Swisscom AG (SCMWY) (Q2 2026) Earnings Call Highlights: EBITDAaL Surges 6. ...

Negative Points

• Group revenue declined 2% year-over-year to CHF3.6 billion, driven by lower service revenue in both Switzerland and Italy and lower hardware sales in Italy.

• Swiss B2C broadband RGU losses continued, with minus 8,000 net adds in Q2, and the company expects the B2C service revenue decline to persist in H2 2026.

• Swiss B2B Telco continues to lose RGUs on both mobile and broadband, with no immediate turnaround expected.

• Italian B2C service revenue declined by EUR22 million in Q2, and the company expects a full-year decline of roughly EUR150 million, with gradual stabilization only in the future.

• The loss of the PosteMobile MVNO contract and the upcoming Lyca migration will reduce wholesale revenue in Italy, with a net RGU reduction of 2.3 million in Q2 and further losses expected.

• Swiss IT service revenue is expected to be slightly lower for the full year due to weak demand in workplace and UCC, partially offset by growth in sovereign cloud and AI.

• The Swiss spectrum auction in 2027 poses a risk of increased costs and potential loss of spectrum advantage, with the final rules still pending.

• The company faces intense promotional activity in the Swiss market, limiting the ability to implement further price increases on the main brand.

• Integration costs in Italy are expected to ramp up significantly in H2 2026, with up to EUR200 million in CapEx, which will pressure free cash flow.

• The competitive environment in Italy remains challenging, particularly in the SME segment, leading to lower gross additions in broadband.

Q & A Highlights

Q: What is the outlook for Swiss Telco service revenue decline for the full year, and what are the key headwinds and tailwinds to consider for Q3 and Q4? A: CFO Eugen Stermetz confirmed the full-year guidance of a service revenue decline of roughly CHF120 million, similar to 2025. While B2C performance has been better than expected (down only CHF3 million in Q2 vs. CHF16 million in Q1), the company expects headwinds in the second half, including roaming dynamics in Q3, international call packages, and weak gross adds as the market recovers from the price increase. The guidance assumes a similar decline in H2 as seen in H1, potentially slightly better on the B2C side.

Q: How has the customer reaction been to the Swiss price increases, and is there room for more structural annual price increases? A: CEO Christoph Aeschlimann stated that while churn is normalizing after an initial spike, the price increase did generate incremental churn and increased down-trading from the main brand to Wingo. He noted that the room for further price increases on the main brand is limited due to a highly promotional market. However, there might be more room to work consistently on price for the second and third brands (Wingo, Migros Mobile), as demonstrated by the recent more-for-more price increase on Wingo.

Q: What is the status of the Vodafone Italia integration and synergy realization? A: CEO Christoph Aeschlimann reported that the integration is proceeding ahead of plan. Synergy realization reached EUR166 million in H1, with EUR89 million delivered in Q2 alone, putting the company fully on track to deliver the EUR300 million target for the full year. Integration costs are under control at EUR51 million so far, but are expected to ramp up significantly in H2, with up to EUR200 million in integration CapEx expected for the full year.

Q: What is the expected impact of the PosteMobile and Lyca MVNO migrations on the Italian wholesale business? A: The PosteMobile migration is complete, resulting in a net reduction of 2.3 million RGUs in Q2. The Lyca MVNO migration, announced by TIM, will result in another roughly 1 million RGUs migrating away over the next half years. While this will generate losses in wholesale MVNO revenues, it alleviates traffic on the network, allowing the company to delay some capacity investments. The company will book a CHF75 million compensation from Vodafone for the Poste loss in Q3 or Q4.

Q: How should we think about the impact of satellite services on the Swiss and Italian broadband and mobile markets? A: CEO Christoph Aeschlimann sees a moderate impact in Switzerland due to the strong existing fiber infrastructure, viewing satellite as a complement for extreme rural areas and emergency resilience. In Italy, satellite (Starlink) is more successful in rural areas without fiber, making the completion of the fiber rollout and migration of copper customers critical to prevent market share erosion. On mobile, the impact depends heavily on European regulation regarding MSS spectrum allocation.

Q: What is the status of the INWIT termination and the Tower JV with Telecom Italia? A: The Court of Milan has rejected INWIT's interim measures, confirming the lawfulness of Swisscom's termination. Preparations are on track for the migration starting April 1, 2028. The Tower JV with Telecom Italia to deploy roughly 6,000 sites is progressing, with the long-form agreement expected by year-end. The RAN sharing agreement is in the regulatory process, with antitrust review expected to complete next year.

Q: What is the expected service revenue decline for Italy in 2026, and will this trend continue? A: CFO Eugen Stermetz confirmed the full-year guidance of a service revenue decline of roughly CHF150 million in Italy, which is much improved over the previous year. He stated that the decline is expected to gradually ease over time, but no specific guidance was given for 2027 onwards. The B2C service revenue decline improved significantly in Q2 (minus EUR22 million vs. minus EUR35 million in Q1) as the value strategy and back-to-front book alignment take effect.

Q: What is the status of the Swiss spectrum auction, and could it erode Swisscom's spectrum advantage? A: CEO Christoph Aeschlimann confirmed that the Swiss regulator is going against the European trend by not extending licenses and instead holding an auction, expected in summer/autumn 2027. The final rules are expected by year-end. Swisscom will ensure it can repurchase its current frequencies to maintain network quality, but the exact auction dynamics will be clearer once the regulator publishes the final rules.

Q: What is the growth outlook for the energy business in Italy? A: The energy business is scaling up well, with 141,000 RGUs and expected to deliver slightly over CHF100 million in top line in 2026, a significant growth versus the previous year. The company is also exploring other avenues like security and insurance to increase share of wallet in its Italian customer base, which could be new growth drivers going forward.

Q: Are there any additional synergy opportunities beyond the EUR600 million target from the Vodafone Italia acquisition? A: CEO Christoph Aeschlimann stated that the company still needs to realize the other 50% of the EUR600 million synergy target (CHF300 million delivered so far). He emphasized that the company will not announce additional synergies until it has delivered on its original promises, but remains confident in achieving the full EUR600 million target based on current progress.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .