposition. But also, we see very good momentum on the security side with strong net adds and also the AI proposition for consumers is developing a very positive traction overall. We will continue to invest both on the AI and security side as this is important to positively impact ARPU over time and counteract the brand switches and deliver new revenues overall for our B2C business.

Maybe one last comment before we move on, on the ARPU side, you can see that ARPU is slightly up, impacted positively on the one side by the price increase of own brands and then some negative effects due to continued brand switching from own brands to Wingo. But overall, you can see that for this quarter, we had a positive impact roughly driving up ARPU CHF 1, both on mobile and on wireline.

Now I'm moving on to B2B, where we -- starting with the Telco business. The operational trends are roughly in line with what we've seen in previous quarters. So losing RGUs, both on mobile and on broadband, while ARPU is also slightly up also due to selected pricing measures that we took in the past quarters. It's sort of stable, slightly improving on the ARPU side, but still negative on the net add side.

One of our main focus in B2B is also working on the RGU side, making sure that we stop the continued loss of connections. We do this by working on several aspects. First, we do a lot of actions on the customer value management, increasing retention and value realization, especially on the SME side. We are executing numbers -- numerous activities. We are scaling up further the sales of beem. Basically delivering more value and different products to our customers on the security side to make sure that our offers are more sticky, combining security with connectivity.

We are also working on strengthening our partner strategy, especially in the mid-market to further scale beem and the IT platform reselling. Maybe one note on beem. We see quite positive numbers on the growth side of beem. The mobile business is delivering very well. We already have over 100,000 users. On the broadband side, pickup is also -- is picking up, slightly lower numbers with 1,200 locations being secured. We will continue to focus on the beem scale-up in the ongoing quarters this year and especially also next year as we believe that secure -- delivering secure connectivity will be one of the key topics going forward in the B2B space.

On the IT side, there is a bit light and shadow. On the one side, we have a softer revenue top line, mainly driven by lower volumes for workplace and UCC, which we were not able to compensate with the higher demand that we see for sovereign cloud and AI. Overall, slightly lower revenues. We expect this to continue for the full year. Probably IT service revenue will come in slightly lower on a full year basis than last year as also the market is quite demanding at the moment. We decided to focus on the profitability improvement and making sure that we can deliver more EBITDAaL despite softer revenues.

You can see that already in Q1 and Q2, we were able to deliver an increased profitability with strict cost discipline and better project execution, and we expect this to continue also on a full year basis, bringing up profitability of the IT business to a much better and more profitable level. At the same time, we are also working on new growth avenues for B2B. We are further investing into Swiss AI Assistant as we see increased demand on the AI front, especially in the SME, but also the corporate side.

We are working on many opportunities in the defense sector, where we have a lot of multiyear contracts in place now, which should allow us to deliver new growth going on -- coming in the coming years.

Now moving on to Network and Wholesale on Page #10. You can see that we continue to invest in our network. 5G plus coverage is up 2.5%, now covering 90% of Switzerland and FTTH coverage is up 4%, now covering 58% of Switzerland with FTTH connection. We're also making good progress on migrating our mobile customers to the new 5G stand-alone core with over 1 million customers now on the new core infrastructure, which is important for our tech renovation and moving to a fully cloud-enabled technology basis.

On the spectrum side, we expect the final communication by the regulator until the year-end in the coming months. We expect the auction to happen somewhere in summer, autumn 2027. Still roughly 1 year to go until the auction will finally happen or should happen. We will know the exact timing once the regulatory communication has happened. Hopefully, we can update you more on this topic in the Q3 call early November.

Positively is, I think, positive news we have on the wholesale front. You can see that we have consistent RGU growth on the broadband side, again, plus 14,000 net adds, exactly the same as in Q1. We have substantially better and higher run rate now than in 2025 when you compare this on a yearly basis. We expect this to continue for the full year. This is continuously delivering service revenue growth on the wireline side, you can see that we deliver CHF 5 million more or plus 10% service revenue growth. We expect this to continue in the next quarters as we continue to gain market share and drive up penetration in the FTTH footprint that we are building out.

Now on Page #11 is the last slide on Switzerland. Some words on our cost savings. You have seen in the results, we have delivered CHF 42 million of cost savings. A lot of the savings this year are front loaded, and we also have some seasonality in Telco savings. We are fully confident that we will deliver more than CHF 50 million of cost savings. But please do not extrapolate the Q2 number to the full year. We will not deliver CHF 84 million of cost savings this year. I mean it would be very nice. But our guidance is to stick to the at least CHF 50 million for the full year.

We also announced the opening of a new near-shoring center. As you know, we have near-shoring centers in Riga and Rotterdam, and we are opening a new center in Lisbon next year to better balance the workflow between these areas and also make sure that we have more options in the light of the geopolitical developments makes -- gives us more flexibility with a new lower cost center in Portugal versus the situation we have today.

I will now move on to Page #12 in Italy. The integration of Vodafone Italia is proceeding very positively and according to plan, actually slightly ahead of plan. You see that we have delivered EUR 89 million savings in Q2, bringing synergy realization to EUR 166 million for the first half. We are fully on track to deliver the EUR 300 million on a full year basis. The integration or synergy realization is driven this year very much by the transitioning of the Vodafone Group services, which we are in-sourcing back into Italy, and this is going as planned.

At the same time, I think we can say that the integration costs are under control, even slightly lower than we expected them in the first half of the year, but we will significantly ramp up integration costs in the second half year as we have some larger IT and network investments coming up in the second half of the year.

Now on Page #13, you can see B2C. We are continuing to execute our value focus on the Telco side and delivering growth in the energy business. Now the back to front book alignment has been successfully completed on the mobile side and is still ongoing in broadband. You can see the different effects this has on churn, RGU and ARPU. On the wireline side, the net adds are improving versus Q1. We are 66,000 better, still negatively impacted by the value strategy, but much better in Q2 over Q1 as the repricing effects are phasing out.

Also, churn is coming down. You see that we are now standing at 16% churn, which is materially better than where we were 1 year ago. For the first time since the merger, we also have a slightly increasing ARPU on the mobile with ARPU now standing at EUR 8.3 overall. The broadband side, Q2 is still affected by the ongoing value focus and the back to front book price alignment that we are currently executing. Churn is only slightly up. This is, I would say, the good news, roughly stable churn.

But on the inflow or sales side, I think the continued value focus makes it harder to generate more gross adds. Overall, we see a slightly softer net adds, but also slightly increased ARPU versus Q1. Now we are sharpening also our brand positioning. While we are clearly positioning Fastweb and Vodafone as a premium brand, we position home mobile much more clearer as an attacker brand so that we can serve the market with our dual strategy branding on the one side, the premium approach under the Fastweb and Vodafone umbrella and a more smart shopper approach, attacker approach on the home mobile side.

Last but not least, we are continuing to invest in our energy business. We have successfully launched a new enhanced converged proposition, which is delivering very encouraging results. We now have 141,000 RGUs, and this will deliver slightly over CHF 100 million in top line in 2026. So a very nice growth compared to the previous year.

Now moving on to B2B on Slide #14. We continue to maximize value in Telco and drive IT and energy growth. You can see that the RGU developments are slightly negative, both in wireline and in wireless. But wireless is impacted by the fading out of the TM9 framework agreements, but the RGU base is growing on a year-by-year comparison by plus 75,000 net adds. Broadband net adds are broadly in line with previous quarters, but are affected by lower gross additions due to challenging market environment, especially in the SME space, where the market is quite challenging at the moment.

But we are working on further portfolio optimization, working on new portfolio elements so that we can make our portfolio more attractive and hopefully improve these trends in the coming quarters.

Now we are -- I think on the IT front, we have good news. We are scaling up our proprietary AI solutions and cloud services, where we see very good demand to strengthen our sovereign cloud offering for enterprises and public administration. Also, the energy business is scaling up, double-digit top line growth expected also on the B2B side, driven by both RGU and ARPU improvements, thanks to the convergent offers and the strong sales performance.

On the Network and Wholesale side, on Page #15, you can see that also in Italy, we are continuously expanding and investing in our network. 5G plus coverage is up 3%, standing exactly at 90%, the same as in Switzerland. We have again been awarded numerous network awards being the best network in Italy. Also, FTTH rollout is advancing steadily. It's up 8%, bringing us to 61% FTTH coverage in Italy with a balanced 50-50 passive active fiber sharing that we are using from Open Fiber and fiber.

You've maybe seen also that we have launched a pilot with Starlink to test how we could improve mobile coverage in rural areas. This is a technical pilot. It's delivering encouraging results, but still a lot of work required and also regulatory approvals required to be able to launch this as a full commercial offering.

Now some words on the development of the wholesale side. You can see that as we announced previously, the PosteMobile migration is now completed, and you can see the full RGU effect of roughly EUR 2.6 million gross in the Q2 figures. Some of it is partially offset by the performance of CoopVoce and other MVNOs, but still we have a net reduction of RGUs by minus 2.3 million. This net reduction will continue in the second half of the year as TIM announced the winning of the Lyca MVNO and the migration is now fully ongoing.

This represents another roughly 1 million of RGUs that will be migrated away from our network over the next half years. This will, of course, generate some losses on the -- like wholesale MVNO revenues, but it also alleviates quite a lot of traffic on our network, and we can counterbalance some of these effects by delaying some network or not required capacity investments on the mobile network side due to less SIMs on the network.

On the other side, broadband is developing very positively. You see plus 49,000 net adds, plus 22% on a year-on-year basis, driven by solid demand and expanded partners in this space, and we are continuously working on acquiring new partners to continue to drive our broadband on the -- broadband wholesale business, sorry.

Okay. Final slide from my part from me on Page #16. One word around AI and strategic infrastructure initiatives. We are continuously bolstering our AI footprint in Italy. We have launched a new Fastweb AI suite and managed -- which is basically a managed inference solution and we're able to win over 10 projects since the launch early this year. We will continuously invest into this offering as we believe that AI inferencing will be a major growth drivers in the years to come.

We also launched the ROSS proposition for consumers, which is basically an AI agentic app for consumers, and we will see how this delivers in the coming quarters and years. I think more importantly on this slide are the strategic infrastructure initiatives, which are progressing very well. You have seen that the Court of Milan has rejected INWIT interim measures and basically confirmed that our termination is fully lawful and in line, and we can proceed. Our preparations are fully on track for the migration starting on 1st of April 2028 to maximize flexibility. We will provide you with more detailed update probably in the Q3 results, how we intend to migrate off the INWIT grid.

We are also progressing on the Tower JV with Telecom Italia, which is the initiative to deploy roughly 6,000 sites. We are currently working on the long-form agreement, which we expect to be completed by year-end. We are also working on the RAN sharing agreement with Telecom Italia to accelerate 5G deployment or 5G coverage in low-density area. This is currently in the regulatory process where we are making progress. The antitrust review is ongoing, and we expect this to be completed also next year, and we will update you as soon as we have more news on this topic.

Overall, very pleasing progress on the infrastructure side, which is important for us to make sure that we can on the one side, accelerate investments in network, make sure that the networks become better in Italy at the same time, reduce our cost base in the years to come.

I will now hand over to Eugen for the financial results.

Thank you, Christoph, and good morning, everybody, from my side. Let's dive directly into the group numbers on Page 18. Revenue was down CHF 225 million year-over-year. Net of currency, that's CHF 147 million. In Switzerland, revenue was down just CHF 27 million, most of which was in the first quarter. The overall equation is Telco service revenue down, also IT service revenue slightly down, but higher hardware and software revenues in B2B in particular in the second quarter. Also the service revenue decline was lower in the second quarter. This is why Q2 is better than Q1.

Italy, down CHF 111 million basic equation here, Telco service revenue down, also hardware and software down, but energy up. Q2 also here was much better than Q1. The year-over-year development was driven by lower Telco service revenue decline in the second quarter, among other factors. On the EBITDAaL side in the group, we are up CHF 83 million, adjusted CHF 92 million. Switzerland is slightly up, plus CHF 10 million. We had strong cost savings in the first half of the year with a bit of phasing. Christoph already did my job here of managing expectations for the full year. I'm not going to add much on that topic.

There was another factor in play in the second quarter, which was a better IT result despite lower revenues. Also here, Christoph already commented very much to the point.

Italy, EBITDAaL was up CHF 92 million, obviously driven by synergy, but also here some in-year phasing in indirect costs helped. All in all, we are clearly on track to meet the EBITDAaL guidance for the full year.

Page 19. CapEx was down CHF 131 million in the group. In Switzerland, down CHF 70 million. The main reason here is different phasing of FTTH between the years. In the first half of 2025, we had very high FTTH volumes. There will be some CapEx catch-up to be expected in the second half of the year. For the full year, we confirm the guidance of CapEx slightly down in Switzerland.

In Italy, CapEx was down CHF 67 million. That's CapEx adjusted. Integration CapEx was actually up. You don't see it here on this chart. We'll see it on the Italian pages. For the full year, we confirm the guidance of reported CapEx in Italy roughly stable with adjusted CapEx down, which you already see here on this chart in the first half of the year and the integration CapEx up in the full year.

Then operating free cash flow, up CHF 214 million, obviously driven by higher EBITDAaL and lower CapEx, both in Switzerland and in Italy. Also here for the full year, we are fully on track to deliver as guided, stable free cash flows from Switzerland and growing free cash flows from Italy.

I'll move on to Switzerland, Page 20. Revenue first, down CHF 27 million. B2C, minus CHF 23 million, pretty equal in the first 2 quarters. The service revenue development was better in Q2 than Q1. You don't see it here in the total revenue numbers because there was a change in hardware revenues quarter-over-quarter, but we'll see the service revenue on the next page. B2B down EUR 11 million with Telco service revenue down, also IT, but hardware up, as I mentioned already.

On the Wholesale, you see quite nicely in the second quarter, plus CHF 5 million on wholesale. For once, we have a quarter where roaming is not bouncing around much year-over-year. What emerges is the steady -- slow but steady growth from the wireline access business that will continue to go on for a very long time due to the fiber rollout.

EBITDAaL in Switzerland, slightly up CHF 13 million, adjusted CHF 10 million, as we saw on the first pages. B2C down CHF 10 million. Telco service revenue partly compensated by cost savings. We had some shift of advertising from Q1 to Q2 compared to prior year. This is why the improvement in Telco service revenue doesn't show up in the EBITDAaL number this quarter.

B2B, minus EUR 8 million. Here also Telco service revenue partly compensated the cost savings and in particular, the improvement in IT business EBITDAaL due to the factors that Christoph already mentioned shows up here also in the sequential evolution of year-over-year numbers. Infrastructure and Support Functions, cost savings flowing in as expected.

I move on to Page 21. You see it here on the top part of the chart, CapEx was down EUR 70 million. It's almost entirely due to lower CapEx in the wireline access network, meaning in the FTTH rollout, this is mostly phasing, as mentioned. Just to be clear, we confirm the 60% FTTH coverage target for the end of the year. With EBITDAaL slightly up and CapEx down, obviously, operating free cash flow is up EUR 83 million.

Page 22, deep dive on the Swiss numbers. On top right, the Telco P&L. You see here the plus CHF 42 million that we delivered in the first half of the year. I'm not going to comment any further on the phasing. We already did that. Top left, you see the Telco service revenue development very nicely. B2C in Q1, minus CHF 16 million and year-over-year and in Q2, only minus CHF 3 million. This is the price increase that works as planned. ARPU effects are improving both in wireless and in wireline.

Now there are a couple of more moving pieces than just the price increase also going ahead into the third and the fourth quarter, particularly roaming in the third quarter. We don't expect this minus EUR 3 million of Q2 to be the run rate for the coming quarters, rather for the second half of the year, we expect the B2C service revenue decline roughly in the range as in the first half of the year. Total service revenue decline, B2B and B2B for the full year, we still expect to be in a similar range as 2025, which was around minus EUR 120 million, maybe slightly better given the recent development here on B2C.

On to Italy, Page 23, revenue down EUR 118 million. B2C minus EUR 56 million, which is essentially the service revenue decline you see in the quarterly evolution that service revenue decline improved significantly in Q2. We'll see it on the next page. B2B, down EUR 82 million, mostly driven by lower hardware revenue with low margins, but also lower Telco service revenue. Q2 a bit better across all revenue categories.

In Wholesale, you see in Q2 the flat year-over-year number, 0 compared to prior year. This is the Poste loss kicking in also in the financial numbers. In Q2, it was possible still to compensate the Poste loss by other MVNOs ramping up over the last 12 months and also the year-over-year positive development of our wireline business. This flat development will not be the case in the coming quarters as the Poste loss fully kicks in and also the Lyca loss that Christoph mentioned will play a role.

EBITDAaL, lower part of the page, EBITDAaL up EUR 104 million, adjusted EUR 98 million. It's mostly driven by the contribution margin in B2C, which is obviously in turn driven by the MVNO synergy ramp-up. Contribution margin in B2B minus 15% reflects the lower revenues given the -- also the revenue mix of the revenue decline. Contribution margin wholesale is flat. There's also a different mix of revenues as wireless revenues drop out with Poste and wireless -- wireline revenues come in with a lower margin.

Then indirect costs were lower by EUR 50 million, 5-0. In particular, Q2 was impacted by in-year phasing. That's not the number to use our favorite phrase to be extrapolated into the second half of the year.

On to Page 24. CapEx lower EUR 52 million overall. Adjusted CapEx lower by EUR 71 million across all categories, as you can see, mostly from Q1, Q2 was much more in line with prior year. Under adjustments, you see the higher CapEx from the integration. It's a bit masked by 2 or 3 other factors, but integration CapEx was higher than prior year by EUR 27 million. It's still ramping up.

For the full year, we expect up to EUR 200 million CapEx integration costs or up to EUR 100 million higher than in the prior year. Operating free cash flow is up by EUR 156 million in the first half of the year, but with the bulk of the integration CapEx yet to come.

Page 25, service revenue evolution in Italy, similar picture to Switzerland. Finally, on B2C, we see the value strategy at work also in year-over-year service revenue numbers. We have been talking for a while about the impact on operations and on quarter-on-quarter figures. Now with mathematics at work, it also shows up in the full -- in the year-over-year numbers.

Q1 B2C service revenue was down EUR 35 million. Now in Q2, it's just minus EUR 22 million with a positive impact from the ARPU effect, both in wireless and in wireline, where in wireless, we have completed the back book to front book alignment. In wireline, as Christoph explained, it's still going on. On B2B, also Q2 better than Q1, but obviously, B2B is always a bit more volatile with some onetime revenues that we had in Q2.

On to Page 26, synergies on track. We reached a quarterly run rate of EUR 80 million. We are on track to deliver EUR 300 million plus for the full year. Integration costs, EUR 51 million so far. We still expect up to EUR 250 million in total, out of which up to EUR 200 million in CapEx, as I mentioned already, the spike is yet to come. Also prior year 2025 was quite backloaded when it came to integration CapEx, and we expect the same for this year.

I'll now move back up to the group. Page 27, free cash flow bridge. Free cash flow was up by CHF 221 million in the first half of the year, fully in line with operating free cash flow. Just 2 moving pieces in between. On the one hand, the net working capital is always negative in the first half of the year. This year, we have a positive deviation compared to prior year of plus CHF 85 million. On the other hand, we had a second moving piece, which is higher tax payments in Q2 of almost equivalent size. All in all, free cash flow increase is simply in line with operating free cash flow increase.

Also Page 28, net income, quite uneventful. Net income is up by CHF 43 million, simply driven by the higher EBITDAaL. Page 29, given the results we just reported, we obviously confirm the full year guidance.

with that, I hand back to the operator.

[Operator Instructions] First line is open.

It's Polo Tang from UBS. I have 3 questions. The first one is really just about Swiss price rises. You raised pricing on the Swisscom brand by, I think, 3%, 4% in April and by 1% to 2% on the Wingo brand that will take full effect by September. I'm just curious, what's been the reaction from your customers? Given your competitors are also trying to land price rises, have you seen any changes in terms of behavior or promotional activity in terms of the market? That's the first question.

Second question is really just coming back to the soft guidance on Swiss Telco revenues. You mentioned that you're still expecting CHF 120 million of decline for Swiss Telco revenues for the full year. But given that Q1 was CHF 25 million, Q2 was, I think, CHF 19 million. I'm just trying to understand why you've left unchanged. Can you maybe talk about some of the headwinds and tailwinds to consider over Q3 and Q4? I know you flagged the roaming drag in Q3, but is there anything else?

My third question is really just a bigger picture question in terms of satellites. How should we think about satellites in terms of impact or not in terms of the Swiss and Italian markets? Is there a difference in terms of how you think about the impact on broadband versus mobile?

Thank you, Polo. On the price increase, overall, I would say, reactions from customers was as expected. You've seen that we had slightly elevated churn figures in Q1 and now churn is sort of normalizing again, but the price increase did generate incremental churn from our customers, both on mobile and on broadband. We also saw some increased down trading from the main brand to Wingo, which I think also highlights that the room for further price increases on the main brand is somehow limited.

Although our competitors also reacted with price increases, the market remains very promotional, especially on the MVNO front, but also the main MNOs are still out there with very aggressive promotions. On the one side, you have increases on the back book and front book, but at the same time, executing very aggressive promotions. So this sort of counterbalances or affects some of the price increase, and we expect this to continue also in the coming quarters.

Okay. I'll take the second question on the service revenue guidance. As you mentioned, our initial full year guidance was in a similar range to prior year, about minus CHF 120 million. I think the split last year was roughly minus CHF 70 million on B2B and minus CHF 50 million on B2C. Now if we are in the first half of the year, we are at minus CHF 35 million. This is very much in line with what we gave as a full year guidance.

Yes, B2C is better. That the current figure of minus CHF 18 million would not be in line with minus CHF 50 million. This is also why I said we expect something similar to the first half of the year in the second half of the year, maybe slightly better than the CHF 50 million we gave at the beginning of the year and also maybe slightly better than the minus CHF 120 million for B2C and B2B taken together.

What prevents Telco service in our view for the full year to be something like minus -- on B2C, minus CHF 16 million first quarter, minus CHF 3 million second quarter and then another CHF 2 million, minus CHF 3 million in Q3 or Q4. There are a couple of pieces. One I mentioned it's the roaming dynamics in the third quarter. There's also packages for international calls, which was a bit in line with roaming and the geopolitical situation, which impacts travel patterns.

Then finally, there is the gross adds dynamics as we still recover from the price increase that Christoph mentioned with gross adds quite weak. Churn is coming up nicely in the [indiscernible] in the past, but gross adds still have to discover and this will also have an impact. These are the 3 things that we see. Obviously, there might be things that we don't see. We came to the conclusion, the most plausible forecast, if you like, for the moment is the minus CHF 120 million, but maybe a bit better on the B2C side.

Coming to your question on satellite, I would say in -- I mean, probably the impact is, one, very hard to predict because technology is developing very quickly. Consumer perception is changing quickly. At the same time, we have the ongoing fiber rollout and very different dynamics both in Switzerland for mobile and broadband. I think it's not so easy to give like a single answer to your question, probably requires some more nuanced look.

I think on the Swiss side, I believe the impact will be quite moderate because the broadband infrastructure we already have today is very performant, and we are progressing well with the FTTH monetization and then the migration to the FTTH network. Satellite, we see it mostly as a complement on the broadband side for sort of extreme rural areas where we will most likely not build out fiber infrastructure. On the mobile side, at the moment, the networks in Switzerland are so good that we don't really see meaningful competition on the mobile side from satellite.

We also rather see it as a complement delivering more resilience, especially for emergency communication or should a mobile tower sort of break down for a couple of hours.

I think in Italy, broadband, the situation is slightly different. There, you can also see already quite a big pickup from satellite services. I think Starlink is quite successful in Italy, especially in the rural areas where there is no fiber and also the copper infrastructure is not that strong. That's why it's very important in Italy that the ongoing fiber rollout is really completed and that we reach 90% fiber coverage by end of the decade.

But also not only building out the coverage, but also starting to focus more on migration of copper to fiber infrastructure because we do believe that once the customer is on fiber, this product is far superior to what satellite can deliver and delivers a much better customer experience. It is the best way to ensure that there is not too much erosion on the broadband side or a loss of market share to the satellite services.

Like on mobile, as we said, we are testing mobile services to complement our mobile coverage with satellite. This could be an interesting avenue. But also the mobile development on satellite will be very heavily impacted by the European regulation, which is still under discussion. Depending on what the EU regulate ultimately on the division of the MSS spectrum, it will have either a higher impact on mobile or a negligible impact depending on how much spectrum is really available to deliver services over satellite in the coming years.

The next one for questionnaire.

It's Maurice Patrick from Barclays. Just a couple from my side. The first question, you alluded to it in your prepared remarks around the spin down from main brands to discount brands in the Swiss market. I think historically, you have given some specific data points, very helpful on the spin down from main brand to discount brand. You highlight, I think, in this presentation that continues. I'd love to get a sense in terms of if that sort of 2 to 3 percentage point annual swing is still at the same pace and maybe if that's going to continue through the rest of '26 and '27?

The second question, just on AGCOM and INWIT in Italy. AGCOM, the regulators come out proposing license extensions or spectrum extensions in exchange for higher quality delivery of mobile services. Clearly, very helpful to get a cost tailwind if that comes through for you. But you remain in deadlock with INWIT, if I'm not wrong, having won the latest court case, which they're going to appeal.

I'm just curious to understand if those 2 processes can go in parallel, i.e., the extent to which you can agree or negotiate with AGCOM guaranteed improvements in mobile service whilst planning to remove your entire infrastructure from INWIT.

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

Yes. I mean just -- so 38% of your mobile is coming in the second and third brand on a fixed line was how much?

15%, some are coming in, but already in the base. So that's...

Of the base. Yes, I think it was -- sorry to jump in. I think historically, you showed like a market share shift or rather a market -- it was like a diagram showing the extent to which your customer base is shifting from main brand to second brand.

Well, what we do have, obviously, we show on a regular basis, the penetration rate in the base. You can deduct the change in this penetration rate. Year-over-year, the penetration rate went up by 3 percentage points on the mobile side. The 38% was respectively, 35% or whatever last year and also in broadband, it went up.

Now on your second question, Italy, AGCOM and INWIT. The AGCOM published the new rules a couple of days ago. Actually, the details came out only this week. We are still analyzing the impact of exactly what this would potentially mean in terms of service coverage, service quality of service obligations and how we -- what kind of investments are required to fulfill these obligations. I would say we can update you in more detail on the impact at the next quarter.

Then we can also estimate if actually what AGCOM has proposed is net positive or net negative compared to the cost of spectrum or an auction. I think this analysis is still ongoing. It looks encouraging, but it really depends a bit on the details of what is expected in terms of coverage and the quality of service investment. Now irrespective of what AGCOM would like us to do on coverage and quality of service, we have, in any case, planned to continue to invest in our mobile network, both to densify the network that demand is increasing and to increase coverage.

