2017
Annual Report
2017
Annual Report
2017
Sustainability Report
2017
at a glance
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Annual report publications
The annual report, sustainability report and Swisscom at a glance
together make up Swisscom’s reporting on 2017.
The three publications are available online at: swisscom.ch/report2017
“Welcome to the networked world” concept
In our networked world, everything is becoming more and more connected.
At the centre of this connectivity are high-performance and secure networks.
That is why for years we have invested CHF 1.7 billion in the expansion,
maintenance and innovation of our network infrastructure.
We are extremely proud of our employees, who day in, day out,
put their energy, heart and soul into making sure that our customers
stay optimally connected no matter where they are.
The pictures in the 2017 annual report publications offer a peek behind
the scenes into our working environment – where we build our network
and support our customers. We want to open up the opportunities offered by
a networked future and take advantage of them together with our customers.
A very big thank-you goes to Stefanie Haag, Tiziana Conzett, Natalija B., Mona W., Edvin Caminada, Pirmin Egloff,
Manuel Haag, Peter Fritschi, and all the children who took time out to have their photos taken.
Table of contents
Introduction
Management Commentary
Corporate Governance and Remuneration Report
Financial Statements
Further Information
1–14
15–54
55–92
93–160
161–168
2017 in review
11.7 bn
CHF
4.3 bn
CHF
1.6 bn
CHF
2.4 bn
CHF
Net revenue
EBITDA
Net income
Capital expenditure
1.3 mn inOne
customers
Swisscom has radically simplified its price plans and
offers a single package for at home and on the move.
Customers can put together their own individual
packages comprising Internet, TV, telephony and
mobile telephony.
20 years
in the service of sustainability. Since 1997,
Swisscom has had a team working for the environment.
It gained ISO 14001 environmental standard
certification in 1998. Today, Swisscom offers some
50 products with sustainability benefits.
Unchanged
dividend
CHF 22 per share will be proposed for the 2017
financial year at the Annual General Meeting.
Swisscom
Blockchain Ltd
is the name of the new company driving forward
blockchain applications in and for Switzerland.
Fastweb
has streamlined its fixed-line
price plans and launched a new
mobile offering.
SimplyMobile
is the first subscription package in
Switzerland in which the data
allowance does not expire at
the end of the month.
Wingo Fair Flat
is the name of the new mobile
subscription that offers a
full service at an attractive price.
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20,506
6.6 mn
1.5 mn
2.5 mn
Employees
(full-time equivalents)
Mobile lines
Switzerland
Swisscom TV connections
Switzerland
Broadband lines
Italy
Best network
The results of tests conducted for the trade magazines Connect
and CHIP confirm that Swisscom’s network is the best.
5G
Swisscom is working hard to drive
the development of 5G forward
and is conducting the first tests of
transmission capacities of over 20
Gbps per radio cell in a test
environment.
All IP
90% of lines have been switched
from conventional fixed-line
telephony to Internet Protocol (IP)
over the past four years.
Cloud
Swisscom is expanding its cloud
portfolio by adding Enterprise
Service Cloud and Enterprise Cloud
for SAP, together with global
offerings from Amazon Web
Services and Microsoft Azure.
1 Gbps
in mobile
telephony
In 11 cities, customers can surf
the Internet at speeds of up to
1 Gbps.
Call filter
to counteract unwanted
advertising calls is now available
for mobiles too.
Smart ICT
So far the only package for
the digitisation of SMEs to include
the setting up and operation
of telephony and IT.
Internet Guard
means Swisscom customers’
devices are even better protected
against threats on the Internet.
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2
KPIs of Swisscom Group
In CHF million, except where indicated
Net revenue and results
Net revenue
Operating income before depreciation and amortisation (EBITDA)
EBITDA as % of net revenue
Operating income (EBIT)
Net income
Earnings per share
Balance sheet and cash flows
Equity at end of year
Equity ratio at end of year
Operating free cash flow
Capital expenditure in property, plant and equipment
and intangible assets
Net debt at end of period
Operational data at end of period
Fixed telephony access lines in Switzerland
Broadband access lines retail in Switzerland
Swisscom TV access lines in Switzerland
Mobile access lines in Switzerland
Revenue generating units (RGU) Switzerland
Unbundled fixed access lines in Switzerland
Broadband access lines wholesale in Switzerland
Broadband access lines in Italy
Mobile access lines in Italy
Swisscom share
Number of issued shares
Market capitalisation at end of year
Closing price at end of period
Closing price highest
Closing price lowest
Dividend per share
Employees
Full-time equivalent employees at end of year
Average number of full-time equivalent employees
2017
2016
Change
11,662
11,643
4,295
36.8
2,131
1,568
30.31
7,645
34.7
2,159
2,378
7,447
2,047
2,014
1,467
6,637
4,293
36.9
2,148
1,604
30.97
6,522
30.4
1,791
2,416
7,846
2,367
1,992
1,418
6,612
12,165
12,389
107
435
2,451
1,065
51,802
26,859
518.50
527.00
429.80
22.00 1
20,506
20,836
128
364
2,355
676
51,802
23,627
456.10
528.50
426.80
22.00
21,127
21,543
0.2%
0.0%
–0.8%
–2.2%
–2.1%
17.2%
20.5%
–1.6%
–5.1%
–13.5%
1.1%
3.5%
0.4%
–1.8%
–16.4%
19.5%
4.1%
57.5%
0.0%
13.7%
13.7%
0.0%
–2.9%
–3.3%
%
CHF
%
in thousand
in thousand
in thousand
in thousand
in thousand
in thousand
in thousand
in thousand
in thousand
in thousand
CHF
CHF
CHF
CHF
number
number
1 In accordance with the proposal of the Board of Directors to the Annual General Meeting.
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Business overview
Other Operating
Segments
With subsidiaries in the areas
of network construction and
maintenance (cablex), broadcast-
ing services (Swisscom Broadcast)
and collection (Billag), Swisscom
complements its core business
in related areas. The new Digital
Business unit is focused on
growth areas in the fields of
Internet services and digital
business models and also
encompasses business with
online directories and telephone
directories (localsearch).
Swisscom
Switzerland
Fastweb
Fastweb is one of the largest
providers of broadband services
in Italy. Its product portfolio
comprises voice, data, broadband
and TV services as well as
video-on-demand for residential
and corporate customers.
In addition, Fastweb offers mobile
phone services on the basis of
an MVNO contract (as a virtual
network operator). It also
provides comprehensive network
services and customised solutions
for corporate customers.
Residential Customers
The Residential Customers division
offers mobile and fixed-line
services. These include telephony,
broadband, TV and mobile
offerings as well as ICT solutions
for SMEs.
Enterprise Customers
Whether voice or data, mobile
or fixed-line, individual products
or integrated solutions: Enterprise
Customers designs, implements
and operates entire ICT infra-
structures for corporate customers.
IT, Network & Infrastructure
The division plans, operates and
maintains the network and
IT infrastructures in Switzerland.
Wholesale
The Wholesale segment provides
other telecommunication
service providers with access
to the Swisscom fixed and mobile
networks.
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Revenue
Revenue
Revenue
9.0 bn CHF
2.2 bn CHF
0.5 bn CHF
EBITDA
EBITDA
EBITDA
3.5 bn CHF
0.8 bn CHF
0.2 bn CHF
Visiting the historic cable tunnel on
Bollwerk street in Berne, where the latest
fibre-optic and copper cables provide
parts of the city with Internet.
Shareholders’ letter
Dear Shareholders
We have succeeded once again: Swisscom held its ground in an extremely
challenging environment and achieved the targets set for 2017. An impressive
market performance permitted Swisscom to generate revenue that was
practically on a par with the previous year. Fastweb also posted another pleasing
performance, growing its revenue and expanding its customer base.
Swisscom achieves its targets in spite of high market pressure
Swisscom generated revenue and earnings that were in line with the previous year in an increasingly fierce market.
Swisscom’s net revenue was stable at CHF 11,662 million, as was its consolidated operating income before depre-
ciation and amortisation (EBITDA) at CHF 4,295 million. Net income also virtually remained on a par with the
previous year at CHF 1,568 million.
Revenue in the Swiss core business fell slightly to CHF 9,058 million, mainly due to declining revenue from fixed-
line telephony and lower income from roaming services. As more and more customers are giving up their land-
lines, the number of fixed-line phone connections fell by 320,000 year-on-year to around 2 million. The first signs
of saturation are also emerging in the mobile telephony market. Although the number of connections rose only
slightly (0.4%) to 6.64 million compared with the prior year, Swisscom nonetheless managed to keep its market
share in mobile telephony virtually stable in a fiercely contested market.
Broadband connections were up by 22,000 (+1.1%) to 2.0 million year-on-year. Swisscom TV is a strong driver of
this: with a market share of 33% (prior year: 32%), it is Switzerland’s most popular digital TV offering. And some-
thing of which we are very proud. The number of Swisscom TV connections rose by 3.5% year-on-year to 1.47 million
in spite of strong competition from cable network providers. The most popular television in Switzerland was upgraded
in November with Entertainment OS3, a fully overhauled operating system with a simplified user interface.
inOne: more than 1.3 million customers in less than nine months
We are also extremely successful in the market with our new combined package inOne: as at the end of December 2017,
i.e. just nine months after the launch of the flexible product line, more than 1.3 million customers with around
2.7 million connections had already opted for inOne. This makes it Swisscom’s most successful product ever, with
revenue from bundled contracts increasing year-on-year by 13.4% to CHF 2,837 million.
Fastweb: strong growth in mobile telephony
Fastweb is performing well. Net revenue rose by 8.3% year-on-year to EUR 1,944 million. In spite of difficult market
conditions, Fastweb’s broadband customer base grew by 4.1% to 2.45 million in 2017. It also made strides in
mobile telephony, with connections up by 58% to more than 1 million customers in a stagnating market. The
reason for this marked increase was Fastweb’s launch of more attractive mobile phone offerings over the course
of the year. In the fiercely competitive market for corporate customers, Fastweb consolidated its market position,
while incoming orders grew by 31%.
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Capital expenditure: still at a high level
Swisscom continued to invest heavily in its infrastructure in 2017. Despite being marginally down by 1.6% to
CHF 2,378 million over the previous year given the enhanced efficiency of our network expansion, capital expen-
diture nevertheless still accounted for 20.4% of net revenue (prior year: 20.8%). Swisscom in Switzerland accounted
for 70% of 2017 capital expenditure. These investments are paying off: German industry magazine CHIP named
Swisscom as having the best network, while Connect gave our mobile phone network the grade “outstanding” –
the highest accolade among all international networks tested.
The digitisation of the fixed network (All IP technology) is progressing on schedule. Today, over 2 million customers
are already profiting from HD voice quality, personalised block lists, automatic caller identification and an auto-
matic filter for blocking unwanted advertising calls. Work on the full migration of customer lines to IP in the major
regions of Switzerland has been under way since the start of 2018, which will allow Swisscom to push forward
with the decommissioning of the old infrastructure in these locations.
Regulatory environment remains challenging
Swisscom’s licence to provide a universal service in Switzerland has been renewed for another five years. A parlia-
mentary proposal to increase the minimum bandwidth under the universal service from 3 to 10 Mbps is pending.
This year should also see the allocation of new mobile frequencies for 5G bands – a vital prerequisite for the
launch of the fifth mobile generation. The second prerequisite for setting up a 5G network would be a modest
adjustment to the ONIR limits and the associated measurement methods. And finally: the revision of the Tele-
communications Act (TCA) could have an adverse impact on investments in the pipeline, since a paradigm shift
towards technology-neutral access regulation reduces the incentive to invest in infrastructure – to the detriment
of the whole of Switzerland, especially rural areas.
More finely tuned corporate strategy for sustainable growth
The upcoming second major wave of digitisation will change key aspects of our day-to-day lives both as a residential
customer and as a company. Swisscom as market leader wants to play a defining role in the technologies of the
future and continue to inspire customers in an increasingly networked world. And we want to grow.
We are currently working on improving Swisscom’s health. This should assist us in raising sufficient funding for
new business activities, despite the decline in our core business. For example, in February 2016, Swisscom
announced that it would be cutting its annual cost base in Switzerland by around CHF 60 million per year by 2020.
Given the persistent market pressure in the core business and the time and resources needed to establish new
business in growth areas such as the cloud and security, Swisscom is raising this target for 2018 to 2020 to
CHF 100 million per year. At the same time we are focusing on agile and more streamlined working models and
organisational structures and on tapping into new areas of business.
Rethinking things or thinking in a new light leads to value-adding innovation. A study conducted by HTP St. Gallen
concludes that Swisscom is the third most innovative company in Switzerland. We are pleased about this. Because
we are doing our utmost to constantly inspire our customers with innovative ideas – one current example of
which is the filter for blocking unwanted advertising calls. Ideas such as these have a long tradition at Swisscom:
Swisscom introduced innovative mobile phone subscriptions that are no longer billed on the basis of largely
incomprehensible factors such as data volume years ago. In Swisscom TV, Swisscom successfully brought a product
to market that was not brushed off by consumers as a technological fad but rather embraced as offering real
potential. Technical terms such as “IP-based broadcasting” and “cloud recording” were turned into a product
whose added value was immediately recognised by all customers – and which they could no longer do without.
This holds true for all innovations: they are only successful when their added value no longer needs to be explained,
but is understood intuitively.
These factors for success will be also decisive for the second phase of digitisation. It is now all about applications
that will play an even more prominent role in our daily lives and in some cases encroach on sensitive areas: on
healthcare, on financial transactions, on dealings with the authorities, on B2B, on energy, on transport or on dia-
logue with local partners. Studies show that most small to medium-sized enterprises in Switzerland have not yet
sufficiently got to grips with digitisation – not least because they lack the time, resources and expertise to do so,
and sometimes because they do not recognise the added value it offers. This is creating a backlog that could well
unleash itself in a sizeable wave. Swisscom aims to exploit this increasing future demand for IT services and IT
outsourcing to the cloud as entrepreneurial opportunities. Other areas in which we see business potential range
from the field of FinTech to disruptive technologies such as blockchain. In 2017 Swisscom founded Swisscom
Blockchain Ltd with the aim of tapping into this field as rapidly as possible. The first projects embarked upon
included digitising the commercial registers of individual cantons and setting up an international trading platform
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for fi lm and television rights. There is a clear and obvious need for central applications built around blockchain –
and Swisscom could become not just a national but even an international pioneer in this area.
Shareholder return
Swisscom seeks to maintain a stable dividend policy and paid out an ordinary dividend of CHF 22 per share in 2017.
The Swisscom share price rose by 13.7% in the year under review. Based on the closing price at the end of 2016 and
taking the gain in the share price into account, this translates into a total return of 19.4%.
Outlook
For 2018, Swisscom expects net revenue of around CHF 11.6 billion, EBITDA of around CHF 4.2 billion and capital
expenditure of less than CHF 2.4 billion. If the targets are met, Swisscom will propose to the 2019 Annual General
Meeting payment of an unchanged dividend of CHF 22 per share for the 2018 fi nancial year. As you can see, the
Swisscom share continues to be attractive.
Sincerest thanks
In a time of rapid change, ahead of a future shaped by uncertainties, we have created with you, dear shareholders,
and with our customers and employees, a company that has changed things. It has changed things not only for
itself, but also, to some extent, for the entire country. We thank you for your trust and your loyalty. But we also
extend our sincere thanks to our employees, who deserve our utmost respect and gratitude for the passionate
commitment they demonstrate to Swisscom every day. So much so that today Switzerland is a trailblazer both in
terms of technology and its affi nity to customers – a picture that is very diff erent from the 1980s and 1990s. And
a trailblazer it should remain. Which is why we keep doing what we do. Not in spite of, but because the world is
facing uncertainties and because it is confronted with major challenges. We want to seize this opportunity.
Committed, trustworthy, curious.
Yours sincerely
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Hansueli Loosli
Chairman of the Board of Directors
Swisscom Ltd
Urs Schaeppi
CEO Swisscom Ltd
Welcome to
the networked world.
We are committed to delivering the best quality,
the best service and the best network day in, day out –
because it is the basis for all of the products and
services that Swisscom offers its customers.
The following profiles provide a glimpse behind the
scenes in areas where we give our best.
Welcome to Swisscom!
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“We support our customers on-site
in the case of a fault with the aim
of providing them with the very best
customer experience. Our services
range from providing customised
advice to guaranteeing interruption-
free access lines, confi guring devices
and integrating them into home
networks.”
Edvin Caminada
Service technician
Installations, fault rectifi cation and support
for residential and business customers.
On-site advice and sale of Swisscom products.
Approx. 850
technicians and 400 partner employees
are working for our customers.
2,100
customer visits take place every day
on average.
“We are expanding and maintaining
the best network – even during high
winds and bad weather. It is physically
demanding to splice and lay optical
fi bres and climb up overhead lines.
But I view it as a challenge and I am
proud to be able to apply what I have
learned directly on-site.”
Tiziana Conzett
FCP apprentice network electrician specialising
in telecommunication
In 2018 Tiziana will be the fi rst woman to
complete her apprenticeship as an FCP network
electrician.
1,500
employees and 80 apprentices work in the
fi elds of network planning, construction and
maintenance at subsidiary cablex.
In 300
municipalities every year, Swisscom is
expanding its network.
Over 400,000
homes and businesses are connected to
Swisscom’s fi bre-optic network every year.
“Thanks to targeted research, we have developed a measuring procedure
for displaying spatially averaged results of electromagnetic fi elds.
This is based on international norms and is easier to reproduce than the
manual method used in the past.”
Peter Fritschi, Project Manager, measurement robot
Manuel Haag, Senior Innovation Engineer
Development of a robot that improves and automates the measurement of electromagnetic fi elds.
Ten times
more stringent than the international average –
precautionary limits in Switzerland.
More precise
The use of the new measuring procedure
ensures that transmitter emissions can be
evaluated more realistically and precisely.
5G
The applicable precautionary limits are
an impediment to the introduction of new
mobile technologies such as 5G.
99%
of the Swiss population are equipped
with 4G. 80% have 4G+, with up to
300 Mbps.
1 Gbps
can be reached in 11 Swiss cities.
90%
of mobile sites in urban areas have
reached their limit in terms of capacity
and cannot be expanded any further.
“We have done our job well when the more than
440,000 travellers every day at Zurich Main Station
can benefi t from the best mobile phone network.
We work even when others are asleep.”
Pirmin Egloff
Mobile communication technician
Guaranteeing the operation, fault rectifi cation and maintenance
of all antenna locations and mobile radio cells.
Management Commentary
Strategy and the
environment
Corporate strategy __________________________________________ 16
Objectives and achievement of targets ___________________________ 18
General conditions ___________________________________________ 19
Data protection _____________________________________________ 23
Infrastructure
Infrastructure in Switzerland ___________________________________ 24
Infrastructure in Italy _________________________________________ 27
Employees
Employees in Switzerland _____________________________________ 28
Employees in Italy ___________________________________________ 30
Brands, products and
services
Swisscom brands ___________________________________________ 31
Products and services in Switzerland _____________________________ 32
Products and services in Italy ___________________________________ 33
Customer satisfaction ________________________________________ 34
Innovation and
development
Financial review
Innovation as an important driver _______________________________ 35
Targeted innovation __________________________________________ 35
Summary __________________________________________________ 39
Segment results _____________________________________________ 40
Depreciation and amortisation, non-operating results _______________ 43
Cash flows _________________________________________________ 44
Capital expenditure __________________________________________ 45
Net asset position ___________________________________________ 46
Value-oriented business management ____________________________ 48
Statement of added value _____________________________________ 49
Financial outlook ____________________________________________ 50
Capital market
Swisscom share _____________________________________________ 51
Dividend policy _____________________________________________ 52
Indebtedness _______________________________________________ 52
Risks
Risk situation _______________________________________________ 53
Risk factors ________________________________________________ 53
Strategy and the environment
Swisscom’s corporate strategy is aimed at securing its position as a market,
technology and innovation leader, and offering its customers the best.
Trustworthy, committed and never losing sight of what is important.
Corporate strategy
General
Swisscom is the Swiss market leader for mobile telecommunications, fixed-line telephony and television. It also
occupies a leading market position in a wide range of IT business segments. Fastweb is the leading alternative
provider for both retail and business customers in the Italian fixed-line market.
Megatrends such as digitisation and connectivity, customisation and demographic change are shaping and
changing our society and the economy in the long run and have a long-term impact on the activities of Swisscom.
The increasing proliferation of the Internet of Things, the 5G mobile telephony standard being ready for market
and the advancements made in the field of artificial intelligence are short to medium-term trends that impact
Swisscom’s business.
The market environment in which Swisscom operates has changed radically in recent years. Characteristic exam-
ples of this include increasing connectivity, exponential data growth, the growing significance of software, data
and content, changing customer requirements and rapid technological progress. The competition on the satu-
rated core market is becoming increasingly fierce, which is in turn intensifying price pressure. Global Internet
companies are using their economies of scale and forcing themselves into local ICT markets, stepping up compe-
tition even further. These developments have exerted pressure on the revenues generated in the Swisscom core
business. The resulting lower revenue and income need to be offset in order to ensure that sufficient financial
resources are available.
As number 1, we are shaping the future.
Together we inspire people in the networked world.
Best customer experience
Operational excellence
New growth
In its capacity as a market, technology and innovation leader, Swisscom connects both residential and corporate
customers. In an increasingly networked world, it is taking an active and assertive role in shaping the future.
Swisscom focuses on the needs of the people in everything that it does. Its employees work in concert to provide
inspirational experiences. Swisscom is committed and trustworthy in its actions, consistently takes a curious
stance towards further development and never loses sight of what is important when pursuing its goals. Customer
trust is at the heart of everything Swisscom does, and is reinforced by the reliability and sustainability of the
company’s activities. In order to make its vision a reality, Swisscom has set out three strategic aspirations which
help to define the strategy.
Best customer experience
In order to inspire its customers, Swisscom has to provide them with the best service at all times, regardless of
their location. The customer experience is based on a high-performance infrastructure. Swisscom therefore aims
to offer its customers the latest IT and communications infrastructure and therefore assert its position as a tech-
nological leader. Customer requirements vis-à-vis the availability and performance of the networks are constantly
growing. As a result, Swisscom is setting up and operating networks that are second to none in terms of security,
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availability and performance. By expanding and upgrading its fixed telephone and mobile network infrastructure
with the latest technologies (such as 5G), Swisscom is ensuring that its customers enjoy the best experiences
when utilising the company’s offerings. The Swisscom Cloud is the key platform for the internal and external pro-
vision of services and forms the basis for new, scalable offerings that are produced in Switzerland. Swisscom
complements its own cloud with global solutions, thereby operating as a service provider that also integrates
solutions into hybrid environments.
The key to the success enjoyed by Swisscom is its relationships with its customers. The company’s main guiding
principles are to provide the best service and inspirational experiences across the board. Swisscom customers can
count on us as a competent, reliable partner and enjoy service that is individual, flexible and personal at all points
of contact. For example, customers can have their damaged mobile phones repaired in no time at all in the nine
Repair Centres, which meets a key customer requirement. Swisscom is thus reducing complexity and providing
relevant, innovative offerings. In the TV segment, Swisscom is continually simplifying operability and offers each
and every one of its customers a personalised entertainment service thanks to the further development of the
user interface. Swisscom is also continually upgrading its service offerings, such as with My Service – the personal
support offering for technical enquiries. When creating new digital services and experiences, Swisscom always
focuses on meeting the needs of its customers. In this way, Swisscom is restoring the trust its customers have in
the company, reinforcing customers’ loyalty to the brand and increasing agility and efficiency.
Operational excellence
Due to fierce competition, the revenues being generated by national telecommunications service providers are on
the whole declining, resulting in even greater cost pressure. It is therefore key that Swisscom consistently opti-
mises its cost base over the next few years in order to remain financially successful in the long term and to absorb
the effects of price competition and margin erosion. This is the only way in which Swisscom can release the funds
for developing new business opportunities and secure profitability. One of the main focuses in optimising costs is
the creation of efficient operating procedures, for example by simplifying and adjusting the product portfolio,
using agile development methods, modernising and consolidating the IT platforms, increasing the efficiency of
staff deployments, and optimising processes being driven by initiatives such as All IP migration. Another key ele-
ment is the internal digital transformation, which includes the virtualisation of network functions, improvement
of the online channel, increasing the level of process automation and the greater use of artificial intelligence and
analytics. In addition to this, Swisscom is increasing the efficiency of its investment activities, for example by
utilising an intelligent mix of technologies and by reducing the number of partners involved in the expansion of
the network.
New growth
Swisscom anticipates that the figures for the relevant markets in Switzerland and Italy will continue to grow
steadily on the whole. The main driving forces behind this are modest population growth, the increase in use of
ICT in a wide variety of industries and the relatively low broadband penetration in Italy. Nevertheless, price pressure
remains at a high level, to the extent that a slight drop in market revenue is to be expected on the whole, particularly
in the telecommunications market.
Swisscom wants to realise growth opportunities by further developing its core business – for example by means
of growth in entertainment (such as TV) and in Wholesale or by making use of opportunities that arise as a result
of new consumer applications in the area of the Internet of Things (IoT). There are further opportunities for growth
in the medium term in other sectors, too, such as healthcare and banking – in which Swisscom provides vertical
ICT services – as well as the solutions business relating to digital security and in the cloud segment. Swisscom is
launching new digital services in selected areas. Some of these services are based on new business models, focusing
on marketplaces (such as siroop and Mila), digital services for SMEs (such as localsearch), and support technologies
and platforms (such as blockchain). When selecting growth areas, Swisscom is guided by future customer require-
ments, focuses on future-oriented business models with substantial growth and is making increased use of
partnerships. In addition to the activities mentioned above, Italian subsidiary Fastweb is playing a key role in the
realisation of growth opportunities. Swisscom is improving Fastweb’s market position and achieving growth in
Italy thanks to the further development of the mobile communications market, the expansion of the business
customer portfolio by means of horizontal solutions in relation to the cloud and digital security, high-quality
service, the utilisation of partnerships as well as a convergent product portfolio which cuts an impressive figure
due to its transparency, fairness and simplicity.
In order to both further develop the core business and also tap into new business areas, Swisscom is continuously
striving to transform the corporate culture. To achieve this, it will focus on agile and customer-centric working
models and organisational structures, the development of relevant key skills and technological transformation,
for example.
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Forerunner in corporate responsibility
Swisscom is committed to developing a modern and future-oriented Switzerland. Its Corporate Responsibility
activities focus on issues that have high relevance for stakeholder groups and at the same time are closely linked
to the company’s core business. These activities are centred around the following seven action areas:
> Networked Switzerland: By the end of 2021, some 90% of all homes and businesses will have a minimum
bandwidth of 80 Mbps – with around 85% of connections achieving speeds of 100 Mbps or higher.
> Energy efficiency and climate protection: By 2020, Swisscom plans to increase energy efficiency by another
35% compared to 1 January 2016. Together with its customers, Swisscom is aiming to save twice as much CO2
as it emits through its operations including the supply chain by 2020.
> Attractive employer: Swisscom wants to be one of the most attractive employers in Switzerland by 2020.
> Work and life: By 2020, Swisscom aims to be supporting one million people with its offerings in the healthcare
sector and also provide one million people with the opportunity to use mobile working models.
> Media skills and security: Swisscom aims to be the market leader in data security by 2020, helping one million
people to use the media safely and responsibly.
> Sustainability image: Swisscom wants to improve the way its sustainability efforts are perceived by the general
public and achieve a “Citizenship” score of 70 out of 100 points (Reptrak standard) by 2020.
> Fair supply chain: In the interests of a fair supply chain, Swisscom is committed to improving employment
conditions for more than two million people by 2020.
Climate protection includes the following activities in particular: analysis of the opportunities and risks caused by
climate change; creation and implementation of a programme relating to the issues determined; and monitoring
and reporting of the progress of this programme. Coordination and management of these activities lies with the
Corporate Responsibility team. Clear governance exists for the activities mentioned. Swisscom applies the recom-
mendations of the Task Force on Climate-related Financial Disclosures (TCFD). Further detailed information is avail-
able in Swisscom’s sustainability and climate reports.
Objectives and achievement of targets
Based on its strategy, Swisscom has set itself various short- and long-term targets that take economic, ecological
and social factors into consideration.
