Swisscom AG - ADR

Q1 overall: solid delivery; guidance confirmed (good + “surprising” driver) - Group results were as expected: EBITDAaL ~flat (CHF 1.28bn), net revenue slightly softer (CHF 3.6bn, in line with guidance). - Operating free cash flow (FCF) CHF 494m, up CHF 96m, but mainly due to intra-quarter phasing in 2026 (management cautioned not to annualize Q1). - Full-year guidance reconfirmed by management (Eugen): stable FCF from Switzerland and growing FCF from Italy as guided.

Switzerland: price increase executed; churn/mix softened results, but profitability improved (good, with competitive challenge) - Price increase execution on own brands was “as expected”; churn roughly in business-case (mobile postpaid roughly stable vs Q4; broadband churn increased with net add losses). - Commercial environment remains mixed/weak: competitors (notably Sunrise) became more aggressive on promotions after the price increase, including lifetime discounts, offsetting price-positive effects. - Financially, telco service revenue decline is progressing toward the target: ~CHF 120m full-year decline expected; additional cost savings expected (~CHF 50m full year). - B2B IT profitability improved: EBITDAaL up from CHF 25m to CHF 32m in Q1 (revenue flat/soft market).

Italy: integration on track; synergy ramp is the key positive offsetting service pressure - Vodafone Italia / Fastweb integration progressing: one legal entity since Jan, SAP merged, one integrated HR rolled out. - Synergies delivered CHF 77m (on track) with expectation to reach CHF 300m full-year; management also indicated this is half of planned order synergies by 2029. - Despite revenue pressure, EBITDAaL up CHF 30m in Q1, helped by B2C synergy realization and lower costs; integration costs within plan. - Service revenue decline Italy: Q1 -CHF 55m; management expects greater improvement in H2 as guided.