Ongoing investments in mobile are fully compatible with what we are doing on the INWIT side. That's also one of the reasons why we launched the Tower JV because it will be one of the means to actually build out new towers and we are also in discussion with other tower operators to use existing towers for the densification. I would say both activities progress in parallel in the situation and at the same time, continuing to densify our mobile network.

I will now open the next line.

It's Josh Mills here from BNP Paribas. A couple of questions from my side. Firstly, on the Swiss price increases, it does look like alongside the service revenue tailwinds, the impact on churn and it hasn't been as negative as you might see it. Do you think that this could become more of a structural annual price increase? Or is there a specific reason why for you, this is more of a 2026 one-off that wouldn't be repeated? I think you mentioned on the call that you don't want to test the limits of customer willingness to pay too much, but it does look like it could become a bit more structural. Some of your thoughts around that would be helpful.

Then secondly, on Italy, TI is challenging some of the MSA terms or at least having a discussion with FiberCop about them going forward. Is that something that you're looking at doing? What does your current guidance strictly assume in terms of MSA costs? Can you just explain whether there's any potential upside benefit if you were to secure better prices on the fixed line MSA?

Okay. On the Swiss price increase, I would say, yes, churn is coming down. It was not that high, but I think every incremental churn is not something we want to see. Churn is only one aspect. I think also what we saw on the NPS side, the NPS took quite a hit from the price increase. Customers do notice the price increase and are not really happy about it. Looking at the market overall, being still very promotional with very aggressive offers, we believe that the room to make this like structural and having repetitive price increases is quite small.

I wouldn't bet on the fact that the Swiss market moves into, let's say, a market structure where you see repeated price increases. But it doesn't mean that we can't work on pricing going forward. I think one of the levers, which is more-for-more approach is always available. This is what we are executing now with Wingo, changing the product structure, including more service and hence, increasing prices or the Swiss parliament is discussing several VAT increases. This obviously is also something that we need to take in account and could lead to potentially next price increases in the years to come.

I wouldn't exclude them, but we will be very careful about further price increases as the customer reaction we see also, we shouldn't push the customers too much, especially on the main brand.

Now in Italy, I'm not sure if I fully got the question about the MSA. Obviously, the INWIT discussion we have is about M&A and structurally improving our cost of the towers. I mean, you have seen that we have won the first legal proceeding. We have the right to terminate the MSA. Migration is technically feasible, and we are preparing the migration now, but we are obviously also open to continue working with INWIT if the economic conditions meet our expectations.

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

Can I sneak one extra one in just because in relation to Maurice's question, I know you stopped disclosing on a quarterly basis, the penetration of sub-brands, but it looked like at the end of last year, the sub-brand penetration increased by about 2%. It's now increasing by about 3%. Then also the spin down or the brand mix on wireless ARPU has increased a bit quarter-on-quarter. Does that fit with the message you're giving today that there has been a bit more of a spin down versus Q1, just to check those numbers.

I can't confirm the exact numbers, and there might also be some rounding in there. But yes, Christoph already mentioned that the price increase led to an increase in spin downs of customers from the main brand to the second and third brand. That's consistent with what you see.

We have the next one.

It's Paul Sidney from Berenberg. Just a couple for me, please. The Swiss spectrum auction in 2027 seems to be going against the trend of extending license terms that we've seen in Germany and Italy. I was just wondering, is there any reason that Switzerland is going down this route? And could the auction raise the risk that Swisscom's spectrum advantage in Switzerland is eroded, spectrum potentially reserve for new entrant or even SpaceX looks to bid, which is obviously a sort of nightmare scenario.

Then just in Italy, I was intrigued to hear your CHF 100 million of revenue from the B2C energy customers, 141,000. I just wonder, is there an opportunity to upsell further services to your customer base? Obviously Poste is selling insurance, wealth management services and I think planning to sell the services across the TI base post the transaction completion, but like to hear your comments there.

Okay. Thank you. Spectrum auction, yes, it's a fact that the Swiss are slightly going against the trend we see in Europe, but the regulator made it clear that they will not extend licenses, but will go for an auction. I think that's quite clear going forward. We will obviously make sure that we can repurchase the frequencies we have today as we believe that this is an important asset that we need to have also in the future to guarantee the quality of service of our network and looking at the number of customers we have on our network.

How the auction will proceed exactly, we will see once the regulator has published the final rules, which should happen until the year-end. Then I think we can also comment a bit more on how we see the auction playing out.

Now in Italy, the CHF 100 million energy is not only B2C, it's including B2B. It's the full energy business. But it's indeed good to see that we can sell other products to our B2C customer base. We are also looking into other avenues like security or insurance also in Italy to basically increase the share of wallet in our customer base. That's something we are looking into and could be new growth drivers for Italy going forward.

Next line is open.

Yes. Mark [indiscernible] from [ Finance Wichoft ]. I have 3 short questions concerning the mobile spectrum. Given that it will be an auction in Switzerland because that's news for me it's still in play. The second question is about the service revenue decline in Italy. Will we have to get used to it in the coming years? Will there always be a decline? Did you give a concrete number for Italy for this year as you did for Switzerland, this slightly less than CHF 120 million. Is there an equivalent figure for Italy?

The third and last question is about the competitive situation in Italy. Do you still think that there is the chance that there will be a merger among one of your competitors and then you will have one less? I mean there still is, I think, a rumor going on about Iliad. And yes, if Iliad is going to merge with a competitor.

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

Question number 2. Yes, there is a number out there that we mentioned in the full year results conference. We expect the service revenue decline in Italy of roughly CHF 150 million, which is much improved over the previous year, and we expect for the future a gradual stabilization of that number without any specific guidance at the moment for 2027 onwards.

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

Okay. And just maybe for clarification. So you say CHF 150 million was the outlook. And did I understand correctly that you're saying the service revenue decline is going to -- that this trend is going to continue in the coming years in Italy?

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

Okay. Gradually easing.

I open the next line.

It's Christian Bader from ZKB. Actually my question has just been answered. It's regarding Telco service revenues in Italy at the first quarter conference call, you said you expect CHF 150 million loss this year. I just wondered if you confirm that number.

Confirmed.

Next line is open.

It's Robert Grindle from Deutsche Bank. I'd just like a reminder, please, about the accounting and cash treatment of the Vodafone compensation for the loss of the Poste MVNO. Does that come through at all in Q2? And what's the phasing from here? Is there any compensation from Vodafone for the loss of the Lyca MVNO?

Yes. Thanks, Robert, for the question. On Lyca, no, there is no compensation. Yes, there is a compensation on Voda on the Poste deal. We are going to book it in either Q3 or Q4 in one go at CHF 75 million, and we will treat it as an adjustment.

Last question will be.

It's Ajay Soni from JPMorgan. Two quick questions. On the price rises, I think it's clear the main brand situation is not clear and there's caution here going ahead. On the second and third brands, do you feel more comfortable pushing through consistent price rises here as I think you have done in the last couple of years? Obviously, this section of the market remains very competitive.

Then just bigger picture on the Italian synergy. You've owned the Vodafone asset for a couple of years now. Have you seen any further synergy opportunities? Where would these be? Could you quantify any of them?

Thank you. On second and third brand, there might be more room to work consistently on price. I mean now we are executing the second price increase in Wingo. We will see how this goes. We will gather more experience and we can then decide next steps going forward. On the IT synergies, I think we still have to realize the other 50% of synergies. We delivered CHF 300 million out of the CHF 600 million. There is still a lot of work to be done. We are confident that we can deliver the full CHF 600 million based on what we see today. But we will not announce additional synergies as we first need to already deliver what we promised 2 years ago.

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

Good morning, ladies and gentlemen. Thank you for joining the Swisscom Q1 2026 Results, hosted by Christoph Aeschlimann, Eugen Stermetz and Louis Schmid.

Louis, the floor is yours.

Good morning, ladies and gentlemen, and welcome to Swisscom's Q1 '26 Results Presentation. My name is Louis Schmid, Head of Investor Relations. And with me are our CEO, Christoph Aeschlimann; and Eugen Stermetz, our Chief Financial Officer.

Let's now move to Page 2 with the agenda of today. As you can see, our CEO starts presentation with Chapter 1, achievements and a quick overview on the Q1 highlights, operational and financial performances of the first quarter. Then in Chapter 2, Christoph presents the business update for Switzerland and Italy. In the second part of today's results presentation, Eugen runs you through Chapter 3 with our Q1 financials, including the confirmation of our full year guidance.

With that, I would like to hand over to Christoph to start his part. Christoph?

Thank you, Louis, and welcome also from my side to this Q1 2026 call. I will move directly to Page #4, highlighting our key achievements of this quarter with a consistent delivery, reinforcing our position as the customers' preferred choice.

I am pleased to announce that the operational results on the group level are as expected. We have sound financials with operating free cash flow ahead of consensus. However, we would like to highlight that this is mainly due to intra-quarter phasing during 2026, and we expect a result on a full year basis as guided.

In Switzerland, I would like to highlight the successful price increase execution, which I will detail a bit more later on, and the improved B2B IT profitability that we have achieved during the first quarter.

In Italy, the integration of Vodafone Italia is on track. Synergies are coming in as expected, and we are continuing on our turnaround of the B2C business to move from volume to value. And I will talk a bit about -- in more detail about this later on during the call. You've also seen that we have achieved significant growth in the energy business, and we expect continued growth from that business throughout the full year of 2026.

Now moving on to Page #5, you see the overview -- the commercial overview of 2026 Q1. You can see that overall, both on mobile and broadband, Switzerland and Italy, the results have been softer. I will explain those effects in detail later on. There are some overlapping effects in both countries coming from B2C and B2B. So I will mostly explain this in detail when we are in the section of Italy and Switzerland. But on the other side, you can also see that the wholesale business in both countries, both in Switzerland and in Italy, is doing very well. We have continued growth, both on the broadband side and on the mobile side in Italy.

Now I will move on to Page #6, which shows you the commercial overview of the Q1. We have a net revenue, which is slightly softer due to a decline in revenues, both in Italy and Switzerland, and some overlapping currency effects, posing CHF 3.6 billion on revenue, in line with guidance. Profitability or EBITDAaL is roughly flat at CHF 1.28 billion. CapEx slightly down, delivering highly increased operating free cash flow of CHF 494 million.

You can see that the increase of CHF 96 million is mainly driven by Italy segment where we see the synergy realization kicking in, also a bit softer CapEx, but also Switzerland delivered on the guidance and contributed CHF 34 million adjusted free cash flow on top compared to previous year's results. And I assume Eugen will go into the details of the financial results in his section later on.

I will now move on to the business update. I will go directly to Slide #8, which highlights our priority for 2026. So for both countries, we have clear priorities.

I will start with Switzerland. Of course, priority #1 in Switzerland is managing the telco service revenue top line, ensuring that our decline is slowing down and ideally coming to a halt. For this year, we expect a CHF 120 million decline on the service revenue side. At the same time, we are continuously working on our cost base, boosting our efficiency. We expect, as guided, CHF 50 million of savings. And at the same time, we want to work on IT profitability and growing the revenue at the same time. We do expect softer growth this year, but increased profitability, as you've seen already in the Q1 results.

On the Italian side, our main priority is, of course, working on the integration of Vodafone and Fastweb, driving the synergy realization, which is very well on the way. We are also working on the telco service revenue side, especially on the B2C business, turning around the B2C business moving from volume to value to stabilize and the service revenue and massively reduce the decline on the service revenue side. At the same time, we are also continuously scaling the energy business and the IT business. And overall, this should deliver stable free cash flows from Switzerland and growing free cash flows from Italy so that we have growing free cash flow on the group level and are able to increase the dividend to CHF 27 for the year of 2026.

I will now go into the details of Switzerland. I will start on Page 9 with the B2C business in Switzerland. Of course, let's say, the main priority in Q1 and the highlight was the price adjustment that we executed for our own brand offerings in order to sustain the best network quality and service excellence. Basically, the price increase was executed as expected. We had roughly, as expected, the churn in line with our business case. We had some effects also on customers moving or spinning down to the second brand, also roughly in line with expectations.

You can see the impact on churn on the right-hand side of the chart. Mobile postpaid churn is roughly stable, slightly increased compared to Q4. But if you compare it to Q1 '25, it's roughly at the same level. Whereas on the broadband side, there was indeed a more churn based on the price increase that we executed in the market. And you can see this on the left or the middle of the chart with the resulting net adds. Whereas on the broadband side, we had net add losses due to the increased churn and slightly lower order volumes due to the price increase. On the mobile side, we still managed to generate a growth on the net debt side, slightly lower than in the previous quarters, but still a positive growth in RGU despite executing the price increase, which is obviously an encouraging result.

From a promotional perspective, Q1 was a bit mixed bag or, let's say, the 4 -- the previous 4 months. On the one side, we have a positive movement in the market with both Salt and Sunrise following the price increase. On the other side, we have seen excessive aggressiveness from Sunrise, especially in the previous 3 months. After our price increase, they became really aggressive on the promotional side, even moving to lifetime discounts again on the main brand under the Sunrise umbrella, which is kind of counteracting the price increase. So I would say from a promotional perspective, a bit a mixed situation right now and overall, in line with sort of our expectation and not that much different from before.

This is also why we continue to bolster the Wingo positioning on the full service side, so positioning Wingo as an integrated wireline and wireless provider. We are expanding the reach on the shop or the sales side. We opened new shops. We bring Wingo in some of the Swisscom shops to make the brand more visible and sort of be more present in the market with the Wingo brand to make sure that we generate enough sales out of the Wingo side, especially on the broadband business, where we see continued losses on the main brand.

Next to -- sort of the main telco service revenue. We are also working on new revenue potential. There are 2 areas where we are investing heavily at the moment. One is the security proposition. So we have launched a new security proposition in Q1 integrated directly into the router, which we believe is very important, and we will continue to drive security service revenue in the future, which will help us to offset some of the ongoing decline on the traditional connectivity side.

And we are also continuously investing on the AI side. We see quite a good momentum on the myAI solution, which achieved 78,000 registered users end of Q1. So we will continue to drive user adoption throughout 2026 and looking into how to monetize the AI potential going forward. But if you look at what's going on in the AI world and the general adoption throughout the planet, we do believe that there is potential also for us to generate revenue from this in the consumer space.

I'll now move on to Page #10, B2B. So on the B2B side, you see that ARPU-wise, the development is nearly stable. There is a slight decline mainly driven out of the SME space. But overall, I would say, quite a stable ARPU situation. Whereas on the RGU side, you see continued losses. We had, especially on the mobile side, some corporate contracts that ended but also some losses in the SME space on the mobile side, whereas broadband is roughly stable in terms of RGU development.

Whats' important for 2026 is that we are on track with the migration from the legacy portfolios to the new modern portfolios, both on wireline with Enterprise Connect and on the wireless with the Protect & Connect product, which integrates the beam security proposition because this is an important element going forward, driving the convergence between connectivity and security, which we believe will make a real difference going forward, both in positioning, but also in generating new revenues. At the same time, we are also working on CVM using better data analytics to drive targeted campaigns, especially in the SME space to stabilize the SME price and RGU development going forward.

I'm very happy about the beem evolution. So we managed to secure nearly 60,000 users by end of Q1 over 1,000 locations. So we are very pleased with this development. And we can really see a big demand and a good fit or product market fit with the beem proposition and the requirements of our customers. So both in the SME segment, but also in the corporate segment, we managed to win first corporate customers, which really tells us that the direction is the right one and security will be an important -- or is and will be an important topic going forward.

Now on the IT business side, I am very pleased with the development of the profitability. So you can see that we managed to increase profitability from CHF 25 million to CHF 32 million EBITDAaL in Q1. So this is obviously a very pleasing development. On the other side, revenue evolution was flat. Market is not so easy at the moment. Demand is quite soft. So on the revenue growth side, probably there will be only slight growth this year, and we will focus mainly on improving the profitability throughout the year to make sure that the services that we do deliver are also making the required profit -- are at the required profitability level. One positive note going forward, especially also into '27, we have signed a multiyear contract with the Swiss Armed Forces, which should deliver continued growth on sovereign ICT investments going forward.

Now on Page 11, some words about network and wholesale. So we continue to invest in network coverage. So both FTTH coverage is up 3% to 56%, going as expected and well. And also on the mobile side, we increased the 5G plus coverage to 89 -- sorry, I mixed up things. So we increased the 5G coverage by 3% to 89%, and we increased the FTTH coverage by 4% to 56%. Sorry for this mix up. And we have also finalized the 5G SA Dual Mode Core. It's fully cloud-native, fully automated, and we will start migrating users now on to the 5G SA Core, which is, I think, quite an important milestone for our mobile tech team and a good achievement that we are proud of, and which will drive user experience and adoption of 5G going forward on the mobile side.

On the wholesale side, we are pleased with the results. I've already highlighted before. Access revenues have grown by 8% from CHF 49 million to CHF 53 million. FTTH share is up by 8%. So you can see that this drives our wholesale market share in the market quite nicely, which stands now at 18.6%, and over half of this revenue is already coming from FTTH and continues to grow quite substantially, showing that the FTTH rollout is driving adoption, is driving revenues, especially on the wholesale side.

Now moving on or finishing the Swiss side on Page 12 with the cost saving view. So you've seen that Q1 has a quite extraordinary higher cost savings of CHF 25 million. Please do not extrapolate this number on the full year. We continue to expect slightly more than CHF 50 million in savings on a full year basis as we had some cost shifting between Q1 and the other quarters. For example, we had less marketing spend in Q1 than expected and shifted some of the spend into Q2 and Q3. And this explains most of the advance that we have on the cost savings side, and we will catch up or basically spend this money later in the year. So you shouldn't expect much more than the guided CHF 50 million on a full year basis.

But what is important, we continue to work, obviously, on the efficiency, both on the sales side, making our shops more efficient, finding new formats. We work on the call center efficiency, heavily investing into AI-driven technologies, both on, let's say, chatbot side but also supporting and helping agents serving our customers better and faster. So this is an ongoing effort from which we continue to expect continued savings this year, but also next year.

At the same time, we are also heavily investing internally. We are still working on a phase out of legacy IT systems, but also legacy network systems. And we are also building a new data platform, which will help us move into the agentic world and deliver cost savings going forward when we shut down the old platforms in 2027. So you can see a lot of things going on, both on the commercial front but also on the efficiency front, which is making sure that we can deliver on our targeted and guided revenues and profitability.

Now moving to Italy. Page #13 gives you an overview of the integration. So I am happy to announce that the integration activities are all on track. We have One legal entity since January this year. We have also merged the SAP systems into One system. We are now working on harmonizing all the financing activities. We are rolling out one integrated HR system, which allows us to streamline all the HR payrolling processes.

So things are going as expected. We've delivered CHF 77 million of synergies. So we are very well on track to deliver the full CHF 300 million that we expect this year. So this is a topic I am very pleased about for Italy this year. And so if things go as expected, we will have reached half of the planned synergies that we expect from this deal on -- by 2029. Also on the cost side, the integration cost side, we are slightly below our planned values. So this is also good news from the integration cost side.

Now moving on to Page #14. Looking into the B2C business. So you can see that we are working on all fronts to turn around the business into a more value-oriented approach. So the first and foremost, most important topic is making sure that our existing customers are happy, have high NPS and stay with the company. So you can see the effect of this on the right-hand side. Churn is down quite impressingly from 20% to 17.6% on mobile and from 20.3% to 16% on broadband. And this is despite the fact that we are still have ongoing price increases going on.

So as you know, we are executing what we call a back book to front book alignment. So we have increased front book prices past year, and we are now migrating all back book customers, which are below the front book prices onto the new front book prices. So despite these activities going on and of course, generating some incremental churn, the overall resulting net churn is actually going down, demonstrating that all the activities that we are executing in the call center side, servicing side, network side are impacting positively the customer experience and customer happiness and driving down the related churn.

Another important aspect that we are working on is driving down or bringing up -- driving down the ARPU that is leaving the company. So making sure that the high-value customers are not churning and staying with the company. And if they are churning that less, ARPU is flowing out. And at the same time, we are working on the inflow ARPU. So we have increased front book pricing. We are also working on the mix of inflows. So historically, we had a very, very high percentage of inflow on the lowest value subscription.

We have now managed to shift it. So now over 1/3 of the subscription inflow is on the higher-value subscription. So it lifts our inflow -- average inflow ARPU up. And the resulting effect is that the differential between outflow ARPU and inflow ARPU has substantially decreased. It is nearly half of the mobile side, precisely minus 43%. But of course, it generates on the journey, while we are executing this, it generates some more net add losses as we have softer gross adds. We are focusing on higher value sales.

For example, we are less aggressive on tourists or some of the other segments, which generate very low revenue. So this generates lower gross adds and despite lower churn results in a bit softer net adds. We expect this to improve over the year as we are reaching the end also of the back book to front book alignment, and we are more in a stable territory. And going forward, we expect revenue to stabilize throughout the second half of the year. So this is, I would say, all I would like to say on this.

On the other side, ARPU, you can see is roughly stable, especially important on the mobile side. It's exactly stable, broadband slightly declining. And on the energy business, we are very pleased. We have now reached over 119,000 customers. So the growth has doubled, as we have sold also into the Vodafone base, and we will continue to focus on the energy business as this revenue growth helps us to compensate still the expected service revenue decline going forward and making sure that the B2C business stabilizes overall throughout 2026.

Now on Page #15, looking into B2B. On the telco side, I would say, roughly stable. So you can see the RGU development slightly positive on mobile, slightly negative on broadband. But overall, we could say the telco service revenue on the RGU perspective is slightly -- is roughly stable. From a revenue perspective, it is still slightly declining, but most of the service revenue decline is actually coming out of the B2C business in Italy. And on the B2B side, things are going quite well. The IT trajectory is also confirming the strategic directory. We have been selected as an AWS European sovereign cloud launch partner. We are continuing to push on the AI front and making sure that we can also, again, generate growth out of the IT business in Italy going forward.

Now going to Slide 16, Network & Wholesale. So you can see that also in Italy, we are continuously investing in our network. 5G coverage has reached 89%, up by 4%, and FTTH coverage has reached 58%, up 6%. So this is the first time that Italy has a higher FTTH coverage in Switzerland. And this will remain like this for many years to come as the rollout in Italy is driven by Open Fiber and FiberCop and they are heavily investing in expanding the FTTH coverage in Italy.

On the wholesale business, we have seen very pleasing growth, both on mobile and on broadband, so you see plus 108,000 mobile, plus 68,000 on broadband. So really shows that our wholesale strategy is successful and working. We expect continued growth in broadband going forward, whereas on wireline, as you know, PosteMobile is leaving our wholesale business. They are executing or have substantially finished executing the migration in Q2.

So at the next quarterly call, you will see a substantial decline on the wireless side from mobile. So we should enjoy this picture of growth in Q1 on both mobile and wireline. And we will, of course, or are already working since many months now on compensating the PosteMobile loss with new customers on the mobile side, so we launched Sky Mobile, but we're also working on new customers on the broadband side, making sure that we can compensate the revenue loss from PosteMobile going forward over the next quarters until we're running into 2027.

Now the final slide on Italy, regarding our RAN or mobile infrastructure strategy. So we have taken 3 actions in the Q1 to work on accelerating the rollout, improving coverage and at the same time, decreasing our cost base. So the first one is the RAN sharing that we have announced with TIM that will essentially help us in accelerating rollout and improving coverage. So we expect the final agreement in Q2 2026 to be signed, and then subject to regulatory approval, which will last up to 1 year. So we will see if we can accelerate this a bit, but this will take some time.

At the same time, we signed a tower JV with Telecom Italia to deploy up to 6,000 new towers at sustainable market conditions. So this is also in the stage of finding the final agreements and the authority approvals. And then we have terminated the MSA with INWIT, where we believe we have the right to exit by 2028, and this will also help us moving or -- moving away the infrastructure from INWIT onto new infrastructure at sustainable market prices will help us reduce our cost base to effectively compete in this very competitive market in Italy.

This was it from my side, and I will now hand over to Eugen for the financial results.

Thank you, Christoph, and good morning, everybody, from my side. All in all, a very solid set of numbers. So I'm happy to walk you through the details. As usual, I'll start with the group perspective on Page 19 with revenue.

Revenue is down CHF 153 million. There was CHF 44 million currency. So net of currency revenue is down minus CHF 109 million. Switzerland, minus CHF 25 million, essentially service revenue decline. Italy is down CHF 76 million. That looks like quite a big number. So there is service revenue decline on the one hand, but there is also a sizable decline in hardware revenue with no impact on the margin that is a bit distorting the picture in Q1. There is compensation by growth from the wholesale and from the energy business as well.

On the EBITDAaL side. EBITDAaL is slightly up, both on reported numbers and adjusted numbers. Switzerland, almost stable, thanks to higher telco cost savings, a bit of phasing in there, as Christoph already mentioned. And Italy is up CHF 30 million, so the telco service revenue decline could be offset by the realization of synergies and we also have lower costs there in the first quarter compared to prior year.

On Page 20, CapEx. CapEx is down CHF 86 million in the group. That's very much driven by phasing effects both in Switzerland and in Italy. Switzerland CapEx is down CHF 40 million. We have lower FTTH construction volumes, which were pretty high in the first quarter 2025. And Italy is around CHF 63 million. It's a combination of somewhat lower CapEx for business as usual as we guided and with a number of phasing effects in Q1.

So by implication, the operating free cash flow is up CHF 96 million. So we're clearly on track to deliver stable free cash flows from Switzerland and growing free cash flows from Italy, as guided, given all the phasing effects and OpEx and CapEx, obviously, please don't multiply the year-over-year numbers by 4, but stick to our guidance for the full year, which we're going to confirm in this call.

I move on to Page 21. Switzerland. Switzerland revenues, down CHF 25 million. If you look at the individual segments, B2C is down CHF 12 million. So that's telco service revenue decline compensated by a bit of higher hardware revenues. B2B minus CHF 13 million, lower telco service revenue and also slightly lower IT service revenue, as Christoph already pointed out. The wholesale, minus CHF 8 million, is mainly due to roaming. The underlying excess service revenue is actually growing steadily as we communicate on a regular basis.

Then on to EBITDAaL. EBITDAaL is almost stable with minus CHF 5 million, also B2C, almost stable. We have the top line decline, which is compensated by telco cost savings. Here, we have, as Christoph already mentioned, some phasing in there, with advertising spend being much higher in the first quarter 2025 due to the introduction of the We are Family! offering back then. Then B2B is down CHF 9 million. The telco decline was partly compensated by the improved profitability from the IT business and wholesale minus CHF 7 million is just the revenue impact of the roaming effect I mentioned. Infrastructure and Support Functions, plus CHF 13 million. So this is the telco cost savings flowing in.