Objectives
Target achievement 2017
Financial targets 1
Net revenue
Operating income before depreciation
and amortisation (EBITDA)
Capital expenditure in property, plant
and equipment and intangible assets
Operational Excellence
Other targets
Ultrafast broadband in Switzerland 2
Ultrafast broadband in Italy
Group revenue for 2017
of around CHF 11.6 bn
EBITDA for 2017
of around CHF 4.2 bn
Capital expenditure for 2017
of around CHF 2.4 bn
In 2017, reduction of cost base in Swiss business
by CHF 75 mn
Coverage of 90% by the end of 2021
in excess of 80 Mbps
Corverage of 13 mn households by the end of 2021
with FTTH and FTTS
CHF 11,662 mn
CHF 4,295 mn
CHF 2,378 mn
Achieved
55%
60% or 8 mn
1 As already announced in 2017, the financial targets for 2017 have been adjusted as follows as a result of compensation from legal proceedings involving Fastweb:
EBITDA of approximately CHF 4.3 bn.
2 Basis: 4.3 million homes and 0.7 million businesses (Swiss Federal Statistical Office – SFSO).
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General conditions
Market environment
The three macroeconomic factors of the economy (Switzerland and Italy), interest rates and exchange rates (EUR
and USD) have a considerable influence on Swisscom’s financial position, results of operations and cash flows and
therefore on financial reporting.
Change GDP Switzerland
Change GDP Italy
Yield on government bonds (10 years)
Closing rate CHF/EUR
Closing rate CHF/USD
1 Forecast SECO
2 Forecast Istat
Unit
in %
in %
in %
in CHF
in CHF
2013
1.9
(1.7)
1.25
1.23
0.89
2014
2.4
0.1
0.38
1.20
0.99
2015
1.2
0.8
(0.04)
1.08
1.00
2016
1.4
0.9
(0.14)
1.07
1.02
2017
1.0 1
1.5 2
(0.10)
1.17
0.98
Economy
In the year under review, the Swiss economy grew by approximately 1% measured by gross domestic product
(GDP), despite the unabated very low rate of inflation. Economic developments are having a wide range of impacts
on customer segments. A high share of the revenues generated in the Residential Customers segment can be
attributed to products with fixed monthly charges, meaning economic fluctuations are low. In contrast, revenue
from roaming services is subject to increased volatility due to being reliant on trips made outside of Switzerland
(inbound and outbound). Nevertheless, a large and ever-increasing proportion of the roaming services in terms of
outbound traffic are included in the fixed monthly charges. Project business in the Enterprise Customers segment
is more sensitive to cyclical factors.
Economic fluctuations tend to have a larger impact on the sales and revenue generated by Italian subsidiary
Fastweb for both residential and business customers.
Interest rates
The interest rate level has an impact on funding costs and also affects the valuation of long-term provisions and
pension liabilities in the consolidated financial statements. In addition, interest rates are a key assumption for the
impairment assessment of recognised goodwill and other items in the financial statements. Although the returns
on ten-year government bonds increased slightly in 2017, they remain at a historically very low level. Swisscom
exploited this in 2017 and reduced the average interest expense to 1.7% (prior year: 1.9%) by issuing bonds total-
ling CHF 500 million. 84% of financial liabilities were charged a fixed interest rate. The average maturity is 5.3 years.
In addition, Swisscom has in the past concluded interest rate swaps with long terms to maturity which are not
designated for hedge accounting. Changes in market interest rates can result in high fluctuations in fair values
recognised in the consolidated financial statements.
Currencies
The exchange rate trends for foreign currencies have very little impact on the Swisscom results of operations.
Transaction risks exist primarily in the purchase of end devices and technical equipment as well as in the acquisi-
tion of services from network operators outside of Switzerland. In the core business in Switzerland, the amount of
money paid out in foreign currencies is higher than income. The net cash flows in foreign currency are partly
hedged by foreign currency forward contracts. Swisscom funds itself for the most part in Swiss francs and to a
lesser extent in EUR. Over the last three years, the share of the funding denominated in EUR has gradually increased
to 25%. In addition to the transaction risks on the operational cash flows in foreign currencies, there is a currency
translation risk in the balance sheet. Fastweb’s net assets, which totalled EUR 2.8 billion at the end of 2017, and
those of the other foreign subsidiaries are translated into Swiss francs in the consolidated financial statements at
the exchange rate applicable on the balance sheet date. Any differences from the foreign currency translation are
recognised in equity and have no impact on the results. Cumulative currency translation adjustments in respect
of foreign subsidiaries amounted to CHF 1.7 billion at the end of 2017. A portion of the financial liabilities in EUR
has been classified as a currency hedge of the Fastweb net carrying amount.
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Legal environment
Swisscom’s legal framework
Swisscom is a public limited company with special status under Swiss law. Corporate governance is governed by
company law and the Telecommunications Enterprise Act (TEA). In its capacity as a listed company, Swisscom also
observes capital market law, including the provisions concerning management remuneration. The legal frame-
work for Swisscom’s business activities is primarily the Federal Telecommunications Act (TCA) and the Federal
Cartel Act (CartA).
Telecommunications Enterprise Act (TEA) and relationship with the Swiss Confederation
The TEA requires the Swiss Confederation to hold a majority of the capital and voting rights in Swisscom. Were the
government to dispose of the majority holding, this would require a change in the corresponding law, which
would be subject to a facultative referendum. Every four years, the Federal Council defines the goals which the
Confederation as principal shareholder aims to achieve. These include strategic, financial and personnel policy
goals as well as goals relating to partnerships and investments. In 2017, the Federal Council approved the goals for
the period from 2018 to 2021. The goals for the previous period of 2014 to 2017 will to a large extent remain in
place.
See
www.swisscom.ch/
targets_2018-2021
See
www.admin.ch
Telecommunications Act (TCA)
The TCA and the associated legislation primarily govern network access, basic service provision and the use of
radio frequencies. The government is currently deliberating on revising the TCA.
Network access
Swisscom is required to grant other providers access to its fixed network and telecommunications services at
cost-based prices. As part of this service provision, physical network access is restricted to copper-based technol-
ogies. The supervisory authority only makes a decision about the specific access conditions (including price) if the
provider seeking access cannot come to an agreement with Swisscom on the conditions (primacy of negotiation).
The question of whether network access regulation should be expanded to include newly built fibre-optic-based
and hybrid fixed networks (technology-neutral network access) is the subject of the ongoing TCA revision.
See
www.admin.ch
Basic service provision
The aim of the basic service is to provide reliable and affordable basic telecommunications to all sections of the
population in all regions of the country. The scope of services as well as the related quality and pricing require-
ments are determined periodically by the Federal Council. The current licence (2018 to 2022) comprises a multi-
functional telephone line, Internet access with a minimum data transfer rate of 3 Mbps (download) and various
services for the disabled. The law provides that the overall net costs of the basic service are compensated for via a
sector-specific fund. Up until now, Swisscom has abstained from bringing the overall net costs to bear for the
basic service.
Mobile phone licence
Mobile phone licences are usually awarded by means of public tenders. In 2012, all of the frequency ranges for
mobile communications were sold in an auction. Swisscom acquired 42% of the frequency bands auctioned for
CHF 360 million and paid the total amount in the same year. The licences run until the end of 2028 and can be used
with all technologies. It is expected that there will be new mobile communication frequencies available from 2019
onwards (frequency bands 700 MHz, 1,400 MHz and 3,400 to 3,800 MHz). The requisite awarding of frequency
ranges will likely take place in 2018. No decision has been made as regards the way in which the ranges will be
awarded and the future framework conditions for the use of the frequencies.
Federal Cartel Act (CartA)
As a result of the company’s market position, competition law (Federal Cartel Act) for various products and ser-
vices is highly relevant for Swisscom. The Federal Cartel Act allows for direct sanctions to be imposed for unlawful
conduct by market-dominant companies. The Swiss competition authorities have classified Swisscom as being
market-dominant in a wide range of submarkets. There are currently proceedings open for three issues, within the
context of which the Competition Commission (COMCO) has classified Swisscom as being market-dominant and
its conduct as being unlawful, and has thus imposed direct financial sanctions. The proceedings refer to the pro-
vision of ADSL wholesale services, the broadcast of live sporting events on pay TV and the broadband connections
of post office locations. The statuses of the proceedings and the potential financial effects are set out in the notes
to the consolidated financial statements (Note 3.5).
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Legal and regulatory environment in Italy
The business activities of Fastweb are heavily influenced by Italian and European telecommunications legislation.
Italy is required to have national legislation in line with the European legislative framework. The Italian regulatory
authority, Autorità per le Garanzie nelle Comunicazioni (AGCOM), uses a market analysis as the basis for passing
provisions and regulations for telecommunications companies, which have to be submitted to the European
Commission and the regulatory authorities of other member states in advance. In 2017, AGCOM retroactively
approved a wide range of reference offerings from TIM for 2015 and 2016. This will bring about a number of
reductions, including in the wholesale prices charged for bitstream services as well as the one-off charges for the
activation and deactivation of lines and for transferring fixed-line numbers. In 2017, AGCOM also opened new
consultations on the reference offerings from TIM for the wholesale services for 2017.
Swiss market trends in telecoms and IT services
The Swiss telecommunications market is highly developed by international standards. It is characterised by inno-
vation and a wide range of voice and data products and services. The constant advancement of digitisation and
connectivity is a key trend. In addition to the established national telecommunications companies, more and
more global competitors are entering the Swiss telecoms market, offering both free and paying Internet-based
services around the world, including telephony, SMS messaging and streaming services. Cloud solutions are also
playing an ever more important role, with storage capacity, processing power, software and services all relocating
to an increasing degree to the Internet. These developments are generating constant growth in demand for high
bandwidths that enable fast, high-quality access to data and applications. The uninterrupted availability of data
and services, as well as the security involved in ensuring this availability, play a key role here. Modern, highly effec-
tive network infrastructures provide the ideal foundations for this. Swisscom is therefore setting up the networks
of the future for both fixed-line and mobile communications.
The Swiss telecoms market is broken down into the submarkets of relevance to Swisscom – mobile and fixed-line
telephony. The total revenue it generates is estimated at around CHF 12 billion; however, this is being put under
increasing pressure. Market saturation is ramping up the fierce competition in almost all submarkets. As a result
of the increased price pressure, most market players are being confronted with a trend towards sinking revenues.
Various market participants adjusted their portfolios of offerings during the course of 2017, with the focus of the
changes on new, convergent offerings which can also contain one or more mobile lines in addition to a fixed
broadband connection with Internet, TV and fixed-line telephony. Swisscom’s range likewise includes bundled
offerings combining different technologies, while it also offers products and services from the core business using
secondary and third-party brands.
Market share Swisscom Swiss telecommunication market
100%
75%
50%
25%
0%
60% 60%
67% 67%
32% 33%
2016 2017
Mobile subscribers
2016 2017
Broadband
2016
2017
TV
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Mobile communications market
Switzerland has three separate, wide-area mobile networks on which the operators of those networks market their
own products and services. Other market players additionally offer their own mobile services as MVNOs (mobile
virtual network operators). Swisscom also makes its mobile communications network available to third-party
providers so that they can make proprietary products and services available to their customers over the Swisscom
network. Due to the high level of market penetration, the mobile communications market in Switzerland is
showing signs of saturation. For this reason, the number of mobile lines (SIM cards) in Switzerland has stagnated
at around 11 million. The penetration with mobile access lines in Switzerland remains about 130%. As in the
previous year, the number of postpaid subscriptions taken out increased, while the number of prepaid customers
fell. The proportion of mobile users with postpaid subscriptions now stands at 70% (prior year: 65%). Swisscom’s
market share remains unchanged from the previous year at 60% (postpaid: 62%; prepaid: 57%).
Fixed-line market
Switzerland has almost 100% coverage of fixed broadband networks. Alongside the fixed-line networks of tele-
coms companies, there are also networks provided by cable network operators. Moreover, market players such as
utilities operating in particular cities and municipalities are building and operating fibre-optic networks on their
own initiative at a regional level. These network infrastructures are largely also made available to other market
participants so that they can supply their products and services. The fixed broadband connection has increasingly
developed into the key access point for customers. It is the basis for a wide-ranging product offering from both
national and global competitors. Competition has gained momentum in the fixed-line segment owing to market
participants launching new offerings throughout 2017.
Broadband market
The most widespread access technologies for fixed broadband connections in Switzerland are infrastructures
based on the networks of telecommunications providers and cable network operators. At the end of 2017, the
number of retail broadband access lines in Switzerland totalled 3.8 million, corresponding to 85% of households
and businesses. As in the previous year, the number of broadband connections increased by around 3% in 2017.
Growth in broadband access lines provided by cable network operators thus lagged behind that of the broadband
access lines of telecom service providers. Telecom service providers accounted for more than two thirds of new
broadband access lines in 2017, corresponding to a stable 67% market share of all broadband lines. Of these, 53%
(prior year: 54%) were for Swisscom end customers and 14% (prior year: 13%) for Swisscom wholesale offerings
and fully unbundled lines.
TV market
In Switzerland, TV signals are transmitted via cable, broadband, satellite, antenna (terrestrial) and mobile. They are
almost completely digitised, as the large-scale broadcast of analogue TV signals has been discontinued. The Swiss
TV market features a wide range of offerings from national market participants, and is now also playing host to
offerings from other international companies. These international companies offer TV and streaming services
that can be used over an existing broadband connection, regardless of the Internet provider. The level of compe-
tition has increased, particularly in terms of TV content. Various national and international companies have
secured the Swiss broadcasting rights for a wide range of sports that were for the most part previously held by
Swisscom. This has given them the opportunity to position themselves on the market with their own new offer-
ings.
Approximately 90% of TV connections are provided via cable or broadband networks. Swisscom has steadily
increased the market share of its own digital TV offering, Swisscom TV, over the past few years. Swisscom is the
market leader and further expanded on this leading position throughout 2017, achieving a market share of 33% at
the end of the year (prior year: 32%).
Fixed-line telephony market
Fixed-line telephony is mainly based on lines running over the fixed networks of the telecom service providers and the
cable networks. The number of fixed-line telephony connections is steadily declining. This trend accelerated in 2017,
with the number of Swisscom fixed-line connections falling by around 14% to 2.0 million. The main reason for the
decline was the substitution of mobile phones for fixed-line connections.
IT services market in Switzerland
The market for IT services generated revenue of CHF 10 billion in 2017 and will continue to enjoy moderate growth
over the next few years. Swisscom expects the strongest growth in business process outsourcing (BPO) and in
segments offering application-based and infrastructure project-based services, most notably cloud and security
services. This growth is a result of the increasing number of business-driven ICT projects as well as the ever-grow-
ing willingness to procure external services. Customers usually expect services customised to their individual sec-
tor and business processes with related consultancy.
The shifts in the market and IT innovations are creating new opportunities for Swisscom. As one of the few pro-
viders of integrated digitisation solutions, Swisscom helps companies to improve customer experiences, simplify
and automate processes and integrate existing solutions. Swisscom also co-creates new IT services with its cus-
tomers. As a result, Swisscom is seen as a driver of digitisation in the Swiss economy. With a market share of
around 11% (prior year: 9%), it remains one of the leading providers of IT services on the Swiss market.
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Italian market trends in telecoms services
Italian broadband market
Italy’s fixed broadband market is Europe’s fourth largest, with a revenue volume of EUR 12 billion. Broadband
penetration in households has increased to 60%, but remains below the European average. This is driven by the
growth of new fibre-optic networks and by the increasing use of online services, such as streaming and gaming
services. Convergence offerings for the fixed network and mobile communications are also becoming increasingly
popular. Due to the intensely competitive environment, the market is under considerable pricing pressure. Ultra-
fast broadband network coverage has continued to rise, with some 70% of households now having access to the
network. During the year under review, the situation regarding the ultrafast broadband infrastructure in Italy
changed significantly. TIM significantly increased the expansion targets for its ultrafast broadband infrastructure
and at the same time expanded and improved the wholesale fibre-optic offering, which is open to all operators.
This development has been spurred by the ambitious expansion plans of Enel Open Fiber. The company aims to
provide 270 towns and cities with a total of 9.5 million connections with FTTH and began work on the expansion
in 2017. Enel Open Fiber intends to offer all telecommunications companies access to the access lines as wholesale
services. Fastweb is the second-largest provider in the broadband business after TIM, with a market share of 16%
in the residential customer segment and 29% in the major business customer segment. Thanks to the new whole-
sale offerings from TIM, Fastweb has made significant progress with its ultrafast broadband coverage, totalling
47% or 13 million households as at the end of 2017.
Italian mobile communications market
After the market consolidation in 2016, Italy has three major integrated providers on the market (TIM, Vodafone
Italia, Wind Tre). These are increasingly marketing convergent offers to their large mobile customer bases in order
to strengthen customer loyalty. The French telecommunications provider Iliad has announced that it will be enter-
ing the market in early 2018. It will be the fourth provider to set up its own mobile network and attempt to suc-
cessfully gain a foothold in the Italian market. After a hard-fought price war in the past few years, revenue in the
Italian mobile communications market has stabilised at EUR 16 billion. The relaunch of its mobile offering on the
TIM network (as a “full MVNO”, including 4G) represents an important step in Fastweb significantly increasing the
share of convergent customers in the customer base.
Data protection
As part of its business activities, Swisscom processes data relating to various people. Swisscom processes this
data in order to provide and continuously improve its services, to offer customers an enhanced experience and to
open up new areas of business. Swisscom is committed to protecting the privacy of the persons concerned. A large
proportion of data processing requires the consent of the persons concerned. Whenever possible, data analyses
are conducted on the basis of anonymised and aggregated data with no personal reference. Under no circum-
stances is data containing personal references handed over or sold to third parties. Swisscom continuously
expands its data protection measures. For example, all employee rights of access to critical data have been
reviewed and redefined. Technical measures have also been implemented to further improve data protection and
confidentiality. A central data governance organisation has the task of stipulating and enforcing framework
conditions for data processing.
Finally, Swisscom strives to provide information on issues relevant to data protection in non-technical language
and in befitting detail. Part of the Swisscom website is dedicated to this.
See
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dataprotection
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Infrastructure
Swisscom is unswervingly committed to meeting customer needs and delivering
service and quality, and is also investing heavily in the networks of the future.
Infrastructure in Switzerland
Network infrastructure
The telecommunication networks form the backbone of the Swiss information society. Swisscom pursues the
same strategy both on the ground and in the air – to provide Switzerland with the best network and thus provide
a solid foundation for the digital transformation. Swisscom currently operates three networks that help facilitate
the achievement of this aim: the fixed network, the mobile network and the Low Power Network (LPN). The LPN
is the latest addition to the Swisscom network family and is used to connect objects such as machines, vehicles,
lifts, oil tanks and much more.
A uniform basis for increasing demand
Bandwidth requirements in the Swiss fixed and mobile telephone network continue to grow. This can be attributed
to the fact that customers now use a wide range of devices for accessing the Internet. At the heart of the Swisscom
network and its infrastructure is Internet Protocol (IP) technology, which can be used via copper and fibre-optic
lines. As planned, Swisscom converted the services and products for almost all residential customers and the
majority of corporate customers to All IP by the end of 2017. This means that around 2 million Swisscom custom-
ers now benefit from the advantages offered by IP technology. As of 2018, Swisscom will start transferring all of
its locations to IP. All IP enables faster and more flexible processes and operations, and is boosting the competitive
strength of Swisscom, its customers and Switzerland as a business centre. The Swisscom All IP initiative thus
forms the basis for the digitisation of the Swiss economy.
Leading international position thanks to constant expansion
International studies carried out by the OECD, the Institute for Advanced Studies (IHS) and Akamai regularly show
that Switzerland possesses one of the best information and telecommunications infrastructures in the world.
Rural regions benefit in particular from the high level of capital expenditure, almost two thirds of which is financed
by Swisscom. According to a study carried out by the IHS (Broadband Coverage in Europe 2016), the availability of
broadband in rural regions of Switzerland is twice as high as the EU average.
In mobile communications, broadband LTE coverage now extends to 99% of the population. 80% of the population
currently has 4G+ with speeds of up to 300 Mbps, and 60% 4G+ with speeds of up to 450 Mbps. In addition,
Swisscom already provides speeds of up to 1 Gbps in 11 Swiss cities – and 30% of the Swiss population is set to
benefit from these speeds by the end of 2018. This makes Swisscom the largest network operator in Switzerland
by far, both in the fixed and mobile network. In the fixed-line segment, Swisscom continues to expand its ultrafast
broadband coverage with minimum bandwidths of 80 Mbps. In doing so, it is focusing on establishing a globally
unique mix of fibre-optic technologies as well as convergent approaches that harness both the mobile and fixed-
line networks in combination. When talking about fibre-optic technologies, Swisscom is referring to Fibre to the
Home (FTTH) as well as network architectures in which copper cables are used in the last few metres of the con-
nection, i.e. Fibre to the Curb (FTTC), Fibre to the Street (FTTS) and Fibre to the Building (FTTB). Optical fibre is
getting ever closer to the customer.
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Fibre to the Curb (FTTC)
> Up to 100 Mbps
Fibre to the Street (FTTS)
> Up to 500 Mbps
Fibre to the Building (FTTB)
> Up to 500 Mbps
Fibre to the Home (FTTH)
> Up to 1,000 Mbps
Fibreglass
Copper
Swisscom has set itself ambitious goals as regards network expansion: the majority of people living in any given
Swiss municipality should have access to increased bandwidths by the end of 2021. To this end, some 90% of all
homes and businesses will have a minimum bandwidth of 80 Mbps by the end of 2021 – with around 85% of
those achieving speeds of 100 Mbps or higher. In remote regions of Switzerland, Swisscom will honour its univer-
sal service provision mandate. Thanks to the new DSL+LTE Bonding technology, it is also noticeably improving
broadband provision in certain regions. DSL+LTE Bonding combines the performance of the fixed-line network
with that of the mobile network, thus ensuring a significantly better customer experience. As at the end of 2017,
Swisscom had established around 3.9 million connections to its ultrafast broadband service (+8% in comparison
to the prior year) with speeds in excess of 50 Mbps through continuous expansion. Of this number, over 3.1 million
lines (+24% in comparison to the prior year) were equipped with the latest fibre-optic technology.
Innovative technologies put us right at the cutting edge
In terms of technology, Swisscom has maintained its leading international position. For example, Swisscom
became the first European telecommunications provider to introduce the G.fast technology globally in September
2016. G.fast enables bandwidths of up to 500 Mbps on short copper cables (up to 200 metres in length). By way
of comparison, a speed of 500 Mbps will ensure that customers can use cutting-edge services for many years to
come, such as digital TV in HD quality which requires 10 Mbps or Netflix and YouTube in HD quality which needs
6 Mbps.
The Swisscom mobile network is one of the best by international standards. Swisscom currently supplies around
99% of the Swiss population with 4G, 3G and 2G coverage. Expansion is continuing, with 80% of the Swiss popu-
lation surfing the web with 4G+ at speeds of up to 300 Mbps and 60% with 4G+ at speeds of up to 450 Mbps. In
addition, Swisscom already provides speeds of up to 1 Gbps in 11 Swiss cities – and 30% of the Swiss population
will also benefit from these speeds by the end of 2018. The volume of data transferred on the mobile network
doubles every year. As a result and owing to the stringent legal framework conditions, the mobile network has to
be expanded with new mobile telephony sites. Microcells can enhance the mobile sites. Thanks to a Swisscom
innovation, they can even be installed in the floor and also be used in business premises and indoor public areas
by means of antennas. The good 4G coverage and the availability of WLAN in most buildings allows for Advanced
Calling, i.e. IP telephony via VoLTE (Voice over LTE) and WLAN (WiFi Calling). Furthermore, the newly launched HD
Voice Plus technology provides users with crystal-clear call quality.
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See
www.swisscom.ch/
networkcoverage
Antenna in the
cable duct
DSL/LTE
Bonding
Antennas for
in-house amplification
Macro-
antenna
Micro-
antenna
Mobil signal-
amplifier
4G
4G
2G | 3G | 4G
2G | 3G | 4G
2G | 3G | 4G
2G | 3G | 4G
The rollout of 5G and replacement of 2G are both scheduled for 2020. 5G is the mobile communication standard
of digitisation, enabling speeds of up to 10 Gbps, real-time reaction and much larger capacities. Swisscom is
currently working together with Ericsson, the EPFL and Ypsomed on research into the new standard as part of the
“5G for Switzerland” programme, and is also in discussions with other industrial partners. Swisscom expects 5G
to create a great deal of advantages for the economy and companies, particularly in relation to the Internet
of Things.
Swisscom is continually expanding its broadband network, extending the product range and increasing the
number of antenna sites. It coordinates site expansions with other mobile providers wherever feasible and already
shares nearly a quarter of its approximately 8,400 antenna sites with other providers. At the end of 2017, Swisscom
had around 5,800 exterior units and 2,600 mobile communication antennas in buildings. And with around
5,500 hotspots in Switzerland, Swisscom is also the country’s leading provider of public wireless local area
networks.
The Internet of Things has long connected an immense number of objects and devices to one another and to
people. Swisscom is the first provider in Switzerland to set up an additional network dedicated to the Internet of
Things: the Low Power Network (LPN). Swisscom is also planning to roll out Narrowband-IoT and the expanded
LTE standard LTE Cat M1 in 2018. These technologies form the basis for the Internet of Things and thus for smart
cities, energy-efficient buildings, machine-to-machine networking and new digital applications. The LPN reached
more than 95% of the Swiss population by the end of 2017.
IT infrastructure
It’s not only bandwidths in the networks that are constantly increasing, but also the usage of cloud services.
Swisscom positions itself as a trustworthy provider of private, public and hybrid cloud services. It is growing its
portfolio thanks to partnerships with internationally renowned organisations. The myCloud and Storebox storage
offerings resulted in data growth of 20 terabytes per day or 7 petabytes in total in 2017, which Swisscom stores
for its customers securely in its data centres. The switch to data transmission only by means of Internet Protocol
(All IP) is increasing the requirements imposed on locations that previously provided telephony services. The virtu-
alisation of network functions is bringing about the creation of new geographically redundant IT platforms that
can process large volumes of data with short reaction times, in addition to those in Zurich and Lausanne. Among
other things, they are laying the foundation for the rollout of the next generation of mobile technology – 5G. The
constant state of change on the market backs up Swisscom’s efforts to use the latest technologies both internally
and externally for the benefit of its customers. Instead of developing its own infrastructures, Swisscom is increas-
ingly making use of the standardised systems created by its partners and is turning its attention to developing
market-specific, value-added services that are based on the respective infrastructure. The industrialisation of IT
continues to make good progress, accompanied by the development of modern applications that benefit from the
new opportunities offered by the platforms and cut costs. Nevertheless, the old and new technologies will con-
tinue to exist and function side-by-side over the coming years. Swisscom can use specific services here, e.g. the
“Journey to the Cloud” portfolio, to establish itself in the digital transformation. By combining different genera-
tions of technology to meet its needs, Swisscom is building upon its experience and expertise to provide support
to its customers as they make their way in the digital world.
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Infrastructure in Italy
Network infrastructure
Fastweb’s network infrastructure consists of a fibre-optic network spanning approximately 47,500 kilometres,
reaching some 60% of the Italian population. Its ultrafast broadband connections are used by around 8 million
households and businesses, or 30% of the population, with FTTH and FTTS technologies enabling speeds of up to
1 Gbps or 200 Mbps, respectively. In 2016, Fastweb concluded a strategic partnership with TIM (Flash Fiber) to the
FTTH coverage in 29 cities. By the end of 2020, Fastweb will have over 13 million ultrafast broadband connections,
with 5 million of these equipped with FTTH technology and 8 million with FTTC technology. In 2017, Fastweb also
launched a new mobile service based on a full MVNO agreement with TIM.
IT infrastructure
Fastweb operates four large data centres in Italy with a total surface area of 8,000 square metres. The IT infrastructure
consists of around 5,500 servers (4,000 virtual servers and 1,500 physical servers), 900 databases and 5 petabytes of
storage capacity. One data centre is managed by a technology partner who is responsible for setting up, designing
and adapting the centre as well as for the operational tasks of Fastweb’s IT infrastructure. Two data centres are
mainly used for corporate business services, in other words for housing, hosting or other cloud-based services. One
of the Fastweb data centres in Milan was the first in Italy to receive Tier IV certification, which recognises the highest
level of reliability, security and performance. The data centre is fully operational and hosts services for business
customers.
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Employees
At the end of 2017, Swisscom had 20,506 full-time equivalent employees,
of whom 17,688 or 86% were employed in Switzerland. Swisscom is also training
959 apprentices in Switzerland.
