Shareholders' Letter

Development of third-revenue in EUR million
2,000
1,500
1,000
500
0
1,708
2008
Fastweb
In EUR million, except where indicated 2010 2009 Change
Revenue from external customers 1,870 1,846 1.3%
Intersegment revenue 10 7 –
Net revenue 1,880 1,853 1.5%
Segment expenses (1,447) (1,302) 11.1%
Segment result before depreciation and amortisation 433 551 –21.4%
Margin as % of net revenue 23.0 29.7
Capital expenditure in property, plant and equipment
and other intangible assets 427 434 –1.6%
Full-time equivalent employees at end of year 3,123 3,125 –0.1%
Broadband subscribers in thousand 1,724 1,644 4.9%
1,846
2009
1,870
2010
Development of EBITDA in EUR million
> Adjusted net revenue increased by 3.7%.
> Adjusted EBITDA margin declined by 1.3 percentage points to 27.7%.
> Strength of the franc led to lower growth rates in Swiss francs.
600
450
300
150
0
Fastweb increased net revenue by 1.5% to EUR 1,880 million. The figures for 2009 and 2010 contain
non-recurring revenues of EUR 20 million and EUR 15 million, respectively. Also taking into account
a change in revenue recognition, revenue grew by 3.7% on a like-for-like basis. The number of broadband
subscribers increased year-on-year by 80,000 or 4.9% to more than 1.7 million. In the corporate
business segment, around 60% of the bids submitted by Fastweb were successful, which further
consolidated its market position in this segment. The residential customers and SME business
felt the effects of intensifying competitive pressure. As a result of the ongoing investigation into
VAT, a provision of EUR 70 million was recognised under other operating expense in the first quarter
of 2010. The result was also impacted by the aforementioned revenue effects and the restructuring
costs. Consequently, the segment result before depreciation and amortisation (EBITDA) declined
by 21.4% year-on-year to EUR 433 million. The adjusted EBITDA margin declined to 27.7%, chiefly
due to an increase in revenue generated from low-margin hardware products. As per 31 December
2010, headcount was largely unchanged year-on-year at 3,123 full-time equivalent employees.
Capital expenditure fell by EUR 7 million or 1.6% to EUR 427 million as a result of lower spending
on network infrastructure.
In the consolidated Group results, the continued weakening of the euro negatively impacted revenue
as well as the segment result before depreciation and amortisation. The average CHF/EUR
exchange rate fell by 9.1% year-on-year. In Swiss franc terms, Fastweb’s revenue from external customers
fell by 7.9%, versus an increase of 1.3% in local currency terms. The segment result before
depreciation and amortisation was down 29.1% in the reporting currency, or 21.4% in local currency
terms.
548
2008
551
2009
433
2010
Management Commentary 56 | 57
Operating segment results