Next, Page 22. CapEx is down [ CHF 40 million ]. There is a number of in-year phasing effects across all categories. Obviously, the most important point is wireline access CapEx, which is down CHF 28 million. This is related to the very high FTTH volume in the first quarter in the previous year. And that's a result of stable EBITDAaL and lower CapEx. Obviously, operating free cash flow is up by CHF 34 million.

We deep dive into Switzerland on Page 23. Top right, the telco P&L. So telco service revenue came in at minus CHF 34 million. That's pretty much in line with the previous quarters. There is no effect yet from the price increase, which becomes effective in the second quarter. So this is fully in line with our full year guidance of roughly CHF 120 million of service revenue decline.

In the P&L, top right, you also see the impact in the indirect costs. So indirect costs, CHF 25 million down, which is obviously quite a bit above the expected quarterly run rate. So we stick to our original guidance of CHF 50 million plus for the full year.

Bottom right, the IT P&L, service revenue down minus CHF 5 million. So the market environment is rather challenging, as Christoph already mentioned, we expect only limited growth for the full year. EBITDAaL, however, is up in the first quarter, plus CHF 7 million with improved profitability. So the smaller growth outlook in IT services has neither an impact on our revenue guidance nor obviously on the EBITDAaL guidance for the full year.

I move on to -- sorry, I move on to Page 24, Italy. Revenue in Q1 was down CHF 81 million, B2C minus CHF 45 million. So we have a service revenue decline of CHF 35 million and also lower hardware sales. B2B is the biggest chunk here with minus CHF 55 million. Service revenue down CHF 20 million. But as I said, I think there is a significant decline in hardware revenues, which we expect to recover at least partly and has very good margin impact anyway. Wholesale is up due to wireless and wireline business growing. Obviously, the Poste effect will kick in from Q2. So this number will turn negative once we present the second quarter results.

EBITDAaL, up CHF 36 million, very nice contribution margin from B2C up CHF 21 million. So you clearly see the significant synergy realization out of MVNO costs in the B2C segment, which overcompensates the telco service revenue decline. B2B contribution margin, down CHF 10 million. So very little influence of the lower revenue line, in particular, the hardware, and there also some compensation out of synergies that we realized on the B2B side, wholesale, up CHF 9 million, in line with revenue. And in indirect costs, we have lower cost of CHF 15 million. It's also driven EBITDAaL by in year phasing. So that number will probably not last, once we go into the subsequent quarters.

Page 25. CapEx, down CHF 42 million. Adjusted number is even down, CHF 67 million. Integration costs, obviously up with CHF 29 million year-over-year total adjustments, CHF 25 million of CapEx. As you know, adjusted CapEx is expected lower for the full year despite our guidance by about CHF 100 million, but CHF 60 million CapEx down in just one quarter is obviously driven by some phasing across all categories. And as a result, operating free cash flow is up by CHF 78 million as a result of higher EBITDAaL and lower CapEx.

I move on to Page 26. Deep dive into Italy. So you see the service revenue on the left side. Service revenue decline was minus CHF 55 million, is slightly better than in previous quarters. Obviously, still not where we want it to be, and we clearly expect a greater improvement of that number over the coming quarters, in particular in the second half of the year as guided in February.

You already see the first time of what is going on in the year-over-year numbers in B2C wireless, where we first started with our back book alignment to front book and the consequent increase in the -- consequent positive effect on to the ARPU. So the service revenue kind of B2C wireless is just minus EUR 13 million, significantly better than in the previous quarters, and this is back book alignment to front book already showing up in the ARPU effect, which is basically down to 0 with just the RGU effect remaining in the service revenue decline. And this is the first sign of what we expect to come overall.

Next, Page 27, synergy and integration costs are on track. So synergy realization is running smoothly. We have reached a quarterly run rate of CHF 77 million. This quarterly run rate will not increase dramatically over the course of the year, given that the biggest high -- I mean there is the MVNO synergies, which is now already at full quarterly run rate. And as already mentioned, we expect overall, a yearly run rate increase over the previous years of CHF 200 million up to CHF 300 million, which is already half of order synergies we expected and also integration cost is on track. We expect this to pick up speed over the course of the year.

Page 28. Free cash flow. Free cash flow is up CHF 115 million. So I'm backing the group -- sorry, up from Italy back in the group. Free cash flow is up CHF 115 million versus the prior year, fully driven by the increase in operating free cash flow. Not much else to report on this page.

I move on to Page 29. Net income. Net income is down minus CHF 35 million. Actually, EBITDAaL, EBITDA and EBITA, all flat. So the only negative impact on net income that is driving the number is a transitory noncash effect in the financial result. Otherwise, net income fully in line with the operating numbers.

And then on to Page 30. Last but not least, obviously, given the solid set of Q1 results, we confirm the guidance for the full year.

And with that, I hand back to the operator.

[Operator Instructions] So I will now take the first question.

It's Polo Tang from UBS. I have 3 questions. The first question is just on back to Swiss price rises. So you talked about how you're executing according to plan. But should we expect more Swiss subscriber declines in Q2? Also were you surprised by the recent 2% to 3% price increases by both Salt and Sunrise? And did you assume competitor price rises when you set your guidance for 2026?

Second question is just about Italian IT service revenues. They saw a decline. So can you maybe elaborate in terms of what's driving this? And how should we think about the outlook for Italian IT service revenues for the rest of the year?

And my final question is just on spectrum. What are your expectations for the structure of the Swiss spectrum auction in 2027? And separately, how should we think about the range of outcomes, the allocation of Italian spectrum going forward? So do you think Italian spectrum could be allocated at low cost in return for investment commitments?

Thank you, Polo. So I will start with your first question. So in terms of RGU decline, I mean, it will -- we will see now going forward, how promotional aggressiveness develops, and I think this will also impact RGU development. I don't expect the same amount of negativity as we've seen in Q1 because Q1 also had the additional effect of sort of Black Friday cancellations coming in from Q4, which kind of overlapped with the price increase impact.

But now during Q2, customers received their first increased invoice this month. So we still need to see a bit how customers react, if -- how churn develops. I think so far, what we've seen post -- or in Q2 is that churn has sort of reverted back to where it used to be. But we still need to, I would say, observe 1 or 2 months more. So -- but overall -- the overall effect, we expect service revenue to come in as guided at roughly minus CHF 120 million overall for B2C and B2B.

And we made no specific assumption with regard to price increases by the competition. The on top churn that we expected out of the price increase happens basically between the announcement of the price increase and the first month that the customers get the higher invoice, which is, in our case, from January to April and May. So there will not be much of an impact of the price increases by the competition on the overall outcome of our price increase.

And then in Italy, so I mean you see a bit the same effect in the Italian market as in the Swiss. The Swiss market, the demand is softer, especially on the corporate side. So we are working on sort of reversing the Italian IT revenue back to growth. So we do expect this to improve over time, and we will see how it develops going forward. But overall, I would say we should be able to get at least back to a stable situation and maybe a slight growth.

Now on the spectrum question for Switzerland for 2027. So the final -- the consultation on the spectrum auction is ongoing. We expect the final rules to be published after summer. So we can probably talk about this at the Q3 call going forward, knowing exactly how the auction will be structured and when it will happen in 2027. So at the moment, I would say, is roughly in line with expectations, but it's a bit too early to tell as we don't know the final rules yet.

The same situation is in Italy. So we expect -- there is also the final consultation going on in network auction 2029 in Italy, and with the final opinion of AGCOM, like the telecom regulator is expected also by summer in Italy, and then we will actually know if there will be a renewal or not, which spectrum will be renewed and at what conditions, which right now is hard to predict.

I will now open the line for the next question.

It's Andrew Lee from Goldman Sachs here. I had 2 questions. Just one, a follow-up on the Swiss competitive environment. And then just a second question on Italian towers.

So just first on the Swiss competitive environment. Am I right in understanding that what you're basically saying is we've had this back book price rise in the first quarter, but that positive is netted off by the negative of more aggressive promotional activity? And so the competitive environment in Switzerland hasn't improved structurally or even on a kind of near-term basis versus where we were, let's say, 6 months ago? Are you seeing any signs of trajectory towards any form of sustainable improvement in the competitive environment, notwithstanding the fact that you're expecting Swiss revenues to improve through the year?

And then secondly, just on Italy, just as One independent telco puts it, that looks to be a commercial dispute in terms of what's actually happening on Swiss Towers. Our understanding until at least today is that you haven't come to the table with INWIT to discuss a way of alleviating this problem. And I guess it is a problem for both of you. You're obviously not happy about price, but you also need to invest in your network at some point and this is delaying that. So could you just give us your thoughts in terms of the time line to resolving this issue? Because it's obviously undermining your network quality ambitions in that market.

Okay. So regarding your first question, so I think your -- if I understood your summary, I think it's well summarized. So overall, there is some positives regarding different price moves. But of course, they are completely offset, if the promotional aggressiveness in the market continues to be very high. And if other brands move to lifetime promotion on the main brand, basically, there is no more positive effect from the price increase because it's kind of -- what people really look at is what is going on at the promotion side to attract new customers. So in order to structurally improve the competitive environment, it would really need a sustainable change on the promotional approach in the market.

On the Italian tower side, so we do expect this issue to take quite some time to be resolved. So I'm not expecting any rapid resolution. I'm not sure, I think you alluded that we haven't come to the table, but actually, we did try to negotiate many times with INWIT, which they refuse to enter into -- entertain a discussion with us, finally forcing us to exiting or providing the notice to the overall MSA contract.

We continue to invest into the network. So we are continuously building out new towers and identifying the network. So this dispute doesn't prevent us from continuous investment because, as you say, continuingly -- continuously investing into network quality, coverage and densification is really important, and we continue to do this in Italy. But of course, at the same time, we need to come to a sustainable cost base on the tower side. And this is why we have to take in this action. We are -- this is why we are working on the JV with Telecom Italia. We are in discussion with other tower companies to prepare our migration plan away from INWIT. But of course, if INWIT is open to discuss on moving back to sustainable cost base, we are open to discuss with INWIT, and finding an agreement on the necessary towers that we need to retain post migration.

That's all very clear. Can I just have one follow-up. Has there been any kind of conversations between you and INWIT post your announcement of the JV and the subsequent advancement of the contract?

No, there has been no further...

We'll now take in the next question. Your line is open.

It's Josh Mills here at BNP Paribas. A couple of questions from my side. I'm going to start with the INWIT question. So you've got a slide in your presentation talking about the options going forward. Telecom Italia put out a bit more detail last night as well. And what they're saying is it would take 10 years to replace the INWIT contract structure. And obviously, they're looking to terminate the contract in 2030 rather than 2028. My question is how practically are you -- if you go down this route, going to replace these towers in such a short time period.

I understand this transition agreement, but it's probably not going to last 10 years, it might last for a few years. And on that, have you actually engaged in discussions with other Italian tower companies on transferring anchor tenancies from INWIT to them already? Or is this something that you're just going to talk about doing in the future? Basically I want to understand at what point we'll get a clear guidance on how you go down this route?

And then secondly, on the cost savings, clearly came in ahead of expectations this quarter. What gives you the caution to not raise the full year guidance of CHF 50 million now, and which of the areas of cost savings have been overdelivering in Q1 versus what we might have expected?

Okay. Thanks, Josh. So I'll take the INWIT question. So the -- so we are working on our migration strategy. And of course, this migration strategy that needs to be discussed together with INWIT. So this activity has not yet started together with INWIT because this is a joint discussion that we need to have with INWIT to make sure that we have a sustainable way of moving towers away.

But I would say the overall, looking at what TIM published last evening kind of makes sense. We have the same building blocks. We probably have a similar time line in mind. Also sort of a mix of moving to existing towers, with which we've sort of -- which are provided by many different or multiple different tower companies in Italy. We are in discussion with all of those tower companies already since quite some time to look at what this would mean for them. We're also working out on how to build new towers directly with new tower cos or also with the JV.

So I would say overall, it's sort of a similar approach. And of course, the migration period needs to be agreed with INWIT. The contractual provision for this is a negotiation in good faith. It lasts at least 3 years, like from the end of the contract, so giving us already 2 plus 3 years, that means 5 years of migration period. And I also expect, I mean, INWIT has an interest to sustain revenues on their towers. So we do expect that we can accommodate the full year -- the full -- sorry, not the full year, the full duration of the migration with a good faith discussion of migrating those towers in due time one by one.

Okay. Josh, just briefly on the second one. So the target for this year is CHF 50 million cost savings. So if you do a kind of regular quarterly run rate, that would be CHF 12 million, CHF 13 million a quarter. If you look at the cost savings out of our infrastructure and support functions segment, that's CHF 13 million year-over-year. So that's very much in line with what you expect quarterly.

But then on top, there are cost savings mostly in the B2C segment. If I remember correctly, it's CHF 11 million out of advertising which comes on top of that normal regular run rate. And this is just in year phasing, as I mentioned, in 2025, we launched the We are Family! offering in the first quarter. So we had higher advertising spend, and that advertising spend is going to be spent over the course of the year. So there is no more magic to our reasoning here.

Got it. Maybe just to come back on this tower question. Presumably, there is a date by which you will have to communicate to the Board and to shareholders, who will take on some of these anchor tenancies because the third party providers will take a while to ramp up, I think, TI say it will take -- they can enable about 500,000 towers a year through new players. So are you actually already talking about switching the anchor tenancies? Or are the discussions with existing tower cos just about future secondary tenancies, build-to-suits, et cetera? And when will we find out -- at what point do you expect to update the market on the detailed plan for switching away from INWIT?

Well, I would say the detailed plan, as said, needs to be discussed with INWIT first. I don't want to communicate things to the market that we didn't discuss with INWIT beforehand. Until now, there is no discussion. I assume INWIT is waiting for the outcome of the legal proceedings that are currently ongoing for the provisionary measures, which we expect to happen over the course of the summer.

And then I expect to enter into discussions with INWIT about the migration. And once we have substantially agreed with INWIT how this is going to happen, we will also communicate and update the market. Might be by the end of this year, might also be only next year, but what I can assure you is that we are very seriously and intensively working on this topic to make sure that we have a sustainable way forward for our operations.

So we are now taking the next question. Go ahead, your line open.

It's Robert Grindle from Deutsche Bank here. Hopefully, it's not going to be an issue much longer, but please remind what's your hedging on energy costs in Switzerland? And is the higher energy cost a boost for your Italy business as customers are looking to change suppliers?

And my second question is back to Italy towers. How did the -- no, it's not actually the towers, the relationship with Vodafone, how did the indemnity work in Q1? And what's the full year effect, please? Is it the same benefit for 4 quarters? And at the EBITDAaL level, is it just like the past customers didn't move away this year?

Okay. So first, on the energy cost. So both in Switzerland and in Italy, we have a hedging strategy in place for the energy cost, which protects us from short-term spikes, obviously, there is no projection for long-term increase in energy prices anywhere. But that is in place. So both in Switzerland and in Italy, for 2026, about 90% or so of our energy needs are already purchased and the price is fixed.

The methodology with which we do this in Switzerland and Italy differs a bit. So in Switzerland, we have a rolling hedging strategy for the forward years. In Italy, we have the part of the energy need covered by power purchase agreement. So the details differ, but the bottom line is we are protected for -- we are protected for this year.

Then on the Vodafone indemnity for the PosteMobile migration, that will most probably be booked during the year in one single quarter. We have not put anything in the first quarter. So the numbers you see for the wholesale segment in Italy in the first quarter are the operational numbers. And PosteMobile is actually still fully in there because they just started their migration after the end of Q1.

We'll now take the next question. Your line is open. Please introduce yourself.

It's Paul Sidney from Berenberg. Just a couple of questions, please. And the first one, sorry to go back to this, but on the Swiss competition levels, you've been pursuing a value over volume strategy for some time, you're putting prices up modestly. But it just doesn't seem to be working, as I think Andrew said earlier, he summarized it with just being given away in promotions. So I was just wondering, is there anything more Swisscom can do to reduce competitive intensity? Maybe the answer is raising prices more, focusing more on churn reduction? Is there anything else you can do? Or do you just have to accept the rational competition levels that we're currently seeing?

And then secondly, on B2C, Swiss B2C, you set out how you would like to monetize additional services by upselling security by AI. I was just wondering, are you currently charging for these services? And if not, what do you think the appetite is for customers to pay for these types of services going forward? And what's your strategy there?

Okay. So on the Swiss competition side, I mean, we are -- our overall strategy is to be a price follower in -- like we are not trying to position Swisscom as an aggressive brand. So we are restraining our commercial aggressiveness, really trying to tone down competitiveness in the market. This has always been our strategy, and we continue to work on this.

There is not much more, I would say, we can do. I mean, at the end, competition behaves the way they -- or they do what they do. And it's their own decision. I think we have executed the price increase on our second brand. We have executed a price increase on the main brand. Our promotional strategy is around 6 or 12-month promotions. We are not executing lifetime promotions on the main brand, and we will -- I think this is an important way of positioning Swisscom brand as a premium brand and not something that we give away at the low cost.

I think what we are -- things we are working on right now, our churn reduction, honestly, is quite hard because the churn levels we have are already quite low. They have now temporarily increased slightly on the broadband side. We will, of course, work again on that side to bring it down even more. But I would say we continue to work on branding, on positioning the brand as a premium brand. We are continuously working on reinforcing Wingo positioning as a converged provider and we are working on increasing our sales footprint to make sure that we are enough visible in the market. But overall, I would say that the strategy will be unchanged going forward. And we will see how the competition evolves over the next quarters.

On the additional products, so security, we are already charging for these products. So since many years, we have -- we've always had a security offering that we are kind of amplifying right now and expanding. And we have 300,000 paying customers for security already. So it's quite a nice penetration into the base. We are looking at expanding this penetration, adding new security options so that we can upsell and cross-sell more into the base and really drive revenue generation from this product. So I would say on that side, we are confident that we can monetize security more going forward.

The myAI proposition at the moment is a free proposition. So we are mostly looking at driving adoption, making sure that customers know about the product, and we will look into monetizing this next year. But it's still quite hard to tell how many customers are willing to pay for this proposition. And hopefully, of course, we will find many. But I think it also depends a bit on the evolution of what the hyperscalers are doing, what other AI players are doing, what they are charging, et cetera. But we will, of course, look into monetizing the AI proposition also on the consumer front.

So I will now open the line for the last question. This is the last question. Please introduce yourself.

It's Christian Bader from ZKB. And there's a couple of questions regarding Italy. So first of all, telco service revenues declined by CHF 55 million in the first quarter. And you commented that you expect an improvement in the second half, the B2C side, they could be flat. So I was wondering, I mean, would it be possible to get them, let's say, annual number of new expectations for the telco service revenue loss might be in Italy? That's my first question.

Yes, I can take that immediately. So the guidance for the full year for telco service revenue decline in Italy is CHF 150 million, CHF 100 million of which from B2C.

Okay. My next question relates to the wholesale business in Italy. And can you maybe quantify the loss that you do expect from the Poste MVNO contract in terms of user numbers or revenues that we should expect from second quarter onwards?

Yes. So it's a full year effect in 2026 of about CHF 75 million. The migration started after Q1. So you will have a 12-month effect that goes into 2027 of about CHF 100 million.

All right. And also, I believe -- a question related to that, I believe I have read but I can't remember where, that you do get some compensation for this loss. And so therefore, the -- let's say, effect on the results will only be visible in 2027. Am I correct or...

That is correct. There is an indemnification provision with Vodafone, which we also guided for in February, and it will hit the P&L positively by CHF 75 million this year, and we will show it in adjustments and it will be booked in one individual quarter, as I just explained.

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

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

Good morning, and welcome to our ad hoc conference call for investors and analysts. My name is Louis Schmid, Head of Investor Relations; and with me are our CEO, Christoph Aeschlimann; and Eugen Stermetz, our Chief Financial Officer. Let us start with some introductory remarks from our CEO on the JV news of last week and on the termination of the MSA with INWIT we announced today. Then we'll move straight into the Q&A session.

With that, I would like to hand over to you, Christoph.

Thank you, Louis, and a warm welcome from my side. Let me briefly share our perspective on the strategic TowerCo initiative announced last week as well as the termination of the MSA with INWIT announced today. So here is our view. For us, the Italian tower situation is completely decoupled from the mobile market we are operating in and is, in our view, in an unsustainable situation. Why? The Italian tower fees we pay are among the highest in Europe and keep on growing and the Italian market is de facto duopoly. On the other hand, the Italian mobile market is highly competitive. Prices have been in structural decline and are among the lowest in Europe. As a result, our tower lease costs are now approximately 20% of our mobile revenues, and this share keeps growing, which is unsustainable for us.

In our view, tower economics cannot diverge forever from the economics of the mobile market. Therefore, we decided to take action. First, we launched a strategic initiative with TIM to create an independent open access TowerCo as a 50-50 JV that will develop, own and operate up to 6,000 sites across Italy and commercialize them to multiple operators, including third parties at market conditions and on a nondiscriminatory basis. This pro-competitive project is designed to complement the existing passive infrastructure, support network densification and 5G deployment, create an additional make option and in-source, an increased sourcing flexibility in the Italian market.

Through the entrance of a third-party minority investor, there will be 3 co-controlling shareholders with no consolidation obligation, meaning CapEx is off balance sheet for Swisscom and through the multi-tenancy approach, there will be a lower unit cost per tenant. The initiatives will be financed through a combination of debt and equity from the third-party investor with no impact on Swisscom's free cash flow and net debt position. Therefore, we expect decreasing lease expenses over time as the MSA with the new TowerCo will offer services at market prices.

Second, we announced today the termination of the MSA with INWIT scheduled for March 2028. The terms and conditions specified in the current MSA stem from a transaction executed many years ago and are strongly favorable to the TowerCo and deviate from market standards in several respects, among others, because of very high fees that are significantly above market and an inflation clause that increases the price we pay by 100% of inflation without any cap, which is unrelated to the actual increase of the underlying cost -- is not at market and not sustainable.

Due to INWIT's refusal to engage in commercial negotiations and to renegotiate the MSA terms and given the deadline for an automatic renewal for another 8 years due on March 31, INWIT left us no choice but to terminate the agreement with INWIT now in full compliance with the contractual provisions. Considering the repeated public statements by INWIT in which they claim that the current MSA was subject to a fixed term until 2038, Fastweb, Vodafone has filed an action before the competent courts to assert its contractual right to terminate the MSA.

So what happens next? Operational continuity is ensured with the following contractual provisions and measures. Until its expiry date in March 2028, the agreement with INWIT remains fully effective and operational. According to the MSA, both parties must agree on a multiyear migration plan for a period which needs to be agreed in good faith between the parties. As such, we will have access to INWIT towers for the duration of the migration, avoiding abrupt or unilateral disruption.

Over time, Fastweb, Vodafone will evaluate the most efficient infrastructure sourcing model and progressively diversify sourcing through 2 different channels. The first channel consists of existing tower providers such as Cellnex and PTI and potentially other tower providers. This category might eventually also include INWIT provided they offer market conditions. The second channel is going to be the new TowerCo that we announced last week. I would like to emphasize that we remain open to a constructive dialogue with INWIT and are available to reach a fair negotiated agreement with lease costs for towers at market prices. At the same time, we are pursuing a more diversified and sustainable tower sourcing strategy. The new TowerCo with TIM will therefore proceed independently of any potential negotiation outcome as it addresses the need for increased densification and competition in the Italian tower market.

With that, I'll now turn it over to the operator for the Q&A session.

Before we start with the Q&A, let me remember you this call is recorded. About 10 minutes after the call ends, you can listen to the recording by the phone, find the details in the invitation to this call. [Operator Instructions]

It's Joshua Mills here from BNP Paribas. Thank you for the conference call this morning. A few questions from my side. So the first one is you've talked about the INWIT contract being well above market prices. Could you give us a bit more of a steer on how much more expensive the contract is in the reference terms you're looking at, so that we can think about the negotiating position and what you're trying to save there would be helpful.

And Secondly, on the practicalities of actually doing this network migration, how long do you expect the transition period to last? And how confident are you that you can do this without disrupting network quality? And perhaps related to that, I think at the moment, of the 25,000 sites you have, there's 20,000 with INWIT, how many of those sites do you think you could replace with Cellnex and other options that are already in the market?

And then third and finally, related to that, do you already have discussions ongoing with these TowerCo partners to help you manage that transition once we get to 2028?

Thank you, Josh. So on your first question, we don't want to provide too much detail on how much we think they're over market, but you can trust me that they are substantially over market, and we talk about significant numbers here. Otherwise, we would have not undertaken this measure.

On the migration side, we are very confident that we can migrate the towers over time. Of course, this will be a multiyear undertaking. As such, we launched the TowerCo to provide us with multiple thousands of towers. But on the other side, we are also already in discussion with other providers such as PTI and Cellnex, of course, to provide multiple thousands of towers. So we are confident that we can rapidly migrate away a substantial amount. And for the others, we are finding solutions. And I would also remind you, we are still also open to work together with INWIT to -- assuming that we find at market agreements, we are happy to continue to collaborate with INWIT and sourcing towers from them as well.

Next question, the line will be open.

I guess the INWIT pushback, if I understand this, is that a change of control at Vodafone, Fastweb would trigger an extension to the MSA and that change in control could have either been in 2022 with the transfer of assets from Vodafone into Vantage or perhaps more clearly in 2024 with your acquisition of Vodafone. So could you just give us your opinion on whether that has legal credibility or not? That seems to be the major debate here. That would be useful.

Yes, I'm happy to answer this, Eugen here. Good morning, everybody. So you're right, the question of change of control is crucial. The agreement is actually quite clear in that respect. So in the case of a change of control under the MSA, any contract party has an option to extend the MSA terms by another 16 years. And in order to exercise such an option, the exercising party had to notify the other party within 30 days of a change of control event. What constitutes a change of control event is precisely defined in the MSA, as I said, in a very precise and unambiguous way. It means the event in which Vodafone Europe B.V. ceases to exercise control or joint control together with TIM over INWIT. And Vodafone Europe B.V. ceased control over INWIT in 2020 with the Vantage transaction. INWIT did not exercise their option to extend the validity of the contract at that point in time. And so the original terms prevail with the termination rights for Fastweb and Vodafone for 31st of March 2028 with 24 months' notice.

So the 2024 transaction is irrelevant. Is that correct? The acquisition.

It doesn't play any role, correct. Next line.

And the next line will be open.