Employees in Switzerland
Introduction
Swisscom staff are employed under private law. The legal terms and conditions of employment in Switzerland are
based on the Swiss Code of Obligations. General terms and conditions of employment which exceed the mini-
mum standard defined by the Code of Obligations govern the employment law provisions applicable to Swisscom
management staff in Switzerland, also known as the collective employment agreement. In the year under review,
employees in Switzerland on open-ended contracts accounted for 99.6% of the workforce (prior year: 99.7%). Part-
time employees made up 19.6% (prior year: 18.8%). Terminations of employment by employees in Switzerland
amounted to 6.3% of the workforce (prior year: 5.8%). Further information on HR topics can be found in the
Sustainability Report.
Collective employment agreement (CEA)
Swisscom is committed to fostering constructive dialogue with its social partners (the syndicom union and the
transfair staff association) as well as the employee associations (employee representatives). The collective employ-
ment agreement (CEA) and the social plan constitute fair and consensual solutions. Under the Telecommunications
Enterprise Act (TEA), Swisscom is also obliged to draw up a collective employment agreement in consultation with
the employee associations. In the event of any controversial issues, an arbitration commission must be convened
which will support the social partners by providing suggestions for solutions. The current collective employment
agreement (CEA) has been in force since 1 April 2015 and will be replaced by a new CEA on 1 July 2018. The CEA
sets out the key terms and conditions of employment and the relationship between Swisscom and the social
partners. At the end of December 2017, 83% of the Swisscom workforce were covered by the collective employ-
ment agreement. The key terms and conditions of employment set out in the CEA govern working hours and
working models, salaries and salary payments, professional developments, holidays and absences, among other
aspects. The past core elements are set out in the Sustainability Report. The CEA grants the social partners and the
employee associations rights of co-determination in various areas. The new CEA has been amended in view of the
requirements of the working world of the future as well as to fall in line with market conditions. It takes particular
account of employability, family-friendliness, work-life balance and the protection of privacy.
Social plan
The objective of the social plan is to formulate socially acceptable restructuring measures and avoid job cuts. It
sets out the benefits provided to employees covered by the CEA who are affected by redundancy. Furthermore,
the social plan makes use of the relevant means to increase the employability of employees and provides for
retraining measures in the event of long-term job cuts. Responsibility for implementing the social plan lies with
Worklink AG, a subsidiary of Swisscom. It provides employees with advice and support in their search for new
employment and arranges temporary external or internal work placements. The offering provided by Worklink to
employees also includes skill assessments, career advice and coaching sessions to enhance employability.
Swisscom also supports special employment schemes, such as phased partial retirement or temporary place-
ments in similar areas of expertise, in line with its commitment to providing fair solutions for older employees
affected by changes in skill set requirements or redundancy. In 2017, 77% of those affected found a new job before
the end of the social plan programme.
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Employee remuneration
Salary system
Competitive pay packages help to attract and retain highly skilled and motivated specialists and managerial staff.
Swisscom’s salary system comprises a basic salary, a variable performance-related component and bonuses. The
basic salary is determined based on function, individual performance and the job market. The performance-re-
lated salary component is contingent on business performance as well as individual performance in the case of
executive functions. Business performance is measured based on achievement of the Swisscom Group’s overarching
targets and the targets of the respective business segment or division. The targets primarily relate to key financial
indicators and customer loyalty. Individual performance is measured according to the achievement of results- and
conduct-related contributions. Details on remuneration paid to members of the Group Executive Board are
provided in the Remuneration Report.
See report
page 81
Pay round and payroll development
In 2016, Swisscom and its social partners signed a pay round agreement for 2016 and 2017. With effect from April
2017, salaries for employees participating in the CEA were increased by 0.6% of the total salary. Salary adjustments
were made based on individual employee performance and specifically for employees with salaries that needed
to be increased in line with the market. The sum of salaries paid out to members of management was increased
by 0.3% for individual salary adjustments. Salaries that needed to be brought in line with the market were specif-
ically adjusted. In comparison with the previous year, the sum of salaries paid out in Switzerland fell by 2.7% to
CHF 2.1 billion. Salary increases were more than offset by the decline in the number of jobs.
Staff development
Swisscom’s market environment is constantly changing. The company invests in targeted professional training for
its employees and managers in order to maintain and improve their employability and the company’s competi-
tiveness in the long term. Employees have the opportunity to attend internal and external training programmes.
As a pioneer in the field of digitisation in Switzerland, Swisscom is dedicated to getting to grips with the working
models of the future so as to provide employees and management with a learning environment in which they can
develop new skills and shape their own professional development. In 2017, every Swisscom employee spent
3.1 days on learning, training and development.
Employee satisfaction
Swisscom employees submit their feedback with respect to a wide range of questions revolving around their per-
sonal work situation several times a year. The results are available for everyone to access in real time and allow
individual employees, individual teams and the entire organisation to respond to feedback and make improve-
ments. The new survey promotes a culture of feedback which creates the shared basis to grow Swisscom together.
Three survey rounds have taken place since October 2016. The response rate was 61% across the three rounds.
79% of employees took part in at least one survey. The results so far show that 77% of participating employees
rate their work situation as positive, 33% of them as very positive even. The Swisscom values for the dimensions
surveyed are higher than or just as high as those of the benchmark.
Diversity
The different perspectives, experiences, ideas and skills provided by all of the employees when working together
in their day-to-day work make Swisscom the successful and innovative company it is. To promote diversity,
Swisscom aligns its activities to the dimensions of gender, inclusion, generations and language regions. In the area
of gender for instance, Swisscom is placing the emphasis on flexible working models which help to promote a
better balance between work and family as well as on a wide range of measures designed to increase the accep-
tance of part-time work, on job-sharing and on the promotion of talent. This has resulted in a slight increase in the
number of women in management positions from 11.1% to 11.7% since 2015. The number of employees working
part-time has also risen marginally since 2015, from 18.8% to 20.0%. Part-time male employees amount to 11.1%.
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Employees in Italy
Employment agreement for the telecoms sector
Statutory terms and conditions of employment in Italy are based on the Contratto collettivo nazionale di lavoro
(CCNL), a state collective employment agreement. The CCNL defines the terms and conditions of employment
between Swisscom’s Italian subsidiary Fastweb and its employees. It also contains provisions governing relations
between Fastweb and the unions.
Employee representation and relations with the unions
Fastweb engages in dialogue with the unions and the employee representatives and, in the event of major opera-
tional changes, involves them at an early stage.
Industry-wide collective agreement for employees
The working week for employees covered by the CCNL is 40 hours. Benefits include five weeks’ annual leave,
20 weeks’ maternity leave and one day of paternity leave. In the event of incapacity for work due to illness or
accident, Fastweb guarantees full payment of the employee’s salary for 180 days and half the salary for a further
185 days.
Working time model
The company’s terms and conditions of employment enable employees to achieve a healthy balance between
their work requirements and private needs. These include in particular the following measures agreed with the
unions in the Conciliazione famiglia e lavoro in 2001: flexible office working hours, choice of shifts for mothers and
temporary part-time work for mothers.
Employee remuneration
Fastweb offers competitive salary packages aimed at attracting and retaining highly qualified specialists and
managers. The company’s salary system comprises a basic salary, a collective variable profit-sharing bonus for
non-managerial staff and a variable performance-related component for managerial staff which is contingent on
meeting individual goals and company targets. The basic salary is determined according to function, individual
performance and the situation in the labour market. The variable profit-sharing bonus is based on the Premio di
risultato agreed separately with the unions. Fastweb respects the legal minimum salary defined by the CCNL.
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Brands, products and services
Swisscom is committed to service and quality and to interacting with its
customers in a personalised and value-adding manner.
Swisscom brands
The Swisscom brand is managed strategically as an intangible asset and an important element of the Group’s
reputation management. It provides optimum support for Swisscom’s business activities, gives guidance to
customers and partners, and also acts to attract and motivate current and potential staff .
The brand is implemented across all units – in a consistent and high-quality manner. It also has to be extremely
fl exible at the same time, bridging the gap between known and new concepts, and likewise standing for network
and infrastructure, best experiences and entertainment, as well as ICT and digitisation.
Swisscom off ers products and services from the core business under the Swisscom corporate branding, as well as
under the secondary brands Wingo and SimplyMobile and the third-party brand M-Budget. It also has other
brands in its portfolio which are associated with other themes and business areas. Outside Switzerland, Swisscom’s
main market is Italy, where it operates under the Fastweb brand. The strategic management and development of
the entire brand portfolio is an integral part of corporate communications.
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Extract of the brand portfolio
Swisscom wants to be perceived as being trustworthy, committed and curious, and aims to support its customers
in today’s networked world. This is embodied by the successful mobile telephony and bundled off erings, as well as
the ongoing success of the Swisscom TV business. The Teleclub, Kitag and Cinetrade brands, also operated by
Swisscom, make a further contribution to positioning the Group in the entertainment market. Other progressive
off erings with a market presence, such as cloud services under the Swisscom brand or – for example in the
e-commerce sector – under the siroop brand, improve the company’s position on the market and refl ect its
commitment towards the continuous improvement of its services.
Trustworthiness and service remain important factors in confi rming to existing customers that they made the
right decision in opting for Swisscom and in winning new customers, while also helping to underscore the impor-
tance of Swisscom for Switzerland: Swisscom is part of a modern Switzerland, is always recognisable as a Swiss
company and positions itself clearly and credibly through its stance on responsibility. All this rounds off the
positive image of the Swisscom brand and enriches the Group’s multi-faceted customer relationships. This is one
reason why the reputation values achieved by Swisscom are exceptionally high for a company in the telecommu-
nications sector by global standards.
External rankings also confi rm this image. According to the “Best Swiss Brands” survey carried out by Interbrand,
Swisscom sits in fourth place. This makes it one of the most valuable brands in Switzerland, with a monetary
brand value of over CHF 5 billion.
Products and services in Switzerland
Residential Customers
Swisscom offers products and services from the core business under the Swisscom corporate branding, as well as
under the secondary brands Wingo and SimplyMobile and the third-party brand M-Budget. In order to provide its
customers with the best communications experiences, Swisscom is constantly adjusting its portfolio of offerings
to meet customer needs. The offerings were further simplified following the launch of the inOne subscription
packages in spring 2017. Their modular structure allows customers to select the individual components according
to their needs.
Offerings for private individuals
Thanks to “inOne home”, Swisscom is able to offer private individuals a bundled offering tailored to customer
needs with a choice of TV and/or fixed-line telephony on top of the broadband connection. For all three compo-
nents, customers can select from three separately priced profiles with varying levels of service. The profiles differ
mainly in terms of Internet speed, the number of TV channels available, the activation of the recording and replay
functions, and the free call minutes/SMS allocation. Customers can also choose not to include the TV and fixed-
line telephony components in their individual package.
In “inOne mobile”, Swisscom has launched a new mobile subscription that provides customers with an even larger
scope of service. This subscription allows Swisscom customers to make unlimited phone calls and send unlimited
SMS messages to all Swiss networks, as well as unlimited Internet surfing at flat rates. The profiles in the offering
mainly differ in terms of mobile data speeds and the inclusive services when abroad. “inOne mobile” customers
can use their mobile line with the same telephone number on up to three devices at once. Swisscom offers occa-
sional users of the mobile network prepaid services with no monthly subscription fee. The basic tariff of the
“inOne mobile prepaid” subscription also offers faster surfing speeds and three new bundled packages to meet a
wide range of customer needs. With “inOne XTRA mobile”, young people under the age of 26 will receive a dis-
count on their subscription. The new “SimplyMobile” subscription, which is available in selected Coop sales chan-
nels, is the first offering in Switzerland in which the data allowance does not expire at the end of the month.
Customers can now hand their damaged mobile phones into Swisscom Repair Centres and have them repaired
without the phone leaving the Swisscom Shop, while myCloud offers Swisscom customers a Swiss solution for the
secure management and sharing of their personal data, such as photos, videos and documents. Customers can
securely save their important documents, passwords and notes in Docsafe. Swisscom is also continually upgrad-
ing its service offerings, thus catering to changing customer needs.
Offerings for SMEs
Swisscom offers companies with up to five employees “inOne SME office”, and companies with six employees or
more “Smart Business Connect”. The two bundled offerings include a broadband connection, a fixed-line tele-
phony service and additional services such as an Internet failover. The “inOne SME office” offering can be expanded
to include the TV service. Within this offering, customers can choose the components and assemble them into a
package that meets their needs. In addition, customers with “inOne SME mobile” can make unlimited phone calls
and send unlimited SMS messages to all Swiss networks, as well as enjoy unlimited surfing, for an all-in flat rate.
Customers can choose from a range of profiles with different prices and services. In this way, customers only use
and pay for the services they actually need.
Thanks to modern collaboration functions (UCC) and modular IT product components (Dynamic Computing Ser-
vices and Business Network Solutions), SMEs are gaining a measure of flexibility in their everyday work, as they can
modify their IT and communications infrastructure at any time to meet their requirements. Swisscom also offers
software from the cloud (Storebox, Microsoft Office 365 and HomepageTool) as well as full service solutions.
Through the digital solutions on offer, Swisscom gives its SME customers the option to work on any device or in
any location, and sets them up to overcome the challenges of an increasingly interconnected world. Furthermore,
Swisscom gives SMEs access to information and directory services in the form of localsearch, which makes it easy
to find addresses, telephone numbers and detailed information on companies – on the Internet, via the mobile
app and in the printed telephone directory (Local Guide).
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Enterprise Customers
Digitisation is substantially changing business processes, business models, the customer experience and the
working world in companies. It therefore requires solid communication networks. Swisscom makes use of its
many years of experience as an integrated telecommunications and IT company in providing customers with sup-
port during the digitisation process. The company works together with customers to develop future-oriented
solutions, supported by one of the most comprehensive ICT portfolios in Switzerland. This portfolio comprises
cloud, outsourcing, workplace and UCC solutions, as well as mobile phone solutions, networking solutions, loca-
tion networking, business process optimisation, SAP solutions, security and authentication solutions (mobile ID)
and a full range of services tailored to the banking industry, ranging from IT and business outsourcing to trend
research. Swisscom expanded its cloud offering, IT security, digital consulting and software development in par-
ticular in 2017. In addition to this, Swisscom offers solutions relating to the Internet of Things, ranging from access
to an international ecosystem to connectivity and service development. The company provides hospitals with
support in the digitisation of processes and thus increases their efficiency levels. It also helps health insurance
companies by assuming the operation of their core IT systems. Swisscom is driving digitisation in the healthcare
sector by providing its networking solutions for service providers and implementing the electronic patient dossier
system.
Wholesale
Swisscom provides a variety of copper- and fibre-optic-based connectors as per customer requirements. With the
Carrier Ethernet service, Carrier Line service and TCA leased lines, Swisscom Wholesale provides telecoms service
providers with high-quality, transparent, point-to-point connections that meet their needs with a range of band-
widths and interfaces and/or a flexible Ethernet service that allows for tailored bandwidths and service level
agreements. Swisscom also provides basic offerings for the connection of telecommunication systems and
services (interconnection) as well as infrastructure products such as the shared use of cable ducts.
Products and services in Italy
Fastweb provides its residential and corporate customers with voice and broadband services through its own
ultrafast broadband network as well as via unbundled access lines and wholesale products of TIM. In 2017,
Fastweb enhanced its convergence offerings by launching a mobile 4G service on the market, making its coverage
and performance the best in Italy. Fastweb’s offerings are characterised by a sense of simplicity (three price plans),
transparency (no promotions or hidden costs) and convergence (fixed network and mobile communications bun-
dled together). Fastweb also affirmed its leading role in the corporate customers sector in 2017, most notably in
the public administration segment. During the year under review, Fastweb continued upgrading and expanding
its fibre-optic network. 70% of the Fastweb FTTS network now provides speeds of up to 200 Mbps downstream;
in addition, the FTTH network has been upgraded to offer speeds of 1 Gbps, and thanks to the joint venture with
TIM (Flash Fiber), has been expanded to five additional major cities (Catania, Padua, Palermo, Perugia and Venice).
Finally, Fastweb has upgraded its WiFi sharing solution (WoW-Fi), which can turn a customer’s home router into a
potential Wi-Fi access point for the entire Fastweb community. The new customer modem – known as FastGate –
has one of the best WiFi performances on the market, while the new mobile app further enhances the customer
experience.
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Customer satisfaction
Swisscom Switzerland conducts segment-specific surveys and studies in order to measure general customer
satisfaction. It measures customer satisfaction twice a year, in the second and fourth quarters of the year. The
Wholesale segment measures customer satisfaction once a year. For all segments, the most important metrics
are the extent to which customers are willing to recommend Swisscom to others and the related Net Promoter
Score (NPS), which depicts the emotional aspects of customer loyalty as well as revealing customers’ attitudes
towards Swisscom. The NPS is calculated from the difference between promoters (customers who would strongly
recommend Swisscom) and critics (customers who would only recommend Swisscom with reservations or would
not recommend the company). Swisscom also conducts the following segment-specific surveys and studies:
> The Residential Customers segment conducts representative surveys to determine customer satisfaction and
the extent to which customers are willing to recommend Swisscom to others. Callers to the Swisscom hotline
and visitors to the Swisscom Shops are questioned regularly about waiting times and staff friendliness. Product
studies also regularly survey buyers and users to determine product satisfaction, service and quality.
> The Enterprise Customers segment conducts surveys among customers to measure satisfaction along the
customer experience chain. Feedback instruments are also used at key customer contact points in order to
determine customer satisfaction. After each interaction with the service desk or after placing orders, IT users
can submit feedback or enter their comments in the order system. Customers can also assess the quality and
success of their projects on completion.
> The Wholesale segment measures customer satisfaction along the entire customer experience chain.
The results of these studies and surveys help Swisscom to improve its services and products and they influence
the variable performance-related component of employees’ pay.
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Innovation and development
In a dynamic environment in which the market situation and general conditions
are constantly changing, a company must be innovative to ensure long-term
success.
Innovation as an important driver
Innovation is a key driver in the bid to enter new markets and partake in up-and-coming technologies. Due to the
rapidly changing nature of Swisscom’s business environment, innovation and development – in other words the
commercially successful implementation of new ideas – are becoming increasingly important. Innovation is also
an important lever in remaining relevant in the core business, in generating growth in new markets and in digitis-
ing internal work processes. Swisscom strives to anticipate strategic challenges, new growth areas and future
customer needs early on, so as to help actively shape the future of telecommunications and the Internet. At
Swisscom, innovation takes place in all areas of the company as well as beyond. Within the company, Swisscom
practises and promotes decentralised product development. New ideas are generated throughout the company.
Outside the company, Swisscom promotes innovation throughout the industry. In particular, Swisscom is commit-
ted to supporting young companies that offer progressive solutions in the fields of IT, communications and enter-
tainment. It participates in start-ups as a project partner and investor, supports them by providing tailored products
and services, and offers them access to infrastructures and markets. Swisscom works in collaboration with FinTech
start-ups and thus makes targeted investments in promising FinTech ventures. Swisscom is also present in Silicon
Valley. Its branch offices run targeted trend and technology scouting operations and help to remain at the fore-
front of technological development via collaborations with start-ups.
See
www.swisscom.ch/
innovation
Targeted innovation
Swisscom is focusing its innovation activities on the following seven areas of innovation, which in turn directly
help the Group achieve its goals:
35
Network
More efficient expansion
and differentiation through
the best network
Digital Swisscom
Digitising internal processes
for simplification
and automation
Entertainment
Increasing the relevance
of the offer,
e.g. through new content
Digital Business
Set-up of data driven
and software-based
platforms
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Internet of Things
Added value beyond connectivity
in the platform
and application business
Analytics & Artificial
Intelligence
Better customer service
through artificial intelligence
Security
Building security capabilities
for internal
and external use
Swisscom continually invests in progressive solutions in these areas of innovation. The aim is to provide the best
ICT infrastructure for a digital Switzerland, tap new growth markets and offer its customers the best services and
products:
Network
> 5G for Switzerland: As part of the “5G for Switzerland” programme, Swisscom and Ericsson are making prepa-
rations for the new generation of mobile technology. Working together with the Federal Institute of Technol-
ogy Lausanne (EPFL) as a research partner, their aim is to advance the development of 5G. They are also plan-
ning to work together with industrial partners on developing and testing the potential applications in a wide
range of different areas, such as smart transportation and virtual reality. The research results will influence the
definition of the global 5G standard. Swisscom presented initial applications to journalists in June 2017.
> G.fast: (pronounced “gee dot fast”): At the end of 2017, Swisscom became the first telecommunications company in
Europe to integrate the innovative G.fast transmission standard into its fixed network. G.fast is an important element
of Swisscom’s fixed network strategy and accommodates the continuous data growth within the network. Thanks
to G.fast, customers can benefit from bandwidths of up to 500 Mbps.
Internet of Things
> Nationwide networks in Switzerland for the Internet of Things (IoT): Swisscom is laying the foundations for
national Internet of Things applications. The expansion of the only Low Power Network in Switzerland continued to
make strides in 2017. By the end of 2017, network coverage had already reached 90% of the Swiss population. The
mobile communications-based IoT networks Narrowband-IoT (NB-IoT) and LTE Cat M1 are then set to be expanded
from 2018 to 2020. NB-IoT is opening a whole new chapter for big data, enabling millions of networked devices, low
data rates, low energy consumption, beneficial hardware, very good indoor network coverage and high security.
It also offers global usability thanks to the 3GPP standard. With this, Swisscom will offer the right network for all IoT
applications: be it for battery-operated sensors which send data sporadically or for applications that transmit large
amounts of data regularly.
> Smart City: In Pully, Canton of Vaud, and other pilot cities, anonymised, aggregated mobile phone data is helping
to improve traffic flows in the town and relieve the burden on the town centre by displaying extremely accurate
movement patterns. The project is intended to act as a pilot: Swisscom is helping towns and cities to plan their
infrastructure in a more systematic manner and find easier ways to manage it. It is currently able to convert the
20 billion or so datasets that are created daily on the mobile phone network into traffic indicators using a smart
city solution. This solution will improve urban planning and accelerate the transformation of towns and cities as
the data delivered increases public acceptance of projects. The first application examples are available. In the
commune of Montreux, through traffic in the city centre was calculated precisely thanks to the Swisscom solu-
tion. Its annual share of the total volume of traffic worked out at 22%. As a consequence, the commune took the
decision not to go ahead with the construction of a tunnel that would have cost CHF 150 million. It follows that
such new indicators, as supplied by Swisscom’s smart city solution among others, offer a progressive way of
managing city development better than before. They are helping to overcome one of the biggest challenges of
sustainable cities: traffic management.
Analytics & Artificial Intelligence
> Artificial Intelligence: In 2017, Swisscom made targeted improvements to its expertise in the area of artificial
intelligence across various fields of application (customer support, customer experience and document
insights, etc.) and achieved major development steps in the data lake. In customer service, for example,
Swisscom launched a product that automatically categorises e-mails, making it possible to organise customer
service work far more effectively and efficiently.
Security
> Security thanks to artificial intelligence: The number of threats from the Internet continues to grow and the
threats themselves are becoming increasingly intelligent. Swisscom plans to use algorithms and corresponding
artificial intelligence to automatically identify attacks and threats as well as to initiate the corresponding
countermeasures. Artificial intelligence thus makes a considerable contribution towards ensuring a safe and
secure network. Since September 2017, Swisscom has been running the Computer Security Incident Response
Team. This team is able to respond to threats or existing incidents with intervention measures. For residential and
SME customers, Swisscom developed the “Internet Guard” in 2017 – network-based protection against phishing
websites and viruses. This protection is more comprehensive than ever before as it is based on a global blacklist.
See
www.swisscom.ch/lpn
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Entertainment
> UHD TV-Box for a new era of picture quality and voice recognition: After eleven years, Swisscom discontinued
Swisscom TV 1.0 at the end of 2017. The first generation of the IPTV offering is now only used by less than one
percent of customers. When Swisscom TV came on the market in autumn 2006 it was ahead of its time. Back
in 2006, high-definition television, which is commonplace these days, was still seen as an exception. Swisscom
has been continuously pressing ahead with the development of Swisscom TV in recent years. An entirely new
TV offering was developed with input from our own customers in Switzerland and by our own Swisscom
designers and engineers. The UHD TV-Box is therefore a product for Switzerland which is developed and pro-
duced in Switzerland in line with the wishes of its customers. The developers paid particular attention to low
energy consumption, dispensing with a disruptive fan and ensuring a compact form. The latest generation of
the TV-Box processes images in super-sharp UHD quality. It features voice recognition in dialect, is fully acces-
sible for customers with a sensory impairment and includes a personal on-screen programme guide that
points out favourite shows that have been missed over the last seven days.
Digital Swisscom
> Simplification of processes: To get ahead in a digital world, Swisscom must first digitise itself and become a
model digital company. In 2017, Swisscom again took a series of targeted steps to take it closer to this goal.
These include work in agile structures (for example, use of the SaFE framework for agile development), as well
as the simplification of crucial processes such as those involved in customer activation and problem-solving in
customer service. In 2017, for example, Swisscom succeeded in making the process for solving incidents much
more proactive and in providing customers with efficient, digital self-care. With the completion of All IP in
2018, Swisscom will take a giant step towards its own digitisation.
Digital Business
In the Digital Business innovation field, Swisscom supported key innovations in 2017, both within and outside the
company, through the promotion of intrapreneurship as well as through Swisscom Ventures.
> FinTech: Launch of two FinTech ventures (Swiss Credit Exchange, Swisscom Blockchain Ltd)
> siroop: Testing of the new marketplace Evero for consumer-to-consumer relationships
> Kickbox: Establishment and setup of an intrapreneurship programme providing employees with resources
(for example, time and budget) to realise innovation projects.
In addition to the activities it carries out in innovation fields, Swisscom is constantly investigating the opportunities
offered by new technologies. In 2017, it focused on the potential of blockchain disruptive technology as well as
virtual and augmented reality. The aim is for Swisscom to provide the best infrastructure for a digital Switzerland,
tap new growth markets and offer its customers the best services and products.
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Financial review
Net revenue in CHF million
EBITDA in CHF million
11,678
1,862
9,816
11,643
1,948
9,695
11,662
2,155
9,507
16,000
12,000
8,000
4,000
0
6,000
4,500
3,000
1,500
0
Fastweb
Swisscom
w/o Fastweb
4,098
619
3,479
4,293
721
3,572
4,295
845
3,450
2015
2016
2017
2015
2016
2017
Capital expenditure in CHF million
Headcount in full-time equivalents
2,409
581
1,828
2,416
633
1,783
2,378
692
1,686
3,000
2,250
1,500
750
0
24,000
18,000
12,000
6,000
0
Fastweb
Swisscom
w/o Fastweb
21,637
2,401
19,236
21,127
2,468
18,659
20,506
2,504
18,002
2015
2016
2017
2015
2016
2017
Fastweb
Swisscom
w/o Fastweb
Fastweb
Swisscom
w/o Fastweb
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Operating free cash flow in CHF million
Net income in CHF million
1,844
1,791
2,159
3,000
2,250
1,500
750
0
2,000
1,500
1,000
500
0
1,604
1,568
1,362
2015
2016
2017
2015
2016
2017
Summary
In CHF million, except where indicated
Net revenue
Operating income before depreciation and amortisation (EBITDA)
EBITDA as % of net revenue
Operating income (EBIT)
Net income
Share of net income attributable to equity holders of Swisscom Ltd
Earnings per share (in CHF)
Operating free cash flow
Capital expenditure in property, plant and equipment and intangible assets
Net debt at end of year
2017
11,662
4,295
36.8
2,131
1,568
1,570
30.31
2,159
2,378
7,447
2016
11,643
4,293
36.9
2,148
1,604
1,604
30.97
1,791
2,416
7,846
Full-time equivalent employees at end of year (number)
20,506
21,127
Change
0.2%
0.0%
–0.8%
–2.2%
–2.1%
–2.1%
20.5%
–1.6%
–5.1%
–2.9%
Swisscom’s net revenue was level with the previous year at CHF 11,662 million. Reported revenue increased by
0.2%, while on the basis of constant exchange rates it fell by 0.2%. Revenue in the Swiss core business decreased
by CHF 199 million or 2.1% to CHF 9,058 million, mainly due to declining revenue from fixed-line telephony and
lower income from roaming services. The Italian subsidiary Fastweb reported strong revenue and customer
growth. Revenue rose by EUR 149 million or 8.3% to EUR 1,944 million and the number of broadband customers
by 96,000 or 4.1% to 2.45 million.