This is Andrea Devita from Bank Intesa. Just an idea of the total investment that you foresee for the network joint venture and the implication for your lease net debt on 2026 and faster CapEx for the next 3 years?

Okay. Happy to take that question. So the investment on the joint venture from our side will actually be very limited. As we explained in the respective press release, we intend to include a third-party investor who will invest equity in the joint venture. And obviously, the joint venture will also take on debt. So our initial investment into the joint venture will be very limited.

As for the leverage guidance for 2026, this is unchanged. I remind you the leverage guidance was 2.3x plus whatever would come on top from the renewal or from new tower agreements in Italy. Now obviously, the renewal option is gone, but new tower agreements might be the case in 2026. So our leverage guidance is unchanged, 2.3x plus whatever comes from tower agreements. The whole story has no impact on Fastweb CapEx in the near term and certainly not in 2026 for which our guidance is unchanged.

The next line will be open.

It's Roshan Ranjit from Deutsche Bank. I've got two questions, please. And perhaps just a quick follow-up on the previous one around the triggering of the change of control. You referred to the 2020 event in your press release. I think you answered around the 2024 event. What's about the breakup of the shareholder agreement, which was triggered by TIM in 2022. In your view, does that not trigger a change of control and the 16-year extension that you referred to?

And my second question, please, is just regarding the use of third-party passive infrastructure and how that reconciles with the terms of your MSA where INWIT is the preferred supplier of your passive build and any new build, they have the right of first offer. Do you think that does not apply in this situation?

Okay. So I'll take the first one. So the change of control is triggered when the co-control by Vodafone Europe B.V. and Telecom Italia ends, and this ended on [ December 17, 2020 ]. So afterwards, it ended and there was no other option to be exercised. On the preferred supplier clause, this obviously applies only as long as the agreement is valid, which is the case until the 31st of March 2028. And afterwards, there is no preferred supplier clause anymore.

We will open the next question in line.

Nicolas Gourdain from Lexcor Capital here. I'm just curious about the reaction of the Italian government and regulator on this course of action because the objective has clearly been to increase the quality of the network in Italy, which is poor and drive investments. And basically, here, the deal seems to me like you're going to give a lot of effort, a lot of money to at best replicate what you have with little hope of really improving quality in the period. So isn't there a risk that should eliminate the authorities? And could it impact also the negotiation where you're asking for free spectrum in the sense that the money freed up for investments in exchange of the free spectrum is now really more to replicate what you have rather than to improve?

So I think it's an excellent question. Obviously, the relevant party to answer this would be the Italian government. So I cannot speak for the Italian government. But my impression is that this undertaking is viewed positively. As we are taking pro-competitive measures, we are trying to make the tower market more competitive to lower overall cost in order to be able to then redirect more investment into the network and actually improve the Italian network overall on the mobile side. So our intention is clearly to accelerate mobile densification and network quality to redirect investment into the network. And for this to happen, we need to work on the tower costs overall. And so I think it is in the interest of consumers and businesses, it's the interest of the country and overall, a favorable move.

And just a second one, if I may. You sound a bit like you -- presumably, you knew all of this when you bought the asset, right? So it sounds a bit like certainly the cost is very high. It's surprising to us. It's not -- in a way, was it always the plan, I guess, that this was sort of a contract that you knew about that you were going to change basically the terms of...

Well, I think we already made clear in February 2025, immediately after the takeover that we were of the opinion that the tower cost was above market. So this is not a new topic, but we have been talking about this for a while.

Taking our next question now.

It's Akhil Dattani from JPMorgan. I've got a couple of questions as well, please. The first is just to understand the legal process from here. As you've mentioned, INWIT's disputing the termination time line that you believe is appropriate. Can you just talk us through the legal steps that you'll now take to assert the time line that you believe is right? And at what point and how quickly can we get visibility to the resolution of that dispute just to know that the process you're now taking obviously can move forward? That's the first question.

The second one is just on time line on your tower JV. Obviously, you've said 6,000 sites is what you're targeting. Can you help us understand within Italy, how quickly you think it's actually possible to build sites like that? And then the last one is just a broader executional question around the plan that you have here. If you're going to theoretically migrate a substantial portion of the sites off INWIT, assuming you can't get some sort of agreement with INWIT through this process, can you just talk us through the one-off costs that, that would incur? Because presumably, you're going to have antennas and other associated costs that you have to build up as you're replacing this, you won't be able to migrate the existing antennas you have with INWIT. So when you think about whatever you do, can you just help us understand the execution risk and costs that might potentially associate with this plan that you have here?

I can take the first question. So the legal action that we commenced against INWIT is essentially aimed at obtaining a ruling from the Court of Milan confirming the lawfulness and validity of the termination of the MSA by Fastweb, Vodafone and consequently confirming that the MSA will terminate on the 31st of March 2028. As for the timing, we would not like to speculate on that topic. We all see over time.

Okay. And then sort of second question, the tower JV. So first, we need to establish a tower JV and it needs to be approved. But we plan with a rollout of roughly 500 towers per year. So this gives you an indication of the speed and the rollout speed that we will have once the JV is established. On the migration side, of course, depending on how we migrate, it implicates different one-off costs. It depends if you migrate to existing towers to new towers. And so the precise costs that will be needed depend on the precise migration planning, and we will share this in due course once it becomes clear how the migration planning will be set up once we negotiated it with INWIT, which will take probably some time to step up in the -- with the counterparty over the coming months and quarters.

We'll move now to next line.

It's Christian Bader here from ZKB. I have a follow-up question on the legal process. Can you tell us when do you expect a judgment by the competent Court of Milan -- do you expect the judgment before the end of this year? Or is it, let's say, more for the medium term?

We already had that question. All I'm going to say is that we all know that Italian courts tend to be not extremely fast. So that can take quite a while. But I don't want to speculate on exact number of quarters or years of how much that could take.

We will take now the last question.

It's Robert Grindle from Deutsche Bank here. Do you envisage a scenario whereby you could beat your synergy expectations on the Italian acquisition via taking this route? Or is this about securing what you were hoping to do in the first place? And there's obviously some dispute about the change of control dates and you have your view, which you've had since the purchase of Vodafone Italy. Just to ask whether you have any indemnities from Vodafone, should your opinion on this point not be supported by the courts?

Okay. So let me be clear about the synergies. The synergies have nothing to do with the question at hand. You all know the sources of the synergies. The most important one is the migration of the Fastweb mobile customers onto the Vodafone network. this whole discussion here comes on top and has nothing to do with the realization of synergies, which is fully on track. Then the second question on -- again, on change of control. Sorry, I lost the second question. Could you repeat it again?

We have an indemnity.

Yes, we are not going to comment on any relation with Vodafone in that regard. Sorry, I forgot the question.

Okay. There's still a couple of questions. We'll try to get some more over the next line.

It's Paul Sidney from Berenberg. Just a couple of follow-ons from questions we've already had, please. Could you discuss the net free cash flow implications for the Italian business going forward? Obviously, there's so many moving parts, both OpEx and CapEx. And obviously, we have the JV to think about as well. But if you could just set out how should we think about that free cash flow profile for the business looking forward, assuming that the determination goes ahead?

And then just secondly, it feels like much of the dispute comes down to legal interpretation of the MSA, and it does feel like this could end up in the court for many years. But if it's -- if a legal dispute goes on beyond March '28, I know that's sometime in the future, but do we just roll on in terms of the contract under the current terms? Is that the right way to think about it?

Okay. So on the free cash flow question, as I said before, there is no immediate impact on free cash flow. There will be tower leases irrespective from which tower company we source the towers over time. And also if we source them from our joint venture with TIM, there will be tower lease expense in the Italian P&L. Obviously, the whole point of the exercise is to bring down the tower costs over a long period of time, much closer to what we believe is market standard. So long term, there is a positive free cash flow impact compared to a continuation of the status quo. Then after March 31, 2028, as Christoph already pointed out, a migration period will start, the details of which has to be defined together with INWIT. And obviously, during those periods, we are going to pay for the towers that we use from INWIT.

Next line to be open.

This is Ondrej Cabejšek from UBS. I had a question in terms of the migration. So I think in the past, we've had a situation in Italy where due to various limitations, including EMF proximity, et cetera, it's been very difficult for operators to actually co-locate on infrastructure that is pretty full in terms of tenancies, which is both -- which is the case for both INWIT and Cellnex and it has been impossible to migrate even low to mid-single-digit thousands of sites to either of these companies in the past.

So my question would be, if you are planning, if I understood correctly, to migrate about 500 -- or build 500 sites per year, presumably with the amount of sites that you have and presumably, again, the limits on the amount of sites that you would be able to move to either Cellnex or PTI infrastructure, it sounds like the realistic time line for migrating the rest would be a very long one. And presumably also in uncertain especially high traffic density, et cetera, areas in the city centers of a lot of Italian cities, this could be virtually impossible, very difficult, if not virtually impossible. So my question would be, how do you plan on actually kind of completing this project because there will be a big amount of sites where this will be very difficult to actually do.

So I can maybe comment a bit on the planned migration. And indeed, the new EMF regulations in Italy made it much easier to co-locate sites, which is good news for us in this situation because it makes it much easier to reuse existing sites from PTI or Cellnex. And this will be one of the main axis of migration, of course. So not building new sites, but reusing existing sites and actually augmenting the colocation factor on existing towers, which will be one of the main avenues of our migration plan.

And then, of course, some sites will need to be built. This is, as you pointed out, not always easy, but it's not impossible. And don't also -- so we will proceed also on that front. Of course, this requires a CapEx depending on how it is structured if we go through a JV or a direct build on our own. But on the other side, it also frees up substantial lease liabilities and out payments. So it's always a balance of what you, let's say, upfront payments and the costs over time.

So we are confident that we have a good migration plan in place. Of course, now all the details need to be discussed with INWIT and agreed upon. And once we have more clarity on how we proceed, we can then update you again on what this means precisely in terms of numbers in the long run.

And maybe if I can follow up. How do you -- I guess, there will come a point where, as you say, some sites will be very difficult, you'll be left with a certain number of sites where maybe traffic is crucial, et cetera. So then it comes into play the all or nothing clause and how -- I guess, do you plan on dealing with that once the wind-down agreement actually reaches the end because presumably it's going to be forever. So how do you plan on dealing with the all or nothing element in this contract?

Well, if I may, after 31st of March 2028, there is no all or nothing anymore. So there is just the opportunity beyond the migration plan for both parties to come together and agree if we are interested in sites from INWIT and INWIT is interested to provide it at market terms to come together. But the whole all or nothing clause is something that lives during the life of the agreement. That means that the older sites have to be taken together at a fixed price, and you cannot move away at least not more than a small number of sites, but it has no impact whatsoever beyond the life of the contract.

Next line will be open.

It's Joshua Mills here from BNP Paribas. Just a follow-up on Rob's question earlier. I understand that the synergy targets with Vodafone Italia are unrelated to the TowerCo deal. But when you did announce that transaction, you provided some longer-term guidance as well on the run rate pro forma of EBITDA, operating free cash flow and also link that to your dividend guidance as well. So my question is, does that financial guidance, which was laid out at the time, assume a renegotiation of the tower contract or an alternative network build? Or would savings that you plan to make either of those routes be additive to the current guidance. I just want to really stress us how confident we can be in your current financial guidance based on this debate about the towers, which may take some time to be resolved.

Yes, sure. So the picture we presented upon the signing of the transaction in March 2024 still stands. If you remember what we presented back then was net synergies of EUR 600 million at the level of operating free cash flow. It was always clear that obviously, outside that net accrual of synergies of EUR 600 million, there would be pluses and minuses from the ongoing business as we observed. And this tower opportunity we are talking about here is exactly one of these additional pluses. But as we know, the market -- in the market, there are also minuses. And net-net, we still stand by our net EUR 600 million plus communication when we presented the deal.

Next question in line will be open.

It's Andrew Lee from Goldman Sachs here. I had two questions. First is just in terms of coming back to the plan B, which you cite Cellnex as a key partner, which, of course, it must be. The feedback from management meetings with Cellnex, is that Cellnex understands that it can't act first of all, in terms of capacity for that many towers to enable the plan B, but also that if it were to facilitate the termination of master service agreement, it derates the whole sector, including its own stock. How confident are you -- your commentary around the relationship with Cellnex and negotiation suggests a more constructive engagement. Could you just help us understand that tautology between your position and the difficulties that Cellnex has to support you on that journey?

And then just second question, more explicitly, just on the -- what's your understanding of the cost to take antenna of one tower and put them on to another, just per tower, what's the cost that you've envisaged and put into your model?

So on the Cellnex question, I think I already went into details around the migration plan. So yes, we are confident that we can reach an agreement and that we will find good solutions to make our plan B work.

As for the CapEx to move antennas, you're correct. There is some CapEx associated to that. We are not in a position today to give a precise estimate. It's still early days. But suffice it to say that whatever antenna moving CapEx, if that's what you want to call it, is going to come, will be within the typical total CapEx envelope that we have envisaged for Fastweb, Vodafone in our business plan.

And that strength of the relationship with Cellnex that regards both the migration of the existing antenna off of INWIT onto Cellnex as well as the incremental tower build that you announced with the JV last week. It's both elements that you think you're having a constructive dialogue with Cellnex on.

I'm not sure I got your question.

If you could you repeat the question.

Say that there's two elements to your dialogue with Cellnex. One, can Cellnex support you in building new towers as part of your JV? And secondly, will Cellnex existing towers receive antenna that have been taken off the INWIT towers? Do you think there's a supportive constructive dialogue on both elements of those discussions?

Absolutely so.

Next line will be open.

Justin Funnell Here. Yes, just follow-up questions, please. I mean, hypothetically, is this just a question of price? If INWIT was charging you market rate, you would just extend? Or is it also to do with other things, for example, the nature of the all or nothing contract, you want to move away from that type of contract, perhaps more of a sort of tower-by-tower deal? Or in any case, you want to diversify supplier, perhaps use more second tenants?

And then secondly, can you tell us any more about INWIT's obligations to sustain the service whilst you go through this migration process? How much leverage do you have to switch off towers after you've switch their places.

So mainly on your first question, so it's mainly a question of price, but not only it's in general, let's say, overall conditions. So I outlined 2 of them. One of them is the inflation clause. The other one is the price per site. There are some other topics that we would like to discuss as well like cost of new spectrum, RAN sharing benefits. But it's overall, let's say, the main focus is on commercial conditions. It's not about other things like the all or nothing clause or -- which is not really our main focus.

On that side, we created the other tower JV to create more, let's say, sourcing opportunities in the market. But at, let's say, the right commercial conditions, we would have been happy to renew the INWIT contract as we have stated multiple times. But unfortunately, we couldn't reach a conclusion with INWIT on these topics. Now the MSA foresees multiple obligations in terms of the termination. The most important one is a good state negotiation of the migration plan. And as such, we would expect that INWIT doesn't just turn off towers because it's also obviously clearly detrimental to their own position and revenues. So we are confident that we can reach a good agreement with them, either how to offboard or maybe also find an agreement on the commercial conditions for the sites that we would like to source from them.

The next line will be open.

It's James Ratzer from New Street Research. So I have two questions, please. So the first one is your press release says that you're allowed a multiple year transition under the MSA to remove your equipment. How many years is that? And during that transition period, does the MSA require that you pay the ongoing rate per site where you still have equipment?

And then the second question I had was, do I assume from the release today that you're now acting unilaterally from Telecom Italia here? And if so, does that mean your RAN sharing agreement with Telecom Italia is now effectively terminated? And if so, do you think that the lost synergies you might get from the RAN sharing agreement could be offset by greater tower savings moving to a third-party tower?

Okay. So I'll take the first question. You're correct. The migration period will be multiyear starting from 1st of April 2028. So we are talking about a very long time frame here. There is even a minimum migration period stated, which we're not going to talk publicly about because it's in the agreement, it's not public information. But you can assume that this will be a transition that will span many, many years, during which, yes, as I said before, we are going to obviously pay the ongoing rate for the towers that we continue to use during the migration period.

So on the third question, of course, we are acting unilaterally. I mean we are talking about our contract between Fastweb, Vodafone and INWIT, which we are terminating. The precise impact on RAN sharing, we will see depends now also on, let's say, the next steps and what happens over the coming months. But I would highlight again that the RAN sharing benefits are not included in the EUR 600 million synergy target. So the EUR 600 million synergy target that we announced upon signing the deal in 2024 are completely independent of: a, RAN sharing; b, the tower JV; and c, now the termination of this contract with INWIT, and we will deliver the EUR 600 million synergies irrespective of what is going on in the mobile tower side.

All right. Let us take one final question before we conclude today's conference call.

I'll open the last question in line.

It's Mathieu Robilliard from Barclays. A few questions, please. So the first one, in terms of the strategy to redeploy your antennas into sites. Any sense you can give us in terms of the mix of what could be migration to existing sites from Cellnex or PTI, and what you think you will need to build? And linked to that, does it mean that maybe the JV you announced with TIM could be expanded in terms of scope? You talked about 6,000 sites. Maybe it could be some more. That's the question.

And the second one is a bit of the logistics. I mean, what kind of CapEx are you taking into consideration to build new sites? And in terms of the antenna, how does it work? You can literally take them out of the existing INWIT site and put them back into your new sites? Or do you need to -- in practice, you need to build -- to buy a new antenna?

So the -- on the strategy to redeploy the mix, it's too early, I would say, to give precise numbers in terms of mix between existing and new sites. It depends on the precise migration plan. So we will reinform in due time. Of course, expanding the JV with TIM is always a possibility to increase the build mix. And this is certainly something that we will also look into.

Now in terms of logistics, I mean the CapEx requirements also depends on the mix of existing and new. So at the moment, it's too early to make a clear announcement on that side. But in reality, how does it work? You basically take the new site in production. So you need a new antenna and then you dismantle the other site, and this antenna can then be reused for the next site you migrate. So there is some incremental antennas you need to buy, but to build the first or migrate the first site. But once you migrate the first, you can dismantle existing sites and then reuse this equipment. So there is no real impact or, let's say, fundamental impact on CapEx that is required to buy a lot of new antennas because we essentially will recycle the existing equipment and move it from site to site.

If I may just add one sentence to be clear, for the moment, we do not foresee any CapEx to build new sites, okay? Maybe we were not entirely clear before. There is no CapEx plan to build new sites. New sites if built, would be built through the JV. So I would like to reiterate, there is no change whatsoever to our general financial predictions. There is no change to our financial policy or dividend policy whatsoever. There is no impact of this whole exercise on our overall financial strategy.

All right. Thank you, Christoph and Eugen. And with that, I would like to thank everyone for joining and close today's call. If you should have any follow-up questions, feel free to reach out to us from the IR team. We are happy to support. Have a great day.

Good afternoon, and welcome to Swisscom's full year results presentation 2025. My name is Louis Schmid, Head of Investor Relations. And with me are CEO, Christoph Aeschlimann; our CFO, Eugen Stermetz; and Walter Renna, CEO Fastweb+Vodafone.

Let us now start the meeting with the agenda for today on Page 2. As you can see, Christoph presents the first 3 chapters achievements where he dives into some of last year's highlights, commercially, operationally and financially, strategy update, where he presents Swisscom's framework lead, innovate, perform to grow free cash flow and the review of our business in Switzerland, covering achievements 2025 and our focus, 2026. Then Walter Renna, CEO of Fastweb+Vodafone, reviews our business in Italy. He will talk about the integration of Vodafone Italia and the industrial performance of our Italian business and its plans going forward. After Walter's part, Eugen Stermetz, our CFO, will present the financial result 2025, including the guidance 2026. And in the wrap-up chapter, some final remarks from our CEO, Christoph Aeschlimann. After the presentation, we will move directly to the Q&A session.

With that, I would like to open the meeting and hand over to Christoph for his part.

Thank you, Louis. Welcome to our 2025 results presentation from my side. I will directly move to Page #4. So 2025 was quite an eventful year for the Swisscom Group both in Switzerland and Italy. We put in place a new lean group organization. put in place a new group-wide sustainability strategy. And for the first time in over 10 years, we have confirmed that we will vote at the AGM for a dividend increase of 18% to CHF 26 per share. Despite the integration of Vodafone Italy, and the new debt financing, we were able to maintain a sector-leading credit rating of A2, which I'm very pleased about. We achieved strong results both in Switzerland and in Italy.

In Switzerland, we were voted strongest telco brand according to Brand Finance. We won all service tests, both in shop hotline and on the network side. And with Beam, we launched a successful new B2B connectivity portfolio. The highlights in Italy are obviously linked to the integration of Vodafone and Fastweb, where the integration and synergy realization is in full swing and ahead of plan. We also announced a round sharing agreement with Telecom Italia a couple of weeks ago, about which Walter will talk a bit more in detail. Another major milestone in Italy was also the alignment of the go-to-market portfolios. So while we still have 2 brands in Italy with Fastweb and Vodafone, the B2C product portfolio has been completely aligned, and we have exactly the same offering on mobile and on wireline under the Fastweb and the Vodafone brand, which creates a great momentum in the market.

Now moving on to the next Slide #5, we can see an overview of the net add trends both in Switzerland and in Italy. I think we have a stable development in Switzerland. If you look at the postpaid side, we had plus 44,000 net adds in Q4, bringing us to 185,000 net adds on the mobile side, pretty stable performance throughout the year, whereas on broadband and TV, we were able to improve the negative trends we had in Q1 and Q2 to still slightly negative in Q4 with minus 4 and minus 6,000 but very much improved compared to Q1 at the beginning of the year. If you combine the broadband evolution on the retail side with minus 29,000, with the performance on the wholesale side of plus 37,000. You can see that overall, we have a net positive effect on the broadband patriation in Switzerland.

On the fixed voice side, we have the usual mobile fixed voice substitution, which continues and which we expect to continue also in 2026. On the Italian side, I will start with the broadband picture. So you can see that the wholesale side, we have a very pleasing performance with Q4 being roughly at the same level as Q1 after a bit weaker Q2 and Q3 with a total of plus 221,000 net adds and also on the retail side, we were able to substantially improve dynamics in the market with continuous slowdown of the B2C erosion over the 4 quarters bringing us also to a net positive effect of plus 37,000 net adds in the market.

On the mobile side, we have a slightly -- or front evolution. As you know, we are executing a strategy in the market and moving from a volume to a value strategy on the B2C retail side. And you can see some of the net debt effects in Q4. So we have Walter will give you a bit more details on the execution of the strategy so far, it goes exactly according to plan, and we are pleased with the results. The negative net adds are basically linked to 3 effects. We -- as you know, we have increased front book prices, which led to a slightly lower order intake. We are aligning back book price to front book pricing, which created some incremental churn effects.

But the most -- so this brought us a bit more negative net adds on the B2C side. But the most important effect is actually the slowdown of Tier contribution on the B2B side where most of the SIMs of the TM9 government contract have been onboarded until Q3. And in Q4, there was no more growth coming from that contract. So now you can see mostly the negative B2C contribution in the overall number whereas in Q1 and Q2, Q3, there was still a positive counterbalancing of the Tier 9 ramp-up in the overall numbers.

On Slide 6, you can see that we have achieved the guidance with a stable operating free cash flow in Switzerland and also stable operating free cash flow in Italy despite the transition here and many moving pieces in Italy. This is something we are especially pleased about, and [indiscernible] will deep dive in great detail into the financial numbers, so I will not go through the revenue numbers on this slide, but we will do this later in the section of [indiscernible]. So I move on to the strategy update.

I will go directly to Page #8. I think after the stability or transition year of 2025, where our main goal was to provide stable free cash flows both from Italy and from Switzerland. We are now ready to grow free cash flow on the group level. We will do this with several means. We have a proven strategy and now a new scale in Italy. We will continue to invest in best network and services. We will continue to innovate mostly in security, AI and cloud. And we will, of course, perform in the market, striving to be the #1 customer choice in both countries continue our transformation, both in Switzerland and in Italy to remain a high-performing organization so that overall, on the Swisscom Group level, we can generate growing free cash flows in this year, but also in the future.

One word around our strategy. We have a proven strategy framework that we put in place a couple of years ago. It is centered around 4 pillars. First and most importantly is to consistently delight customers by providing best experience, best network, best hotline and great shops or shopping experience. I think this is really the key cornerstone of our success in both countries, while at the same time, constantly innovating and delivering new products and services to the market, being it in the core mobile or fixed, but also in adjacent markets around energy insurance entertainment and TV services, which allows us to also be competitive in the future. And as you know, telco is also under price pressure, so achieving more with less and constantly driving operational excellence, delivering better quality service at higher automation rates higher digitization is one of our key focus also to achieve further cost savings in Switzerland and in Italy.

And at the same time, we are constantly upscaling our employee base so that we can continue to improve the overall performance of our employee base going forward as we have really high transformation work going on with the digital and AI transformation driving a lot of the change going forward. Overall, with this strategy, we can deliver on the group ambition.

As you can see on Slide #10. We want to be a trusted leader in the digital life our consumers and in the business of our SME and corporate customers. This is based on a couple of key cornerstones. As you know, we are very adamant on having the best networks because we do believe that either on the IT side, but also obviously on mobile and fixed side, you need the best network as a basis of providing or having or satisfied customers, both in B2C and B2B. On the B2C side, we are very much focusing on a premium positioning on the telco space. We have a multi brand offering, trying to segment the market in the right way, whereas on the B2B side, to the premium positioning. We are also focusing very much on a comprehensive telco and IT product portfolio centered around security, cloud and AI next to connectivity. Wholesale helps us in both countries to increase the utilization of our infrastructure assets to get more out of the infrastructure that we are building with -- by leveraging additional brands, reselling our connectivity in different market segments.

Overall, this will lead to rock solid financials, leading to a long-term value creation based on stable free cash flows from the Swiss business, growing free cash flows from synergies in Italy, and this will allow us to deliver an attractive and growing dividend in the future years in line with free cash flow evolution. Next to delivering higher dividends to our shareholders. We obviously do not forget our bond investors. We also focus on a strong balance sheet, good rating and continue to delever the Swisscom Group balance sheet. Now One part of leading in both markets is also having the required scale to make the necessary investments, and you can see this on Slide #11.

We have now achieved #1 or #2 position, both in both markets and in both countries and both markets, mobile and fixed. I will not go through all the numbers. I think they are quite clear on the slide, but this allows us to have the relevant scale to drive investments in both countries and continue to improve customer experience. And we also have a very well diversified revenue mix, both in Italy, but also in Switzerland between the different segments, B2B, B2C and wholesale, but also between telco and the IT side, which continues to grow in both countries. And I think this is an important aspect going forward also for the coming years, positioning Swisscom and Fastweb+Vodafone as the integrated comprehensive telco and IT player delivering sovereign infrastructure and products to our corporate customers.