At CHF 4,295 million, operating income before depreciation and amortisation (EBITDA) remained on a par with the
previous year. It was impacted by non-recurring items, including one-off income from legal disputes at Fastweb
amounting to CHF 102 million (prior year: CHF 60 million) and net expenses associated with headcount reductions
in the Swiss business of CHF 61 million. Excluding non-recurring items and on the basis of constant exchange
rates, EBITDA fell by CHF 23 million or 0.5%. In the Swiss core business, a decrease of 2.4% or CHF 88 million resulted
on a like-for-like basis. The drop in revenue was partially offset by savings in indirect costs. Fastweb’s EBITDA
increased by EUR 58 million or 9.6% on an adjusted basis. Consolidated operating income (EBIT) contracted by
CHF 17 million or 0.8% to CHF 2,131 million due to higher depreciation and amortisation, while net income was
down CHF 36 million or 2.2% to CHF 1,568 million. Payment of an unchanged dividend of CHF 22 per share for the
2017 financial year will be proposed to the Annual General Meeting.
Capital expenditure fell by CHF 38 million or 1.6% to CHF 2,378 million. Progress continues to be made on expanding
the broadband networks. In Switzerland, capital expenditure for the expansion of the broadband networks remained
virtually unchanged at a high level. With other investments declining, capital expenditure in Switzerland fell overall
by CHF 96 million or 5.4% to CHF 1,678 million. Capital expenditure at Fastweb rose by EUR 41 million or 7.1% to
EUR 622 million, mainly as a result of higher customer-driven investment.
Operating free cash flow increased by CHF 368 million or 20.5% to CHF 2,159 million, fuelled chiefly by the improve-
ment in net working capital. At CHF 7,447 million, net debt was CHF 399 million lower than at the end of 2016. The
ratio of net debt to EBITDA is 1.7 (prior year: 1.8).
Headcount decreased year-on-year by 621 FTEs or 2.9% to 20,506 FTEs. In comparison with the previous year,
headcount in Switzerland fell by 684 FTEs or 3.7% to 17,688 FTEs as a result of the declining core business. More
than three quarters of the reduction was offset by natural fluctuation and vacancy management.
For 2018, Swisscom expects net revenue of around CHF 11.6 billion, EBITDA of around CHF 4.2 billion and capital
expenditure of less than CHF 2.4 billion. Subject to achieving its targets, Swisscom will propose payment of an
unchanged dividend of CHF 22 per share for the 2018 financial year at the 2019 Annual General Meeting.
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Segment results
In CHF million, except where indicated
2017
2016
Change
Net revenue
Residential Customers
Enterprise Customers
Wholesale 1
IT, Network & Infrastructure
Intersegment elimination
Swisscom Switzerland
Fastweb
Other Operating Segments
Group Headquarters
Intersegment elimination
6,053
2,508
944
167
(614)
9,058
2,164
850
1
(411)
6,265
2,540
979
173
(700)
9,257
1,957
789
2
(362)
Revenue from external customers
11,662
11,643
Operating income before depreciation and amortisation (EBITDA)
Residential Customers
Enterprise Customers
Wholesale
IT, Network & Infrastructure
Swisscom Switzerland
Fastweb
Other Operating Segments
Group Headquarters
Reconciliation item pension cost 2
Intersegment elimination
3,512
832
446
(1,290)
3,500
845
180
(111)
(92)
(27)
3,651
848
379
(1,262)
3,616
721
164
(114)
(72)
(22)
Operating income before depreciation and amortisation (EBITDA)
4,295
4,293
1 Including intersegment settlements of services performed by other network providers.
2 Operating income of segments includes ordinary employer contributions as pension fund expense.
The difference to the pension cost according to IAS 19 is recognised as a reconciliation item.
–3.4%
–1.3%
–3.6%
–3.5%
–12.3%
–2.1%
10.6%
7.7%
–50.0%
13.5%
0.2%
–3.8%
–1.9%
17.7%
2.2%
–3.2%
17.2%
9.8%
–2.6%
27.8%
22.7%
0.0%
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Swisscom’s reporting focuses on the three operating divisions Swisscom Switzerland, Fastweb and Other Operating
Segments. Group Headquarters, which includes non-allocated costs, is reported separately. Swisscom Switzer-
land comprises the customer segments Residential Customers, Enterprise Customers and Wholesale, as well as
the IT, Network & Infrastructure division. Fastweb is a telecommunications provider for residential and business
customers in Italy. Other Operating Segments primarily comprises the Digital Business division, Swisscom Broadcast Ltd
(radio transmitters) and cablex Ltd (network construction and maintenance).
The IT, Network & Infrastructure segment does not charge any network costs to other segments, nor does Group
Headquarters charge any management fees to other segments. Other services between the segments are
recharged between the segments at market prices. Network costs in Switzerland are budgeted, monitored and
controlled by the IT, Network & Infrastructure division, which is managed as a cost centre. For this reason, no
revenue is credited to the IT, Network & Infrastructure segment within the segment reporting, with the exception
of the rental and administration of buildings and vehicles. The results of the Residential Customers, Enterprise
Customers and Wholesale segments correspond to a contribution margin before network costs.
Segment expenses comprise direct costs, personnel expenses and other operating costs less capitalised costs of
self-constructed assets and other income. Segment expense includes ordinary employer contributions as pension
fund expense. Under IAS 19, the difference between the ordinary employer contributions and the past service cost
is reported as a reconciliation item between the operating incomes of the segments and Group operating income.
Swisscom Switzerland
In CHF million, except where indicated
Net revenue and results
Telecom services
Solution business
Merchandise
Wholesale
Revenue other
Revenue from external customers
Intersegment revenue
Net revenue
Direct costs
Indirect costs
Segment expenses
Segment result before depreciation and amortisation (EBITDA)
Margin as % of net revenue
Depreciation, amortisation and impairment losses
Segment result
Operational data at end of period in thousand
Fixed telephony access lines
Broadband access lines retail
Swisscom TV access lines
Mobile access lines
Revenue generating units (RGU)
Bundles
Unbundled fixed access lines
Broadband access lines wholesale
Capital expenditure and headcount
2017
2016
Change
6,464
1,084
648
578
203
8,977
81
9,058
(1,943)
(3,615)
(5,558)
3,500
38.6
(1,485)
2,015
2,047
2,014
1,467
6,637
12,165
1,907
107
435
6,662
1,072
637
591
213
9,175
82
9,257
(2,028)
(3,613)
(5,641)
3,616
39.1
(1,473)
2,143
2,367
1,992
1,418
6,612
12,389
1,672
128
364
–3.0%
1.1%
1.7%
–2.2%
–4.7%
–2.2%
–1.2%
–2.1%
–4.2%
0.1%
–1.5%
–3.2%
0.8%
–6.0%
–13.5%
1.1%
3.5%
0.4%
–1.8%
14.1%
–16.4%
19.5%
–5.8%
–4.5%
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Capital expenditure in property, plant and equipment and intangible assets
Full-time equivalent employees at end of year (number)
1,654
15,157
1,755
15,876
Net revenue for Swisscom Switzerland fell by CHF 199 million or 2.1% to CHF 9,058 million as a result of fierce
competition and the downward trend in fixed-line telephony. Revenue from telecommunications services
decreased by CHF 198 million or 3.0% to CHF 6,464 million, with almost half of the drop due to the declining sub-
scriber base in the fixed-line telephony business, which fell by 320,000 connections or 13.5% to 2.0 million. The
other half of the decrease resulted from price cuts for new bundled offerings, increased promotions, the inclusion
of roaming fees in basic subscription charges and lower prices in the Enterprise Customers segment. In the solu-
tions business with large customers, revenue increased by CHF 12 million or 1.1% to CHF 1,084 million. In spite of
the very competitive environment, Enterprise Customers saw a 7% rise in incoming orders to around CHF 2.7 bil-
lion. For Wholesale, lower proceeds as a result of the reduction in termination tariffs on mobile networks were
largely offset by higher inbound roaming volumes.
The number of mobile subscribers rose by 25,000 or 0.4% year-on-year to 6.64 million in a saturated market.
Swisscom increased the number of subscribers to its postpaid lines by 90,000 or 2.0% to 4.64 million, whereas the
number of prepaid lines decreased by 65,000 or 3.2% to 2.0 million. The markets for broadband and TV are also
becoming increasingly saturated, and customer growth has slowed. The number of broadband connections rose
by another 22,000 or 1.1% to 2.0 million, while the number of TV connections grew by 49,000 or 3.5% to 1.47 mil-
lion. By the end of December 2017, i.e. just nine months after launch, over 1.3 million customers representing approx-
imately 2.7 million connections had opted for the inOne combined package . At the end of 2017, 1.9 million customers
were using a bundled package, which represents a year-on-year increase of 14.1%. Revenue from bundled contracts
increased year-on-year by CHF 335 million or 13.4% to CHF 2,837 million.
Segment expense fell by CHF 83 million or 1.5% to CHF 5,558 million. Excluding non-recurring items such as provi-
sions recognised for headcount reduction or regulatory risks and gains from the sale of properties, the decrease
was 2.0% on a like-for-like basis. The decrease of CHF 85 million or 4.2% in direct costs to CHF 1,943 million is due
to the lower termination tariffs on mobile networks and lower costs of purchasing goods. At CHF 3,615 million,
indirect costs were only marginally higher than the prior-year figure of CHF 3,613 million. Excluding non-recurring
items, indirect costs fell by 0.7%, whereby the reduced costs resulting from the decrease in headcount were par-
tially offset by the lower capitalised costs of self-constructed assets. Headcount fell year-on-year as a result of
efficiency measures by 719 FTEs or 4.5% to 15,157. The segment result before depreciation and amortisation was
CHF 116 million or 3.2% lower at CHF 3,500 million. A large portion of the drop in revenue was offset by cost savings,
resulting in a decline of 2.4% on a like-for-like basis. Capital expenditure fell by CHF 101 million or 5.8% to
CHF 1,654 million. Capital expenditure for the expansion of the broadband networks remained virtually unchanged
at a high level, while customer-driven investment and investment in other infrastructure decreased.
Fastweb
In EUR million, except where indicated
Residential Customers
Corporate Business
Wholesale
Revenue from external customers
Intersegment revenue
Net revenue
Segment expenses
Segment result before depreciation and amortisation (EBITDA)
Margin as % of net revenue
Capital expenditure in property, plant and equipment and intangible assets
Full-time equivalent employees at end of year (number)
Broadband access lines at end of period in thousand
Mobile access lines at end of period in thousand
2017
986
710
240
1,936
8
1,944
(1,185)
759
39.0
622
2,504
2,451
1,065
2016
906
706
175
1,787
8
1,795
(1,134)
661
36.8
581
2,468
2,355
676
Change
8.8%
0.6%
37.1%
8.3%
0.0%
8.3%
4.5%
14.8%
7.1%
1.5%
4.1%
57.5%
Fastweb’s net revenue rose by EUR 149 million or 8.3% year-on-year to EUR 1,944 million. Despite difficult market
conditions, Fastweb’s broadband customer base grew by 96,000 or 4.1% to around 2.5 million in 2017. Fastweb is
also growing in mobile telephony: compared to the previous year, the number of mobile access lines increased by
389,000 or 57.5% to 1.07 million due to the launch of attractive mobile offerings during 2017. The pressure on
pricing in the Residential Customers segment as a consequence of fierce competition was more than offset by
customer growth and the reduction in the billing period to four weeks introduced in the second quarter of 2017.
Revenue from residential customers rose accordingly by EUR 80 million or 8.8% to EUR 986 million. Despite the
high level of competition, Fastweb held its strong position in the market for business customers. Revenue from cor-
porate business increased by EUR 4 million or 0.6% to EUR 710 million, while wholesale business revenue was up
by EUR 65 million or 37.1% to EUR 240 million.
The segment result before depreciation and amortisation totalled EUR 759 million, equivalent to a year-on-year
increase of EUR 98 million or 14.8%. This includes one-off income from legal disputes amounting to EUR 95 million
(prior year: EUR 55 million). Adjusted for these effects, EBITDA rose by EUR 58 million or 9.6%. This increase was
mainly the result of higher revenue and improved regulatory conditions. The adjusted EBITDA margin rose by
0.4 percentage points to 34.2%. The expansion of Italy’s fibre-optic broadband network is continuing as planned.
Capital expenditure remained at a high level, totalling EUR 622 million. Headcount at Fastweb rose by 36 FTEs or
1.5% to 2,504 FTEs, driven chiefly by the appointment of new employees in the corporate business segment.
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Other Operating Segments
In CHF million, except where indicated
Revenue from external customers
Intersegment revenue
Net revenue
Segment expenses
Segment result before depreciation and amortisation (EBITDA)
Margin as % of net revenue
Capital expenditure in property, plant and equipment and intangible assets
Full-time equivalent employees at end of year (number)
2017
529
321
850
(670)
180
21.2
58
2,580
2016
519
270
789
(625)
164
20.8
49
2,493
Change
1.9%
18.9%
7.7%
7.2%
9.8%
18.4%
3.5%
The net revenue of the Other Operating Segments rose year-on-year by CHF 61 million or 7.7% to CHF 850 million.
The increase was mainly due to higher revenue from construction services rendered by cablex for Swisscom
Switzerland. The segment result before depreciation and amortisation improved year-on-year by 9.8% or
CHF 16 million to CHF 180 million. This corresponds to a profit margin of 21.2%. Headcount rose by 87 FTEs or 3.5%
to 2,580 FTEs, driven primarily by the hiring of new employees at cablex.
Depreciation and amortisation, non-operating results
In CHF million, except where indicated
Operating income before depreciation and amortisation (EBITDA)
Depreciation, amortisation and impairment losses
Operating income (EBIT)
Net interest expense
Other financial result
Share of results of associates
Income before income taxes
Income tax expense
Net income
Share of net income attributable to equity holders of Swisscom Ltd
Share of net income attributable to non-controlling interests
Earnings per share (in CHF)
2017
4,295
(2,164)
2,131
(149)
(11)
(11)
1,960
(392)
1,568
1,570
(2)
30.31
2016
4,293
(2,145)
2,148
(155)
–
(3)
1,990
(386)
1,604
1,604
–
30.97
Change
0.0%
0.9%
–0.8%
–3.9%
–1.5%
1.6%
–2.2%
–2.1%
–2.1%
Depreciation and amortisation increased year-on-year by CHF 19 million or 0.9% to CHF 2,164 million; at constant
exchange rates this represents a rise of 0.3%. The amortisation of intangible assets related to business combinations
declined, amounting to CHF 50 million (prior year: CHF 104 million). Net interest expense declined by CHF 6 million
to CHF 149 million as a result of lower average interest costs. Income tax expense was CHF 392 million (prior year:
CHF 386 million), corresponding to an effective income tax rate of 20.0% (prior year: 19.4%).
Net income fell by CHF 36 million or 2.2% to CHF 1,568 million. Earnings per share is calculated based on the share
of net income attributable to equity holders of Swisscom Ltd and the average number of shares outstanding.
Earnings per share fell from CHF 30.97 to CHF 30.31.
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Cash flows
In CHF million
Operating income before depreciation and amortisation (EBITDA)
Capital expenditure in property, plant and equipment and intangible assets
Change in net working capital and other cash flows from operating activities
Operating free cash flow
Net interest paid
Income taxes paid
Free cash flow
Net expenditures for company acquisitions and disposals
Other cash flows from investing activities, net
Issuance and repayment of financial liabilities, net
Dividends paid to equity holders of Swisscom Ltd
Other cash flows
Net increase in cash and cash equivalents
2017
4,295
(2,378)
242
2,159
(155)
(289)
1,715
(106)
120
(401)
(1,140)
(9)
179
2016
4,293
(2,416)
(86)
1,791
(157)
(328)
1,306
43
(87)
(101)
(1,140)
(14)
7
Change
2
38
328
368
2
39
409
(149)
207
(300)
–
5
172
Free cash flow increased year-on-year by CHF 409 million to CHF 1,715 million, mainly due to higher operating free
cash flow. Operating free cash flow increased by CHF 368 million to CHF 2,159 million. In the previous year, cash
flow was affected by the payment of the penalty of CHF 186 million for the ongoing Competition Commission
proceedings regarding broadband services. Swisscom does not consider the sanction justified and has lodged an
appeal with the Federal Court. It paid the penalty of CHF 186 million in the first quarter of 2016, as no suspensive
effect had been granted. Excluding this payment, operating free cash flow rose by CHF 182 million or 9.2% versus
the previous year. This is attributable primarily to lower trade receivables, on the one hand, and prepaid expenses, on
the other. In the second quarter of 2017, the Swisscom pension fund (comPlan) also received a one-time payment of
CHF 50 million as a result of the pension fund changes communicated in October 2016.
Net expenditure for company acquisitions and disposals amounted to CHF 106 million (prior year: net proceeds of
CHF 43 million). This includes, in particular, the purchase of a Tiscali business division by Fastweb and the acquisi-
tion of the remaining shares of Cinetrade (prior year: sale of stake in Metroweb). Other cash flows chiefly include
the taking out and repayment of fixed-term deposits. In 2017, Swisscom issued debenture bonds with an aggre-
gate nominal value of CHF 500 million and paid back debenture bonds and private placements totalling around
CHF 900 million.
Development of free cash flow in CHF million
4,295
–2,378
204
36
2
2,159
–155
–289
1,715
EBITDA
Capital
expenditure
Change in
net working
capital
Change in
defined
benefit
obligations
Other
Operating
free cash
flow
Net interest
paid
Taxes
paid
Free
cash flow
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Capital expenditure
Swisscom remains committed to maintaining the high quality and availability of its network infrastructures. In
Switzerland this involves making targeted investments in ultrafast broadband network expansion, migrating to
an All-IP-based infrastructure, and modernising the mobile network to the latest mobile network standards. In
Italy, Fastweb is also systematically expanding the network infrastructure.
See report
pages 24—27
In CHF million, except where indicated
Fixed access & infrastructure
Expansion of the fibre-optic network
Mobile network
Customer driven
Projects and others 1
Swisscom Switzerland
Fastweb
Other Operating Segments
Group Headquarters and eliminations
Total capital expenditure
Thereof Switzerland
Thereof foreign countries
Total capital expenditure as % of net revenue
1 Including All IP migration.
2017
486
469
269
109
321
2016
511
476
231
176
361
1,654
1,755
692
58
(26)
2,378
1,678
700
20.4
633
49
(21)
2,416
1,774
642
20.8
Change
–4.9%
–1.5%
16.5%
–38.1%
–11.1%
–5.8%
9.3%
18.4%
23.8%
–1.6%
–5.4%
9.0%
Capital expenditure decreased year-on-year by CHF 38 million or 1.6% to CHF 2,378 million, corresponding to
20.4% of net revenue (prior year: 20.8%). Swisscom Switzerland accounted for 70% of 2017 capital expenditure,
while Fastweb accounted for 29% and Other Operating Segments for 1%.
Capital expenditure incurred by Swisscom Switzerland declined year-on-year by CHF 101 million or 5.8% to
CHF 1,654 million, corresponding to 18.3% of net revenue (prior year: 19.0%). Capital expenditure for the expansion
of the broadband networks with the latest technologies remained virtually unchanged at a high level, while
customer-driven investment and investment in other infrastructure decreased.
Fastweb increased its capital expenditure year-on-year by CHF 59 million or 9.3% to CHF 692 million. In local
currency, the rise amounted to EUR 41 million or 7.1% to EUR 622 million. Fastweb is continuing the expansion of
the broadband networks in Italy as planned. The rise in capital expenditure is primarily the consequence of higher
customer-driven investment. The ratio of capital expenditure to revenue was 32.0% (prior year: 32.4%).
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Net asset position
In CHF million
Property, plant and equipment
Goodwill
Intangible assets
Trade receivables
Trade payables
Provisions
Other operating assets and liabilities, net
Net operating assets
Net debt
Defined benefit obligations
Income tax assets and liabilities, net
Equity-accounted investees and
other non-current financial assets
Equity
Equity ratio at end of year
Ratio net debt/EBITDA
Operating assets
31.12.2017
31.12.2016
Change
10,697
5,186
1,758
2,389
(1,753)
(1,077)
(582)
16,618
(7,447)
(1,048)
(731)
253
7,645
34.7
1.7
10,177
5,156
1,756
2,425
(1,597)
(962)
(601)
16,354
(7,846)
(1,850)
(447)
311
6,522
30.4
1.8
520
30
2
(36)
(156)
(115)
19
264
399
802
(284)
(58)
1,123
Net operating assets rose by CHF 0.3 billion or 1.6% to CHF 16.6 billion. The higher volume of property, plant and
equipment as a result of investing activity was offset by lower net working capital. The net carrying amount of
goodwill was CHF 5.2 billion, the bulk of which relates to Swisscom Switzerland (CHF 4.3 billion). This goodwill
arose primarily in 2007 in connection with the repurchase of the 25% stake in Swisscom Mobile Ltd sold to Vodafone
in 2001. Following the repurchase, the mobile, fixed-network and solutions businesses were organisationally
combined and merged to create the new company Swisscom (Switzerland) Ltd. The valuation risk of this goodwill
item is extremely low. The net carrying amount of Fastweb’s goodwill is EUR 0.5 billion (CHF 0.6 billion). Fastweb’s
carrying amount in the consolidated financial statements totals EUR 2.9 billion (CHF 3.4 billion).
Net debt
Swisscom targets a net debt/EBITDA ratio of around 1.9. Net debt comprises financial liabilities less cash and cash
equivalents, current financial assets and non-current certificates of deposit, and derivative financial instruments
for financing.
Development of net debt in CHF million
7,846
–2,159
1,140
149
289
182
7,447
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Net debt
31.12.2016
Operating
free cash flow
Dividends
Net interest
expense
Taxes paid
Other
effects
Net debt
31.12.2017
The ratio of net debt to EBITDA was 1.7 at the end of 2017 (prior year: 1.8). In recent years, Swisscom has taken
advantage of favourable capital market conditions with a view to optimising the interest and maturity structure
of the Group’s financial obligations. The share of the Group’s variable interest-bearing financial liabilities amounts
to 16%.
As at 31 December 2017, Swisscom’s financial liabilities amounted to CHF 8.3 billion. Around 80% of the financial
liabilities have a residual term to maturity of more than one year. Financial liabilities with a term of one year or less
amounted to CHF 1.7 billion at 31 December 2017. In 2017, the average interest expense on all financial liabilities
was 1.7% (prior year: 1.9%), and the average residual term to maturity was 5.3 years. A large proportion of the
financial liabilities will fall due for repayment if a shareholder other than the Swiss Confederation gains majority
control over Swisscom.
In CHF million
Bank loans
Debenture bonds
Private placements
Finance lease liabilities
Other financial liabilities
Total interest-bearing financial liabilities
Post-employment benefits
Due within Due within Due within Due within
1 year 1 to 2 years 3 to 5 years 6 to 10 years
Due after
10 years
–
1,385
72
23
235
1,715
–
–
278
18
109
405
445
176
1,670
2,085
–
30
28
–
27
3
100
960
150
363
–
Total
720
6,100
500
461
375
2,173
2,291
1,573
8,156
Defined benefit obligations presented in the consolidated financial statements are measured in accordance with
International Financial Reporting Standards (IFRS). Net defined benefit obligations amounted to CHF 1.0 billion,
which represents a CHF 0.8 billion decline year-on-year, mainly due to the return on plan assets of CHF 0.9 billion.
In accordance with the Swiss accounting standards applicable to the pension fund (Swiss GAAP ARR), the funding
surplus amounts to CHF 0.8 billion, corresponding to a coverage ratio of 108%. The main reasons for the difference
of CHF 1.8 billion compared with IFRS are the application of differing actuarial assumptions, for example with
regard to the discount rate, life expectancy and risk sharing (CHF 1.1 billion), as well as a different actuarial mea-
surement method (CHF 0.7 billion). Unlike Swiss GAAP, IFRS measurement takes into account future salary, contri-
bution and pension increases and early retirements.
Equity
Equity rose by CHF 1.1 billion or 17.2% to CHF 7.6 billion, while the ratio of equity to total assets increased from
30.4% to 34.7%. The CHF 1.6 billion in net income and net gains of CHF 0.8 billion recognised directly in equity
exceeded dividend payments of CHF 1.1 billion to the shareholders of Swisscom Ltd. Net gains recognised directly
in equity include non-cash actuarial gains from pension plans totalling CHF 0.7 billion as well as unrealised gains
of CHF 0.1 billion resulting from currency translation of foreign Group companies. The CHF/EUR exchange rate
climbed from 1.074 at the end of 2016 to 1.17 at the end of 2017. On 31 December 2017, cumulative currency
translation losses recognised in equity amounted to CHF 1.7 billion (after tax).
Distributable reserves are calculated on the basis of equity reported in the separate financial statements of
Swisscom Ltd in accordance with Swiss company-law financial-reporting standards, rather than on the basis of
equity as disclosed in the consolidated balance sheet prepared in accordance with International Financial Report-
ing Standards (IFRS). On 31 December 2017, the equity of Swisscom Ltd totalled CHF 5.31 billion. The difference
between this amount and equity disclosed in the consolidated balance sheet is essentially due to earnings retained
by subsidiaries as well as different accounting and valuation methods. Under Swiss company law, share capital
and that part of the general reserves representing 20% of the share capital may not be distributed. On 31 Decem-
ber 2017, Swisscom Ltd held distributable reserves of CHF 5.25 billion.
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Value-oriented business management
Key performance indicators for planning and managing business operations are revenue, operating income before
depreciation and amortisation (EBITDA) and capital expenditure. The enterprise value/EBITDA ratio also permits
comparisons of Swisscom’s enterprise value derived from the share price on the balance sheet date with that of
similar companies (European telecommunications companies) as well as with the prior year. The members of the
Board of Directors and Group Executive Board are paid a portion of their remuneration in the form of Swisscom
shares, which are blocked for a period of three years. They are also subject to a minimum shareholding require-
ment. Variable remuneration based on financial and non-financial targets, the partial payment of remuneration
in shares and the minimum shareholding requirement ensure that the financial interests of management are
aligned with the interests of shareholders.
In CHF million, except where indicated
31.12.2017
31.12.2016
Enterprise value
Market capitalisation
Net debt
Defined benefit obligations
Equity-accounted investees and
other non-current financial assets
Non-controlling interests
Enterprise value (EV)
Operating income before depreciation and amortisation (EBITDA)
Ratio enterprise value/EBITDA
26,859
7,447
1,048
(253)
(11)
35,090
4,295
8.2
23,627
7,846
1,850
(311)
8
33,020
4,293
7.7
Swisscom’s enterprise value increased by 6.3% or CHF 2.1 billion to CHF 35.1 billion in 2017. The rise in stock market
capitalisation of 13.7% or CHF 3.2 billion was partially offset by a reduction in net debt of CHF 0.4 billion and in
pension liabilities of CHF 0.8 billion. With EBITDA remaining practically unchanged, the higher enterprise value
resulted in an increase in the ratio of enterprise value to EBITDA to 8.2 (prior year: 7.7). Swisscom’s relative market
valuation is therefore well above the average for comparable companies in Europe’s telecoms sector. The higher
ratio is supported by the solid market position Swisscom has achieved thanks to a high level of investment and an
attractive dividend policy, as well as the lower interest rates and lower corporate income tax rates in Switzerland
as compared to other European countries.
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Statement of added value
Thanks to a modern, high-performance network infrastructure and a comprehensive, needs-driven service offering,
Swisscom makes an important contribution to Switzerland’s competitiveness and economic success and generates
direct added value. Operating added value is equivalent to net revenue less goods and services purchased, other
indirect costs and depreciation and amortisation. Personnel expense in the statement of added value is treated as
use of added value rather than as an intermediate input.
In CHF million
Added value
Net revenue
Capitalised self-constructed assets and other income
Direct costs
Other operating expenses 1
Depreciation and amortisation 2
Intermediate inputs
Operating added value
Other non-operating result 3
Total added value
Allocation of added value
Employees 4
Public sector 5
Shareholders (dividends)
Third-party lenders (net interest expense)
Company (retained earnings) 6
Total added value
Switzerland
Abroad
Total Switzerland
Abroad
2017
2016
Total
9,476
2,186
11,662
9,665
1,978
11,643
325
(1,946)
(1,594)
(1,528)
183
(720)
(604)
(586)
508
325
(2,666)
(2,036)
(2,198)
(1,634)
(2,114)
(1,493)
143
(723)
(467)
(548)
468
(2,759)
(2,101)
(2,041)
(4,743)
(1,727)
(6,470)
(4,838)
(1,595)
(6,433)
4,733
459
5,192
4,827
383
5,210
2,666
376
244
18
(72)
5,120
2,910
2,651
308
394
1,148
149
519
5,120
224
13
(107)
5,103
2,875
321
1,148
155
604
5,103
1 Other operating expense: excluding taxes on capital and other taxes not based on income.
2 Depreciation and amortisation: excluding amortisation of acquisition-related intangible assets such as brands or customer relations.