On #12, you can see our ambition on leading on the network side. So you see that in 2025, we continue to build out FTTH in Switzerland and also increase our coverage in Italy. So interestingly enough, we have exactly the same FTTH coverage in both countries, 56%. Our target in Switzerland is to continue the FTTH rollout and reach 60% coverage by year-end, with still the same ambition 2030, roughly 75% to 80%. And our long-term ambition, 2035, when we end the fiber rollout of roughly 90% fiber coverage. In Italy, as you know, open fiber and fiber crop continue to roll out FTTH. This also increases the Fastweb+Vodafone FTTH coverage. If everything goes according to plan, the target is to reach 65% FTTH coverage in Italy by end of this year and roughly 90% at the end of 2030.

Next to the FTTH side, we also continue to roll out 5G in both countries. So we also have exactly the same 5G plus coverage in both Italy and Switzerland standing at 89%. We target roughly the same percentages for next year with 91% coverage in Switzerland and 92% coverage in Italy with the long-term 2030 ambition of roughly 5G plus coverage. In both countries, we are constantly winning network tests demonstrating that we do indeed have the best networks for our customers. Networks is the basis of what we do. But obviously, you also need to sell and service our customers. So investing in service excellence and sales excellence is an important aspect of our strategy of delighting our customers.

So in both countries, we continue to invest in our customer loyalty programs we've happy in Italy or Swisscom Benefits in Switzerland. These programs are highly appreciated by our customer base and we will continue to add value to these loyalty programs going forward. We also continue to invest in our sales and care network to make sure that on this -- it is of high quality, highest excellence, but also expanding the footprint as we will see a bit later, especially on the Swiss side. We also have many or multiple brands in both markets, which we intend to continue to use as it is an important aspect of tiering the retail market and being able to offer premium products up to like the no frills offering in the budget segment of the market.

Next to Networks and Sales and Service Excellence, an important aspect of the strategy you've seen is to continuously innovate and bring new products to the market. I think Swisscom and Vodafone, Fastweb, or innovation powerhouses. We never stopped bringing out new ideas and new products to our customer base. At the moment, the most important aspect of these innovations are centered around network renovation internally to make sure that we have state-of-the-art networks in the core Italy and in Switzerland. And then a lot of it is centered around AI and cybersecurity making sure that our customers cannot only connect, but also connect securely. So this is done through the beam offering in Switzerland, for example, which we launched in the last year. And in both countries, we invest heavily on the AI side to provide sovereign AI infrastructure to the market.

Next to this, we also expand our cloud and application offerings. And especially in Italy, we are focused on the energy market, which is liberalized, which allows us to grow on that side. And you have seen that we have already managed to win over 100,000 customers, which is an excellent result and very pleasing also encouraging for this year as we expect quite a lot of growth coming from the energy space also in 2026. So you can see innovation is really at the core of Swisscom in Italy and in Switzerland and we will continue to focus and invest heavily in these topics as we believe that this is the only way to currently bring more value to our customers and also generate new revenues and compensate in some form or the other, the price erosion that is happening on the, let's say, classic connectivity in mobile and the fixed space. Another important topic everybody talks about is obviously AI.

We cannot conclude this analyst presentation without talking about AI. So AI has many important aspects. One of them is obviously generating new revenues with new product offerings. So for this we have offerings in both markets that allow us to sell professional services, helping our customers using AI and implementing AI solutions. So we have offerings both in Italy and Switzerland the rent model as a service or we go up to the infrastructure level where we have an NVIDIA infrastructure [indiscernible] you can really see that on the [indiscernible] and hopefully [indiscernible] AI internally for 2 purposes. Here, for example, but also to drive which we are existing offerings [indiscernible], we really want to be at the forefront of sustainability because we believe that to drive business performance if we take care of our environment.

But especially if we also take care of our society by suppliers, employment conditions and act with the right governance especially behaving in a trusted, ethical way, which from our point of view is absolutely mission-critical for our brand positioning in the market and being able to sell to our customers, digital services like cloud, cyber or AI services, which are rooted in a deep trust that we treat the customer data in the right way, which is very tightly linked to behaving in the right way from a governance perspective.

So you can see that the ESG topics tie very neatly together with our business strategy and is really sort of underpins or helps us to drive business performance by -- at the same time doing something good on these dimensions. So we are committed to continuing our path for the first time in the history of Swisscom Group, we have a group-wide sustainability strategy, which we put in place now post Vodafone acquisition. So this is something I'm very happy about. And for the first time also, we have an integrated annual report, which tackles all the financial and ESG topics under a simplified CSRD framework. So you can also see that we are making progress on the financial reporting side, which I'm very pleased about. So we're coming to the performing side.

So what will be the result of all of these actions we talked about or the priorities in this year. So for Switzerland, it is clearly managing the telco top line slowing down the service revenue erosion by working on new levers with new products or the price increase we announced a couple of weeks ago. We continue to work on telco cost aiming at delivering cost efficiencies again in 2026. And of course, we want to continue to grow profitably on the IT side. And overall, if we manage to execute these 3 priorities properly, we will have stable free cash flows from Switzerland in this year. On the Italian side, that the most important topic is obviously to continue to drive the integration and capture the synergy potential that we announced when we signed the deal.

And Walter will talk a bit more detail about how -- what we intend to do this year. We will continue the telco turnaround that we started last year to stabilize service revenue in Italy, both in B2B and the B2C space. And as in Switzerland, we will continue to scale the IT part of our business, but also the energy business to create new revenues and go back to top line growth in Italy in the next quarters. Upon executing those 3 priorities, we will also then have growing free cash flows from Italy, so that overall, on the group level, we also have growing cash flows coming out of the group. This was it on the group strategy update. I will now move to chapter the next chapter, which is the business update in Switzerland.

I will start with Slide #19 where you can see the 2025 achievements. So I think we really successfully reinforced our #1 -- or our position as #1 customer choice in Switzerland. We had a lot of activity around delighting our customers. We worked a lot on our branding, our positioning. We had a big brand update in the Swiss market, which we executed with very positive feedback. We continue to expand our shop footprint to reach our customers even better and we managed to win all the services, as I already mentioned before. At as we improved and delighted customers, we, at the same time, optimize our cost base. So you can see that we delivered another year of telco cost delivery of over CHF 50 million of cost savings that were delivered. And we started to work more intensively now also on CapEx efficiency that we continue to improve also this year going forward.

Overall, we invested over CHF 500 million in the FTTH rollout and we are fully on track to achieve our targets by 2030. And we are also focusing quite a lot on the fiber monetization. And you will see some numbers later on that we made really great progress, especially on the fiber penetration side. The IT growth continues. It was slightly lower than expected in 2025, but we continue to be committed to the IT growth and continue to invest both in the cloud and security space, bring out new portfolios to really drive also is the revenue growth in this year. And what I'm really pleased about is that we were able to further improve the profitability of the IT business, and we also plan to further improve profitability in this year. Now what does this mean for B2C? You can see on the B2C overall, we have like a dual strategy in the market.

We need to defend our core market. At the same time, we attack with the second and third brands to overall keep the value as high as possible. You can see that the blended ARPU is still declining in Switzerland, roughly CHF 1. This is mainly linked to the fact that we still have a brand mix shift from the main brand to the lower brands with Wingo and Cope and Micro Mobile, essentially, the prices on the individual brands are roughly stable. We have executed a price increase last year on Wingo plus CHF 1. And you have seen that we announced now a price increase also on the Swisscom main brand, and we will see the impact of this going forward. Really, I think highlight also on the B2C side is the increased fiber penetration, which went up by 7% last year. On the one side, linked to the increased fiber footprint, of course, that we build, but we are also very actively working on the copper decommissioning so that we can shift customers over to the fiber network wherever there is fiber network and a copper network in parallel.

And you can see the effects of this now going quite impressive uptake of plus 7%. This will be one of the main priorities also in this year continue to roll out, continued penetration and counter the ARPU pressure with the best service, the best products so that we can keep the NPS high and churn low. As you can see in the middle, we have quite a big NPS lead in the market compared to our competitors, and we continuously work on this to make sure that our customers continue to be happy, which they seem to be as we have record low churn. You can see on the right-hand side, 7.3% on mobile and 8. 5% on B2B -- on the broadband, sorry, not on broadband. And we continue to work on keeping this lower churn level won by customer satisfaction, but obviously also by extending things like the Swisscom benefit program to make sure that the customers, which are with us, remain happy and loyal to the brand.

Overall, we managed to win 100,000 RGUs accumulated over the year. You can see that the second and third brand penetration slightly increased on the mobile side went up 36%. And on the wireline side, side, we had a slight decrease of 17,000 net adds, whereas the second brand penetration increased also by 2 points to 30%. And and we do expect a similar movement again in this year.

Now on Page #21, you can see also some more information on the business. We continue to grow in entertainment, sports and streaming. So we have another year of growth on the blue sports subscription side by plus and we will continue to invest in this adjacency also going forward in this year to make sure that customers not only buy broadband but also TV and other adjacent services in the entertainment space. Something which I am very pleased about as well is the launch of a new AI offerings for consumers in Switzerland. So we launched Swisscom, My AI, which is basically a sovereign GPT for customers, which we launched a couple of months ago, and we were able to attract 67,000 spend capabilities of this AI solution for consumers and continue to accelerate the growth and make sure that as many customers as possible start of this offering, but rather growing the customer base, and then we will look into monetization a bit later down the road.

Another key topic that we are driving this year is security as a differentiator. So we not only want to have the best network, but also the securest network. So we launched a couple of products like a security dashboard or identity monitor last year, and we will continue to launch new security features also going on this going forward this year to really make sure that security becomes like a new growth avenue for us. As you can see that last year, we were able to grow revenues by 4%, and we will continue to invest and launch additional security features for consumers going forward as we do believe that next to connectivity, having a secure connectivity is absolutely crucial for our consumers the more they are in the digital space, the more they use digital services, the more cybersecurity and protection will become -- will be more important.

Now moving on to on Slide #22. First, you can see ARPUs are down by minus 2%. So there is still quite a lot of price pressure in the market. This has 2 effects, I would say. One is really the competitive pressure in the market, both in corporate and SME, but also still ongoing technology shifts, such as MPLS to SD-WAN, which allows customers to substitute high-value connectivity with lower-end connectivity that basically drives down our average ARPU per product. The RGU base is roughly stable, slightly increasing overall, where it's growing on wireless, it was slightly declining on wireline as we lost a couple of bigger corporate customers in 2 over the last year, these locations have been migrated that led to a slight decline on the wireline side in the last year. We talked already several times about BIM, and I think we will talk about Beam every quarter this year because it is really a key cornerstone of our new connectivity proposition on the B2B side, really unifying connectivity with cybersecurity.

So we launched it about half a year ago. we managed to bring nearly 40,000 users and nearly 1,000 locations onto the new platform. We are very pleased with these numbers. They are ahead of our expectations. And we continue to drive sales now going forward in this year to really ramp up as much as possible the number of users and locations onto this new and very innovative service. And as you can see, there is quite a big market demand. There is good response we see from our customers, both in the corporate but also on the SME side, and we will continue to invest in this product bring out new features, new capabilities, which are especially important to our bigger SME and the corporate space so that we can really fulfill the full breadth of cybersecurity offerings so that we can drive revenues we've been not only this year but especially also in the outer years, '27 and onwards.

One important aspect to drive the beam take-up on the wireline side is the technical migration. So this is something you see at the bottom of the slide. We now stand at 67% of all wireline connections, which have been migrated from MPLS to SD-WAN and we strive to complete this migration by end of this year, so reaching 100% of A base in our wireline business of B2B. This is also the necessary requirements so that you can move on to the beam offering because on the beam side, everything is software driven. So this is an important aspect that we will focus on this year so we can finish this technical migrations. And once this is done, also ARPU effects from MPLS SD-WAN movement should start to fade out. You will obviously still see them in '27 as you have the year-on-year comparison with '26. But over the -- going forward, at least this sort of structural technology effect will fade away over time.

On the NPS side, we had a successful year in '25. We have a great NPS both in corporate and SME, and we're able to keep it stable overall.

Now moving on to wholesale on Page #23. We are the leading wholesaler in Switzerland, and we want to defend this position. I think we are doing a great job on the wholesale side. We have high customer satisfaction with many, many customers that we are serving what is important or especially important with regards to the fiber rollout is that we can continue to drive the access service revenue on the wireline side. So you see this on the bottom left of the chart, we had a 9% growth in wireline revenues from the axide going CHF 186 million to CHF 203 million in 2025, and we intend to continue to grow this revenue as the fiber footprint continues to grow. And as we continue to monetize our infrastructure. What is also especially pleasing is that on the wholesale side, we already have more than 50% or precisely 51% of all active connections are already on FTTH, 49% are on our copper network. And we expect this FTTH share to continue to grow throughout 2026 and what this means is that basically, the service revenue, you see this CHF 203 million are generated already by over half by the fiber side, meaning it is future proof.

It is protected also going forward. And I think this is an important aspect of making sure that the wholesale revenues we have on copper are migrated to the FTTH side as we continue to build out the network. Now next to revenue. Obviously, cost is also an important topic in the telco space.

So you can see on Page #24, what we are doing on the cost side. So we have many different levers that we are pulling on to decrease our cost base. So one of them on the -- in the service center side is increasing the near-shoring share of our workload. So you see the advancement that we made in the last year, and we will continue to near show more of the outsourced workload also this year to generate cost savings or like factor cost savings. And at the same time, we are also working on the digitization of customer service, where we have very encouraging results on the chatbot side. So you can see the automation rate or basically the number of incidents that the chatbot can really successfully autonomously solve, which has gone up from 30% to 53%, meaning that we can serve much more customer incidents through the chatbot channel, making it a much more effective channel and allowing us to generate more cost savings in the future.

Now with Agentic AI and progress in AI, we do expect this 53% to further increase over the coming years and making these chat bots and also increasingly [indiscernible] the chatbot service a much better and more effective channel going forward on the hotline side. We're also experimenting digital features in shops. We are trying out or experimenting with new lean shop format. So we want to increase our shop footprint, meaning having more shops throughout Switzerland, but at the same time, decreasing our cost base in the shop side. We do this by digitizing shops on one side by having new leaner format. So one of them is, for example, we have like pop-up stores which we only have on weekends in shopping malls. And so we are experimenting with different aspects to always optimize the cost of sales or in the physical channel.

We are not only doing this on the B2C side. We're also obviously working on workload or call center workload on the B2B side. So you can see at the bottom the achievements we have on the B2B side, workload reduction by simplifying our product portfolio, moving to FTTH. We have less calls also on B2B. And overall, this allows us or allowed us to decrease the B2B telco cost base by 4% year-on-year in '25, and we will continue to work on our telco cost base also -- or B2B telco cost base going forward this year.

Now on Page 25, you can see some highlights linked to the network where we also focus on generating cost savings. So one of the structural cost savings that we will see also going forward is obviously the copper phaseout. So at the peak, we had 2 million copper active copper connections inside Swisscom. Today, we stand at CHF 1.6 million active corporate connections, that's minus 20% over the past 2 years. We reduced by 200,000 the number of connections in 2025 and expect a roughly similar decline also this year by, again, a drop of around 200,000 corporate line. So you can see that we're making good progress on the copper phase outside, and we are completely on track to achieve our phaseout target of 2035.

We are not only working on the access networks. We're also working very heavy since many, many years, basically since I'm at Swisscom in 2019. We are working on modernizing our core platforms. So you can see that in 2019, we had 57 core IP optical platforms. We are now standing at 35 platforms, and we continue to modernize and phase out older legacy platforms, and our ambition is to reach 18 core platforms within the next 2 years meaning a 70% reduction compared to 2019. And this is obviously also generating continuous cost savings as we are able to turn off certain platforms, both in FTEs but also electricity, maintenance costs, et cetera. So going forward, we are focused to deliver more telco efficiency. Our guidance for this year 2026 is CHF 50 million cost savings in Switzerland, working on the same levers as the past network and IT simplification and phase out data and AI, leaner and more agile organization, factor cost optimization with nearshoring and more and more digital customer interaction on B2C and B2B.

Now last topic on the Swiss side, B2B IT on Page #26. Sorry, I just need to have a quick drink. So we are the leading Swiss IT provider in Switzerland, and we want to lever this position to unlock more growth that in 2025, we were able to grow plus 2%, which is slightly below our expectations. But last year was not an easy year in Switzerland on the IT side with all the tax uncertainty with the U.S. with macro, other macro uncertainty, leading many of our customers to delay some of the IT redimension some of the IT investment. So I'm pleased that we still managed to generate a slow small growth. of 2% in these market conditions. At the same time, we worked on our cost base on the IT side. We improved our EBITDA margin to 6.5%, and we are intending to further improve this margin also going forward in this year.

We do this by continuously also automating and digitizing service offering on the B2B IT side. And as I already mentioned before, we will continue to push the AI side in the private cloud, sovereign cloud offerings at the same time as leveraging our strategic partnerships with several different vendors in the IT space.

Now to summarize all of this before my voice completely stops working. We focus on managing the telco top line, trying to slow down the service revenue erosion by growing wholesale -- the wholesale access, but at the same time, working on the best products and care will continue to generate telco cost savings with high discipline both on OpEx, but also working on CapEx efficiency. And as mentioned previously, we are working on our IT side to, on the one side, grow the IT business and make it more profitable and achieving all of these 3 objectives. Overall, we will deliver stable free cash flows in 2025.

Now Walter will explain to you we will grow free cash flows in Italy.

Thank you, Christoph. Welcome to everybody also from my side. We are at Page 29. I'm very happy to say that through this has been a transition year for Italy, as Christoph said, but we are very happy about the results. Why? For 3 reasons. First of all, we delivered on promises, especially on synergies. You will see that we are ahead of the plan. We also deliver a stable free cash flow despite all the challenges of this year. And last but not least, we set the foundation for the future growth from this year onwards. So let me enter into the main achievements of this year. Of course, integration is the first one. We started the very early in 25 to integrate the 2 organizations. And now we have a full integrated single team that is driving the business.

We also aligned the go-to-market and the product portfolio of the 2 brands, Fastweb + Vodafone. And as said, we have delivered -- over-delivered on synergies. This is very important for us because this shows that the rationale is confirmed and even reinforced. Another important strategic project for the year is the run sharing agreement with TIM is a preliminary agreement still subject to authorization but is extremely important for us because this will bring us additional value in the medium term. Why? For 3 reasons.

First of all, this will accelerate the 5G rollout in the low-density areas namely the towns with less than 35,000 inhabitants. Therefore, will bring more value to our customers, a better service wide fag coverage, so good for our customers. Second, this model allows us to be totally independent from a commercial and technical point of view, so we can bring our own innovation on those areas. Last but not least, again, the efficiency gains because we'll save electricity, we'll save maintenance and this will bring additional value to the company. As I said, the other priority for us was continued to be the stabilization of our telco service revenue. We have started the year main KPIs going in the wrong direction, but we were able to change this trend over the year. So we are very happy on how we are executing our value strategy. Value strategy, which means we bring more value to our customer and we can continue to work with them with new products.

But there is not only a stabilization of revenues. We have worked also to develop new growth areas. So wholesale is one of those both on fixed and mobile, we are continuing to grow, and we'll discuss in a second, but also energy is growing very well together with the IT in the B2B market.

Page 30. I will deep dive the integration. I said for us was key and crucial to start working together as fast of a Vodafone. So we achieved to have a single team already in place by mid- and then we worked to align processes, HR processes, but also to set a new framework for the new culture of the company. So in '26, looking forward, we are working to optimize our organization. There are still areas of efficiency that we want to gain but we need also to establish and implement the new winning culture that we are designing together with the old employees. Another important aspect is related to the integration of our product portfolio, but also of our sales force, both on fixed mobile, both on B2B and in B2C.

As you can see from the slide already all our shops have been changed to a dwell branding image. So in all shops, you can find both Fastweb and Vodafone products. So this is an improvement in the boost of the sales of the 2 brands. And then our operating model. Our operating model is changing. Since January this year, we have completed the legal merger between Vodafone merged into Fastweb, but this will bring massive simplification for our processes. So we need to work along this line also for simplification of processes, consolidation of location all over Italy and also aligning HR policies for all our employees.

Next page, synergies. I said we are progressing very well. We are very happy about the progress on especially on the migration of the faster mobile SIMs, the 4 million SIMs on the Vodafone network. This has enabled us to reach the CHF 200 million synergies up and running for '26. So we completed this migration of plan. So we are very happy for what we did. We'll continue to work on synergies in '26. We need to work on fixed network because we need also to optimize the access cost by leveraging on the best of breed of footprint we have in faster by Vodafone, which will bring additional efficiency, but also new technologies to our customers.

Another important element is that we are working on reviewing our strategy. The current terms and conditions of our contracts are not sustainable especially in light of the telco market that is very competitive and with strong pressure on margins. So we will work on that front unfortunately cannot say much. As you know, this is a very sensitive topic. So please understand that we will not answer any further questions on this topic. I can only say that as usual, we try to work with our partners to find a win-win solution. But at this stage, we will investigate all the options that we have on the table to maximize the value for our shareholders. Another important piece of the synergies that we realized in '25 is the disentanglement of the in-sourcing of some services that are currently provided by Vodafone Group.

So we worked very hard with our teams to define migration plans and to start executing on those. Just to give an example, we are very proud that at the very beginning of the year, we've been able to introduce our WiFi modem on Vodafone customer that is completely managed by us. This has brought simplification on processes and efficiencies on cost. So we will continue to work on new services to in-source but we will also continue to collaborate with Vodafone Group where we see that there is a value in working together. So all in all, in '25, we overachieved the synergies by CHF 35 million. Very happy about that. And we are on the right trajectory to reach the CHF 600 million at 2029.

So now we are working on consolidating IT, on consolidating the networks and to further optimize the external spend. Page 32, B2C. As you know, consumer market is very complex, is highly competitive, but we decided to exit the volume strategy, which focuses only on promotion. So we moved on a value strategy. Value strategy means bring value to our customer in a more formal approach. For this reason, we worked very hard on our product portfolio on our pricing to bring to our customers the best products on fixed and mobile is not only that, we also worked on quality. We are increasing the customer experience to our customers. And this has turn into a very satisfactory trend of the ARPU in outflow gap, which has been reduced by 60%, both on fixed and mobile during the '25 if compared to last year. So if you look to the customers, you see that on mobile, the customer losses are 2.7% through that you don't see improvement there.

But to be honest, in debt losses, most of them are related to low-value customers. We are talking about tourist SIM. We are talking about second SIMs. We've been able to keep and develop our customer base, our high-value customer base. On the B2B is more evident the result of this strategy. As you can see, the losses of fixed are reducing quarter-on-quarter. We are very happy about this development, which again set the trend for 2026. Another important pillar of our value strategy is also to deliver transparent and simple offer to our customers. And this is extremely important because if you treat well the customer, then they will stay with you, and this is very evident if you look to the churn reduction in mobile and fixed which has been very satisfactory to us.

Last but not least, we continue to work on enhancing the customer experience. We have seen the NPS growing in all the brands both on fixed and mobile, and this is crucial because the customer starts to understand that we deliver value to them and they recognize our brands as premium brands with quality. If I look at '26, we need to continue on this trend. We need to continue to deliver value to our customers. We need to continue to deliver quality to our customers to bring new products to our customers that are in line with their expectation but it's also a matter of being transparent with our customers. This is the reason why we are continuing to align the front book and the back book prices to reduce the in-out spreads and therefore, also reduce the churn and then extend the convergence benefits because the more the customer buys new services, the more they are loyal.

Last but not least, we need to work on optimizing sales structure. We need to work on increasing the by continuing to improve the customer experience. And during the course of this year, we will also introduce new eye driven tools, which will help us both on churn reduction, but also on cross-sell and upsell of our services. On Page 33, we talk about B2B in '25. We know very well how to manage this segment. We put together immediately the best of the 2 in terms of product portfolio. So we can deliver the best of fixed, thanks to the faster experience. We can deliver the best of mobile thanks to Vodafone experience and skills, we are combining all this and bring it to our customers. And this is extremely important because it's allowing us to gain traction in the order intake, especially on the high-value customer the order book is growing very well.

This means that we deliver value to our customers, and they are starting to -- they are continuing to buy from us. The churn is also very important. So we started immediately to renegotiate the contracts that were going to expire we did in advance and we did with a different approach, which is a value approach. So we started to offer to them more value in exchange of a longer contract. So this is working because we see the trustable that you can see also on the RGUs that are growing on mobile, thanks to TM9, pretty stable on fixed thanks to this strategy. Also NPS for us remains key. Also in the B2B, we are #1 or fixed with the faster brand, #1 on mobile. Thanks to the Vodafone brand, we'll continue to work and bring innovation to our customers, also working on some initiatives like the mobile private network, which shows how we can deliver also a complex project to our customers.

On '26, again, we need to continue to work along this line, order intake will continue to grow also in '26. We will continue to simplify our product portfolio in order to offer always the best products to our customers. We need to work on churn, but also to optimize and maximize the value of our complementary public sector tenders. Again, also for B2B, customer experience is key. We'll introduce AI in the operations also in the B2B, and this will bring us additional value for this segment. Wholesale for wholesale was a great year '25 bottom-fixed and mobile. You see on this page, the growth that we did on fixed over 200,000 lines but also mobile, over almost 2 million lines added to our network, thanks to the crop [indiscernible] on our net. This shows the superiority of our proposition the quality that delivered through our network. But as you can see, we are not only working on the network. We are also delivering operational excellence.

You see a couple of KPIs that are improving significantly, the activation process is shortening and also the one-day resolution is improving considerably. So in '26, we'll continue to grow in the ultra broadband market, leveraging on our strong customer base. We will try to drive up the FTTH because we see more value on those customers. And so we will continue to strengthen the operation on that front. We will also continue to work on mobile we would like to minimize the post losses that will happen this year. And we are also working to find new customers. One of those is Kai that we launch in the course of 2026. Energy. Another important key driver of growth for us, both on consumer and B2B, we launched energy in mid-'24 and now after 1.5 years, we are very happy about the development of this service, especially in terms of growth of customers.

You see we are over 100,000, but we are growing also in terms of new acquisition we did 141,000 acquisition in 2025. So we will continue to scale up this service, this business. We opened the Fastweb offer to the Vodafone customer base. We still see space of growth on that front. We are also opening continuing to opening new sales channel to fast of Energia. We are very happy about the development of the B2B, especially in the small and so business where we see still space for growth. So we'll continue to work to increase the customers on that front. But we will also work on the value creation as we want to evolve from a pure reseller towards market operator. This will increase the margins that we do. on those services. And energy is also very important to strengthen our convergent proposition because we will push more and more on what we call convergent fixed mobile and Energia together, this will bring additional value -- additional loyalty from our customers.