3 Other non-operating result: financial result excluding net interest expense, share of profits of investments in associates, and depreciation and amortisation of
acquisition-related intangible assets.
4 Employees: employer contributions are reported as pension cost, rather than as expenses according to IFRS.
5 Public sector: current income taxes, taxes on capital and other taxes not based on income, as well as ComCo sanctions.
6 Company: including changes in deferred income taxes and defined benefit obligations.
Of the consolidated operating added value of CHF 5.2 billion, 91% or CHF 4.7 billion was generated in Switzerland,
which was 1.9% less than in the previous year. In contrast, added value per FTE was 1.2% higher at CHF 262,000.
In addition to direct added value, purchases from suppliers provide significant indirect added value for Switzer-
land’s economic development. Taking into account capital expenditure instead of depreciation and amortisation,
the purchasing volume in the Swiss business was around CHF 4.9 billion in 2017, with added value contributed by
suppliers in Switzerland of approximately 60% or CHF 2.9 billion.
Swisscom development of added
value per employee in Switzerland in CHF thousand
400
300
200
100
0
272
259
262
2015
2016
2017
Allocation of added value in %
3%
Third-party lenders
10%
Company
8%
Public sector
22%
Shareholders
57%
Employees
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Financial outlook
In CHF million, except where indicated
Net revenue
Swisscom Group
Swisscom without Fastweb
Fastweb
2017
reported
2017
pro-forma
2018
Change
w/o IFRS 15
2018
Impact
IFRS 15
2018
outlook 2
11,662
11,662
< 0
< 0
> 0
< 0
< 0
> 0
< 0
< 0
> 0
(10) ~ CHF 11.6 bn
~ CHF 9.2 bn
> EUR 2.0 bn
(50)
~ CHF 4.2 bn
~ CHF 3.4 bn
~ EUR 0.7 bn
–
< CHF 2.4 bn
> CHF 1.6 bn
~ EUR 0.6 bn
Operating income before depreciation and amortisation (EBITDA)
Swisscom Group
Swisscom without Fastweb
Fastweb
Capital expenditure
Swisscom Group
Swisscom without Fastweb
Fastweb
4,295
4,254 1
2,378
2,378
1 Adjustment of CHF 41 million: Fastweb litigation income of CHF 102 million less termination benefits of CHF 61 million.
2 Echange rate CHF/EUR of 1.16 (CHF/EUR of 1.11 for financial year 2017).
For 2018, Swisscom anticipates net revenue of around CHF 11.6 billion, EBITDA of around CHF 4.2 billion and capital
expenditure of less than CHF 2.4 billion. Due to strong competition and price pressure, Swisscom’s revenue with-
out Fastweb is expected to decline; however, this should be partially offset by a rise in Fastweb’s revenue. EBITDA
for Swisscom, excluding Fastweb, is expected to be lower year-on-year. The expected reduction in EBITDA is attrib-
utable to price pressure and continued declines in the number of fixed-line telephony connections. EBITDA will be
positively affected by cost savings. Fastweb’s EBITDA is expected to be higher. From 2018 onwards, a new account-
ing standard for recognising revenue (IFRS 15) is to be applied, which is likely to have a negative effect on EBITDA
of around CHF 50 million. By contrast, at the current euro exchange rate, the currency translation of Fastweb
should positively affect revenue and EBITDA. Capital expenditure is expected to be slightly lower in Switzerland
and slightly higher at Fastweb. Subject to achieving its targets, Swisscom will propose payment of an unchanged,
attractive dividend of CHF 22 per share for the 2018 financial year at the 2019 Annual General Meeting.
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Capital market
Swisscom’s shares are listed on the SIX Swiss Exchange. The creditworthiness
of Swisscom is regularly assessed by international rating agencies.
Swisscom share
Swisscom’s market capitalisation as at 31 December 2017 amounted to CHF 26.9 billion (previous year: CHF 23.6 bil-
lion). The number of shares issued remained the same at 51.8 million. Par value per registered share is CHF 1. Each
share entitles the holder to one vote. Voting rights can only be exercised if the shareholder is entered in the share
register of Swisscom Ltd with voting rights. The Board of Directors may refuse to enter a shareholder with voting
rights if such voting rights exceed 5% of the company’s share capital.
Share performance 2017 in CHF
550
500
450
400
350
.
7
1
1
0
2
0
.
.
7
1
2
0
8
2
.
.
7
1
3
0
1
3
.
.
7
1
4
0
0
3
.
.
7
1
5
0
1
3
.
.
7
1
6
0
0
3
.
.
7
1
7
0
1
3
.
.
7
1
8
0
1
3
.
.
7
1
9
0
0
3
.
.
7
1
0
1
1
3
.
.
7
1
1
1
0
3
.
.
7
1
2
1
9
2
.
Swisscom
SMI (indexed)
Stoxx Europe 600 Telcos (in CHF, indexed)
See
www.swisscom.ch/
shareprice
The Swiss Market Index (SMI) rose by 14.1% compared with the previous year. The Swisscom share price increased
by 13.7% to CHF 518.50, outperforming the Stoxx Europe 600 Telecommunications Index (+5.1% in CHF; –3.63% in
EUR). Average daily trading volume grew by 16.9% year-on-year to 156,147 shares. The total trading volume of
Swisscom shares in 2017 amounted to CHF 18 billion.
Shareholder return
On 7 April 2017, Swisscom paid out an ordinary dividend of CHF 22 per share. Based on the closing price at the end
of 2016, this equates to a return of 4.9%. Taking into account the gain in share price, the total shareholder return
(TSR) of the Swisscom share was 19.4% in 2017. The TSR for the SMI was 17.9% and for the Stoxx Europe 600
Telecommunications Index 9.8% in CHF and 0.7% in EUR.
Stock exchanges
Swisscom shares are listed on the SIX Swiss Exchange under the symbol SCMN (Securities No. 874251). In the
United States (Over The Counter, Level 1), they are traded in the form of American Depositary Receipts (ADR) at
a ratio of 1:10 under the symbol SCMWY (Pink Sheet No. 69769).
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Ownership structure
Confederation
Natural persons
Institutions
Total
Number of
Shareholders
Number of
Shares
1
26,394,000
69,837
5,042,232
2,938
20,365,711
31.12.2017
Share
in %
51.0%
9.7%
39.3%
Number of
Shareholders
Number of
Shares
1
26,394,000
74,224
5,497,806
3,205
19,910,137
31.12.2016
Share
in %
51.0%
10.6%
38.4%
72,776
51,801,943
100.0%
77,430
51,801,943
100.0%
The majority shareholder as at 31 December 2017 was the Swiss Confederation, which is obligated by current law
to hold the majority of the capital and voting rights. As at 31 December 2017, some 20% of the shares were held
in unregistered shareholdings.
Analysts’ recommendations
Investment specialists analyse Swisscom’s business performance, results and market situation on an ongoing
basis. Their findings and recommendations offer valuable indicators for investors. 23 analysts regularly publish
studies on Swisscom. At the end of 2017, 17% of the analysts recommended a buy rating for the Swisscom share,
48% a hold rating and 35% a sell rating. The average price target at 31 December 2017, according to the analysts’
estimates, was CHF 480 per share.
Dividend policy
Swisscom pursues a stable dividend policy that is focused on cash flow generation and capital allocation. At the
forthcoming Annual General Meeting on 4 April 2018, the Board of Directors will propose an unchanged ordinary
dividend of CHF 22 per share for the 2017 financial year. This is equivalent to a total dividend payout of
CHF 1,140 million.
Since going public in 1998, Swisscom has distributed a total of CHF 30.7 billion to its shareholders: CHF 18.7 billion
in dividend payments, CHF 1.6 billion in capital reductions and CHF 10.4 billion in share buybacks. Swisscom has
paid out a total of CHF 367 per share since the initial public offering. Together with the overall increase in share
price of CHF 178 per share, this amounts to an average annual total return of 5.4%.
Indebtedness
Level of indebtedness
Swisscom aims to have a net debt of around 1.9 times EBITDA (operating income before depreciation and amorti-
sation). Net debt consists of total financial liabilities less cash and cash equivalents, current financial assets as well
as non-current fixed interest-bearing certificates of deposit and derivative financial instruments on financing.
As at 31 December 2017, net debt amounted to CHF 7.4 billion (prior year: CHF 7.8 billion), corresponding to a net
debt/EBITDA ratio of 1.7 (prior year: 1.8).
Credit ratings and financing
With a rating of A (stable) and A2 (stable) respectively, Swisscom enjoys good ratings from the Standard & Poor’s
and Moody’s rating agencies. To avoid structural downgrading, Swisscom endeavours to raise financing at the
level of Swisscom Ltd. Swisscom aims to have a broadly diversified debt portfolio. This involves paying particular
attention to balancing maturities and a diversification of financing instruments, markets and currencies.
Swisscom’s solid financial standing enabled it unrestricted access to money and capital markets again in 2017.
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Risks
Swisscom’s risk management system is aimed at safeguarding the company’s
enterprise value.
Risk situation
Risks are driven by changes in markets, competition, customer behaviour, technology, the regulatory environment
and government policy. The importance of established telecoms services is continuing to decline. New services in
the areas of digitisation and IT services, such as cloud services, security products and the communication between
machines, should compensate for the loss of revenue from the traditional core business. Over the long term, the
trend in the ICT market will necessitate fundamental changes in the approach to risks related to the business
model, technology and human capital. Forthcoming regulatory decisions pose a latent risk which could impact
Swisscom’s financial development, as illustrated by the following selected key risk factors. The main risk factors in
the supply chain are reported separately in the Sustainability Report.
Risk factors
Telecommunications market
Increasing competition driven by national infrastructure providers and service providers who do not have their
own telecoms infrastructure is exerting transformation pressure on the business. During this transformation, the
complexity resulting from the parallel operation of old and new technologies has to be reduced to enable new,
attractive services. Here there is a risk that the revenue from the classic telecoms business will not be secured
sustainably during the transformation process, while at the same time technical complexity remains undimin-
ished. Moreover, a trend can currently be observed towards national and international cooperation among tele-
communications providers, the purpose of which is to provide low-cost services internationally and exploit major
synergies and economies of scale. There is a risk that Swisscom will not be able to align its cost structures with its
current and future competitors, which would narrow the scope for investment, innovation and price reductions.
If such risks materialise, this could delay implementation of the strategy or have a detrimental effect on customer
satisfaction. Swisscom has initiated measures in various areas to manage these risks.
Politics and regulation
The manner in which regulations are implemented (e.g. in telecommunications and antitrust legislation) entails
risks for Swisscom, which could have an adverse impact on the company’s financial position and results of opera-
tions. The main risks concern the possibility of price regulation being extended to mobile communications (mobile
termination and roaming services) and broadband (optical fibre), which would further reduce Swisscom’s income
and restrict the company’s room for manoeuvre, as well as sanctions by the Competition Commission, which
could reduce Swisscom’s operating results and cause reputational damage to the company. The forthcoming revi-
sion of the Telecommunications Act heightens regulatory risk. Finally, excessively high political demands (e.g. those
imposed on universal service provision) threaten to fundamentally undermine the current competitive system.
See report
page 20
Increased bandwidth in the access network
Customer demand for broadband access is growing rapidly, as is the popularity of mobile devices and IP-based
services (smartphones, IP TV, OTTs, etc.). Swisscom faces tough competition from cable companies and other
network operators as it strives to meet current and future customer needs and defend its own market share. The
network expansion that necessitates calls for major investments. To mitigate financial risks and ensure optimum
network coverage, expansion is determined by population density and customer demand. Substantial risks would
arise if Swisscom were forced to spend more on network expansion than planned, or if projected long-term earnings
were to fall. Swisscom minimises the risks by adapting the broadband expansion of the access network to changing
conditions as well as technical opportunities on an ongoing basis.
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Employees
Constant changes in background conditions and markets mean that corporate culture needs to adapt. The key
challenges in this context lie in maintaining employee motivation and high staff loyalty despite cost pressure, as
well as managing growth and efficiency, increasing employees’ ability to adapt and renew their skills and ensuring
that Swisscom remains an attractive employer.
Competitive dynamics, regulation and recoverability of Fastweb’s assets
The competitive dynamics carry risks which could have a detrimental impact on Fastweb’s strategy and jeopardise
projected revenue growth. The impairment test performed in 2017 confirmed the recoverable value of Fastweb’s
assets. The recoverability of Fastweb’s net assets recognised in the consolidated financial statements is contin-
gent above all on achieving the financial targets set out in the business plan (revenue growth, improvement in
EBITDA margin and reduction in capital expenditure ratio). If future growth is lower than projected, there is a risk
that this will result in a further impairment loss. Major uncertainty also surrounds the future interest rate trend
and the country risk premium. An increase in interest rates or the country risk premium could lead to an impair-
ment loss. Fastweb’s business operations are also influenced by the European and Italian telecommunications
legislation. Regulatory risks can jeopardise the achievement of targets and reduce the enterprise value.
Business interruption
Usage of Swisscom’s services is heavily dependent on technical infrastructure such as communications networks
and IT platforms. Any major disruption to business operations poses a high financial risk as well as a substantial
reputational risk. Force majeure, natural disasters, human error, hardware or software failure, criminal acts by
third parties (e.g. computer viruses, hacking) and the ever-growing complexity and interdependence of modern
technologies can cause damage or interruption to operations. Built-in redundancy, contingency plans, deputising
arrangements, alternative locations, careful selection of suppliers and other measures are designed to ensure that
Swisscom can deliver the level of service that customers expect at all times.
Information and security technologies
Swisscom is in the midst of a transformation from line-switched TDM technology to IP technology. This trans-
formation should enable Swisscom to produce more flexibly and efficiently than before. The experience acquired
with IP technology to date has been positive. Swisscom’s complex IT architecture entails risks during both the
implementation and operating phases. These risks have the potential to delay the rollout of new services, increase
costs and impact competitiveness. The transformation is being monitored by the Group Executive Board.
The area of Internet security has developed and changed with immense speed with respect to technology,
economics and society and their interdependencies. New innovations and capabilities go hand in hand with new
opportunities as well as new risks.
The wider the variety of opportunities for attack, the more difficult prevention becomes. This means it is even
more important for potential threats to be recognised at an early stage, systematically understood and quickly
averted.
Health and the environment
Electromagnetic radiation (e.g. from mobile antennas or mobile handsets) has repeatedly been claimed to be
potentially harmful to the environment and health. Under the terms of the Ordinance on Non-Ionising Radiation
(ONIR), Switzerland has adopted the precautionary principle and introduced limits for base stations which are ten
times stricter than the EU’s limits. The public’s wary attitude to mobile antenna sites in particular is impeding
Swisscom’s network expansion. Even without stricter legislation, public concerns about the effects of electromag-
netic radiation on the environment and health could further hamper the construction of wireless networks in the
future and drive up costs.
Climate change poses risks for Swisscom. These risks are driven by legal and regulatory changes, changes to physical
climatic parameters (increased levels of precipitation, higher average temperatures and temperature extremes, and
the loss of permafrost) and other economic and reputational factors. The resulting developments could impact the
operability of Swisscom’s telecoms infrastructure, particularly in view of the potential risk to base stations, transmit-
ter stations and local exchanges. The analysis of the risks posed by climate change is based on the official report of
the Federal Office for the Environment (FOEN) on climate change, published in October 2011.
See
www.cdp.net
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Corporate Governance and
Remuneration Report
Corporate Governance
Remuneration Report
1 Principles ______________________________________________ 56
2 Group structure and shareholders ___________________________ 57
3 Capital structure _________________________________________ 58
4 Board of Directors ________________________________________ 60
5 Group Executive Board ____________________________________ 72
6 Remuneration, shareholdings and loans _______________________ 77
7 Shareholders’ participation rights ____________________________ 77
8 Change of control and defensive measures ____________________ 78
9 Auditor ________________________________________________ 79
Information policy________________________________________ 80
10
11 Financial calendar ________________________________________ 80
1 Governance ____________________________________________ 81
2 Remuneration of the Board of Directors _______________________ 83
3 Remuneration of the Group Executive Board ____________________ 86
4 Other remuneration ______________________________________ 91
Statutory Auditor’s Report _________________________________ 92
Corporate Governance
Corporate governance is a fundamental component of Swisscom’s corporate
policy. Swisscom is committed to practising effective and transparent corporate
governance as part of its effort to deliver long-term value.
1 Principles
In performing their activities, the Board of Directors and Group Executive Board of Swisscom are guided by the
objective of long-term and sustainable business management. They incorporate the legitimate interests of
Swisscom shareholders, customers, employees and other interest groups into their decisions. To this end, the
Board of Directors practises effective and transparent corporate governance, which is characterised by clearly
assigned responsibilities and based on recognised standards. In this regard, Swisscom complies with the recom-
mendations of the Swiss Code of Best Practice for Corporate Governance 2014 issued by economiesuisse, the
umbrella organisation representing Swiss business, and the requirements of the Ordinance against Excessive
Compensation in Listed Stock Companies (OaEC).
The interaction of investors, proxy advisors and other stakeholder groups with the respective specialist divisions
allows the Board of Directors to identify new standards at an early stage and to adjust its corporate governance
activities to new requirements as and when necessary.
Swisscom’s principles and rules on corporate governance are set out primarily in the company’s Articles of Incor-
poration, Organisational Rules and the Rules of Procedure of the Board of Directors’ committees. Of particular
importance is the Code of Conduct approved by the Board of Directors. It contains an explicit declaration by
Swisscom of its commitment to absolute integrity as well as compliance with the law and all other external and
internal rules and regulations. Swisscom expects its employees to take responsibility for their actions, show
responsibility for people, society and the environment, comply with applicable rules, demonstrate integrity and
report any violations of the Code of Conduct.
The latest versions of these documents as well as their earlier, unamended and superceded versions can be viewed
online on the Swisscom website under “Basic principles”.
See
www.swisscom.ch/
basicprinciples
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2 Group structure and shareholders
2.1 Group structure
2.1.1. Operational Group structure
Swisscom Ltd is the holding company responsible for the overall management of the Swisscom Group. It comprises
the five Group divisions Group Business Steering, Group Human Resources, Group Strategy & Board Services, Group
Communication & Responsibility and Group Security. The Board of Directors delegates the day-to-day business
management to the CEO of Swisscom Ltd. The CEO, together with the heads of the Group divisions Group Business
Steering (CFO) and Group Human Resources (CPO) as well as the heads of the business divisions Sales & Services,
Products & Marketing, Enterprise Customers and IT, Network & Infrastructure, form the Group Executive Board. The
Group also operates a Digital Business division and Group companies such as the Italian subsidiary Fastweb S.p.A.
Board of
Directors
CEO
Swisscom Ltd
Internal Audit
Group
Communications
& Responsibility
Group Strategy
& Board Services
Group Security
Sales & Services
Products &
Marketing
Enterprise
Customers
IT, Network &
Infrastructure
Group Business
Steering
Group Human
Resources
Digital Business
Group Executive Board
Strategic and financial management of the Group companies is assured through the rules governing the assign-
ment of powers and responsibilities set by the Board of Directors of Swisscom Ltd. The Group companies are
divided into three categories: strategic, important and other. Swisscom Ltd, Swisscom (Switzerland) Ltd and the
subsidiary Fastweb S.p.A. are classified as strategic Group companies. The Board of Directors of Swisscom
(Switzerland) Ltd comprises the CEO of Swisscom Ltd as Chairman, the CFO of Swisscom Ltd and the Head of IT,
Network & Infrastructure. The executive management of Swisscom (Switzerland) Ltd is delegated to the Head of
Swisscom (Switzerland) Ltd. This position is occupied by the CEO of Swisscom Ltd. Seats on the Board of Directors
of Fastweb S.p.A. are held by the CEO of Swisscom Ltd, who acts as Chairman, together with the CFO of Swisscom Ltd,
the Head of IT, Network & Infrastructure and other representatives of Swisscom. The Board of Directors also
includes an external member. The Board of Directors of Fastweb S.p.A. has empowered the Delegate of the Board
of Directors with the executive management of the company. In the important Group companies, the responsibilities
of the Chairman of the Board of Directors are fulfilled by the CEO of Swisscom Ltd, the CEO of a strategic Group
company, the head of a Group or business division or other persons appointed by the CEO. Other representatives
of Swisscom and, in some cases, external parties also serve as members of the Board of Directors. A list of Group
companies, including company name, registered office, percentage of shares held and share capital, is provided in
Note 5.4 to the consolidated financial statements.
For financial reporting purposes, the business divisions of Swisscom are allocated to individual segments. Further
information on segment reporting can be found in the Management Commentary.
See report
pages 137—138
See report
page 40
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2.1.2 Listed company
Swisscom Ltd is a company governed by Swiss law and has its registered office in Ittigen (Canton of Berne, Swit-
zerland). It is listed in the Standard for Equity Securities, Sub-Standard International Reporting, of the SIX Swiss
Exchange (Securities No.: 874251; ISIN: CH0008742519; ticker symbol SCMN).
Trading in the United States is conducted over-the-counter (OTC) as a Level 1 programme (ticker symbol: SCMWY;
ISIN: CH008742519; CUSIP for ADR: 871013108). Within the framework of the programme, The Bank of New York
Mellon Corporation issues the American Depository Shares (ADS). ADS are American securities which represent
Swisscom shares. Ten ADS correspond to one share. The ADS are evidenced by American Depositary Receipts (ADR).
As at 31 December 2017, the stock market capitalisation of Swisscom Ltd was CHF 26,859 million. The Swisscom
Group comprises no other listed companies.
2.2 Major shareholders
Pursuant to Article 120 of the Federal Act on Financial Market Infrastructures and Market Conduct in Securities
and Derivatives Trading (FMIA), there is a duty to disclose shareholdings to Swisscom Ltd and SIX Swiss Exchange
whenever a person or group subject to the disclosure obligation reaches, exceeds or falls below 3, 5, 10, 15, 20, 25,
331/3, 50 or 662/3 per cent of the voting rights of Swisscom Ltd, irrespective of whether or not the voting rights can
be exercised. The detailed disclosure requirements and the method for calculating these limits are specified in the
FINMA Financial Market Infrastructure Ordinance (FMIO-FINMA). Under the FMIO-FINMA, nominee companies,
which are not able to independently decide how voting rights are exercised, need not report when any of their share-
holdings reach, exceed or fall below these limits. In August 2017, BlackRock, Inc., New York, reported a shareholding
of 3.44% in Swisscom Ltd. The notification of the shareholding can be viewed on the website of SIX Exchange
Regulation at https://www.six-exchange- regulation.com/en/home/publications/significant-shareholders.html.
According to the Swisscom share register, Chase Nominee Ltd., London, held 3.04% of the voting rights in Swisscom Ltd
on 31 December 2017.
On 31 December 2017, the Swiss Confederation (“the Confederation”), as majority shareholder, continued to hold
50.95% of the issued share capital of Swisscom Ltd, which is unchanged from the previous year. The Telecommuni-
cations Enterprises Act (TEA) provides that the Confederation shall hold the majority of the share capital and voting
rights of Swisscom Ltd.
2.3 Cross-shareholdings
No cross-shareholdings exist between Swisscom Ltd and other public limited companies.
3 Capital structure
3.1 Capital
On 31 December 2017, the share capital of Swisscom Ltd amounted to CHF 51,801,943, divided into registered
shares with a nominal value of CHF 1 per share. The shares are fully paid up. The share capital was unchanged in
the years 2015 to 2017. There is no authorised or conditional share capital. Additional information concerning
equity can be found in the financial statements of Swisscom Ltd.
See report
page 152
3.2 Shares, participation and profit-sharing certificates
Each registered share of Swisscom Ltd has a par value of CHF 1. Each share entitles the holder to one vote.
Shareholders may only exercise their voting rights, however, if they have been entered with voting rights in the
share register of Swisscom Ltd.
All registered shares with the exception of treasury shares held by Swisscom are eligible for a dividend. There are no
preferential rights.
Registered shares of Swisscom Ltd are not issued in certificate form, but are held as book-entry securities in the
depositary holdings of SIX SIS AG, up to a maximum limit determined by the Swiss Confederation. Shareholders
may at any time request confirmation of the registered shares they hold. However, they have no right to request
the printing and delivery of certificates for their shares (registered shares with no right to printed certificates).
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The holder of an ADR possesses the rights listed in the Deposit Agreement (e.g. the right to issue instructions for
the execution of voting rights and the right to dividends). The Bank of New York Mellon Corporation, which acts as
the ADR depository, is listed as the shareholder in the share register. ADR holders are therefore unable to directly
enforce and exercise shareholder rights. The Bank of New York Mellon Corporation exercises the voting rights in
accordance with the instructions it receives from the ADR holders. If it does not receive instructions, it does not
exercise the voting rights.
Further details on the shares are available in Section 7 “Shareholders’ participation rights” as well as in the
Management Commentary.
Swisscom Ltd has issued neither participation nor profit-sharing certificates.
See report
page 77
See report
page 51
See
www.swisscom.ch/
basicprinciples
3.3 Limitations on transferability and nominee registrations
Swisscom shares are freely transferable, and the voting rights of the shares registered in the share register in
accordance with the Articles of Incorporation are not subject to restrictions of any kind. In accordance with Article
3.5.1 of the Articles of Incorporation, the Board of Directors may refuse to recognise an acquirer of shares as a
shareholder if its total holding, when the new shares are added to any voting shares already registered in its name,
exceeds the limit of 5% of all registered shares entered in the commercial register. With the other shares, the
acquirer is entered in the share register as a shareholder or beneficial holder without voting rights. The other
statutory provisions on restricted transferability are described in section 7.1 of this report, “Voting right restrictions
and proxies”.
Swisscom has issued special regulations governing the registration of trustees and nominees in the share register.
To facilitate the tradability of the company’s shares on the stock exchange, the Articles of Incorporation (Article 3.6)
allow the Board of Directors, by means of regulations or agreements, to permit the fiduciary entry of registered
shares with voting rights for trustees and nominees in excess of the 5% threshold, provided they disclose their
trustee capacity. In addition, they must be subject to supervision by a banking or financial market supervisory
authority or otherwise provide the necessary assurance that they are acting for the account of one or more unre-
lated parties. They must also be able to provide evidence of the names, addresses and holdings of the beneficial
owners of the shares. This provision of the Articles of Incorporation may be changed by resolution of the Annual
General Meeting, for which an absolute majority of valid votes cast is required. In accordance with this provision,
the Board of Directors has issued regulations governing the entry of trustees and nominees in the Swisscom Ltd
share register. The entry of trustees and nominees as shareholders with voting rights is subject to application and
the conclusion of an agreement by which the trustee or nominee acknowledges the applicable entry restrictions
and disclosure obligations as binding. Trustees and nominees related in terms of capital or voting rights either
contractually or through common management or other means are treated as a single shareholder (trustee or
nominee).
3.4 Convertible bonds, debenture bonds and options
See report
page 109
Swisscom has no convertible bonds outstanding. Details of the debenture bonds are given in Note 2.2 to the
consolidated financial statements.
Swisscom does not issue options on registered shares of Swisscom Ltd to its employees.
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4 Board of Directors
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4.1 Members of the Board of Directors
The Board of Directors currently consists of nine members. The representative of the Swiss Confederation,
Hans Werder, stepped down from the Board of Directors at the Annual General Meeting on 3 April 2017. The Swiss
Confederation has delegated Renzo Simoni as his successor.
As of 31 December 2017, the Board of Directors comprises the following non-executive members:
Name
Hansueli Loosli 1
Roland Abt
Valérie Berset Bircher
Alain Carrupt
Frank Esser
Barbara Frei
Catherine Mühlemann
Theophil Schlatter
Renzo Simoni 2
Nationality
Year of birth
Function
Taking office at the
Annual General Meeting
Switzerland
Switzerland
Switzerland
Switzerland
Germany
Switzerland
Switzerland
Switzerland
Switzerland
1955
1957
1976
1955
1958
1970
1966
1951
1961
Chairman
Member
Member, representative of the employees
Member, representative of the employees
Member
Member
Member
Deputy Chairman
Member, representative of the Confederation
2009
2016
2016
2016
2014
2012
2006
2011
2017
1 Since 1 September 2011 Chairman.
2 Designated by the Swiss Confederation.
4.2 Education, professional activities and affiliations
Details of the career and qualifications of each member of the Board of Directors are provided below, along with
the mandates held outside the Group and other significant activities. Pursuant to the Articles of Incorporation,
Board members may perform no more than three additional mandates in listed companies and no more than ten
additional mandates in non-listed companies. In total, they may not perform more than ten such additional mandates.