IT is another important driver of growth in the B2B market. We are working on 3 main products. One is cloud. over the course of '25, we have invested in building a strong product portfolio, which is based on sovereignty, but also on the capability to offer multi-cloud proposition to our customer. So as you can see from the picture, we have our own proposition. Fast Cloud is build from us. So it's bringing sovereign 100%, but we have also a significant partnership with AWS and Oracle that are growing very well in the cloud market. Cybersecurity is another important element of our proposition. We offer network security, but also cybersecurity services to our B2B customers. We will introduce AI also in that front to enter also the SME market where you need more automation in order to have a proposition that is compelling with this segment?

Last, AI. AI is key, as Christoph said, in our strategy, we have developed internally in Italy, an end-to-end solution for our customers. from the infrastructure. We have a supercomputer in Milan, which we can leverage. We have our own LLM models. We are developing new application on top to that, we want to bring all this to our customer to offer them a so ramp proposition, but also compliant with all the regulation in Italy and in Europe. This business is developing very well. As you can see, we have over 25,000 licenses sold mostly to so SMA, but we are very happy the result of this new segment. So in '26, we need to work to expand these services to continue to grow on that front and to bring more value to the overall company.

Last slide from my side. Again, we are very happy about what we did -- we are working very hard to integrate 2 big companies. We are now already have a single organization working. We need to have a single culture, a successful culture and future-proof operating model. This is the focus of this year. But we need also to accelerate synergies ramp up. The target of this year is CHF 300 million. We are fully on track to deliver on that. So we are -- we will deliver on that front. Second priority is to continue the Tesco turnaround. You have seen KPIs changing direction, in the right direction. So we need to continue to execute our value strategy, and we need to continue to grow on the wholesale business despite the losses of Poste.

Last, but not least, again, scale growth, thanks to energy and IT, new businesses that are growing very well. We have a good product development in place. So we think that with these 3 pillars, we can continue -- we can start to generate growth in the midterm. Thank you very much, and I leave the floor to Eugen.

Thank you, Walter. Hello, everybody, from my side. Let's move on to the numbers. Page 39, maybe a sentence or 2 at the start. Christoph mentioned it 2025 was a new chapter in Swisscom's history. From a financial point of view that Chapter made for very pleasant reading. So I'm quite happy to present these numbers today. All the numbers that we are going to see are in line with guidance and in line with previous capital markets communication. We delivered what we promised at the outset of the year, stable free cash flows from Switzerland and a transition year in Italy, which incidentally also delivered stable free cash flows from Italy.

So we are very happy with the results. Happy to turn the page to 2026 to grow free cash flows. But before we do so, let's dive into all the results in the appropriate detail. As usual, I'll start with the group overview and then deep dive into the segment Switzerland and segment Italy. So let's start with revenue at group level. Revenue was CHF 15.48 billion, fully in line with guidance, CHF 310 million down year-over-year. CHF 105 million of which were due to currency effects. So net of currency, revenue was down CHF 205 million, CHF 108 million, out of which from the segment Switzerland mainly reflecting lower telco service revenues million lower in Italy, reflecting, on the one hand, lower telco service revenues, but on the other hand, compensating higher revenues from the IT business from the wholesale business and the Energy business.

On the level of EBITDA, CHF 4.984 billion, also fully in line with guidance. On a reported level, down CHF 60 million on an adjusted level, down CHF 100 million. I will cover all the adjustments in individual segments. It's easier to explain in Switzerland and in the Italy segment. So Switzerland was down just CHF 27 million EBITDA on an adjusted basis. That's the net of telco service revenue down on the one hand and cost savings on the other hand, and the positive contribution from the IT business, Italy was down CHF 54 million. That's the net of the impact of the telco service revenue decline but also synergies already kicking in, starting mainly in Q3 and then accelerating in Q4 and also the result of the very pleasing wholesale growth that we already about.

We have a jump in Q4 that you see there is plus CHF 41 million. That's partly driven by synergies, but not only, and I'm going to explain it later when I talk about Italy.

I'll move on to Page 40, which covers CapEx and operating free cash flow on group level. So CapEx at group level was CHF 51 million below prior year. On an adjusted basis, CHF 102 million below prior year, both in Switzerland and in Italy, we had some onetime CapEx item in 2024. So that helped us together, obviously, with the usual cost discipline, deliver lower CapEx in both countries. Obviously, in Italy, there was also integrin CapEx, which we are going to talk about later, which is shown in the adjustments. But on an adjusted basis, CapEx was down. Now on operating free cash flow, with EBITDA down and CapEx down as well, we were able to deliver stable operating free cash flows both reported and adjusted. In Switzerland, EBITDA are slightly down, CapEx slightly down, stable operating free cash flows and the same in Italy, EBITDA down, CapEx down and stable operating free cash flows.

Now let's dive into Switzerland, Page 41. Revenue down CHF 108 million B2C minus CHF 24 million. So we had lower telco service revenue in B2C of minus CHF 52 million, but higher hardware sales, which compensated badly, we had a hardware device push in the market in the fourth quarter. And this is why in Q4, you see a slightly positive number on revenue. B2B down CHF 80 million year-over-year. There is obviously a telco service revenue component to that of CHF 70 million. But that revenue decline is at least partly also by design because we also have lower hardware revenues as we try to avoid having revenues with 0 margin and focus on the higher-margin business, a strategy that we already explained a couple of times over the course of the year.

And then there was another positive effect compensating partly the service revenue decline, which was moderate growth in the IT services business. On wholesale, plus CHF 4 million doesn't look like much. But behind that, there is steady growth in the wholesale bioline business, Christoph showed the impact before. This was masked somehow by smaller leased land businesses and mobile back holding and in particular, in the fourth quarter, also some lower termination revenues. So there are always some volatile elements in the wholesale revenue, but the underlying trend, which is important is the growth in the wholesale wireline business, in particular on FTTH. Now EBITDA in Switzerland reported plus CHF 33 million on an adjusted basis, minus CHF 27 million in between the adjustments of CHF 60 million. Now we had sizable adjustments over the course of the year, which I explained in the individual quarters. Most of them are a wash in the end.

So what shows up in the end here is plus 60% compared to prior year is exactly the transaction costs in relation to the Vodafone acquisition that we booked in segments Switzerland in the prior year. Obviously, there are no such transaction costs anymore in 2025. So we have a positive year-over-year effect that shows up in adjustments. So if we focus on the adjusted numbers, B2C, first, minus CHF 19 million. That's due to service revenue at the kind of minus CHF 52 million, which we could compensate partly by cost savings, indirect cost savings, but also lower subscriber acquisition cost softening EBITDA flow from Batelco service revenue decline. In B2B, EBITDA are down CHF 44 million. That's also due to the service revenue decline. On the one hand, we had some cost savings and in particular, where the small positive contribution from the IT business. Wholesale is up in line with revenue and Infrastructure & Support Functions segment, ISF, up CHF 32 million. There is a number of cost savings in there, obviously, from workforce savings IT cost savings, maintenance and energy savings.

I'll dive into the Swiss P&L next on Page 42. On the top left, you see the telco P&L with the service revenue decline of minus CHF 122million, minus CHF 52 million, B2C and minus CHF 70 million B2B entirely as expected and as communicated already in Q3. You also see they are up on the top left in the box, the plus CHF 53 million cost savings, which partly compensated the service revenue decline. Also the number completely as expected and also as expected and previously communicated, a small contribution only in Q4 of 2025.

Together with some other smaller moving pieces, we yielded a decline of CHF 40 million in the telco business that you can see on the top left chart. Top right, IT business growth of CHF 24 million in revenues year-over-year and a positive impact on EBITDA of plus CHF 13 million, which helped balance the Swiss EBITDA together with minus CHF 40 million from the telco business, this adds up to the minus 27% of the segment Switzerland that we looked at on the previous page. Now importantly, telco service revenue bottom left, there is actually not much to report, no news is good news. We are facing a very stable situation here. There are some variations from quarter-to-quarter, for example, in B2C, but overall, the situation is very stable. So I'll go directly to the outlook for 2026.

We expect service revenue in Switzerland in the same order of magnitude as we saw in 2025. Yes, there is the price increase that we announced in January. But obviously, this price increase will have a gross effect from the price increase and after churn a net effect. And as of today, we obviously don't know yet how big this net effect is going to be or how big the churn is going to be. Number one, point number two, important for you to understand the dynamics already in 2025, we had a non-insignificant increase or positive impact on our service revenue out of price increases. You see it in the wireline ARPU column of this page, where you have a small sentence that says plus CHF 33 million value. So this is the year-over-year result in 2025, out of all the small targeted price increases that we already realized in 2024 and beginning of 2025. So in the dynamics from 2025 to 2026, yes, there is a new across-the-board price increase. But we already had price increases in the past and the dynamics. Therefore, we do not expect to change significantly.

I'll move on to Page 43. CapEx, as I mentioned, slightly down in Switzerland with plus CHF 33 million. We spent as planned, CHF 500 million on the fiber rollout. And so with lower EBITDA and also lower CapEx, stable free cash flows from Switzerland on an adjusted level and reported level plus CHF 66 million. Let's dive into Italy. Starting with revenue. Revenue -- now that's all in euros, by the way. So revenue down CHF 81 million mostly due to B2C. B2C revenue was down CHF 100 million. There is a telco service revenue decline of CHF 160 million. compensated, however, by the growth in energy that Walter mentioned before and by some hardware revenues that were growing as well. In B2B, down CHF 16 million year-over-year. There was also telco service revenue declining B2B of minus CHF 66 million, but the IT -- the growth in the IT business of CHF 42 million was able to compensate most of that.

Very importantly, on wholesale, strong growth, both in wireless and in Byline, actually much more than you see here in the plus 37 total so wireless and wireline together was about plus CHF 70 million, but we had some other wholesale revenues with practice 0 margin, which went down year-over-year, which we inherited from Vodafone. So you see the net effect of all these 3 positions here of plus 37%. Obviously, the margin impact of wireless and wireline will show up in the EBIT bridge to which I move now, EBITDA reported stable plus 1% on an adjusted level, minus CHF 57 million. Now the adjustments in between of plus CHF 58 million, that's mainly the decrease of OpEx integration costs year-over-year. You may remember that last year, at the end of the year, we already booked OpEx integration costs in the amount of CHF 176 million in connection with the termination of our MVNO agreements with [indiscernible] and with Telecom Italia. This year, we also had OpEx integration costs of different sort of CHF 109 million. And so OpEx integration costs in '25 were actually below 24%, and this shows up as a positive impact here in the adjustments column. So if we focus on the adjusted numbers, contribution margin, B2C, down CHF 93 million.

That's obviously mainly due to the service revenue, the kind of CHF 160 million, but also importantly, synergies ramping up. So if you look at the Q3 and in particular, the Q4 numbers, so finally, after talking about the MVNO synergies for the last 2 or 3 years, we see the actual numbers. You see these numbers are kicking in, in Q3 and Q4 where we almost reached a run rate of these synergies on a quarterly basis and which is obviously very nice to see. B2B contribution margin flat. There is 2 things driving this really. One element is the shift from telco service to IT services, which has a negative impact that you see throughout most of the year, if you look at the individual quarters. There is a second driver that shows up in the fourth quarter. This actually has nothing to do with 25%, but much more with 2024. In the fourth quarter of 2024, Vodafone had some significant negative impact from device subsidies on a large B2B or public administration contract. We don't have these anymore in 2025.

So this shows up is a quite significant positive impact year-over-year, but it certainly rather a onetime effect, the underlying trend is rather a shift from B2B telco to B2B IT that we saw in the previous quarters. Together, the Q4 impact in B2C of the synergies and this kind of onetime impact in B2B. Together, these 2 effects explain the jump in EBITDA in the fourth quarter in Italy that I talked about at on the very first page. Wholesale plus CHF 34 million, so that's the margin impact of the CHF 70 million plus in wireless and wireline revenues. Indirect costs are more or less flat. That's a net effect of growing costs from the InVIT MSA and from energy on the one hand. And on the other hand, the first synergies coming out of the disentanglement from Vodafone, and there are some quarterly variations in between, but net, it's a flat development.

So I'll move on to telco service revenue in Italy, also a very important topic also looking forward. So let's start with the total number for 2025, which is minus CHF 226 million B2C and B2B taken together, minus CHF 160 million B2C, minus CHF 66 million. If we look at the quarterly evolution in Q4, we have minus CHF 60 million, so slightly improved over Q3. In B2C, it looks slightly worse than in Q3. We already heard about the increased churn due to our back book to front book alignment in B2C wireless that was announced in October. So customers could already react to that in Q4. The price increase is effective in December. So what we see is the negative impact from added churn, but not yet much of a positive impact from the higher prices. B2B in Q4 is slightly better than Q3. You might remember, I explained that in the Q3 conference was mainly impacted by onetime revenues that we had in Q3 2024 that we were not able to replicate.

And now in Q4, things have normalized a bit on the B2B telco service revenue side. Now I think it's important to understand the individual drivers because they tell us also something about how things are going to move forward into 2026. So I'll go one by one. B2C wireless. Yes, B2C wireless RGUs were down year-over-year. ARPUs were down year-over-year. But as we heard from Walter before, churn numbers are significantly down. The ARPU decline is slowing down as the ARPU spread between Awin and ARPU is declining strongly. So we are definitely moving into the right direction, even if it doesn't show up yet in the year-over-year numbers. Similar story on B2C via line. Yes, [indiscernible] down. And yes, ARPUs are declining year-over-year.

However, if you look at the quarterly numbers, and Walter showed it before, the RGU losses have already come down significantly over the years. So they were mostly in Q1 and Q2 due to commercial decisions taken by Vodafone in the prior year. Churn numbers have come down significantly and also the ARPU is stabilizing. So also here, moving into the right direction. So the short story is -- we lost a lot quarter-over-quarter from Q4 2024 into Q1 2025 and Q2 2025. Now things are stabilizing quarter-over-quarter. But year negative impact. So we will all need to be a bit patient, and that takes me to the outlook. So the outlook 2026, very important is clearly better than what we saw in 2025. We expect a gradual stabilization of year-over-year numbers from the second half of the year onwards.

In total, we expect a service revenue decline of about minus CHF 150 million, which is significantly improved vis-a-vis 2025. And those CHF 105 million, we expect to be split roughly 2/3 into B2C and 1/3 into B2B. Sorry, that was a long explanation, but I think it's very important to understand the dynamics going forward. So quicker on this one. CapEx, as I explained, down year-over-year and with lower EBITDA and lower CapEx, stable operating free cash flow in a transition year, which is obviously very positive.

Page 47, synergies and integration costs. So synergies ramped up to CHF 95 million in -- at the end of 2025. Over achieved our CHF 60 million target mainly due to the faster migration of the faster mobile customers on onto the Vodafone network. Also, integration costs were in line with target, CHF 217 million. We talked about the target of CHF 200 million. Now overall, this doesn't change anything with regard to our plans. So the total run rate synergy that we expect is still at CHF 600 million. The total integration costs we expect over the first 3 years is still CHF 700 million. The ramp-up changed slightly to the better. So the ramp-up accelerated EBIT both on synergies and on integration costs. For 2026, we expect and added CHF 200 million of synergies, so plus CHF 200 million of synergies in 2026, 3/4 of which are related to the MVNO synergies, which are basically already in the bank with the migration having been essentially completed by the end of the year.

And on the integration cost front, we expect another CHF 250 million to be accrued this year with CHF 200 million in CapEx and CHF 50 million in OpEx. I'll move on back from Italy to the group labor. Free cash flow. Free cash flow was stable year-over-year at CHF 1.4 billion. The equation is quite simple. We are comparing not to pro forma here, by the way, but to prior year. as it was reported. So the equation is quite simple. Operating free cash flow is up after the Vodafone acquisition, which is clear, up by CHF 168 million. At the same time, we have extra interest payments compared to prior year to CHF 140 million. And there are some other smaller moving pieces. And so free cash flow remained stable in the group, which is obviously an excellent result for the first year after such a large transaction.

I'll move on to net income. This is a very complicated slide. I don't worry, the story is really quite simple. So net income was down CHF 271 million year-over-year. I'll start the explanation at the level of EBIT because this is the simplest thing. So EBIT came in at CHF 1.95 million, down CHF 28 million year-over-year. There are 2 things behind this flat on the one hand, there is the increased EBIT, excluding PPA, epi. So excluding PPA depreciation, EBIT would have gone up by CHF 208 million. And then there is PPA depreciation, so CHF 236 million of PPA depreciation, which leaves the EBIT basically flat. In addition to PPA depreciation, we have an additional expense in relation with the Vodafone acquisition. And this is the added interest expense. You see the minus CHF 266 million here. Be careful. This is not only financial -- not only interest on financial debt, but this also includes the additional interest on lease liabilities that we acquired with the Vodafone acquisition.

So net income is down due to factors, PPA depreciation and added interest expense. Obviously, this bridge will become much simpler and much more present as we go into the first quarter of 2026. Just a few words on net debt and leverage and our overall debt profile. So first of all, we were able to reduce net debt year-over-year by CHF 600 million. On the one hand, this is due to the spread between the free cash flow and the dividend payment of CHF 1.1 billion that we paid out in April 2025. And secondly, the lease liabilities out of the [indiscernible] agreement up until 2028 came down because the remaining life was reduced. So leverage came in at 2.4x exactly as guidance. Our ratings are still excellent and unchanged. S&P and Moody's A and A2. Our average interest rate is still very low at 1.86%, and we managed over the year -- or over the course of 2025 to first maturity profile, which is very well balanced now.

And we have about 1 billion to 1.5 billion of refinancings every year in the near term. With that, I come to the guidance. And I'll walk you first through Switzerland, then through Italy and then we'll add it up to the group, bearing in mind always that there is third segment other, which typically doesn't have much of an impact, but in the details, it can have. So let's start with Switzerland. Revenue of the guidance is CHF 7.7 million to CHF 7.8 billion, so down CHF 100 million. That decor service revenue decline in the same magnitude as in 2025, as I explained, partially compensated by IT growth. Simpler Bridge. Next, EBITDA about CHF 3.3 billion. So that's slightly down year-over-year. As usual, and as you know well, we will have a spread between the telco service revenue decline on the one hand and the cost savings of roughly CHF 50 million on the other. And then there is a small contribution from the IT business. So that gives an EBITDA in Switzerland of CHF 0.3 billion, which is slightly down year-over-year.

CapEx, CHF 1.6 billion to CHF 1.7 billion also slightly down year-over-year, thanks to CapEx efficiencies. And that gives for Switzerland an operating free cash flow of CHF 1.6 billion to CHF 1.7 billion, which is stable as CapEx efficiencies compensate the somewhat software EBITDA contribution. So this is Switzerland.

Moving to Italy. Italy, revenue guidance that's in euro now CHF 7.2 billion, so down CHF 100 million year-over-year. I talked about the telco service revenue decline that we expect of CHF 150 million. There is on top the loss of the Poste Mobile contract in the wholesale segment. which we expect to impact negatively with minus CHF 75 million. And those 2 negative elements will be compensated by growth in the IT business in the wholesale business outside PosteMobile and from the energy business. On EBITDA, EBITDA, the guidance is CHF 1.8 billion to CHF 1.9 billion, so about CHF 0.1 billion to CHF 0.2 billion higher year-over-year. What are the main drivers? Number one, synergies ramping up, plus CHF 200 million year-over-year. Number two, underlying business, down CHF 100 million. Teleservice revenue decline partially compensated by the rest of the business.

Number three, the loss of the Poste Mobile MVNO will actually be a wash and will not impact the reported numbers in 2026 because we do have an indemnification of a certain size, which is similar to the loss that we have in 2025 from Vodafone. So on a reported level, the [indiscernible] loss will not impact the 2026 numbers, it will impact then the '26 to '27 bridge. So synergies up CHF 200 million, underlying business down CHF 100 million [indiscernible] that's CHF 100 million. And then on integration OpEx, integration OpEx will be lower year-over-year. It will be CHF 50 million expected in 2026 after CHF 100 million year-over-year, a plus of CHF 50 million. And if we add all these elements up, that's business CHF 100 million change in OpEx integration cost, plus CHF 50 million, we end up with CHF 100 million to CHF 200 million higher EBITDA year-over-year.

Then CapEx simpler story, roughly stable at CHF 1.5 billion. On the one hand, we will have higher integration CapEx by CHF 100 million, but at the same time, the underlying business user CapEx will be down about CHF 100 million. So CapEx roughly stable at CHF 1.5 billion. So the EBITDA increase that we guide for in Italy translates into an operating free cash flow increase of CHF 100 million to CHF 200 million. One important note as the business is going to turn around over the course of the year, the operating free cash flow will be -- the operating free cash flow improvement will be backloaded towards the later quarters. So don't be surprised if you don't too much in Q1 and Q2 out of this growth.

Now adding it all up to the group guidance. Revenue 14.7 billion to CHF 14.9 million. So slightly lower revenues from Switzerland, slightly lower revenues from Italy and a different Swiss euro exchange rate underlying these numbers of CHF 0.92. That all adds up to this revenue guidance. EBITDA guidance, CHF 5.0 million to CHF 5.1 billion. thanks higher to Italy, on the one hand and Switzerland, slightly lower. So CHF 100 million higher, CHF 150 million plus out of Italy and slightly lower in Switzerland. CapEx, CHF 3.0 billion to CHF 3.1 billion, slightly down year-over-year, primarily thanks to Switzerland. And so operating free cash flow, which is the nicest part on this slide, CHF 2 billion guidance for 2026, up CHF 10 million roughly year-over-year due to the synergies coming from Italy, as we always said.

Now 2 more words on the guidance, leverage and dividend. The leverage guidance for 2026 is 2.3x. We heard from [indiscernible] that we are reassessing our tower strategy in Italy. This reassessment will have an impact on our lease liabilities at the end of 2026, but of uncertain size. So given this uncertainty, our guidance of 2.3x only includes the in mid-lease liabilities under the current agreement up until 2028 and does not consider the prolongation of existing or the conclusion of new tower agreements, which will come on top of this number of 2.3x, and we will update the guidance once there is news on the topic.

Finally, the dividend guidance for 2026 is upon achieving all the other numbers here. The dividend guidance for 2026 is CHF 27 per share. Looking beyond 2026 for a second, we obviously remain committed to rock solid financials, focusing on long-term value creation and attractive dividend and a strong balance sheet.

And with that, I hand over to Christoph for the wrap-up.

Thank you. Again, I will wrap up on Slide 54. I think we emphasized all of these points in the presentation. We strive to be the #1 customer choice, both in Italy and Switzerland by leading the markets. We will continue to create efficiency and innovate and deliver new products to our customers to increase the value we deliver to our customers. And we have, as outlined, clear priorities in 2026 to perform against expectations. Our investor story is quite simple. We will deliver stable free cash flows from our Swiss business, growing free cash flows based on the back of synergies in Italy, leading to overall growing free cash flows from on the group level, allowing us to further increase the dividend from CHF 26 million to CHF 27 upon achieving the financial guidance of '26.

With this, we conclude the presentation, and I hand back to Louis.

Thank you, Christoph. Now it's time for the Q&A session. [Operator Instructions] First question coming from...

It's Polo Tang from UBS. I have 3 questions. The first one is just on Swiss telco revenues. So you're expecting a decline of minus CHF 120 million for 2026, and that's similar to 2025. But I'm just trying to understand, should there not be more of an improvement given the benefit of the 3% to 4% price rises on the Swisscom brand. Now I know that you said there would be some offset from churn but what level of gross to net drop-through are you assuming from the price rises. Can you maybe talk about what you're seeing in terms of Swiss competitive dynamics in Q1? And specifically on the Swiss B2B revenues, do you think they can grow medium term once the SD-WAN migration is complete?

The second question is really just about Swiss cost savings. So on Page 25, you laid out a number of coating initiatives. But can you maybe give some detail in terms of the quantum of savings from the different initiatives. So for example, how big will copper switch off be and more broadly, what has been the biggest driver of cost savings historically? And what do you see as the bigger driver going forward? So your net savings in the past were about CHF 100 million per annum. Current run rate is CHF 50 million but do you see more or less opportunity for cost savings going forward? Or maybe another way of asking the question is how content are you in terms of your Swiss operating free cash flow do you think it can grow longer term? Or is the ambition in Switzerland only to be stable?

The final question is really just in terms of Italian telco revenues. So you outlined you're expecting a decline of minus CHF 150 million in 2026 compared to minus CHF 226 million for 2025. But given that you've had several rounds of price prices on both the front book and the back book, why is there not more of an improvement in terms of Italian telco revenues? And can I clarify if you said that these Italian telco revenues are expected to be stable in the second half of 2026? And can you give some color in terms of what you're seeing in terms of competitive dynamics in the Italian market?

Thank you very much, Polo. And first question on Swiss telco revenue is covered by Christoph then caused by Eugen and Walter [indiscernible]

So on the telco revenue, so we do expect roughly a similar order of magnitude this year compared to last year. Roughly again split in the same way, so slightly more tilted towards B2B than in terms of maybe sort of a 40%, 60% split between B2C and B2B as we had also in 2025. And we do expect a roughly similar split on that side. Now on the gross to net, let's say, impact of the cost savings is obviously highly dependent on the resulting churn. So depending on what kind of assumptions you make you come to completely different numbers on the net effect of the price increase.

Currently, our assumptions is sort of lower to mid double-digit millions in terms of net effect and this is roughly of the same size of impact we had by taking price measures that we took in '24 and '25 as you know, we worked on price initiatives, especially on moving or turning -- migrating older legacy subscriptions to the new front book. We worked on like options in the TV space, et cetera. And those also generated double-digit millions in terms of new revenues. I think as we progress in -- throughout 2026, and we can better evaluate the churn impact by mid of the year, we might be able to say something different. But I think for the moment, it is more reasonable to stick to a rather conservative outlook.

Good. I'll take the next one on the cost savings. So I'll start with the copper switch-off. Obviously, this is still some years out. We are talking about the final switch of 2035. We once did a rough cut estimate that we also shared, I believe at some point of what the improvement would be of that copper switch-off. And we talked about roughly CHF 100 million at the time, lower energy cost, lower maintenance cost, lower customer care costs, et cetera. So this is the ballpark number for 2035. Obviously, there will be a ramp-up over time. but it also goes in steps because you have to switch off complete central offices to gain the benefit and in the end, which of the complete network, so it will be a progressive saving.

It will be something that contributes to our cost savings over the years, but it's right now at the moment, not yet very significant. Then on the individual component of our cost savings, what where over the last, say, 2 or 3 years, the most important contributions. One is certainly the digitalization of the customer interface which allows us to reduce the customer care costs. Number 2 is the cleanup of the IT and the network architecture which takes a lot of time and cost a lot of money in the first place, but then generate sustainable savings. And number 3 is clearly also near shoring, which we have been which we haven't done much a couple of years ago and have ramped up over the last 2 or 3 years. On the one hand, in IT development, where we have our own near-shoring centers, which produce at a lower cost.

And on the other hand, also near-shoring customer care not our own customer care or internal customer care departments, but the customer care that is being done by our suppliers instead of doing it in Switzerland goes nearshore. So recently, these were the 3 most important things. I can't give you an exact number on each of those, and there is also no exact number, to be honest, because as you know, these cost savings programs also have -- always have hundreds of lines of individual measures but these are the most important buckets we are talking about. Confidence going forward, Christoph talked about it. We expect another CHF 50 million cost savings this year in the near term. It's also something that we had on the slide. We see that more CapEx becomes OpEx as more software becomes not developed on your own, but it's being bought via SaaS models so that will increase the burden on OpEx.

So it will certainly become more difficult to reach the same OpEx number because at the same time, CapEx is kind of being morphed into OpEx. This is why we're also working on OpEx efficiency, obviously. Comfort in delivering stable operating free cash flows from Switzerland is high due to the cost savings on the OpEx side, on the one hand and the CapEx efficiency. On the other hand, confidence in growing free cash flows would not be very high from my point of view, but that's the CFO talking, maybe Christoph has another view, but I would say stable free cash flow is for the moment, the ambition we have, and that is already challenge enough.

Maybe I could just add on your first question here. You asked also the B2B service revenue, which I sorry, I omitted the answer. I think obviously, this year, we still have quite a strong decline. And in the year-on-year effect in '27. You will again see a decline as yes, demand migration takes until the year-end. So I would say, let's say, in the short to medium term, service revenue will continue to our road. But going forward, there is indeed like the SD-WAN effect will obviously go away completely '27 to '28 depending on the ramp-up of IM and if we really manage to scale the offering as we intend, there is, I would say, a reasonable hope that we can get maybe not a rote but at least to a steady state evolution on the B2B side, but we are talking about '28 and beyond.

So there is quite a big range of uncertainty around this. depending on various parameters also obviously market evolution, et cetera. But I think we are working on the right initiatives which should allow us to achieve it. But first, we still need to deliver many, many things before it happened.

Walter.

Thank you for your question. Regarding the Telco revenues, I think you already explained to you the dynamics of the churn reduction is allowing us to stabilize the customer base but also the ARPU is slowing down the decrease. You see already the effect on a quarter-over-quarter revenue trend, why we expect the stabilization in the second half of '26 because all the activities related to front -- back book to front book alignment started in late Q4 and we go -- we'll continue in Q1 and Q2. So you will see the effect of this maneuver only in the second part of the year. In terms of competitive dynamics in Italy, I mean, the market continues to be very competitive.

There is a strong competition. The good news is not deteriorating. So we don't see a market that is deteriorating. We see a market where there is space to play a value strategy, and this is exactly what we are doing. So we are maybe get less volumes in terms of sales, but we are winning a lot in terms of share reduction. So this is a customer base game for us. we continue to work on our customer base because we really believe we have a strong value there.

Thank you, Walter. Thank you, Polo. Next question coming from...

Robert Grindle from Deutsche Bank. I've got 3 as well, please. On leverage, the guide of 2.3x reflects the reassessment of tower strategy uncertainty, and you say does not consider the prolongation on new towers. Is there also a change in view as to when this contract is renewed?

Secondly, you mentioned CapEx savings in Italy this year, which are impressive. Is there any color as to where they're coming from? And are they sustainable in nature? And thirdly, just a point of clarification on the CHF 75 million post mobile MVNO loss at Fastweb, offset by indemnification. I didn't quite hear -- were you saying it's an indemnity from Vodafone I assume that's just 1 year? And are there any other indemnities worth filling us in on?

Thank you very much, Robert. First question will be covered by Eugen, second question, CapEx savings [indiscernible] the last one, again by Eugen.

Okay. So on the leverage guidance, as I said, it excludes prolongation or the conclusion of new tower agreements. On all the rest, we have no news to tell. We told our story last year and [indiscernible] also introduced the topic today. So unfortunately, we are not going to comment on any further contractual question, sorry for this nonanswer, but this is in line with what Marta said before. Maybe I jump to question 3 because then I can already do this. So the indemnity, yes, you understood it correctly. It's an indemnity under the SBA from Vodafone. And it will cover roughly the loss that we expect this year, but this is it. So there is no other in family to be expected under this title.

Okay. Regarding the CapEx, in '25, the saving is driven by a couple of effects. On the network side, we are enjoying by sharing contracts between Faster and Vodafone. So we are leveraging on the best condition of both is from one side is bringing new efficiency. From the other side, we are developing our 5G on a more cautious -- with a more cautious approach. So we develop where it's needed to unlock capacity needs. And the third element is on IT, we are reducing the IT spend because we are investing only on the stock that we will retain. So we divest the stack that we will dismiss after the transformation. These are the major effects, together with the fact that also the customer acquisition slowing down a bit, and this is bringing savings in terms of customer driven.

Thank you, Walter. Thank you, Robert. Next question coming from...

It's Ajay Soni from JPMorgan. I've got a couple of questions. So my first is just around -- you mentioned around second brand penetration potentially increasing again during 2026. I was wondering how the launch of a new brand within this obviously discount segment has had maybe impacted you guys in the last couple of months? And then the second question was around the Swiss beyond the core services, which I think is Slide 21. You mentioned around monetizing it may not be a 2026 story, but what do you think you could actually charge for these services and especially with the Swisscom my AI, I mean, how will this differ from existing free AI offerings in the market. Do you actually think you'll be able to charge us to customers for this?

Both questions go to you, Christoph.

Thank you. So on the second brand, indeed, we expect again a increase in penetration of the order of the same magnitude as we've seen in the past years. Now you alluded to a new brand impact. I assume you allude to the CH Mobile brand of Sunrise because we didn't launch any new brands. So on that side, we don't expect this launch to accelerate our second brand penetration. I think this was more driven by customers coming down from the main brand and going to a lower tier offering with less value at a lower price point. And we don't expect this dynamic to change during the course of 2026. .

On the Swiss adjacencies, like -- so on the security side, we are already monetizing these services since many, many years. So we have different security offerings, and we will launch some new ones in this year. So at certain different price points. Typically, security, I think, is around CHF 70 to CHF 10 a month. So quite an attractive upsell possibility. On the my AI side, we are currently working on increasing the penetration into the customer base. So it's more a question of onboarding as many customers as possible and getting them used to using our GPT versus another GPT. In terms of monetization opportunity, we will see probably '27 onwards if customers are willing to pay for this. I think it's a very compelling proposition because it basically has the same features as an entropic you buy on the market, but with Swiss sovereign capabilities.

And looking at sort of the general GPT pricings in the market, they are typically around CHF 10 to CHF 20. So we do expect to be able to achieve something similar, should we go into a monetization model. Obviously, afterwards, it's a question of how many of the customer base really buy let's say, the upper tier model because probably there will always be like a free version as you already have today on the market from open AI and other players. And then you have like premium version. So it becomes more a question of how much of the customer base can you actually upsell the premium tiers.

Thank you, Christoph. Okay. And then what I know and see from the screen, a very last question coming from...

It's Josh Mills, BNP Paribas. If I can add 2 please. First one was just around the [indiscernible] agreement you've announced in Italy. Could you give us any indication on the scale of those cost savings perhaps in the medium term and then also whether there's any renegotiation required with [indiscernible] in order to deliver on those. I'm not asking you to comment on the separate tower debate, which you've already addressed, but just specific to that and sharing would be very helpful.

And then the second question is more amount of CapEx profile in Switzerland and obviously to stabilize operating cash flow this year, you're reducing CapEx a bit there. You've got a very healthy slide, 63 in the appendix where you can build a breakdown of the different building bot on the Swiss Italian CapEx. But what I'd love to understand is where kind of floor CapEx for you would be in Switzerland and which of those CapEx buckets could drop down a bit further, perhaps not this year or next year, but in the medium term, so we can get a sense of how much an offset to revenue CapEx would be over that period.

First question goes to you, Walter, second one to you, Christoph.

Yes. Thank you for your question. Also in sharing is a strategic project for us. I said as we can really put together the network with [indiscernible] areas. We are talking about over sites as a possible target for this sharing. So this will bring us the opportunity to extend our coverage as said, in cities with less than 35,000 inhabitants. As you may know, in Italy, there are a lot of municipalities of this size. So we will really enjoy the additional coverage and additional quality for our customers. In terms of savings, we will not disclose numbers at this stage as we are still in a preliminary phase.

But in the midterm, I can say that we expect savings of mid-double-digit euro million range. We will let you know once we will go into more details and approval from the authorities here in Italy. So we expect to have more news in the second part of '26.

So the CapEx profile in Switzerland, I think the easiest -- so at the moment, we have roughly CHF 1.7 billion in CapEx, out of which CHF 500 million are strictly related to the fiber rollout. So obviously, once fiber rollout is complete, this CHF 500 million will go away. So you land at CHF 1.2 billion of CapEx in Switzerland starting 2035. I think over the time, you will see sort of a slight ramp down of the rollout CapEx, but still at a very high level until 2030 and then probably starting to slightly decline in the first part of the 2030s. Now on the other buckets of the CapEx, we obviously also work on efficiencies, in particular on the IT bucket, which stands at CHF 470 million.

So as you know, AI is highly impacting software development efficiency, et cetera. So there is an ambition and some hope that we can further decrease the IT bucket. And as we said, on the other side, but this will not help from a free cash flow perspective, there is a CapEx to OpEx shift on the IT side. So some of the IT CapEx of this CHF 470 million migrate into the OpEx. So this is basically a wash from a free cash flow perspective, but will to some decrease CapEx. And then if you look at the backbone and infrastructure, which last year was at CHF 121 million, as you know, we are still modernizing and upgrading our core and backbone infrastructure, which we intend to complete by '27. So this will also generate some savings in this bucket.

Now the magnitude will probably be quite limited. Maybe a low double-digit number. But still, there are opportunities to further optimize CapEx in the short run. Fiber rollout I mentioned at the beginning is obviously a very long-term topic and nothing that will change in the next 3 to 5 years.

Thank you, Christoph. We have some additional new participants. The next one is audio only dialed in. Thank you for your questions.

Justin Funnell here. Yes, just some small follow-up questions, please. Could you explain again the financial effects of the shift from MPLS to SD-WAN in '26 and '27. What does it do to revenue and EBITDA? It's sort of broad brush. It sounds like it the impact peaks in '27. So just wondering how to model that basically. Secondly, the gap between inflow and outflow in Italy on price -- there's still a gap there. Do you think you need to reduce that gap still? Could you do more price ups in Italy on the front or pricing on the front book. And then thirdly, you mentioned without much detail, a sort of more network agnostic approach to fixed line in Italy and I was just wondering what opportunities you saw in moving into sort of selling fixed wireless access instead of fiber? And are you also looking at Starlink?

I think the first question go to you, Christoph, and second and third to you, Walter.

So on the B2B question. So as you know, the service revenue decline in B2B last year was minus million, out of which wire line was minus CHF 44 million. So obviously, this SD-WAN MPLS topic only concerns this wireline effect of minus CHF 44 million. There is some RGU loss in there as well. So I would say the effect of this transition is quite difficult to estimate because it has various components to spinning down from high value to low-value connectivity, sometimes you lose connectivity, et cetera. but it's probably fair to say, okay, sort of a very low double-digit number is related to this effect, and you will see it again in -- or we have it inside the guidance or service revenue guidance again for -- but -- so it has an effect, but it doesn't, let's say, massively change the B2B service revenue erosion going forward.

It helps to bring it down. but it will not like have it or rather suddenly take out 3/4 of the erosion. So I think that will be vastly overestimated.

Okay. Thank you for your questions. So we'll start with the FW question on the network side. Yes, we are using FWA, especially to cover digital divide areas that in Italy are still between 5% and 6% of the population, but we also offer the service where we see that there are copper lines that are low quality. Having said that, for us, FWA is a marginal technology as for us is key to develop fiber. So we always offer the best technology to our customer. So we have in mind the quality, and we do whatever we can to offer the best service. In terms of price increase, which is somehow connected to this, we don't think will change pricing structure on the course of '26, but we'll work to improve the price mix in our tearing offer. We have a 3-tier offering of fixed and in mobile so we will try to move customers from the entry level to the top level.

This will allow us to increase the average ARPU inflow, therefore, contribute to the stabilization of the revenues on the B2C.

Thank you, Walter. And now really the final question.

Just simply a follow-up on your price increase in the Swiss market. Simply just to ask you, what have you noticed from your vials mainly, I mean, Sunrise sold or maybe the other smaller MVNOs. What has the pricing strategy been lately in terms of their entry point in terms of the promotions and how do you expect them to react to your price announcements? Do you think you have given them some briefing room or do you think they will play ball? I mean maybe a little bit of the competitive dynamics you've seen recently in the Swiss market.

So excellent question, which is obviously top of mind in our daily work in B2C. I think in terms of pricing, you've seen that both Salt and Sunrise have increased prices in the past 1 or 2 years. However, the market has remained highly promotional with very aggressive promotions, especially centered around the Black Friday period. And this has not really changed in the course of the last year. And we do expect sort of a similar promotional activity also going forward. And we will see if it is slightly scaling down now or if it sort of continues in the same way. .

In terms of reactions of our competitors to the price increase, I can obviously not comment as I don't know how they will react. So we will see over the coming weeks now, what happens on the promotional side. what are they doing? Do they try to attack even more? Or are they choosing to do something else. This will be up to them to decide and we will, let's say, adapt in function of what is going on. But I think overall, you can say promotional activity, maybe slightly less, but overall, I would say, roughly similar over the past 1.5 years.

All right. clarify what I said before. I don't want to be misunderstood. So on the pricing structure, I said that we will remain with this 3-tier approach, and we work to increase -- to improve the mix. But in terms of individual pricing, of course, this will depend on the market condition and the target that we have. So just to be clear, I don't want to give a forward-looking statement on pricing that I can't.

All right. Thank you very much, Walter and Christoph. Thank you, Javier. At this point, that's it from our side. In case of any follow-up questions, we are available. Thank you for your participation, and have a nice evening.

Good morning, ladies and gentlemen. Thank you for joining the Swisscom Q3 2025 results, hosted by Christoph Aeschlimann, Eugen Stermetz, and Louis Schmid. Louis, the floor is yours.

Good morning, ladies and gentlemen, and welcome to Swisscom's Q3 '25 Results Presentation. My name is Louis Schmid, Head of Investor Relations. And with me are our CEO, Christoph Aeschlimann; and Eugen Stermetz, our Chief Financial Officer. Let's now move to Page #2 with the agenda of today. As you can see, our CEO starts presentation with Chapter 1 and a quick overview on the highlights, the operational and financial performances of the third quarter. Then in Chapter 2, Christoph presents the business update for Switzerland and Italy. In the second part of today's results presentation, Eugen runs you through Chapter 3 with our third quarter financials, including the confirmation of our full year guidance.

With that, I would like to hand over to Christoph to start his part. Christoph?

Thank you, Louis, and welcome to this Q3 2025 call from my side. And I will move directly to Page #4, showing the highlights of Q3. You can see that this quarter, again, was packed with a number of highlights. We have been able to complete to Connect service tests with the last test that we won this year, we have now won all 4 service tests highlighting our unwavering commitment to the best customer service reinforce the multi-brand play with a new Migros offering, and we are extremely proud of our new deal offering, which we -- for which we launched new additional services, advanced editions, apps and further tiers, which have been launched in the past weeks.

South of the Alps in Italy, everything is going according to plan. Integration is proceeding as we have foreseen with integration costs and synergies fully in line. The highlight in Q3 in Italy was the aligned new market portfolio that we launched for the B2C and B2B market, which I will talk a bit more in detail later on in the Italian chapter.

And finally, we have confirmed group guidance with revenues roughly at the lower end towards CHF 15 billion, EBITDAaL of CHF 5 billion and CapEx between CHF 3.1 billion and CHF 3.2 billion, also probably rather at the lower end of the range. Now moving to Page #5. You can see the net adds trends in Switzerland and Italy. I will start with Switzerland. Overall, the competitive environment is broadly stable with, I would say, more aggressiveness recently from Sunrise again, and we will -- we probably discuss later on also in the Q&A.

On the mobile side, the net adds evolution is stable. You see with roughly a run rate around 45,000 net adds on a quarterly basis. Very pleasing results from our perspective for our mobile business and broadband and TV are slightly improving quarter-on-quarter. We're still negative net adds, but a much better run rate than we had in Q1 earlier this year. If you look at the wholesale side, we have a very pleasing result in Q3 with plus 14,000 net adds. So you can see stable or accelerating growth on the wholesale side.

And overall, we have more net adds on the wholesale business than we are losing lines on our B2C. So we can at least partly compensate what we are losing on the consumer side on broadband with new access lines on the wholesale side, which is especially tilted towards fiber connectivity as we will see later on in the details. Now on the Italian side, the market remains competitive, but prices have been pretty stable in the last year. So we can see that the prices are clearly bottoming out and the market is not getting more aggressive.

Now in terms of net adds evolution, we have on the mobile side, an accelerating loss, which is actually, if you look at underlying, the B2C losses are improving. So we have less losses this year, clearly better B2C business, but we have less net adds coming in on the B2B side because the TM9 government contract ramp-up is coming to an end. So let's say, net adds on B2B, so a bit less compensating the B2C decline, which leads to an overall minus 39,000 net adds on a company level.

On the other side, broadband is improving, and we will see, particularly on the B2C side, things are improving very rapidly, and I will talk a bit more about that later on, but overall, quarter-over-quarter, you can already see that net adds loss has been halved -- more than half between Q1 and Q3 from minus 67,000 to minus 33,000 net adds. So -- and then overall, wholesale, also pretty stable run rate around 50,000, 45,000 net adds per quarter. So we have been able to stabilize both in the wholesale side and also compensating the losses on the broadband side. So I think pretty happy about the wholesale business in Italy.

So now moving on to Page #6. You can see that Q3 revenue was slightly softer at CHF 3.7 billion, minus 1.8%, with bringing us to a year-to-date revenue of CHF 1.1 billion, which is minus 2.1%. And the EBITDAaL bridge, you can see on the right-hand side, Switzerland is pretty stable with minus CHF 5 million in quarter 3, bringing us to a total minus CHF 11 million year-to-date. And in Italy, we have the transitional year with the integration and the -- let's say, turnaround of the B2C business, and Eugen will detail the financial numbers a bit more in detail later on in the financial section.

But so far, I would say, EBITDAaL is in line with expectations and in line with our full year guidance. Now I will move on to page as a business update for Switzerland and Italy and directly go to Page #8. where you can see our priorities for 2025. So pretty unchanged compared to last quarter. In Switzerland, we want to defend the Telco top line, make sure the service revenue erosion is as slow or low as possible, deliver on the cost savings. And you have seen that we have already achieved the full year cost target by end of Q3, and we want to further grow on the IT side.

In Italy, it's similar priorities, but more geared towards the integration. So of course, the priority #1 is to proceed on the integration of the 2 organizations and capture the synergy potential, but at the same time, stabilizing the Telco business and reducing the service revenue erosion that we are seeing this year so that next year, we have a substantially better position, especially on the B2C side. And at the same time, we want to accelerate the energy business, selling more services beyond the core while scaling up the B2B IT and wholesale part to stabilize the overall business in Italy.

And you can see now how we are doing in regards to these priorities. I'll move on to Page #9, looking into B2C Switzerland. So as I already highlighted at the beginning of the call, we are extremely proud to be the winner of all connect service tests for best shop, best app and best wireline and mobile hotline. I think this is an important achievement to test and show and demonstrate to the market that the Swisscom customer service is indeed the best customer service in the country.

We're also very pleased with the evolution of the We are Family offering that we launched earlier this year. We continue to drive this offering in the market to sustain net adds on the main brand and make the main brand more appealing for family households. In this regard, we have also worked on our third brand positioning, especially with Migros before it was called M-Budget -- now we -- Migros relaunched the mobile brand under the main retailer brand, which is called Migros.

So this should help generate more net adds going forward with attractive offers under a new name and a more customer-centric offering. And we have also launched a dedicated AI offering or AI chatbot for private consumers. This offering is called Swisscom -- myAI. It's a chatbot basically in a sovereign mode, where the consumer data is not used for training and respect data privacy. And so there is a free version and then a paid version at CHF 14.90, and we see quite some good traction already, at least on the utilization side of -- in the consumer space.

You can see on the right-hand side, RGU and ARPU evolution, churn is at a very stable record low level of 7.7% for fixed and 6.8% for mobile ARPU on the wireline side is pretty stable, which is, I think, a very positive news. And the mobile ARPU erosion of minus CHF 1 is mainly driven by the ongoing brand shift between main brand and second brand, but the ARPUs on a brand level are actually stable as well.

So moving on to B2B on Page #10. We are gradually integrating the beem offering in all our existing product portfolios. But we do see quite a lot of competition in the market, and you can see this on the ARPU box in the middle, where you see quite a heavy erosion on postpaid and average underlying product of minus CHF 3, which is basically driven by price competition in the market. And this is why it is so important that we launched the new beem offering to be able to upsell more security services and also create convergence effect on the B2B side and retain more customers with a broader product portfolio instead of competing just on price with Salt and Sunrise.

So we will continue to ramp up the beem services. We have launched the new ATL campaign -- marketing campaigns in September. And so far, subscription take-up is very pleasing. We are ahead of plan, which is a good news. And we have now started enabling our partner channels so that we can -- as you know, on the SME front, a lot of sales are not driven in a direct sales mode, but more in an indirect sales mode through partner channels, and this is an important piece of the ramp-up next year.

So we have started enabling all our partners to sell the beem offering, especially the higher-end editions, which are more complex to sell, but obviously are more interesting from a revenue perspective. On the IT side, quarter-on-quarter, we have -- or year-on-year between Q3 and Q4, we have -- sorry, between Q3 '24 and Q3 '25. We have a stable revenue evolution. The growth -- we were not able to materialize the growth on the IT side, suffering to some extent a bit from macro conditions in Switzerland.

So there is quite a substantial slowdown in the IT market in Switzerland, also still due to the integration of Swiss Credit Suisse and UBS, which took out quite a lot of volume out of the IT market, and we can see this now in the numbers. So I think already a stable service revenue evolution is actually quite a good achievement. But we are obviously aiming to bring that back to growth starting Q4 this year, but especially also next year.

I think the highlight is the new cloud platform that we delivered for the Swiss Armed Forces. This project is now nearing completion by end of the year and will be the basis for new IT services that we deliver to the Swiss Armed Forces going forward over the next years and will be a good driver of further IT revenue growth going forward.

In parallel, we are also working on the profitability in our operating model, which we continue to transform to improve IT profitability. So you can see that despite having no revenue growth, we were able to increase profitability by 10%, so up CHF 3 million to CHF 35 million quarter-on-quarter, which is, I think, an excellent news, and we will continue to drive IT profitability also next year to make -- or to extract more cash flow from the IT service revenues.

And also on the IT side, we have just launched a couple of weeks ago chatbot for SME. So it's basically very similar to the -- myAI for consumers, but this one is geared towards SME companies, so they can upload their own documents and use a highly secured and data private chatbot for their own company, which is quite a high demand, especially in the public sector and some other areas where people have more needs for data privacy and cannot use the, let's say, public cloud or public offering.

Now on the Network and Wholesale side on Page 11, we can see that our, let's say, network rollout is continuing. We are now at a 5G plus coverage of 88%, fully on track to achieve our 90% target for the full year in 2025. And also fiber rollout is continuing. It's up plus 5%. We have now a 55% coverage with 10 Gbps connectivity across the country, also in line to achieve our full year target that we have set up for the FTTH rollout.

And also on our network, we were able to win the connect fixed network test for the fifth time in a row with a record 991 points out of 1,000. And you can see that on the right-hand side that we are able to monetize also our network in better ways, especially the fiber rollout. So we are accelerating the net adds on the wholesale side. We have more market share on the lines and also plus 4% revenues.

So access revenues are up by 4% from EUR 48 million to EUR 50 million on a quarterly basis. And I think what is especially interesting, you can see that the FTTH penetration on our wholesale business is increasing very rapidly [indiscernible]. It's up by 7%, and we have now nearly half of our wholesale lines, which are fiber-based, precisely 49%, and we expect this to be over 50% by the end of the year.

Linked to this also, the copper phaseout is going very well. So we don't have numbers on this slide, but we already managed to decommission over 350,000 copper lines. So at the peak, we had 2 million lines in activation, and we are now standing at 1.65 million copper lines, which is already -- so we already achieved our full year phaseout target by end of Q3, which is also a very pleasing development on the network side.

So if you look on Page #12, you can see that we have already achieved our full year target of CHF 50 million cost savings by the end of Q3. But I would like to put in a word of caution. We shouldn't get too excited about this because, I mean, it's great that we have achieved the full year target, but we don't expect much more cost savings to come in, in Q4. So please don't extrapolate this -- the growth we had between Q2 and Q3 further into the year, this is definitely way too optimistic. But I would say we come in at 50 plus, but not much more in Q4 to come.

But you can -- but what is, I would say, the good news is that the cost initiatives continue to deliver, especially we continue to digitize our customer service. We continue to automate it. We continue to push AI everywhere. We have now launched our unified contact service platform, which is heavily AI-driven, which will continue to deliver new cost savings next year. We are experimenting with new shop formats, AI in the physical stores. We are further expanding nearshore. And of course, we are especially pushing further simplification on the network in IT and this also will continue to deliver cost savings, especially '26 and onwards.

Okay. So that was it for Switzerland. I will now move on to Italy. On Page #13, you can see the highlights of the integration, which is progressing as planned and synergies are ramping up. So we have completely finalized our integrated organization, which is fully operational now. We have launched a new aligned product portfolio. So it's not a unified single product portfolio, but we essentially have exactly the same product portfolio under 2 different brands, one on the Fastweb side and one is on the Vodafone side, and we are now able to serve customers of both brands in all stores.

And also, most importantly, the SIM migration is progressing in line with plan. So as you know, we have about CHF 200 million of synergies planned next year linked to the SIM migration. So we can confirm that the migration is going according to plan, and we will be -- roughly all customers will be migrated by year-end, and we are very confident to realize the planned CHF 200 million of synergies in 2026. Also, the other projects are ongoing as planned. We have already shut down the first Vodafone Group services that we have terminated and transferred to internal resources, and we are continuously working on carving out more and more services over the coming months and also IT and network consolidations have started.