These restrictions on the number of mandates do not apply to mandates performed by a Board member by order
of Swisscom or to mandates in interest groups, charitable associations, institutions and foundations or employee
retirement-benefit foundations. However, the total number of these mandates is also limited to ten and seven
respectively. Prior to accepting new mandates outside the Swisscom Group, the Board members are obligated to
consult the Chairman of the Board of Directors. Details on the regulation of external mandates, in particular the
definition of the term “mandate” and information on other mandates that do not fall under the aforementioned
numerical restrictions for listed and non-listed companies, are set out in Article 8.3 of the Articles of Incorporation.
No member of the Board of Directors exceeds the limits set for mandates.
See
www.swisscom.ch/
basicprinciples
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Hansueli Loosli
Education: Commercial apprenticeship; Swiss Certified
Expert in Financial Accounting and Controlling
Career history: 1982–1985 Mövenpick Produktions AG,
Adliswil, Controller and Deputy Director; 1985–1992
Waro AG, Volketswil, most recently as Managing Direc-
tor; 1992–1996 Coop Switzerland, Wangen, Director of
Non-Food Product Procurement; 1992–1997 Coop
Zurich, Zurich, Managing Director; 1997–2000 Coop
Switzerland, Basel, Chairman of the Executive Commit-
tee and Coop Group Executive Committee; January
2001–August 2011 Coop Genossenschaft, Basel, Chair-
man of the Executive Committee
Mandates in listed companies: Mandates of the Coop
Group: Chairman of the Board of Directors, Bell AG,
Basel
Mandates in non-listed companies: Mandates of the
Coop Group: Chairman of the Board of Directors, Coop
Group Association, Basel; Chairman of the Board of
Directors, Transgourmet Holding AG, Basel; Chairman
of the Board of Directors, Coop Mineraloel AG,
Allschwil. Other mandates: Member of the Advisory
Board, Deichmann SE, Essen
Mandates by order of Swisscom: Member of the Board
of Directors and Executive Committee of economie-
suisse, until August 2017
Other significant activities: –
in business administration
Roland Abt
Education: Doctorate
(Dr. oec.)
Career history: 1985–1987 CFO of a group of compa-
nies with operations in the areas of IT and real estate;
1987–1996 Eternit Group (currently Nueva Group):
1987–1991 Head of Controlling, 1991–1993 CEO,
Industrias Plycem, Venezuela, 1993–1996 Division
Manager, Fibre Cement Activities; 1996–2016 Georg
Fischer Group: 1996–1997 Chief Financial Officer (CFO),
Georg Fischer Piping Systems, 1997–2004 CFO, Agie
Charmilles Group (currently Georg Fischer Machine
Tools), 2004–December 2016 CFO, Georg Fischer AG,
and Member of the Group Executive Board
Mandates in listed companies: Member of the Board
of Directors of Conzzeta AG, Zurich
Mandates in non-listed companies: Member of the
Board of Directors, Raiffeisenbank, Zufikon; Chairman
of the Board of Directors, Eisenbergwerk Gonzen AG,
Sargans; member of the Board of Directors, BDWM
Transport AG, Bremgarten, since May 2017
Other significant activities: –
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Valérie Berset Bircher
Education: Doctorate in law (Dr. iur.)
Career history: 2005 Office of the International Labour
Organization (ILO), specialist in employment law in the
Department of International Labour Standards; 2006–
2007 International Organization for Standardization
(ISO), Human Resources Department; since 2007 Dep-
uty Head of the International Labour Affairs section of
the State Secretariat for Economic Affairs (SECO) in
which role she has served on committees of the United
Nations (UN) and the International Labour Organiza-
tion (ILO) addressing economics, finance and develop-
ment issues and as a member of the Federal Advisory
Committee for the National Contact Points on OECD
Guidelines for Multinational Companies and the tripartite
ILO Committee; 2011–2014 and since 2017 Member of
the ILO Board of Directors.
Mandates: –
Other significant activities: Member of the Commit-
tee on Freedom of Association, ILO, Geneva, since June
2017
in business administration,
Frank Esser
Education: Graduate
Doctorate in Economics (Dr. rer. pol.)
Career history: 1988–2000 Mannesmann Deutschland,
most recently from 1996 as a member of the Executive
Board of Mannesmann Eurokom; 2000–2012 Société
Française du Radiotéléphone (SFR): 2000–2002 Chief
Operating Officer (COO), 2002–2012 CEO, in this func-
tion from 2005–2012 also a member of the Group
Executive Board of the Vivendi Group
Mandates in listed companies: Member of the Super-
visory Board, Dalenys Group S.A (formerly Rentabiliweb
Group S.A.S.), Brussels; member of the Board of Direc-
tors, interXion Holding N.V., Amsterdam
Other significant activities: –
Alain Carrupt
Education: Swiss school-leaving certificate in economics
Career history: 1978–1994 PTT companies, most
recently as Head of Administration at the telecoms
directorate in Sion; 1994–2000 PTT Union, Central Sec-
retary of the Telecommunications sector; 2000–2010
Communications Union: 2000–2002 Deputy General
Secretary and Head of Personnel, 2003-2008 Vice
Chairman, 2008–2010 Chairman; 2011–2016 syndicom
Trade Union: 2011–2013 Joint Chairman, 2013–Febru-
ary 2016 Chairman
Mandates: –
Other significant activities: –
Barbara Frei
Education: Degree in mechanical engineering, ETH;
Doctorate (Dr. sc. techn.), ETH; Master of Business
Administration, IMD Lausanne
Career history: 1998–2016 ABB Group in various mana-
gerial positions, including, in particular, 2008–2010 ABB
s.r.o., Prague, Country Manager; 2010–2013 ABB S.p.A.,
Sesto San Giovanni (Italy), Country Manager and Regional
Manager Mediterranean; November 2013–December
2015 Drives and Control Unit, Managing Director; 2016
Head of Strategic Portfolio Reviews for the Power Grids
division; since December 2016 Schneider Electric, Paris:
Chairman of the Executive Committee of Schneider Elec-
tric GmbH, Germany, in which capacity she was also
Zone President Germany until June 2017 and since July
2017 Zone President Germany, Austria and Switzerland
for the group Schneider Electric, Paris
Mandates: Mandates for Schneider Electric Group:
CEO of ELSO GmbH, Merten GmbH, Schneider Electric
GmbH, Schneider Electric Holding Germany GmbH,
SE Real Estate GmbH and, since July 2017, Schneider
Electric “Austria” Ges.m.b.H, and member of the Super-
visory Board of Schneider Electric Sachsenwerk GmbH
Other significant activities: –
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Catherine Mühlemann
Education: Lic. phil. I
Career history: 1994–1997 Swiss Television DRS, Head
of Media Research; 1997–1999 SF1 and SF2, Pro-
gramme Researcher; 1999–2001 TV3, Programme
Director; 2001–2003 MTV Central, CEO; 2003–2005
MTV Central & Emerging Markets, CEO; 2005–2008
MTV Central & Emerging Markets and Viva Media AG
(Viacom), CEO; since 2008 Andmann Media Holding
GmbH, Baar, partner, until December 2012 owner
Mandates in listed companies: Member of the Super-
visory Board, Tele Columbus AG, Berlin
Mandates in non-listed companies: Vice-Chairwoman
of Switzerland Tourism; member of the Supervisory
Board of Messe Berlin GmbH, Berlin, since July 2017
Other significant activities: –
in mechanical engineering
Renzo Simoni
Education: Doctorate
(Dr. sc. techn.), ETH
Career history: 1985–1989 Gruner Group, technical
assistant in Civil Engineering and Building Construc-
tion; 1989–1995 Federal Institute of Technology in
Zurich (ETH Zurich), scientific assistant; 1995–1998
ETH Zurich, lecturer (part-time); 1995–2002 Ernst
Basler + Partner AG, Civil Engineering Developer
Consulting Services; 2002–2006 Helbling Beratung +
Bauplanung AG, member of the Management Board,
most recently as Co-CEO; 2007–2017 AlpTransit
Gotthard AG, Chairman of the Management Board
Mandates in non-listed companies: Member of the
Board of Directors, Gruner AG, Basel, since April 2017
Other significant activities: Member of the Advisory
Committee of Deutsche Bahn Stuttgart-Ulm GmbH
(PSU) Project Company (“Stuttgart 21”); Chairman of
the Board of the Psychiatric Hospital of the University
of Zurich, since January 2018
Theophil Schlatter
Education: Degree in business administration (lic. oec.
HSG); qualified public accountant
Career history: 1979–1985 STG Coopers & Lybrand,
public accountant; 1985–1991 Holcim Management
und Beratung AG, controller; 1991–1995 Sihl Papier AG,
CFO and member of the Executive Committee; 1995–
1997 Holcim (Switzerland) Ltd, Head of Finance/Adminis-
tration and member of the Executive Committee;
1997–2011 Holcim Ltd., CFO and member of the Group
Executive Board
Mandates in non-listed companies: Member of the
Board of Directors, Schweizerische Cement-Industrie-
Aktiengesellschaft, Rapperswil-Jona
Other significant activities: –
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4.3 Election and term of office
Under the terms of the Articles of Incorporation, the Board of Directors comprises between seven and nine mem-
bers and, if necessary, the number can be increased temporarily. Under the Articles of Incorporation of Swisscom
Ltd, the Swiss Confederation is entitled to appoint two representatives to the Board of Directors of Swisscom Ltd.
Currently, Renzo Simoni is the only representative appointed by the Federal government. Under the terms of the
Telecommunications Enterprise Act (TEA), employees must be granted appropriate representation on the Board of
Directors of Swisscom Ltd. The Articles of Incorporation also stipulate that the Board of Directors must include
two employee representatives. Employees are entitled to make proposals for their employee representatives.
Since the Annual General Meeting of April 2016, the elected employee representatives have been Valérie Berset
Bircher and Alain Carrupt. Valérie Berset Bircher was nominated by the transfair staff association and Alain
Carrupt was nominated by the syndicom trade union. With the exception of the representative of the Swiss Con-
federation, the Board of Directors of Swisscom Ltd is elected by the shareholders at the Annual General Meeting.
The Annual General Meeting elects the members and the Chairman of the Board of Directors as well as the mem-
bers of the Compensation Committee individually for a term of one year. The term of office runs until the conclu-
sion of the following Annual General Meeting. Re-election is permitted. If the office of the Chairman is vacant or
the number of members of the Compensation Committee falls below the minimum number of three members,
the Board of Directors nominates a chairman from among its members or appoints the missing member(s) of the
Compensation Committee to serve until the conclusion of the next Annual General Meeting. Otherwise, the
Board of Directors constitutes itself.
The maximum term of office for members elected by the Annual General Meeting, as a rule, is a total of twelve
years. This flexible arrangement makes it possible for shareholders to extend the maximum term of office in
exceptional cases if special circumstances exist. Members who reach the age of 70 retire from the Board as of the
date of the next Annual General Meeting. The maximum term of office and age limit for the Federal representa-
tive are determined by the Federal Council.
4.4 Independence
In order to determine independence, the Board of Directors applies the criteria set out in the Swiss Code of Best
Practice for Corporate Governance. Independent members shall thus mean non-executive members of the Board
of Directors who were never a member of the executive management or who have not been a member of the
executive management for at least three years and who have no or only comparatively minor business relations
with the company. The term of office of a member of the Board of Directors is not a criterion that can be used to
assess independence. No members of the Board of Directors hold an executive role within the Swisscom Group or
have held such a role in any of the three business years prior to the reporting year. The Board members have no
significant commercial links with Swisscom Ltd or the Swisscom Group. The Swiss Confederation, represented on
the Board by Renzo Simoni, holds the majority of the capital and voting rights in Swisscom in accordance with the
TEA. Customer and supplier relationships exist between the Swiss Confederation and Swisscom. Details of these
are provided in Note 6.2 to the consolidated financial statements.
See report
page 142
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4.5 Internal organisation and modus operandi
The Board of Directors is responsible for the strategic and financial management of Swisscom and for monitoring
the company’s executive management. As the supreme governing body of the Company, it has decision-making
authority unless such authority is granted to the Annual General Meeting by virtue of law. The Board of Directors
has delegated individual tasks to committees. The standing committees of the Board of Directors of Swisscom Ltd
were constituted as follows as at 31 December 2017:
Board of Directors
Finance Committee
Audit Committee
Compensation Committee
Frank Esser 1
Alain Carrupt
Catherine Mühlemann
Renzo Simoni
Hansueli Loosli
Theophil Schlatter 1
Roland Abt
Valérie Berset-Bircher
Hansueli Loosli
Barbara Frei 1
Frank Esser
Theophil Schlatter
Renzo Simoni
Hansueli Loosli 2
1 Chairman (-woman) of the Committee of the Board of Directors
2 Without voting rights
The Board of Directors is usually convened once per month by the Chairman (except in July) for a one-to-two-day
meeting. Further meetings are convened as business requires. In the event that the Chairman is unavailable, the
meeting is convened by the Vice-Chairman. The CEO, the CFO and the Head of Group Strategy & Board Services
regularly attend the meetings of the Board of Directors. The Chairman sets the agenda. Any Board member may
request the inclusion of further items on the agenda. Board members receive documents prior to the meeting to
allow them to prepare for the items on the agenda. To further ensure appropriate reporting to the members of the
Board, the Board of Directors invites members of the Group Executive Board, senior employees of Swisscom, audi-
tors and other internal and external experts, as appropriate, to attend its meetings on specific issues. Further-
more, the Chairman of the Board of Directors and the CEO report to each meeting of the Board of Directors on
particular events, on the general course of business and major business transactions, as well as on any measures
that have been implemented.
The duties, responsibilities and modus operandi of the Board of Directors and its conduct with respect to conflicts
of interest are defined in the Organisational Rules and in the rules governing the standing committees.
The Board of Directors attaches great importance to the ongoing development and continuing education of the
Board and its individual members. The Board of Directors and the committees conduct self-assessments, usually
once a year and most recently in January 2017. A one-day mandatory training course was held at the beginning of
2017. Each quarter, the members of the Board of Directors also have the opportunity to explore the upcoming
challenges facing the Group and business divisions in-depth as part of “company experience days”. The majority
of members of the Board of Directors regularly take advantage of these opportunities. In addition, individual mem-
bers of the Board of Directors attended selected presentations and seminars during the year. New Board members
are given a task-specific introduction to their activities. At a one-day introduction, they are provided with an over-
view of Group management and the current operational challenges. They are also given an in-depth look at topics
related to the Italian subsidiary Fastweb and attend task-related training sessions. Whenever possible, the Board of
Directors attends the Swisscom Group’s annual management meeting.
See
www.swisscom.ch/
basicprinciples
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The following table gives an overview of the Board of Directors’ meetings, conference calls and circular resolutions
in 2017.
Meetings
Conference calls
Circular resolutions
Total
Average duration (in hours)
Participation:
Hansueli Loosli, Chairman
Roland Abt
Valérie Berset Bircher
Alain Carrupt
Frank Esser
Barbara Frei
Catherine Mühlemann
Theophil Schlatter, Deputy Chairman
Renzo Simoni 1
Hans Werder 2
1 Elected to the Board of Directors as of 3 April 2017.
2 Resigned from the Board of Directors as of 3 April 2017.
4.6 Chairman of the Board of Directors
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5:30
12
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12
12
12
11
12
12
9
2
1
0:15
1
1
1
1
1
1
1
1
1
0
–
–
–
–
–
–
–
–
–
–
–
–
–
See
www.swisscom.ch/
basicprinciples
Hansueli Loosli has been a member of the Board of Directors since 2009 and Chairman of the Board since Septem-
ber 2011. The powers and responsibilities of the Chairman are defined in the Organisational Rules. In the event
that the Chairman of the Board of Directors is unavailable, the Vice-Chairman, Theophil Schlatter, assumes his
powers and responsibilities.
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See
www.swisscom.ch/
basicprinciples
4.7 Committees of the Board of Directors
The Board of Directors has three standing committees (Audit, Finance and Compensation) and one ad-hoc com-
mittee (Nomination) tasked with carrying out detailed examinations of matters of importance. The committees
usually consist of three to six members. As a rule, every member of the Board of Directors always also sits on at
least one of the standing committees. Subject to being appointed to the Compensation Committee (without
voting rights), the Chairman of the Board of Directors is a member of all the standing committees. The commit-
tees are chaired by other members, however. At the following meeting of the Board of Directors, the chairs of the
committees report verbally on the latest committee meetings. All members of the Board of Directors also receive
copies of all Finance and Audit Committee meeting minutes. The minutes of the Compensation Committee are
provided to the other members of the Board of Directors upon request.
Finance Committee
The Finance Committee prepares information for the Board of Directors on corporate transactions, for example,
in connection with setting up or dissolving significant Group companies, acquiring or disposing of significant
shareholdings, and entering into or terminating strategic alliances. The Committee also acts in an advisory capacity
on matters relating to major investments and divestments. The Finance Committee has the ultimate decision-
making authority when it comes to issuing rules of procedure and directives in the areas of Mergers & Acquisitions and
Corporate Venturing. Details of the Committee’s activities are set out in the Finance Committee rules of procedure.
The Finance Committee is convened by the Chairman or at the request of a Committee member as often as business
requires, but as a rule once per quarter. The CEO, the CFO and the Head of Group Strategy and Board Services
attend meetings of the Finance Committee. Depending on the agenda item, other members of the Group Executive
Board, the Management Boards of the strategic Group companies and project managers are called upon, as appro-
priate, to also attend the meetings.
The following table gives an overview of the Finance Committee’s composition, meetings, conference calls and
circular resolutions in 2017.
Total
Average duration (in hours)
Participation:
Frank Esser, Chairman
Alain Carrupt
Catherine Mühlemann
Renzo Simoni 1
Hansueli Loosli
1 Elected to the Board of Directors as of 3 April 2017.
Meetings
Conference calls
Circular resolutions
3
3:35
3
3
3
3
3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
See
www.swisscom.ch/
basicprinciples
Audit Committee
The Audit Committee handles all business relating to financial management (for example, accounting, financial
controlling, financial planning and financing), assurance (risk management, the internal control system, compli-
ance and the internal audit) and the external audit. It also handles matters dealt with by the Board of Directors
that call for specific financial expertise (dividend policy, for example). The Committee is the Board of Directors’
most important controlling instrument and is responsible for monitoring the Group-wide assurance functions. It
formulates positions on business matters which lie within the decision-making authority of the Board of Directors
and has the final say on those business matters for which it has the corresponding competence. Details of the
Committee’s activities are set out in the Audit Committee rules of procedure.
The Chairman and one other member of the Committee are experts in the financial field, and the majority of the
remaining Committee members are experienced in finance and accounting. The Audit Committee is convened by
the Chairman or at the request of a Committee member as often as business requires, but at least once per quarter.
The CEO, CFO, Head of Group Strategy & Board Services, Head of Accounting, Head of Internal Audit and the
external auditors attend the Audit Committee meetings. Depending on the agenda, other members of Swisscom
management are called upon to attend. The Audit Committee can also involve independent third parties such as
lawyers, public accountants and tax experts as required.
The following table gives an overview of the Audit Committee’s composition, meetings, conference calls and circu-
lar resolutions in 2017.
Total
Average duration (in hours)
Participation:
Theophil Schlatter, Chairman 1
Roland Abt 1
Valérie Berset Bircher
Hans Werder 2
Hansueli Loosli
1 Financial expert.
2 Resigned from the Board of Directors as of 3 April 2017.
Meetings
Conference calls
Circular resolutions
5
4:55
5
5
5
1
5
1
0:30
1
1
1
1
1
–
–
–
–
–
–
–
See report
page 81
Compensation Committee
For information on the Compensation Committee, refer to the section “Remuneration Report”.
Nomination Committee
The Nomination Committee is formed on an ad-hoc basis for the purpose of preparing the groundwork for electing
new members to the Board of Directors and the Group Executive Board when needed. The Committee is presided
over by the Chairman and its composition is determined on a case-by-case basis. The Committee carries out its
work based on a specific requirements profile defined by the Board of Directors and presents suitable candidates
to the Board of Directors. The Board of Directors appoints the members of the Group Executive Board or decides
upon the motion to be submitted to the Annual General Meeting for the election and approval of members of the
Board of Directors. A Nomination Committee comprising the following members was formed in the 2017 financial
year: Hansueli Loosli (Chair), Valérie Berset Bircher and Frank Esser. The Committee held two meetings lasting an
average of two hours and twenty minutes.
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4.8 Assignment of powers of authority
The Telecommunications Enterprise Act (TEA) makes reference to the Swiss Code of Obligations regarding the
non-transferable and irrevocable duties of the Board of Directors of Swisscom Ltd. Pursuant to Article 716a of the
Code of Obligations, the Board of Directors is responsible first and foremost for the overall management and
supervision of persons entrusted with managing the company’s operations.
It decides on the appointment and removal of members of the Group Executive Board. The Board of Directors also
determines the strategic, organisational, financial planning and accounting guidelines, taking into account the
goals that the Swiss Confederation, as majority shareholder, aims to achieve. The Swiss Federal Council formulates
these goals for a four-year period in accordance with the provisions of the TEA.
The Board of Directors has delegated day-to-day business management to the CEO in accordance with the TEA
and the Articles of Incorporation. In addition to its statutory duties, the Board of Directors decides on business
transactions of major importance to the Group, including, for example, the acquisition or disposal of companies
with a financial exposure in excess of CHF 20 million and investments or divestments with a financial exposure in
excess of CHF 50 million. The division of powers between the Board of Directors and the CEO is set out in detail in
the Organisational Rules and in Annex 2 to the Organisational Rules, “Rules of Procedure and Accountability” (see
function table).
See
www.swisscom.ch/
targets_2018-2021
See
www.swisscom.ch/
basicprinciples
4.9 Information and controlling instruments of the Board of Directors vis-à-vis the Group Executive Board
The Board of Directors is briefed comprehensively so it can fulfil its powers and responsibilities. The Chairman of
the Board of Directors and the CEO meet at least once a month to discuss fundamental issues concerning
Swisscom Ltd and its Group companies. The Chairman also meets in person with each member of the Group Exec-
utive Board as well as the heads of other Group and business divisions once a year for an in-depth discussion of
topical issues.
At every ordinary meeting of the Board of Directors, the CEO also provides the Board of Directors with detailed
information on the course of business, major projects and events, and any measures adopted. Every month, the
Board of Directors receives a report containing all key performance indicators relating to the Group and the seg-
ments. In addition, the Board of Directors receives a quarterly report on the course of business, financial position,
results of operations, cash flows and risk position of the Group and the segments. It also receives projections for
operational and financial developments for the current financial year. The management reporting is carried out in
accordance with the same accounting principles and standards as external financial reporting. It also includes key
non-financial information that is important for controlling and steering purposes. Every member of the Board of
Directors is entitled to request information on all matters relating to the Group at any time, provided this does not
conflict with the provisions regarding the reclusion of a member from Board deliberations or confidentiality obli-
gations. The Board of Directors is informed immediately of any events of an exceptional nature.
The Board of Directors is responsible for establishing and monitoring the Group-wide assurance functions of risk
management, internal control system, compliance and internal audit and is briefed comprehensively on these
matters.
4.9.1 Risk management
The Board of Directors has set the objective of protecting the company’s enterprise value through the implemen-
tation of Group-wide risk management. A corporate culture that promotes the conscious handling of risks and
opportunities facilitates the achievement of this objective. Accordingly, Swisscom has implemented a Group-
wide, central risk management system which takes account of both external and internal events. It captures risks
in the areas of strategy (including market risks), operations (including finance risks), compliance and financial
reporting. Swisscom engages in level-appropriate, comprehensive reporting and maintains the appropriate docu-
mentation. The objective is to identify, assess and address significant risks and opportunities in good time. To this
end, the central Risk Management unit, which reports to both the CFO and the Controlling department, collabo-
rates closely with the Controlling department, the Strategy department, other assurance functions and line func-
tions. Swisscom assesses its risks and their quantitative effects in the event that the risks crystallise. The risks are
managed on the basis of a risk strategy. The risks are evaluated in terms of their impact on key performance indi-
cators. Swisscom reviews and updates its risk profile on a quarterly basis. The Audit Committee and the Group
Executive Board are informed about significant risks, their potential effects and the status of remedial measures
on a quarterly basis, and the Board of Directors on a semi-annual basis. In urgent cases, the Chairman of the Audit
Committee is informed without delay about any significant new risks. Significant risk factors are described in the
Risks section of the Management Commentary.
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See report
pages 53—54
4.9.2 Internal control system and financial reporting
The internal control system (ICS) ensures the reliability of financial reporting with an appropriate degree of assur-
ance. It acts to prevent, uncover and correct substantial errors in the consolidated financial statements, the finan-
cial statements of the Group companies and the Remuneration Report. The ICS encompasses the following inter-
nal control components: control environment, assessment of financial statement accounting risks, control
activities, monitoring activities, information and communication. The Accounting unit, which is attached to
Group Business Steering, and Internal Audit periodically monitor the functioning and effectiveness of the ICS.
Significant shortcomings in the ICS identified during the monitoring activities are reported together with the
corrective measures in a status report to the Audit Committee twice a year and to the Board of Directors on an
annual basis. Should the ICS risk assessment change significantly, the Chairman of the Audit Committee is
informed in a timely manner. Corrective measures to remedy the shortcomings are monitored centrally. The Audit
Committee assesses the performance and effectiveness of the ICS on the basis of the periodic reporting.
4.9.3 Compliance Management
The Board of Directors has set the objective of safeguarding the Swisscom Group and its executive bodies and
employees from legal sanctions, financial losses and reputational damage by ensuring Group-wide compliance. A
corporate culture which promotes the willingness to behave in a way that complies with the relevant regulations
facilitates the achievement of this objective. Swisscom has therefore implemented a Group-wide, central compli-
ance system. Within the framework of this system, every year Group Compliance, a specialist unit of the Group
legal department, applies a risk-based approach towards identifying areas of legal compliance that require moni-
toring by the central system. Within these areas of legal compliance, the business activities of the Group compa-
nies are reviewed periodically in a proactive manner in order to identify risks in good time and determine the
required measures. The employees affected are informed of these measures and their implementation is moni-
tored. Group Compliance reviews the suitability and effectiveness of the system annually. In certain areas, an
annual audit of the implemented measures is also performed by external auditors (financial intermediation in
accordance with the Money Laundering Act). Group Compliance reports to the Audit Committee and the Board of
Directors once per year on its activities and risk assessments. Should there be significant changes in the risk
assessment or if serious breaches are identified, the Chairman of the Audit Committee is informed in a timely
manner.
4.9.4 Internal audit
Internal auditing is carried out by the Internal Audit unit. Internal Audit supports the Swisscom Ltd Board of Directors
and its Audit Committee in fulfilling their statutory and regulatory supervisory and controlling obligations. Internal
Audit also supports management by highlighting areas of potential for improving business processes. It documents
the audit findings and monitors the implementation of measures.
Internal Audit is responsible for planning and performing audits throughout the Group in compliance with profes-
sional auditing standards. It conducts an objective evaluation and audit of the appropriateness, efficiency and
effectiveness of, in particular, the governance and control systems of the operational processes as well as the
assurance functions of risk management, the internal control system and compliance management in all organi-
sational units of the Swisscom Group.
Internal Audit possesses maximum independence. It is under the direct control of the Chairman of the Board of
Directors and reports to the Audit Committee. At its meetings, which are held at least on a quarterly basis, the
Audit Committee is briefed on audit findings and the status of any corrective measures implemented. In addition
to ordinary reporting, Internal Audit informs the Audit Committee of any irregularities which come to its atten-
tion. At an administrative level, Internal Audit provides reports to the Head of Group Strategy & Board Services.
Internal Audit liaises closely and exchanges information with the external auditors. The external auditors have
unrestricted access to the audit reports and audit documents of Internal Audit. Internal Audit closely coordinates
audit planning with the external auditors. The integrated strategic audit plan, which includes the coordinated
annual plan of both the internal and external auditors, is prepared annually on the basis of a risk analysis and
presented to the Audit Committee for approval. Independently of this audit, the Audit Committee can commis-
sion special audits based on information received on the whistle-blowing platform operated by Internal Audit. This
reporting procedure approved by the Audit Committee ensures the anonymous and confidential receipt and han-
dling of objections raised relating to external reporting, financial reporting and assurance function issues. The
Chairman of the Board of Directors and the Chairman of the Audit Committee are informed of notifications
received and a report is drawn up on a quarterly basis for the Audit Committee.