Now moving on to Page #14, we will have a deeper look into the B2C mobile side. So you can see that we have this joint mobile portfolio. There, you can see some screenshots in the middle. So the pricing and the features of the products are completely aligned. And we are continuously working also on improving customer treatment in the shops, but also in call center. And you can see on the right-hand side that this -- all this work is starting to pay off. The churn has significantly decreased from 20% or nearly 23% to roughly 18%, and we will continue to work on better customer service, also leading to higher NPS, and we can already see in our customer surveys that NPS on both brands is improving.

So this, I think, is a good news. We can see that the value strategy that we are executing or like moving from volume to value is paying off. We are seeing an improved net adds picture. So you can see on the top right, we typically had over 100,000 negative net adds. We are now at minus 79,000, so still negative. But the outflow, which is typically high ARPU outflow has been substantially slowed down. Sales coming in is also slightly lower, but a much higher quality. So with customers really using our services. So the ARPU delta we are having between churn and net adds has been substantially decreased.

And we are further working on this to close the gap and reduce service revenue erosion gradually over the next year. One other important topic on the B2C mobile side is the repositioning of ho. So we have positioned ho. as a clear attacker brand and faster than Vodafone as a clear premium brand, and we will continue to work on this brand positioning to make it clear that we have a clear dual brand strategy with a different service offering on both brands.

Now moving on to Page #15. You can see that we have also launched a new fixed portfolio, which is what we call super converged, which is essentially broadband with energy services, which is an important element to drive new service revenue in Italy. So you can see that up to now, we have minus 170,000 RGUs year-to-date, which is impacted by this value strategy and front book price alignment. But transparency and customer centricity are delivering first positive results.

You can see we have higher NPS. Churn has also substantially decreased to 15.8%. And you can now see that the RGU development between Q1, Q2 and Q3 is very pleasing. We are now at minus 26,000 RGUs in Q3. But actually, underlying to this, in September, we were at a 0 net adds balance. So the whole loss in Q3 is still coming from July and August, and we have now substantially achieved a stable RGU development. And we are hopeful that in Q4, we will see again a much more improved figure on the broadband net adds side, clearly showing that the strategy and turnaround is working that we are executing on the consumer side, and we will continue to push the new portfolio in the market and continue our value strategy.

And I think also one maybe last word on the B2C. We -- the new product portfolio is offered at higher price points. So previously, our lowest price point on mobile was around EUR 8. Now it is at EUR 10 or EUR 9.95. And actually, we can see that the sales inflow or the gross adds are exactly the same. So we are able to sustain the sales performance despite having increased prices from -- or like the entry-level prices from EUR 8 to EUR 10. And the same we see on broadband, our sales numbers have not decreased despite having aligned prices on both sides and now executing at, let's say, increased or above increased prices than previously. So I think that's an excellent news for the Italian market that there are consumers that value quality and are willing to pay for it.

Now moving on to Page #16, looking into B2B. So we keep managing also the Telco top line on the B2C side, growing with IT, cloud, security, and AI. So as mentioned at the beginning of the call, RGU net adds have slowed down a bit because we are reaching sort of the end of TM9 contract ramp-up. So we have a bit softer RGU development. But overall, I think a pleasing result on the telecom side. Also on the B2B side, we have integrated both product portfolios from Fastweb and Vodafone, offering the best of 2 worlds now to our customer.

And all, let's say, corporate accounts have now been allocated to our internal sales force. Customers have been allocated in the indirect channels. This took a bit more time than on the B2C side because it's more complex to execute. And you can see also this is why we have a bit slowdown in growth on the B2B side as we still were a bit internally focused due to the merger. And you can see that the IT service revenue growth is still there at plus 1.5%, but it is a bit lower than it used to be. But here, we intend to accelerate IT growth again going forward next year as we have now finalized the integration and the sales force is, again, focused not on what is my account, but actually really selling to the market.

We also have signed a new contract with Oracle to offer sovereign Oracle cloud offerings in Italy. And as in Switzerland, we have also launched already last quarter, our AI suite for SME companies in Italy, which is a sovereign AI chatbot offering for Italian SMEs. And we are very pleased that we have already been able to sell over 10,000 paying subscriptions, also showing that there is a clear market need or demand for these type of services also in Italy, and we will continue to work on this going forward.

Now moving on to my last slide about Italy, Page #19. You can see also that the network rollout is continuing in Italy as well. We have now 87% 5G plus coverage, up 11% and fixed rollout or FTTH rollout is also proceeding rapidly in Italy. We now stands at 54% FTTH coverage with about half of it active and half of it passive in our footprint based on our Fastweb secondary network. We continue to drive wholesale business, both on wireline and Mobile. So on Mobile, we have essentially finished the Coop migration onto our network, and this will help us also to compensate part of the PosteMobile loss next year. And as you might have read in the press, Sky announced the new partnership between Fastweb, Vodafone and Sky. So we will continue to also provide Sky both on wireline and Mobile services, which would also help us to compensate some of the PosteMobile losses, '26 going forward. So overall, I would say, a very pleasing development on the network and wholesale side in Italy.

And I will now hand over to Eugen for the detailed financial results.

Thank you, Christoph, and good morning, everybody. I'll start as usual on Page 19 with the group overview on revenue and EBITDAaL. So let's get going with revenue. Revenue is down CHF 242 million in the group, 1/3 of which is currency. So net of currency, the number is minus CHF 153 million. Switzerland down CHF 83 million; Italy, down CHF 55 million. If we look at the quarterly dynamics, Switzerland was almost flat in Q3 after a week Q2, that's due mainly to different timing of hardware revenues this year versus prior year in the IT business.

In Italy, it's a bit the other way around. If you look at the quarterly evolution, minus CHF 42 million in Q3 after roughly Q1 and Q2. So year-over-year in Q3, we only had a small contribution from IT and hardware so the Telco service revenue decline shows up in the total number.

Move on to EBITDAaL. EBITDAaL is down minus CHF 191 million. We have a lot of adjustments totaling minus CHF 73 million. Net-net, this essentially boils down to integration costs in Italy on the one hand and to currency. Obviously, the gross numbers are a bit more complicated, and I'll comment the gross numbers when I get to Switzerland later on. And obviously, all the numbers as usual, you will find in the appendix to this presentation. So Switzerland, EBITDAaL almost -- if you look at the adjusted numbers, Switzerland almost stable with minus CHF 11 million year-over-year in the first 9 months, which is obviously very positive. Also the quarterly evolution is very stable indeed.

On the Italian side, Italy is down minus CHF 95 million EBITDAaL. That's driven by service revenue decline in Q3, we had minus CHF 38 million after minus CHF 15 million in Q2. The minus CHF 38 million in Q3 are actually much more in line with what you would expect given the service revenue decline than what we saw in Q2. You might remember that in Q2, I flagged at the minus CHF 15 million are not necessarily sustainable. So both Switzerland and Italy, EBITDAaL are in line with our full year guidance.

I move on to Page 20, CapEx and operating free cash flow in the group. So CapEx is down CHF 174 million, adjusted CHF 171 million. It's driven both by Switzerland and Italy. In both cases, the lower CapEx is due #1 to phasing with some of the capitals to come in Q4. And secondly, also in both cases, Switzerland and Italy, some higher CapEx compared to prior year tied to specific large-scale projects in the prior year. And then obviously, apart from the adjusted numbers in the adjustments, you see the integration CapEx in Italy, which starts showing up this quarter.

Operating free cash flow, adjusted deposits plus CHF 53 million. In Switzerland, it's sustainable EBITDAaL, combined with lower CapEx. And in Italy, stable operating free cash flow lower EBITDAaL, but at the same time, lower CapEx, which we're obviously quite happy about. Then move on to Page 21 and dive into the Swiss picture, starting with revenue. Revenues down CHF 83 million, almost stable in Q3. If we look at the individual quarters, B2C is down CHF 29 million that sold lower service revenue and at the same time, somewhat higher handset sales that combined to the minus CHF 29 million. B2B down CHF 60 million, that's lower service revenue, but also lower hardware revenues in line with our strategy not too many low or no-margin hardware deals and somewhat higher IT service revenues in the first 9 months.

If you look at the individual quarter, Q3 is a bit of an outlier with plus CHF 8 million. There actually significant hardware deliveries in connection with 1 large customer project all in line with the aforementioned strategy, but that drives actually the dynamics between Q2 and Q3, it's Q2, it was like CHF 27 million lower hardware revenues and in Q3, CHF 27 million higher hardware revenues. Wholesale growing CHF 10 million in revenue. That's essentially the growing excess services over the quarters. There are some minor fluctuations around the general trend due to these clients and roaming, so the bit more volatile elements of the wholesale business.

EBITDAaL stable in Switzerland reported slightly up, adjusted slightly down. If we look at the adjustments, we have plus CHF 20 million year-over-year in adjustments positive, in particular in Q3 with plus CHF 33 million. So on the one hand, we released provisions for legal proceedings. But on the other hand, we added restructuring provisions and other provisions with a net effect of plus CHF 33 million.

So if we focus on the adjusted numbers, B2C, minus CHF 10 million. B2C was able to compensate part of the service revenue decline with lower direct and indirect costs. In B2B, EBITDAal is down CHF 45 million, which is in line basically with the service revenue decline, there was not much impact of the revenue ups and downs that we saw on the upper part of this page because these revenues are there are pretty low margin IT hardware revenues, as I mentioned. So the service revenue decline shows up in the margin pretty much one-to-one.

Wholesale plus CHF 11 million, in line with the revenue growth and also infrastructure and support functions, that's mainly a cost position here in EBITDAaL. So that's CHF 33 million lower costs contributing to the overall cost savings target that Christoph already mentioned.

I'll move on to Page 22, deep dive into the Swiss P&L. I'll start at the bottom left with the Telco service revenue evolution decline was minus CHF 35 million in the third quarter, so slightly worse than Q2. If you look at the individual components, B2B at minus CHF 18 million is almost identical to Q2 and Q1. So not much news here. B2C is minus CHF 17 million after minus CHF 13 million in Q2. Actually, wireless in B2C is slightly better than the previous quarter due to increased net debts and also a small effect out of the Wingo price increase and the success of the We are Family! offering.

The only element that is worse compared to the previous quarter is wireline ARPU. It's a combination of the phasing of the impact of targeted price increases in the prior year and somewhat stronger promotions in Q3. But all in all, very small numbers and a very stable general trend in the service revenue. Where does that leave us year-to-date? Top left of the page, year-to-date service revenue decline is CHF 92 million for the full year. This means that we will land at about minus CHF 120 million.

That's slightly higher than originally guided. You remember, we talked about CHF 100 million, if you look for drivers of that more deviation in B2B, we had somewhat faster migrations of customers that we knew we would lose and the migrations came a bit faster than originally anticipated and on the B2C side, we integrated further roaming into the blue offering, so a somewhat lower roaming revenues was a bit lower demand on streaming on the wireline side. But all in all, no big surprises, no big changes by and large, as anticipated.

Move on to Page 23. CapEx is down plus CHF 71 million in the first 9 months, part of which is related to nonrecurring items in the prior year. And part of that deviation will probably remain for the full year and contribute to stable free cash flows from Switzerland, all in line with our full year guidance. And finally, operating free cash flow, up CHF 60 million, adjusted a result of almost stable EBITDAaL and lower CapEx.

Now I move on to Italy, Page 24, starting with revenue, down EUR 57 million in the first 9 months. In the third quarter, with a decline of EUR 44 million after a relatively stable Q1 and Q2. So what's going on? Let's look at the segments.

B2C is down EUR 73 million, a combination of service revenue decline on the one hand, but higher energy revenues on the other hand. The quarterly evolution is pretty stable. B2B is stable in the first 9 months. So a combination of Telco service revenue compensated by higher IT service revenues and energy revenues. However, in Q3, you see the minus EUR 25 million. So there was a more pronounced Telco service revenue decline compared to prior year than in the first 2 quarters.

And at the same time, with growth in IT service revenues and lower hardware revenues in Q3. I'll talk about the reasons for the service revenue decline when I get it on the next page. And finally, wholesale, up EUR 18 million, steady growth, both in wireless and wireline, and there were some decline in non-core revenues. So what you see here is the net of these 2 elements. EBITDAal down minus EUR 148 million reported adjusted minus EUR 99 million. In the adjustment, you have about EUR 40 million of integration cost as the main driver of the adjustments year-over-year in the first 9 months.

So if you look at the individual components, contribution margin B2C down EUR 90 million. This is reflecting the impact of the service revenue decline of minus 17 -- sorry, minus EUR 117 million on the one hand and a small positive contribution from the additional margin from the energy business. However, importantly, if you look at the quarterly evolution, Q3 minus EUR 20 million after minus EUR 35 million in the first 2 quarters. This is for the first time that actually the lower mobile COGS show up, and this is obviously very positive and very pleasing because, as Christoph already mentioned, the migration of our mobile customers onto our own network is in full swing and already for the first time shows up as lower COGS in the contribution margin of B2C.

B2B contribution margin down EUR 23 million. So that's the margin impact of the Telco service revenue decline and some positive margin from the IT and energy business compensating that. Wholesale, plus EUR 19 million margin -- sorry, the revenue improvement showing up also in the margin. So overall, the minus EUR 99 million adjusted are fully in line with the EBITDAal guidance we gave at the beginning of the year.

If we deep dive into the P&L on Page 25, starting with -- also here with the service revenue decline, bottom left. So we had minus EUR 66 million in the third quarter, minus EUR 39 million B2C, minus EUR 27 million B2B, first, B2C. B2C is fairly stable over the quarters, which is very good. Obviously, the operating improvements that Christoph mentioned don't show up yet in the year-over-year numbers, which look backwards, but we are confident they will show up in the next year.

Now what's happening in B2B. In B2B, we had EUR 27 million in Q3 after a very small service revenue decline in Q1 and Q2. It's all down to the wireline revenue. So wireline, we had significant onetime revenues in Q3 and Q4 in the prior year related to some large-scale public administration projects. So the effect that we see here in Q3 on B2B wireline is one that we will also see in Q4 again that, that might even accelerate.

As I said, it's a tough comparison because we actually had increasing B2B wireline revenues quarter-over-quarter in the prior year, if you look at the pro forma numbers, and this is all due to these large projects with one-off revenues. So full year -- or sorry, year-to-date, that leaves us with minus EUR 166 million year-to-date. So it's clear that the full year service revenue decline will be well above EUR 200 million in 2025. What changed, if you remember, we had an original guidance of EUR 100 million to EUR 200 million already said in the second quarter that we are trending towards the upper end of that guidance. So we will be above that in the full year.

What changed is mainly the outlook -- on B2B, we originally expected to be able to replicate these large-scale projects that we had in Q3 and Q4, and this is now not the case. There is no other structural driver we see at this moment. Is there an impact on the EBITDAal guidance? No. The direct and indirect costs we anticipate for the full year are lower than we had originally anticipated in the guidance. So the EBITDAal guidance for Italy is fully confirmed despite this deviation.

I move on to Page 26. CapEx in Italy, EUR 83 million below the prior year. That's partly phasing between the quarters, but also partly due to large projects in the prior year. So a part of the deviation is likely to remain for the full year. On the adjustments, you see the integration costs showing up. We had integration CapEx of EUR 53 million so far. There is still a lot to come in Q4, but maybe not the full EUR 150 million of CapEx integration costs that we guided for at the beginning of the year. So CapEx Italy is clearly trending towards the lower end of the guidance.

And finally, operating free cash flow in Italy adjusted is stable at minus EUR 2 million with EBITDAal below prior year, but so it's CapEx. Page 27, quick update on synergies and integration costs. We confirm the EUR 60 million synergy target for the full year and the plus EUR 36 million, which we had in the first 9 months is fully in line with this expectation. You remember that the synergies are backloaded due to the importance of the MVNO synergy that kicks in, in Q3 and Q4 and then ramps up to the full run rate next year, as Christoph mentioned before.

We also confirm the integration cost target of approximately EUR 200 million. We have in the books EUR 93 million so far, EUR 40 million OpEx, EUR 53 million CapEx. So in the end, there might be some shift from CapEx to OpEx versus the original split of EUR 50 million OpEx and EUR 150 million CapEx, but the overall number of EUR 200 million for the full year, we confirm.

Page 28, free cash flow, stable versus prior year. We are comparing to the reported numbers here, not pro forma, so stable versus prior year, plus CHF 23 million, driven by higher operating free cash flow compared to reported last year, plus CHF 116 million on the one hand. And on the other hand, higher interest paid, CHF 127 million, obviously due to the acquisition and all the other deviations on that page are quite minor.

So I move on to Page 29, net income. Net income is down CHF 295 million year-over-year with 2 main drivers. One is the higher interest expense, obviously, due to the acquisition. And secondly, there is a lower EBIT, which is almost entirely driven by the amortization of intangibles out of the purchase price allocation of the acquisition, and we also had somewhat lower tax expense this year compared to prior year.

So I come to the final page, Page 30 on the guidance. We do confirm the guidance similar to Q2 with 2 comments. Number one, based on the numbers we have seen, it should have become clear that on revenue in Switzerland and Italy and by implication of the group, we trend towards the lower end of the guided range. And we may even undershoot slightly, but if we do so with no impact on EBITDAal guidance and operating free cash flow guidance. And in a similar vein, as mentioned before, CapEx Italy looks like it will land at the lower end of the guidance or even slightly below and also impacting the group number. Last but not least, we confirm the guidance for the dividend of CHF 26.

And with that, I hand back to the operator.

[Operator Instructions]

It's Polo Tang at UBS. I just have 3 questions. The first question is just on Swiss price rises. So you recently increased prices on Wingo by CHF 1 a month. But what impact did this have on NPS and churn? And would you consider further price rises on the Wingo brand? My second question is, what is your view on the CHmobile launch by Sunrise? Do you see it as disruptive to the market? And my third question is just about Italian mobile pricing. So you increased your front book price rises. So you increased your front book prices from EUR 8 to more than EUR 10 in September. I appreciate it will take time for these price rises to feed through the subscriber base. But do you think Italian Telco revenues can reach stabilization at some point in 2026?

Thank you, Polo. So I'll take the question. So on the Swiss price rises, actually, we were very positively pleased by the execution of the price rise with Wingo. We have seen absolutely no impact on NPS and churn. I think it demonstrates that Wingo is a very strong brand with a very attractive service offering. We executed it as a more-for-more price increase. So we included 5G access with the plus CHF 1, but it was, let's say, good news that it didn't impact NPS and churn on the Wingo brand.

And so I will not comment about further price increases, but it is obviously something that we are looking into to see if there is further room to improve revenue and positioning of the brand. But now, let's say, it's also linked to your second question, so CHmobile. Honestly, I don't expect a huge impact from this brand going forward. We already have a lot of low-value brand in the market. It's -- I don't really understand the move from Sunrise because it goes contrary to what they actually talk about moving to a value-based strategy.

And at the end, honestly, I think everybody will just end up with the same number of RGUs, but with slightly lower revenues. So it's not really a good news for the market because it kind of creates more downward pressure in the market, especially if you look at the mid -- not really -- I'm not so worried about the premium segment. But if you look at the mid market piece.

Obviously, the more routed the brand basis in the lower-end budget segment, the more downward pressure you have also in the mid segment. But we will see a bit how this evolves now over time. But it's clearly, let's say, not a move that goes into, let's say, a price rebound direction in the Swiss market. So we will see also a bit how it's going with the Black Friday promotions in the coming weeks. And then we'll be -- we will see over the next year if there is any impact from this CHmobile brand.

Now on the Italian side, the goal is definitely to stabilize service revenue both in B2C and B2B in the midterm. This will take some time, but we are working very hard on it. And actually, price increases, we executed price increases twice. So first, we went to EUR 9 and now to EUR 10. So we have quite a good view on at least the EUR 9 move, which didn't impact sales numbers so far. And I think also now the front book prices, I think, are at a good level. And we are actually executing what we call back book, front book alignment now. So all the back book customers, which are below our front book prices, we are now elevating them onto the front book level to have a completely in-line portfolio.

This is currently being executed over the next weeks, and we have started a couple of weeks ago. And so far, numbers look okay as well. And we feel it's an important action so that all customers are actually treated in a transparent and fair way and everybody pays what we are now selling on the front book side. And this will obviously also help us improve service revenue next year going forward as this is a price increase for a couple or like a part of the customer base.

So at the moment, we have one more question. [Operator Instructions] And now I will open the line for the next question.

It's Josh Mills at BNP Paribas. I had a couple of questions, please. The first was just related to the Swiss service revenue trend. So you said in your comments that part of the reason that you saw a deterioration from 2.4% to 2.6% negative growth this quarter was you had a bit more migration to some of the B2B packages and also some more roaming revenues dropping out as you move to the blue bundles. So it sounds like this is a revenue headwind you've been anticipating, but just one that's coming through a bit earlier than expected.

If that's the case, do you think that you'll start to see an improvement in service revenue trends into the end of this year and into 2026? Or are there other factors to consider which mean that we might see a continuation of the service revenue declines? That's the first question.

And then the second question, was just around the cost cutting that you lay out on Slide 12. I think you're making it clear not to extrapolate the same level of savings into 2020 -- sorry, into Q4 as you saw in Q3, but where -- why is it that these savings are coming in quicker than expected? And why would there not be more upside to the CHF 50 million target you laid out at the start of the year?

Okay. Thanks, Josh. So I'll take the first question. So maybe I was not super clear in my presentation, so I'll try to repeat. There is -- there is 2 different elements to talk about. So the one I've talked about first is the Q3 service revenue decline compared to Q2 because it looks like a bit of an acceleration. Now actually, on B2B, there is no acceleration whatsoever. So it's minus CHF 18 million after minus CHF 18 million in Q2. The only change is the -- only change is in -- B2C minus CHF 17 million versus the minus CHF 13 million.

And there, I commented that wireless is actually slightly better, so the difference that you see between the 2 quarters comes from wireline ARPU because of some targeted price increases we had in the prior year that the impact of which is now trading out and some strong promotions in Q3. So B2B doesn't play a role in this quarter-over-quarter evolution. It's merely B2C. And here, it's wireline ARPU, nothing else. Okay. So that's the one element.

Then I talked about the full year outlook, where I said about that CHF 120 million service revenue decline is what we expect and compare that to the roughly CHF 100 million service revenue decline we guided for at the start of the year. And here, actually, there is a B2B element in that deviation, because we lost some customers in B2B wireline on the corporate side, which we were really new at the start of the year. And the -- but the migration of their locations went a bit faster than we anticipated than this led to a slightly higher service revenue decline on the B2B side than anticipated. So that's a B2B. There is no Q-over-Q B2B story.

Now having said that, these are all super small numbers, just to be clear. So we guided for about CHF 100 million, which you can't read anywhere you like, but you could always think CHF 120 million, we just wanted to be super transparent while we expect the roughly CHF 120 million now. Is there any impact out of these small changes that I'm commenting here on the midterm outlook? No, I would not read too much into it. Obviously, we are going to talk about the our service revenue decline expectation for '26 in February, but we don't see any fundamental shift. I just tried to explain the change from about CHF 100 million to CHF 120 million on the one hand and try to explain the super small change from minus CHF 13 million to minus CHF 17 million on the B2C side between Q2 and Q3. So I hope I was clear now the second time if not, feel free to follow up.

Then on the cost savings side, I always -- I'm repeating myself on that topic. The cost savings do not come in steadily quarter-over-quarter in the same number. That's not realistic. The numbers we are talking about is at the moment, an annual impact of CHF 50 million plus, which is not a huge number, given the overall cost base we have. So small changes in quarters can drive a lot of the change. So it's always important to look at the final year figure, what we achieved for the full year. And I would not read too much into quarterly fluctuation.

It's very helpful. I mean, just to follow up on the first answer. Should we read that as you don't see any big change in trends to service revenue development and declines in '26 versus the current run rate? Is that what you meant to change?

Yes. I mean you're repeating that. No, I think I was clear. We don't see any structural changes out of the things we commented on -- so you can take -- draw your own conclusions when it comes to 2026 and we didn't guide for '26 in February.

So there's one more question, and I will open the line for the next question.

Yes. That's Robert Grindle from Deutsche Bank. I saw you bought a B2B video services company in August, the deal is yet to complete, I believe. Is this part of a wider push into security? Could you also provide B2C security products like one of your competitors? And do you see other adjacent opportunities in the market? And my second question is, how would you describe the mood of the typical Swiss enterprise at the moment? You had all that trade talk volatility during the summer. Has that effect sort of evened out now? Or are enterprise customers still holding back on their ICT projects?

Thank you, Robert. So I think the B2B video merger you're alluding to is a really small acquisition that I think we did last year, if I'm not mistaken. I think now we have separated it out to an other entity, and we merge with some of our existing capabilities on the Swisscom Broadcast side. But it's really, let's say, a minor business. We're talking about sort of a very low double-digit millions. So it's not substantially impacting really our overall numbers in Switzerland. But Swisscom Broadcast, which is one of our subsidiaries, is actually quite active in sort of the whole surveillance aspect with cameras, but also drone surveillance which is, let's say, a growing area. So we do see some opportunities for growth on that side. But sort of it's growing, but not in a way that it would meaningfully impact our overall Swiss numbers yes, unfortunately.

And of course, we -- I mean, there are a number of other adjacencies. I think the most important ones are really sort of AI-related opportunities on the B2B side. So we are pushing very heavily in providing AI consultancy, AI infrastructure services, AI chatbot really trying to monetize the AI implementation in the B2B space. I think that's one important adjacency and the second one is really all around security, which is driven by our traditional security offerings, but also the beem offering, which is completely integrated connectivity and security offering, where we really want to monetize and capitalize on the opportunity of the growing cybersecurity needs of B2B customers.

And I think those should provide also meaningful numbers going forward. Now having said that, the general mood of B2B in Switzerland is a bit damp, I would say. So Switzerland is quite heavily impacted by the tariff situation with the U.S. So especially on the machinery and industrial side, it's quite gloomy, I would say. And customers are heavily saving money. Obviously, not all sectors are impacted in the same way, more domestic services companies are not impacted. And also on that side, we are okay. But the more export-oriented industries are quite heavily impacted, so overall, I would say there is a slowdown on the B2B side. It's not like to worry about. I think it's not that bad, but it's not helping us create more growth on the IT side as many companies are now scaling back a bit on their investment envelopes.

So since we have no more questions left, I will hand over back to Louis for the concluding comments.

Thank you very much. And with that, I would like to conclude today's conference call. In case of any follow-up questions, do not hesitate to contact us from the IR team. Speak to you soon, and have a nice day. Thank you.