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5 Group Executive Board
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5.1 Members of the Group Executive Board
In accordance with the Articles of Incorporation, the Executive Board shall comprise one or more members, who
must not be members of the Board of Directors of Swisscom Ltd at the same time. Temporary exceptions are only
permitted in exceptional cases. Accordingly, the Board of Directors has delegated responsibility for the overall
executive management of Swisscom Ltd to the CEO. The CEO is entitled to delegate his powers to subordinates,
for the main part to other members of the Group Executive Board. The members of the Group Executive Board are
appointed by the Board of Directors. In June 2017, Christian Petit left the Group Executive Board, at which time Urs
Lehner took over as Head of Enterprise Customers.
An overview of the composition of the Group Executive Board as at 31 December 2017 is given in the table below.
See report
page 57
Name
Urs Schaeppi 1
Mario Rossi
Hans C. Werner
Marc Werner
Urs Lehner
Heinz Herren
Nationality
Switzerland
Switzerland
Switzerland
Switzerland and France
Switzerland
Switzerland
Dirk Wierzbitzki
Germany
1 Since November 2013 CEO.
Year of birth
Function
Appointed to the
Group Executive Board as of
1960
1960
1960
1967
1968
1962
1965
CEO Swisscom Ltd
CFO Swisscom Ltd
CPO Swisscom Ltd
Head of Sales & Services
Head of Enterprise Customers
Head of IT, Network & Infrastructure
Head of Products & Marketing
March 2006
January 2013
September 2011
January 2014
June 2017
January 2014
January 2016
5.2 Education, professional activities and affiliations
Details of the careers and qualifications of the members of the Group Executive Board are provided below along
with a summary of the mandates they hold outside the Group and other significant activities. Pursuant to the
Articles of Incorporation, the Group Executive Board members may perform no more than one additional man-
date in listed companies and no more than two additional mandates in non-listed companies. In total, they may
not perform more than two such additional mandates. These restrictions on the number of mandates do not
apply to mandates performed by an Executive Board member by order of Swisscom or to mandates in interest
groups, charitable associations, institutions and foundations or employee retirement-benefit foundations. How-
ever, the total number of these mandates is limited to ten and seven respectively. Prior to accepting new man-
dates outside the Swisscom Group, the members of the Group Executive Board are obligated to obtain the
approval of the Chairman of the Board of Directors. Details on the regulation of external mandates, in particular
the definition of the term “mandate” and information on other mandates that do not fall under the aforemen-
tioned numerical restrictions for listed and non-listed companies, are set out in Article 8.3 of the Articles of
Incorporation.
None of the members of the Group Executive Board exceed the set limits for mandates.
See
www.swisscom.ch/
basicprinciples
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Mario Rossi
Education: Commercial apprenticeship; Swiss Certified
Public Accountant
Career history: 1998–2002 Swisscom Ltd, Head of
Group Controlling; 2002–2006 Swisscom Fixnet Ltd,
Chief Financial Officer (CFO); 2006–2007 Swisscom Ltd,
CFO and member of the Group Executive Board; 2007–
2009 Fastweb S.p.A., CFO; 2009–2012 Swisscom (Swit-
zerland) Ltd, CFO; since January 2013 Swisscom Ltd,
CFO and member of the Swisscom Group Executive
Board
Mandates by order of Swisscom: Vice-President of the
Board of Trustees, comPlan, Berne
Mandates in interest groups, charitable associations,
institutions and foundations, and employee benefit
foundations: Member of the Foundation Board of the
Hasler Foundation, Berne
Other significant activities: Member of the Sanctions
Committee, SIX Swiss Exchange Ltd, Zurich
Urs Schaeppi
Education: Degree in engineering (Dipl. Ing. ETH) and
business administration (lic. oec. HSG)
Career history: 1994–1998 plant manager at Biberist
paper factory; 1998–2006 Head of Commercial Busi-
ness, Swisscom Mobile; 2006–2007 CEO, Swisscom
Solutions Ltd; 2007–August 2013 Head of Enterprise
Customers, Swisscom (Switzerland) Ltd; since Janu-
ary 2013 Head of Swisscom (Switzerland) Ltd; 23 July–
6 November 2013 acting CEO, Swisscom Ltd, since
7 November 2013 CEO
Since March 2006 member of the Swisscom Group
Executive Board
Mandates by order of Swisscom: Member of the Exec-
utive Board, Association Suisse des Télécommunica-
tions (asut), Berne; member of the Foundation Board,
IMD International Institute for Management Develop-
ment, Lausanne; member of the Foundation Council,
Swiss Innovation Park Foundation, Berne; member of
the Board of Directors, Admeira AG, Berne; member of
the Board of Trustees of the Swiss Entrepreneurs Foun-
dation, since December 2017
Other significant activities: Member of the Board of
Directors, Swiss-American Chamber of Commerce,
Zurich; member of the Executive Board, Glasfasernetz
Schweiz, Berne; member of the Advisory Board of the
Department of Economics of the University of Zurich;
member of the Steering Committee of digitalswitzer-
land, Zurich (formerly Digital Zurich 2025); member of
the Advisory Board on Digital Transformation for the
Federal Department of the Environment, Transport,
Energy and Communications (DETEC) and the Federal
Department of Economic Affairs, Education and
Research (EAER), since June 2017
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Hans C. Werner
Education: Graduate in business management, PhD in
business administration (Dr. oec.)
Career history: 1997–1999 Kantonsschule Büelrain,
Winterthur, Rector; 1999–2007 Swiss Re: 1999–2000
Head of Technical Training and Business Training, 2001
Divisional Operation Officer, Reinsurance & Risk Divi-
sion, 2002–2003 Head of Human Resources (HR) Cor-
porate Centre and HR Shared Services, 2003–2007
Head of Global HR; 2007–2009 Schindler Aufzüge AG,
Head of HR and Training; 2010–2011 Europe North and
East Schindler, HR Vice President; since September
2011 Swisscom Ltd, Chief Personnel Officer (CPO) and
member of the Swisscom Group Executive Board
Mandates by order of Swisscom: Member of the Board,
Swiss Employer’s Association, Zurich; member of the
Board of Trustees, comPlan, Berne
Other significant activities: President of the Institute
Council and member of the Advisory Board of the Inter-
national Institute of Management in Technology (iimt)
Marc Werner
Education: Technical apprenticeship with specialised
secondary school diploma, Swiss Certified Marketing
Executive; Senior Management Programme (University
of St. Gallen); Senior Executive Programme at London
Business School
Career history: 1997–2000 Minolta (Schweiz) AG, Head
of Marketing and Sales and member of the Executive
Management; 2000–2004 Bluewin AG, Head of Mar-
keting & Sales, member of the Executive Board; 2005–
2007 Swisscom Fixnet Ltd, Head of Marketing & Sales
Residential Customers; 2008–2013 Swisscom (Switzer-
land) Ltd: 2008–2011 Head of Marketing & Sales Resi-
dential Customers and Deputy Head of Residential
Customers, 2012–2013 Head of Customer Service Resi-
dential Customers and Deputy Head of Residential
Customers, September 2013–December 2015 Head of
Residential Customers division, since January 2016
Head of Sales & Services and since January 2014 mem-
ber of the Swisscom Group Executive Board
Mandates in non-listed companies: Member of the
Board of Directors of Net-Metrix AG, Zurich, until
March 2017
Mandates by order of Swisscom: Chairman of the
Board of Directors, siroop AG, Zurich; member of the
Board of Directors, Digital Festival AG, since September
2017
Mandates in interest groups, charitable associations,
institutions and foundations, and employee benefit
foundations: Member of the Board of Directors of simsa
– Swiss Internet Industry Association, Zurich, until April
2017
Other significant activities: Member of the Communi-
cations Council of KS/CS – Communication Switzer-
land (formerly the Verband SW Schweizer Werbung),
Zurich; member of the Executive Board of the SWA-
ASA – Association of Swiss Advertisers, Zurich; mem-
ber of the Executive Board of the SVC Swiss Venture
Club
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Urs Lehner
Education: Degree in IT Engineering (UAS, university of
applied sciences), Executive MBA in Business Engineering,
University of St. Gallen (HSG)
Career history: 1997–2013 Trivadis Group, most
recently: 2004–2008 Solution Portfolio Manager,
member of the Group Executive Board of Trivadis
Group, 2008–2011 Chief Operating Officer (COO) of
Trivadis Group, 2011–2013 member of the Board of
Directors of Trivadis Holding AG; July 2011–June 2017
Swisscom (Switzerland) Ltd: July 2011–December 2013
Head of Marketing & Sales Corporate Business, 2014–
2015 Head of Marketing & Sales Enterprise Customers,
2016–June 2017 Head of Sales & Services Enterprise
Customers; since June 2017 Swisscom, Head of Enter-
prise Customers and member of the Group Executive
Board
Mandates: –
Other significant activities: –
Dirk Wierzbitzki
Education: Degree in electrical engineering (Dipl. Ing.)
Career history: 1994–2001 Mannesmann (now Voda-
fone Germany): various management roles in the area
of product management; 2001–2010 Vodafone Group:
2001–2003 Director for
Innovation Management,
Vodafone Global Products and Services, 2003–2006
Director for Commercial Terminals, 2006–2008 Direc-
tor for Consumer Internet Services and Platforms,
2008–2010 Director for Communications Services;
2010–2015 Swisscom (Switzerland) Ltd: member of
Management Residential Customers, 2010–2012 Head
of Customer Experience Design for Residential Cus-
tomers, 2013–2015 Head of Fixed-network Business &
TV for Residential Customers; since January 2016,
Swisscom, Head of Products & Marketing and member
of the Swisscom Group Executive Board
Mandates by order of Swisscom: Member of the Board
of Directors, SoftAtHome, Paris
Other significant activities: –
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Heinz Herren
Education: Degree in electronic engineering (HTL)
Career history: 1994–2000 3Com Corporation; 2000
Inalp Networks Inc.; 2001–2007 Swisscom Fixnet AG:
2001–2005 Head of Marketing Wholesale, 2005–2007
Head of Small and Medium-Sized Enterprises; 2007–
December 2012 Swisscom, member of the Group Exec-
utive Board; 2007–2013 Swisscom (Switzerland) Ltd:
2007–2010 Head of Small and Medium-Sized Enter-
prises, 2011–2013 Head of Network & IT; since January
2014 Swisscom, Head of IT, Network & Infrastructure
(formerly IT, Network & Innovation) and member of
the Group Executive Board
Mandates in non-listed companies: Member of the
Board of Directors, Schweizerische Mobiliar Genossen-
schaft, Berne, since May 2017
Mandates by order of Swisscom: Member of the Board
of Directors, Belgacom International Carrier Services S.A.,
Brussels; member of the Board of Directors and Execu-
tive Board of economiesuisse, since August 2017
Other significant activities: –
5.3 Management agreements
Neither Swisscom Ltd nor any of the Group companies included in the scope of consolidation have entered into
management agreements with third parties.
6 Remuneration, shareholdings and loans
See report
page 81
All information on the remuneration of the Board of Directors and the Group Executive Board of Swisscom Ltd is
provided in the separate Remuneration Report.
7 Shareholders’ participation rights
7.1 Voting right restrictions and proxies
Each registered share entitles the holder to one vote. Voting rights can only be exercised if the shareholder is
entered in the share register of Swisscom Ltd with voting rights. The Board of Directors may refuse to recognise an
acquirer of shares as a shareholder or beneficial holder with voting rights if the latter’s total holding, when the
new shares are added to any voting shares already registered in its name, exceeds the limit of 5% of all registered
shares entered in the commercial register. With the other shares, the acquirer is entered in the share register as a
shareholder or beneficial holder without voting rights. This restriction on voting rights also applies to registered
shares acquired through the exercise of subscription, option or conversion rights. A Group clause applies to the
calculation of the percentage restriction.
The 5% voting right restriction does not apply to the Swiss Confederation which, under the terms of the Tele-
communications Enterprise Act (TEA), holds the capital and voting majority of Swisscom Ltd. The Board of Directors
may also recognise an acquirer of shares with more than 5% of all registered shares as a shareholder or beneficial
holder with voting rights, in particular in the following exceptional cases:
> Where shares are acquired as a result of a merger or business combination
> Where shares are acquired as a result of a non-cash contribution or an exchange of shares
> Where shares are acquired with a view to cementing a long-term partnership or strategic alliance
In addition to the percentage restriction on voting rights, the Board of Directors may refuse to recognise and enter
as a shareholder or beneficial holder with voting rights any person acquiring shares who fails to expressly declare
upon request that he/she has acquired the shares in his/her own name and for his/her own account or as beneficial
holder. Should an acquirer of shares refuse to make such a declaration, he/she will be entered as a shareholder
without voting rights.
Where an entry has been made on the basis of false statements by the acquirer, the Board of Directors may, after
consulting the party concerned, delete their share register entry as a shareholder with voting rights and enter
him/her as a shareholder without voting rights. The acquirer must be notified of the deletion immediately.
The restrictions on voting rights provided for in the Articles of Incorporation may be changed by resolution of the
Annual General Meeting, for which an absolute majority of valid votes cast is required.
During the year under review, the Board of Directors did not recognise any acquirers of shares with more than 5%
of all registered shares as a shareholder or beneficial holder with voting rights, did not reject any requests for
recognition or registration and did not remove any shareholders with voting rights from the share register due to
the provision of false data.
7.2 Statutory quorum requirements
The Annual General Meeting of Shareholders of Swisscom Ltd adopts its resolutions and holds its elections by the
absolute majority of valid votes cast. Abstentions are not deemed to be votes cast. In addition to the special quorum
requirements under the Swiss Code of Obligations, the Articles of Incorporation require a two-thirds majority of
the voting shares represented in the following cases:
> Introduction of restrictions on voting rights
> Change in the Articles of Incorporation concerning special quorums for resolutions
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7.3 Convocation of the Annual General Meeting and agenda items
The Board of Directors must convene the Annual General Meeting at least 20 calendar days prior to the date of the
meeting by means of an announcement in the Swiss Commercial Gazette. The meeting can also be convened by
registered or unregistered letter to all registered shareholders. One or more shareholders who together represent
at least 10% of the share capital can demand in writing that an extraordinary general meeting be convened,
stating the agenda item and the proposal and, in the case of elections, the names of the proposed candidates.
The Board of Directors is responsible for defining the agenda. Shareholders representing shares with a par value
of at least CHF 40,000 may request that an item be placed on the agenda. This request must be submitted in
writing to the Board of Directors at least 45 days prior to the Annual General Meeting, stating the agenda item
and the proposal (Article 5.4.3 of the Articles of Association).
See
www.swisscom.ch/
basicprinciples
7.4 Representation at the Annual General Meeting
Shareholders may be represented at the Annual General Meeting by another shareholder with voting rights or by
the independent proxy elected by the Annual General Meeting. The law firm Reber Rechtsanwälte, Zurich, was
appointed as independent proxy for the period up until the conclusion of the General Annual Meeting in April 2018.
Partnerships and legal entities may be represented by authorised signatories, while minors and wards may be
represented by their legal representative even if the latter is not a shareholder.
Authorisation may be granted in writing or electronically via the shareholders’ platform operated by Computer-
share Switzerland Ltd. Shareholders who are represented by a proxy may issue instructions for each agenda item
and also for all unannounced agenda items and motions, stating whether they wish to vote for or against the
motion or abstain. The independent proxy must cast the votes entrusted to him by shareholders according to their
instructions. If it receives no instructions, it shall abstain. Abstentions are not deemed to be cast votes (Article 5.7.4
of the Articles of Incorporation).
7.5 Entries in the share register
Shareholders entered in the share register with voting rights are entitled to vote at the Annual General Meeting.
To ensure due procedure, the Board of Directors defines a cut-off date at its own discretion for determining voting
entitlements, which is a few business days before the respective Annual General Meeting. Entries into and dele-
tions from the share register can be made at any time regardless of the cut-off date. The cut-off date is announced
with the invitation to the Annual General Meeting and also published in the financial calendar on the Swisscom
website. Shareholders entered in the share register with voting rights as of 4 p.m. on 29 March 2017 were entitled
to vote at the Annual General Meeting of 3 April 2017.
8 Change of control and defensive measures
Under the terms of the Telecommunications Enterprise Act (TEA), the Swiss Confederation must hold the majority
of the capital and voting rights in Swisscom Ltd. This requirement is also set out in the Articles of Incorporation.
There is thus no duty to submit a takeover bid as defined in the Federal Act on Stock Exchanges and Securities
Trading, since this would contradict the TEA.
Details on clauses on change of control are given in the section “Remuneration Report”.
See report
page 91
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9 Auditor
9.1 Selection process, duration of mandate and term of office of the Auditor-in-charge
The statutory auditor is appointed annually by the Annual General Meeting following a proposal submitted by the
Board of Directors. Re-election is permitted. The policies for appointing the statutory auditor have been set forth
in a policy by the Board of Directors. A new tender is issued for the statutory auditor’s mandate at least every 10 to
14 years. The statutory auditor’s tenure is limited to 20 years. The Audit Committee steers the selection process,
defines transparent selection criteria and submits two proposals accompanied by a substantiated recommenda-
tion in favour of one audit firm to the Board of Directors. The last tendering process was launched in 2007 with
effect from the 2008 financial year. The Board of Directors of Swisscom Ltd has decided to issue a new tender for
the statutory auditor’s mandate in 2018 with effect from the 2019 financial year.
KPMG AG, Muri bei Bern, has acted as the statutory auditor of Swisscom Ltd and its Group companies (with the
exception of Fastweb S.p.A, which is audited by PriceWaterhouseCoopers S.p.A.) since 1 January 2004.
As regulated by the Swiss Code of Obligations, the person who leads the audit may only perform the mandate for
a maximum of seven years. Hanspeter Stocker of KPMG AG has been responsible for the audit mandate as Auditor-
in-charge since 2015.
9.2 Audit fees
Remuneration for the auditing services provided by KPMG AG in 2017 amounted to CHF 2,843 thousand (previous
year: CHF 3,239 thousand). PricewaterhouseCoopers S.p.A. as auditors for Fastweb received an audit fee of
CHF 671 thousand in 2017 (prior year: CHF 768 thousand).
9.3 Supplementary fees
The fees owed to KPMG AG for additional audit-related services amounted to CHF 388 thousand (previous year:
CHF 283 thousand), and the fees for other services were CHF 121 thousand (prior year: CHF 127 thousand). The
audit-related services comprise certifications of electronic signatures, special reviews and reporting-related advisory
services. The other services comprise tax advising and consulting services regarding regulatory requirements.
The fees owed to PricewaterhouseCoopers S.p.A. for additional audit-related and other services for Fastweb amounted
to CHF 319 thousand (prior year: CHF 112 thousand).
9.4 Supervision and controlling instruments vis-à-vis the auditors
The Audit Committee verifies the qualifications and independence of the statutory auditors as a licensed, state-
supervised auditing firm as well as the quality of the audit services performed as commissioned by the Board of
Directors. It is also responsible for observing the statutory rotation principle for the Auditor-in-charge and for
reviewing and issuing the new tender for the audit mandate. It approves the integrated strategic audit plan, which
includes the annual audit plan of both the internal and external auditors, and the annual fee for the auditing services
provided to the Group and Group companies. The Audit Committee has defined guidelines for additional service man-
dates (including a list of prohibited services). In a regulation, it has also set a threshold for fees charged for additional
services, which is defined as a percentage of the audit fees. In order to ensure the independence of the auditors,
additional service mandates must be approved by the CFO of the local Group company or by the Audit Committee
(where the fee exceeds CHF 300 thousand). The Audit Committee is reported to quarterly by the CFO and annually
by the auditors on current mandates being performed by the auditors, broken down according to audit services,
audit-related services and non-audit services.
The statutory auditors, represented by the Auditor-in-charge and his deputy, usually attend all Audit Committee
meetings. They inform the Committee in detail on the performance and results of their work, in particular regard-
ing the annual financial statement audit. They submit a written report to the Board of Directors and the Audit
Committee on the conduct and results of the audit of the annual financial statements, as well as on their findings
with regard to accounting and the internal control system. The Chairman of the Audit Committee liaises closely
with the Auditor-in-charge beyond the meetings of the Committee and regularly reports to the Board of Directors.
The statutory auditors and Internal Audit took part in all five meetings of the Audit Committee in 2017. They did
not participate in the meetings of the full Board of Directors.
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10 Information policy
Swisscom pursues an open, active information policy vis-à-vis the general public and the capital markets. It publishes
comprehensive, consistent and transparent financial information on a quarterly basis. It also publishes an annual
sustainability report in accordance with the Global Reporting Initiative (GRI) and an annual report including a
management commentary, corporate governance report, remuneration report and the financial statements. The
interim reports and annual report are available on the Swisscom website under “Investors” or may be ordered
directly from Swisscom. The Sustainability Report is available on the Swisscom website under “Company”.
See
www.swisscom.ch/
financialreports
See
www.swisscom.ch/
cr-report2017
Swisscom meets investors regularly throughout the year, presents its financial results at analysts’ meetings and
road shows, attends selected conferences for financial analysts and investors, and keeps its shareholders continuously
informed about its business through press releases.
Related presentations and the ad-hoc press release published by Swisscom are available on the Swisscom website
under “Investors”. It is possible to subscribe to the ad-hoc messages published by Swisscom.
See
www.swisscom.ch/adhoc
See
www.swisscom.ch/
generalmeeting
See report
page 169
The comprehensive minutes of the Annual General Meeting of 3 April 2017 and minutes from past meetings are
available on the Swisscom website.
Those responsible for investor relations can be contacted via the website or by e-mail, telephone or post.
The contact details and address of the head office may be found in the website imprint.
11 Financial calendar
> Annual General Meeting for the 2017 financial year: 4 April 2018, Forum Fribourg, Granges-Paccot
> 1st Quarter Interim Report: 2 May 2018
> Half-year Interim Report: 16 August 2018
> 3rd Quarter Interim Report: 1 November 2018
> Annual Report 2018: February 2019
See
www.swisscom.ch/
financialcalendar
The detailed financial calendar is published on the Swisscom website under “Investors” and is updated on a regular
basis.
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Remuneration Report
Remuneration paid to the Board of Directors and the Group Executive Board is
tied to the generation of sustainable returns and therefore creates an incentive
to achieve long-term corporate success as well as added value for shareholders.
1 Governance
1.1 General principles
The Remuneration Report is based on sections 3.5 and 5 of the annex to the Corporate Governance Directive
issued by SIX Swiss Exchange and Articles 13 to 16 of the Ordinance against Excessive Compensation in Listed
Stock Companies (OaEC). Swisscom implements the requirements of the OaEC and complies with the recommen-
dations of the Swiss Code of Best Practice for Corporate Governance 2014 issued by economiesuisse, the umbrella
organisation representing Swiss business.
Swisscom’s internal principles for determining the level of remuneration are primarily set out in the Articles of
Incorporation, the Organisational Rules and the Regulations of the Compensation Committee. The latest version of
these documents as well as revised or superseded versions can be viewed online on the Swisscom website under
“Basic principles”.
As in previous years, the Remuneration Report will be put to a consultative vote at the Annual General Meeting on
4 April 2018.
See
www.swisscom.ch/
basicprinciples
1.2 Division of tasks between the Annual General Meeting, the Board of Directors and the Compensation
Committee
The Annual General Meeting approves the maximum total remuneration amounts payable to the Board of Directors
and the Group Executive Board for the following financial year upon the motion proposed by the Board of Directors.
Details of the relevant regulation and the consequences of a negative decision by the Annual General Meeting are
set out in Articles 5.7.7 and 5.7.8 of the Articles of Incorporation. Article 7.2.2 of the Articles of Incorporation also
defines the requirements for and the maximum level of the additional amount that can be paid to a member of
the Group Executive Board who is newly appointed during a period for which the Annual General Meeting has
already approved the remuneration.
The Board of Directors approves, inter alia, the personnel and remuneration policy for the entire Group, as well as
the general terms and conditions of employment for members of the Group Executive Board. It sets the remuner-
ation of the Board of Directors and decides on the remuneration of the CEO as well as the total remuneration for
the Group Executive Board. In doing so, it takes into account the maximum amounts approved by the Annual
General Meeting for the remuneration to be paid to the Board of Directors and the Group Executive Board for the
financial year in question.
The Compensation Committee handles all business matters of the Board of Directors concerning remuneration,
submits proposals to the Board of Directors in this context, and, within the framework of the approved total
remuneration, is empowered to decide upon the remuneration of the individual Group Executive Board members
(with the exception of the CEO). Neither the CEO nor the other members of the Group Executive Board are entitled
to participate in meetings at which their remuneration is discussed or decided. The conduct of the members of
the Board of Directors with respect to conflicts of interest is defined in section 2.6 of the Organisational Rules.
The decision-making powers are governed by the Articles of Incorporation, the Organisational Rules of the Board
of Directors and the Regulations of the Compensation Committee.
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See
www.swisscom.ch/
basicprinciples
The table below shows the division of responsibilities between the Annual General Meeting, the Board of Directors
and the Compensation Committee.
Subject
Maximum total amounts for remuneration of the Board of Directors
and Group Executive Board
Additional amount for remuneration of newly appointed
members of the Group Executive Board
Principles for performance-related and equity-participation schemes
Personnel and remuneration policy
Principles underlying retirement-benefit plans and social security payments
Concept of remuneration to members of the Board of Directors
Equity-share and performance-based participation plans of the Group
General terms of employment of the Group Executive Board
Determination of the targets for the variable performance-related salary component
Remuneration of the Board of Directors
Remuneration of the CEO Swisscom Ltd
Total remuneration of the Group Executive Board
Remuneration of the members of the Group Executive Board (excl. CEO)
G 5, 6
1 V stands for preparation and proposal to the Board of Directors.
2 A stands for proposal to the Annual General Meeting.
3 G stands for approval.
4 In the framework of the Articles of Incorporation.
5 In the framework of the maximum total remuneration defined by the Annual General Meeting.
6 In the framework of the total remuneration defined by the Board of Directors.
Remuneration
Committee
Board
of Directors
Annual
General Meeting
V 1
V
V
V
V
V
V
V
V
V
V
V
A 2
A
A
G 4
G
G 4
G 4
G 4
G 4
G 5
G 5
G 5
–
G 3
G
G
–
–
–
–
–
–
–
–
–
–
1.3 Election, composition and modus operandi of the Compensation Committee
The Compensation Committee consists of three to six members. They are elected individually each year by the
Annual General Meeting. If the number of members falls below three, the Board of Directors appoints the missing
member(s) from its midst until the conclusion of the next Annual General Meeting. The Board of Directors
appoints the Chairman of the Compensation Committee, which constitutes itself. If the Annual General Meeting
elects the Chairman of the Board of Directors to the Compensation Committee, he has no voting rights. The Chair-
man of the Board of Directors does not participate in meetings in which discussions take place or decisions are
made with regard to his own remuneration. The CEO, CPO, Head of Group Strategy & Board Services and the Head
of Rewards & HR-Analytics attend the meetings in an advisory capacity, unless the agenda items exclusively con-
cern the Board of Directors or the CEO and CPO, in which case the CEO and CPO are not present. Other members
of the Board of Directors, auditors or experts may be called upon to attend the meetings in an advisory capacity.
Minutes are kept of the meetings, which are provided to the members of the Committee and to other members
of the Board of Directors on request. The meetings of the Compensation Committee are generally held in February,
June and December. Further meetings can be convened as and when required. The Chairman reports verbally on
the activities of the Compensation Committee at the next meeting of the Board of Directors.
The details are governed by Article 6.5 of the Articles of Incorporation, as well as by the Organisational Rules of the
Board of Directors and the Regulations of the Compensation Committee.
The members of the Compensation Committee neither work nor have worked for Swisscom in an executive capacity,
nor do they maintain any significant commercial links with Swisscom Ltd or the Swisscom Group. Customer and
supplier relationships exist between the Swiss Confederation and Swisscom. Details of these are provided in
Note 6.2 to the consolidated financial statements.
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See
www.swisscom.ch/
basicprinciples
See report
page 142
The following table gives an overview of the composition of the Committee, the Committee meetings, conference
calls and circular resolutions held or taken in 2017.
Meetings
Conference calls
Circular resolutions
Total
Average duration (in hours)
Participation:
Barbara Frei, Chairwoman
Frank Esser
Renzo Simoni 1, 2
Theophil Schlatter
Hans Werder 2, 3
Hansueli Loosli 4
1 Elected to the Compensation Committee as of 3 April 2017.
2 Representative of the Confederation.
3 Resigned from the Board of Directors as of 3 April 2017.
4 Participation without voting rights.
3
0:50
3
3
2
3
1
3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2 Remuneration of the Board of Directors
2.1 Principles
See
www.swisscom.ch/
basicprinciples
The remuneration system for the members of the Board of Directors is designed to attract and retain experienced
and motivated individuals for the Board of Directors’ function. It also seeks to align the interests of the members
of the Board of Directors with those of the shareholders. The remuneration is commensurate with the activities
and level of responsibility of each member and is proportionate to the normal market remuneration for compara-
ble functions. The basic principles regarding the remuneration of the Board of Directors and the allocation of
equity shares are set out in Articles 6.4 and 8.1 of the Articles of Incorporation.
The remuneration is made up of a Director’s fee which varies in relation to the member’s function, meeting
attendance fees as well as pension fund and any fringe benefits. No variable performance-related emoluments are
paid. The members of the Board of Directors are obligated to draw a portion of their fee in the form of equity shares
and to comply with the requirements on minimum shareholdings, thus ensuring they directly participate finan-
cially in the performance of Swisscom’s shares. The remuneration is reviewed every December for the following
year for ongoing appropriateness. In December 2016, the Board of Directors assessed the appropriateness of the
remuneration as part of a discretionary decision based on the study published in 2016 by ethos, the Swiss Foun-
dation for Sustainable Development. This study provides information for the 2015 financial year on the remuneration
of the management of Switzerland’s 204 largest listed companies that are constituents of the Swiss Performance
Index. No external consultants were called on with regard to the structuring of remuneration. The Board of Directors
opted not to adjust remuneration for the 2017 financial year.
2.2 Remuneration components
Director’s fee
The Director’s fee is made up of a basic emolument and functional allowances as compensation for the individual
functions. The basic emolument for all members of the Board of Directors excluding employee social insurance
contributions is CHF 110,000 (net) per year.
The functional allowances amount to CHF 255,000 net per year for the Chairman, CHF 20,000 net each for the Vice
Chairman and the Chairmen of the Finance and Compensation Committees, CHF 50,000 net for the Chairman of
the Audit Committee, and CHF 40,000 net for the representative of the Swiss Confederation. Annual remuneration
of CHF 10,000 net is awarded for membership in a standing committee. No functional allowance, however, is paid
for participation in ad-hoc committees appointed on a case-by-case basis.
Under the Management Incentive Plan, the members of the Board of Directors are obligated to draw 25% of their
Director’s fee in the form of shares, with Swisscom adding a 50% top-up to the amount invested in shares. In this
manner, the remuneration (excluding meeting attendance fees, pension fund benefits and fringe benefits) is
made up of a two-thirds cash portion and a one-third equity share portion. The amount of the share purchase obliga-
tion can vary in the case of members who join, leave, assume or give up a function during the year. Shares are allo-
cated on the basis of their value accepted for tax purposes, rounded up to the next whole number of shares, and
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are subject to a blocking period of three years. This restriction on disposal also applies if members leave the com-
pany during the blocking period. The shares, which are allocated in April of each reporting year in respect of the
reporting year, are recorded at market value on the date of allocation. The share-based remuneration is aug-
mented by a factor of 1.19 in order to take account of the difference between the tax value and the market value.
In April 2017, 1,493 shares were allocated to the members of the Board of Directors (prior year: 1,308 shares) with
a tax value of CHF 387 per share (prior year: CHF 439). Their market value was CHF 461 (prior year: CHF 522.50)
per share.
Meeting attendance fees
For meetings, attendance fees of CHF 1,100 net are paid for each full day and CHF 650 net for each half-day.
Pension fund and fringe benefits
Swisscom assumes the costs of social insurance, in particular old-age and survivors’ insurance and unemployment
insurance, for the members of the Board of Directors. The disclosed remuneration paid to the members of the Board
of Directors includes the employee’s share of social insurance contributions. The employer’s share of contributions
is disclosed separately and is also included in the total remuneration.
With regards to the disclosure of service-related and non-cash benefits and expenses, a tax-based point of view is
taken. No significant service-related and non-cash benefits are rendered. Expenses are reimbursed on the basis of
actual costs incurred. Accordingly, neither service-related and non-cash benefits nor out-of-pocket expenses are
included in the reported remuneration.
2.3 Total remuneration
Total remuneration paid to the individual members of the Board of Directors for the 2017 and 2016 financial years
is presented in the tables below, broken down into individual components. The higher amount of total remuner-
ation for 2017 is attributable to the change in the composition of the committees and the fact that a greater
number of meetings were held.
Base salary
and functional allowances
Cash
remuneration
Share-based
payment
Meeting
attendance fees
Employer
contributions
to social security
Total 2017
315
96
96
96
120
112
96
158
90
45
186
57
57
57
71
66
57
93
78
3
28
21
22
18
21
16
18
21
15
5
29
10
10
10
12
11
10
12
10
2
558
184
185
181
224
205
181
284
193
55
1,224
725
185
116
2,250
2017, in CHF thousand
Hansueli Loosli
Roland Abt
Valérie Berset Bircher
Alain Carrupt
Frank Esser
Barbara Frei
Catherine Mühlemann
Theophil Schlatter
Renzo Simoni 1
Hans Werder 2
Total remuneration to members
of the Board of Directors
1 Elected to the Board of Directors as of 3 April 2017.
2 Resigned from the Board of Directors as of 3 April 2017.
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2016, in CHF thousand
Hansueli Loosli
Roland Abt 1
Valérie Berset Bircher 1
Alain Carrupt 1
Frank Esser 4
Barbara Frei
Hugo Gerber 2, 3
Michel Gobet 3
Torsten Kreindl 3, 4
Catherine Mühlemann
Theophil Schlatter
Hans Werder
Base salary
and functional allowances
Cash
remuneration
Share-based
payment
Meeting
attendance fees
Employer
contributions
to social security
Total 2016
315
59
64
64
112
112
34
32
40
96
158
134
186
49
53
53
70
66
4
4
5
57
93
80
27
11
16
14
19
17
6
5
5
16
21
23
29
7
8
8
11
11
3
2
3
10
12
11
557
126
141
139
212
206
47
43
53
179
284
248
Total remuneration to members
of the Board of Directors 4
1,220
720
180
115
2,235
1 Elected to the Board of Directors as of 6 April 2016.
2 The cash remuneration (including meeting attendance fees) till 6 April 2016 for the mandate as member of the Board of Directors
of Worklink AG of CHF 2,500 is included.
3 Resigned from the Board of Directors as of 6 April 2016.
4 In comparison to last year’s report, remuneration for 2016 was adjusted with regard to compensation for social security contributions made abroad.
Total remuneration paid to the members of the Board of Directors for the 2017 financial year is within the maxi-
mum total amount approved by the 2016 Annual General Meeting (AGM) for 2017 of CHF 2.5 million.
2.4 Minimum shareholding requirement
The members of the Board of Directors are required to maintain a minimum shareholding equivalent to one annual
emolument (basic emolument plus functional allowance). The members of the Board of Directors have four years
to acquire the shareholding, in the form of the blocked shares paid as part of remuneration and, if applicable,
through share purchases on the open market. Compliance with the shareholding requirement is reviewed annually
by the Compensation Committee. If a member’s shareholding falls below the minimum requirement due to a
drop in the share price, the difference must be made up by no later than the time of the next review. In justified
cases such as personal hardship or legal obligations, the Chairman of the Board of Directors can approve individual
exceptions at his discretion.
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2.5 Shareholdings of the members of the Board of Directors
Blocked and non-blocked shares held by members of the Board of Directors and/or related parties as at 31 Decem-
ber 2016 and 2017 are listed in the table below:
Number
Hansueli Loosli
Roland Abt
Valérie Berset Bircher
Alain Carrupt
Frank Esser
Barbara Frei
Catherine Mühlemann
Theophil Schlatter
Renzo Simoni 1
Hans Werder 2
Total shares held by the members of the Board of Directors
1 Elected to the Board of Directors as of 3 April 2017.
2 Resigned from the Board of Directors as of 3 April 2017.
31.12.2017
31.12.2016
2,733
2,350
205
213
213
478
784
1,443
1,419
160
–
7,648
88
96
96
332
648
1,326
1,225
–
1,128
7,289
None of the individuals/entities required to make notification holds voting shares exceeding 0.1% of the share
capital.
3 Remuneration of the Group Executive Board
3.1 Principles
The remuneration policy of Swisscom applicable to the Group Executive Board is designed to attract and retain
highly skilled and motivated specialists and executive staff over the long term and provide an incentive to achieve
a lasting increase in the enterprise value. It is systematic, transparent and long-term-oriented, and is predicated
on the following principles:
> Total remuneration is competitive and is in an appropriate relation to the market as well as the internal salary
structure.
> Remuneration is based on performance in line with the results achieved by Swisscom and the contribution
made to results by the area for which the member of the Group Executive Board is responsible.
> Through direct financial participation in the performance of the Swisscom share, the interests of management
are aligned with the interests of shareholders.
The remuneration of the Group Executive Board is a balanced combination of fixed and variable salary compo-
nents. The fixed component is made up of a base salary, fringe benefits (primarily, the use of a company car) and
pension fund benefits. The variable remuneration includes a performance-related component settled in cash and
shares.
The members of the Group Executive Board are required to hold a minimum shareholding, which strengthens
their direct financial participation in the medium-term performance of the Swisscom share and thus aligns their
interests with those of shareholders. To facilitate compliance with the minimum shareholding requirement,
Group Executive Board members have the possibility to draw up to 50% of the variable performance-related com-
ponent of their salary in shares.
The basic principles regarding the performance-related remuneration and the profit and participation plans of the
Group Executive Board are set out in Article 8.1 of the Articles of Incorporation.
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See
www.swisscom.ch/
basicprinciples
Remuneration
Assets
Instruments
Fixed remuneration
Variable remuneration
Base salary
Pension benefits
Fringe benefits
Performance-related
component in cash
and shares
Minimum shareholding
requirement
Requirement to hold
a minimum amount
of Swisscom shares
Influencing factors
Function, experience
and qualifications,
market
Achievement
of annual performance
targets
Long-term
growth of
enterprise value
Purpose
Employee recruitment,
employee retention
and protection
Focus on annual
targets and sustainable
corporate results
Alignment with
shareholders interests
The Compensation Committee decides at its discretion on the level of remuneration, taking into consideration the
external market value of the function in question, the internal salary structure and individual performance.
For the purpose of assessing market values, Swisscom relies on cross-sector market comparisons with Swiss com-
panies as well as international sector comparisons. These two comparative perspectives allow Swisscom to form
an optimal overview of the relevant employment market for managerial positions. In the year under review,
Swisscom referred to two comparative studies conducted by Towers Watson, a recognised consultancy firm. The
comparison with the Swiss market covers major companies domiciled in Switzerland from various sectors, with
the exception of the financial and pharmaceutical sectors. On average, these companies generate revenue of
CHF 4.7 billion and employ 13,000 people. The sector comparison covers telecommunications companies from
eleven western European countries with an average revenue of CHF 8.9 billion and an average workforce of
18,800 employees. The evaluation of the two comparative studies takes into account the extent of responsibility in
terms of revenue, number of employees and international scope.
As a rule, the Compensation Committee reviews individual remuneration paid to members of the Group Executive
Board every three years of employment. Taking into account the benchmarks, the Board of Directors adjusted the
salaries of two members of the Group Executive Board during the course of the reporting year in order to take the per-
formance of these members into account and to bring the salaries into line with standard market remuneration levels.
3.2 Remuneration components
Base salary
The base salary is the remuneration paid according to the function, qualifications and performance of the individual
member of the Group Executive Board. It is determined based on a discretionary decision taking into account the
external market value for the function and the salary structure for the Group’s executive management. The base
salary is paid in cash.
Variable performance-related salary component
The members of the Group Executive Board are entitled to a variable, performance-related salary component which
represents 70% of the base salary if objectives are achieved (target bonus). The amount of the performance-related
component paid out depends on the extent to which the targets are achieved, as set by the Compensation Commit-
tee, taking into account the performance evaluation by the CEO. If targets are exceeded, up to 130% of the target
bonus may be paid. The maximum performance-related salary component is thus limited to 91% of the base salary.
This ensures that the maximum performance-related salary component does not exceed the annual base salary, even
taking account of the market value of the component paid in shares.
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See report
page 34
Targets for the variable performance-related component
The targets underlying the variable performance-related component are adopted annually in December for the
following year by the Board of Directors following a proposal submitted by the Compensation Committee. The
targets relevant to the reporting year remained largely unchanged in line with the Group’s continuing corporate
strategy. The targets are based on the Swisscom Group’s budget figures for 2017.
All members of the Group Executive Board are measured against targets at the levels “Group”, “Customers” and
“Segments”. Group targets consist of financial targets. Customer targets for the reporting year are measured using
the Net Promoter Score – a recognised indicator of customer loyalty – taking into account the customer group for
which the Group Executive Board member is responsible. Further information on customer satisfaction can be
found in the Management Commentary.
Segment targets are tailored to the relevant function of each Group Executive Board member and consist of finan-
cial and non-financial targets. As in the previous year, these include financial targets for the Italian subsidiary Fast-
web S.p.A. (Fastweb), based on which the Group Executive Board members delegated by Swisscom to Fastweb’s
Board of Directors are measured. The target structure is thus aligned to Swisscom’s strategic priorities: strength-
ening the core business in Switzerland by offering the best infrastructure and customer experiences as well as
through the realisation of new growth opportunities and further developing Fastweb in Italy.
The following table illustrates the target structure valid for the CEO and other Group Executive Board members in
the year under review, showing the three target levels, individual targets and the respective weighting.
Target levels
Objectives
Group
Net revenue
EBITDA margin
Operating free cash flow
Customers
Net promoter score
Segments
Segment targets
Total
Weighting of targets level
CEO
Weighting of targets level
of other members of the
Group Executive Board
18%
18%
24%
20%
20%
100%
12–18%
12–18%
16–24%
20%
20–40%
100%
Achievement of targets
The Compensation Committee determines the level of target achievement in the following year once the consol-
idated financial statements become available. Its decision is based on a quantitative assessment of the extent to
which targets have been met using a scale for the overachievement and underachievement of each target. The
achievement of an individual target can vary from 0% (if the lower limit is not achieved) to 200% (if the upper limit
is exceeded).
Achievement scale for each target
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200%
130%
100%
0%
Payment limited if 130%
of overall targets are met
Lower
limit
At
target
Upper
limit
Measured
performance
Payment of the performance-related salary component is based on individual target achievement and
is limited if 130% of overall targets are met (weighted target achievement across all individual targets).
The overall achievement of targets governing the payment of the performance-related component is calculated
according to the weighting of the individual targets. The payment is limited to a maximum of 130% of the target
bonus. In determining the level of target achievement, the Compensation Committee has a degree of discretion
in assessing the effective management performance, allowing special factors such as fluctuations in exchange
rates to be taken into account. Based on the overall achievement of targets, the Compensation Committee
submits a proposal for approval to the Board of Directors for the amount of the performance-related salary
component to be paid to the Group Executive Board and the CEO.
In the year under review, the financial targets of the Group were on the whole exceeded. The customer targets
were not fully met. Most of the other targets of the segments were achieved.
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The subsequent payment of the performance-related component is 105% of the target bonus for the CEO and
between 102% and 106% of the target bonus for the other members of the Group Executive Board.
Payment of the variable performance-related component
The variable performance-related component is paid in April of the following year, with 25% being paid in the form
of Swisscom shares, in accordance with the Management Incentive Plan. Group Executive Board members may opt
to increase this share by up to a maximum of 50%. The remaining portion of the performance-related component
is settled in cash. In the event of a departure from the Group Executive Board during the course of the year, the
payment of the performance-related component for the current year is generally made in full in cash. The decision
of what percentage of the variable performance-related salary component is to be drawn in the form of shares
must be communicated prior to the end of the reporting year, but no later than in November following the publi-
cation of the third-quarter results. In the year under review, three members of the Group Executive Board opted
for a higher share component. The shares are allocated on the basis of their tax value, rounded up to whole num-
bers of shares, and are subject to a three-year blocking period. This restriction on disposal also applies if the
employment relationship is terminated during the blocking period. The share-based remuneration disclosed in the
year under review is augmented by a factor of 1.19 in order to take account of the difference between the market
value and the tax value. The market value is determined as of the date of allocation. Shares in respect of the cur-
rent year are allocated in April 2018.
In April 2017, a total of 2,121 shares (prior year: 1,841 shares) with a tax value of CHF 387 (prior year: CHF 439) per
share and a market value of CHF 461 (prior year: CHF 522.50) per share were allocated for the 2016 financial year
to the members of the Group Executive Board.
Pension fund and fringe benefits
The members of the Group Executive Board, like all eligible employees in Switzerland, are insured against the risks of
old age, death and disability through the comPlan pension plan (see pension fund regulations at www.pk-complan.
ch). The disclosed pension benefits (amounts which give rise to or increase pension entitlements) encompass all
savings, guarantee and risk contributions paid by the employer to the pension plan. They also include the pro rata
costs of the AHV bridging pension paid by comPlan in the event of early retirement and the premium for the
supplementary life insurance concluded for Swisscom management staff in Switzerland. Further information
about this is provided in Note 4.3 to the consolidated financial statements.
With regards to the disclosure of service-related and non-cash benefits and expenses, a tax-based point of view is
taken. The members of the Group Executive Board are entitled to the use of a company car. The disclosed
service-related and non-cash benefits rendered therefore include an amount for private use of the company car.
Out-of-pocket expenses are reimbursed on a lump-sum basis in accordance with expense reimbursement rules
approved by the tax authorities, and other expenses are reimbursed on an actual cost basis. They are not included
in the reported remuneration.
See report
pages 129—134
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3.3 Total remuneration
The following table shows total remuneration paid to the members of the Group Executive Board for the 2016 and
2017 financial years, broken down into individual components and including the highest amount paid to one
member. In the year under review, the variable performance-related salary component for members of the Group
Executive Board (CHF 2,867 thousand in total) was 76.7% of the base salary (CHF 3,736 thousand in total). The total
remuneration paid to the highest-earning member of the Group Executive Board (CEO, Urs Schaeppi) increased by
1.9% compared to the prior year. The increase in total remuneration paid to the Group Executive Board and the
CEO is primarily attributable to the higher variable remuneration as compared to the previous year.
In CHF thousand
Fixed base salary paid in cash
Variable performance-related remuneration paid in cash
Variable performance-related remuneration paid in shares 1
Service-related and non-cash benefits
Employer contributions to social security 2
Retirement benefits 3
Total remuneration to members of the Group Executive Board
Benefits paid following retirement from Group Executive Board 4
Total remuneration paid to Group Executive Board,
incl. benefits paid following retirement from Board
Total
Group
Executive Board
2017
Total
Group
Executive Board
2016
Thereof
Urs Schaeppi
2017
Thereof
Urs Schaeppi
2016
3,736
1,966
901
92
591
847
8,133
629
3,782
1,604
975
84
541
1,064
8,050
–
882
486
193
21
145
141
1,868
–
882
284
338
14
126
189
1,833
–
8,762
8,050
1,868
1,833
1 The shares are reported at market value and are blocked from sale for three years.
2 Employer contributions to social security (AHV, IV, EO and FAK, incl. administration costs, and daily sickness benefits and accident insurance)
are included in the total remuneration.
3 The amount for 2016 includes the share attributable to the Group Executive Board members of the non-recurring special pension-fund contribution made to cushion
the impact of pension reductions resulting from the lowering of the conversion rate.
4 Contractual compensation payments made during the notice period to a Group Executive Board member who resigned from Board during the financial year.
Total remuneration paid to the members of the Group Executive Board for the 2017 financial year is within the
maximum total amount approved by the 2016 Annual General Meeting (AGM) for 2017 of CHF 9.7 million.
3.4 Minimum shareholding requirement
The members of the Group Executive Board are required to hold a minimum amount of Swisscom shares. The
minimum shareholding to be held by the CEO is equivalent to two years’ base salary. The remaining members
maintain a shareholding equivalent to one year’s base salary. The members of the Group Executive Board have
four years to build up the required minimum shareholding in the form of the blocked shares paid as part of remu-
neration and, if applicable, through share purchases on the open market. Compliance with the shareholding
requirement is reviewed annually by the Compensation Committee. If a member’s shareholding falls below the
minimum requirement due to a drop in the share price or a salary adjustment, the difference must be made up by
no later than the time of the next review. In justified cases such as personal hardship or legal obligations, the
Chairman of the Board of Directors can approve individual exceptions at his discretion.
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3.5 Shareholdings of the members of the Executive Board
Blocked and non-blocked shares held by members of the Group Executive Board or related parties as at 31 Decem-
ber 2016 and 2017 are listed in the table below:
Number
Urs Schaeppi (CEO)
Mario Rossi
Hans C. Werner
Marc Werner
Urs Lehner 1
Christian Petit 2
Heinz Herren
Dirk Wierzbitzki
Total shares held by the members of the Group Executive Board
1 Joined the Group Executive Board as of 21 June 2017.
2 Resigned from the Group Executive Board as of 21 June 2017.
31.12.2017
31.12.2016
3,964
1,236
1,068
750
115
–
1,586
234
8,953
3,229
1,027
897
382
–
1,337
1,333
64
8,269
None of the individuals/entities required to make notification hold voting shares exceeding 0.1% of the share capital.
3.6 Employment contracts
The employment contracts of the members of the Group Executive Board are subject to a twelve-month notice
period. No termination benefits apply beyond the salary payable for a maximum of twelve months. The employ-
ment contracts stipulate that Swisscom may allow wrongfully awarded or paid remuneration to lapse or reclaim
such remuneration. They do not contain a non-competition clause or a clause on change of control.
4 Other remuneration
4.1 Remuneration for additional services
Swisscom may pay remuneration to members of the Board of Directors for assignments in Group companies and
for those performed by order of Swisscom (Article 6.4 of the Articles of Incorporation). The members of the Board
of Directors were not paid out any remuneration for work of this kind in the year under review.
The members of the Group Executive Board are not entitled to separate remuneration for any directorships they
hold either within or outside the Swisscom Group.
4.2 Remuneration for former members of the Board of Directors or Group Executive Board and related parties
In the year under review, no remuneration was paid to former members of the Board of Directors or Group Executive
Board in connection with their earlier activities as a member of a governing body of the company and/or which are
not at arm’s length. There were also no payments made to individuals who are closely related to any former or
current member of the Board of Directors or the Group Executive Board which are not at arm’s length.
4.3 Loans and credits granted
Swisscom Ltd has no statutory basis for the granting of loans, credit facilities and pension fund benefits apart from the
retirement benefits paid to the members of the Board of Directors and Group Executive Board.
In the 2017 financial year, Swisscom granted no guarantees, loans, advances or credit facilities of any kind either
to former or current members of the Board of Directors or related parties, or to former or current members of the
Group Executive Board or related parties. Nor are there any receivables of any kind outstanding.
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Report of the Statutory Auditor
To the General Meeting of Shareholders of Swisscom Ltd, Ittigen (Berne)
We have audited the accompanying remuneration report of Swisscom Ltd for the year ended 31 December 2017.
The audit was limited to the information according to articles 14 - 16 of the Ordinance against Excessive
compensation in Stock Exchange Listed Companies contained in the sections 2.3, 2.5, 3.3, 3.5 and 4.1 to 4.3 on
pages 81 to 91 of the remuneration report.
Responsibility of the Board of Directors
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report
in accordance with Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed
Companies (Ordinance). The Board of Directors is also responsible for designing the remuneration system and
defining individual remuneration packages.
Auditor's Responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in
accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies
with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration
report with regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The
procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating the
reasonableness of the methods applied to value components of remuneration, as well as assessing the overall
presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Opinion
In our opinion, the remuneration report for the year ended 31 December 2017 of Swisscom Ltd. complies with
Swiss law and articles 14 – 16 of the Ordinance.
KPMG AG
Hanspeter Stocker
Licensed Audit Expert
Auditor in Charge
Gümligen-Berne, 6 February 2018
Daniel Haas
Licensed Audit Expert
KPMG AG, Hofgut, PO Box 112, CH-3073 Gümligen-Berne
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss legal entity. All rights reserved.
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Consolidated financial statements
F
Consolidated financial
statements
Consolidated statement of comprehensive income _____________ 94
Consolidated balance sheet ______________________________ 95
Consolidated statement of cash flows ______________________ 96
Consolidated statement of changes in equity _________________ 97
Notes to the
consolidated
financial statements
About this report ______________________________________ 98
Operational performance
1
Segment information ____________________________________ 100
1.1
1.2 Operating expenses ______________________________________ 105
Capital and financial risk management
2
2.1 Capital management and equity ____________________________ 106
Financial liabilities _______________________________________ 108
2.2
2.3 Operating leases _________________________________________ 111
Financial result __________________________________________ 111
2.4
Financial risk management ________________________________ 112
2.5
Operating assets and liabilities
3
3.1 Net current operating assets _______________________________ 118
Property, plant and equipment ______________________________ 120
3.2
3.3 Goodwill _______________________________________________ 122
Intangible assets ________________________________________ 124
3.4
Provisions, contingent liabilities and contingent assets ____________ 125
3.5
4
Employees
Employee headcount and personnel expense ___________________ 128
4.1
4.2 Key management compensation ____________________________ 129
Post-employment benefits _________________________________ 129
4.3
Scope of consolidation
5
5.1 Group structure _________________________________________ 135
5.2 Material changes in scope of consolidation_____________________ 135
Equity-accounted investees ________________________________ 136
5.3
5.4 Group companies ________________________________________ 137
Other disclosures
6
Income taxes ___________________________________________ 139
6.1
6.2 Related parties __________________________________________ 142
6.3 Other accounting policies __________________________________ 143
Statutory Auditor’s Report ______________________________ 145
Financial statements
of Swisscom Ltd
Income statement ____________________________________ 152
Balance sheet ________________________________________ 153
Notes to the financial statements _________________________ 154
Proposed appropriation of retained earnings ________________ 158
Statutory Auditor’s Report ______________________________ 159
Consolidated financial statements
Consolidated statement
of comprehensive income
In CHF million, except for per share amounts
Note
2017
2016
Income statement
Net revenue
Direct costs
Personnel expense
Other operating expense
Capitalised self-constructed assets and other income
Operating income before depreciation, amortisation and impairment losses
Depreciation, amortisation and impairment losses
Operating income
Financial income
Financial expense
Result of equity-accounted investees
Income before income taxes
Income tax expense
Net income
Other comprehensive income
Actuarial gains and losses from defined benefit pension plans
Other comprehensive income from equity-accounted investees
Items that will not be reclassified to income statement
Foreign currency translation adjustments of foreign subsidiaries
Change in available-for-sale financial assets
Change in cash flow hedges
Other comprehensive income from equity-accounted investees
Items that are or may be reclassified subsequently to income statement
1.1
1.2
1.2, 4.1
1.2
1.2
3.2–3.4
2.4
2.4
5.3
6.1
2.1
2.1, 5.3
2.1
2.1
2.1
2.1
Other comprehensive income
Comprehensive income
Net income
Other comprehensive income
Comprehensive income
Share of net income and comprehensive income
Equity holders of Swisscom Ltd
Non-controlling interests
Net income
Equity holders of Swisscom Ltd
Non-controlling interests
Comprehensive income
Earnings per share
11,662
11,643
(2,666)
(3,002)
(2,207)
508
4,295
(2,164)
2,131
44
(204)
(11)
1,960
(392)
1,568
679
–
679
143
(5)
(5)
2
135
814
1,568
814
2,382
1,570
(2)
1,568
2,384
(2)
2,382
(2,759)
(2,947)
(2,112)
468
4,293
(2,145)
2,148
80
(235)
(3)
1,990
(386)
1,604
924
(5)
919
(99)
4
9
(2)
(88)
831
1,604
831
2,435
1,604
–
1,604
2,435
–
2,435
Basic and diluted earnings per share (in CHF)
2.1
30.31
30.97
94
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Consolidated balance sheet
In CHF million
Assets
Cash and cash equivalents
Trade receivables
Other operating assets
Other financial assets
Current income tax assets
Total current assets
Property, plant and equipment
Goodwill
Intangible assets
Equity-accounted investees
Other financial assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities and equity
Financial liabilities
Trade payables
Provisions
Other operating liabilities
Current income tax liabilities
Total current liabilities
Financial liabilities
Defined benefit obligations
Provisions
Deferred gain on sale and leaseback of real estate
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Share capital
Capital reserves
Retained earnings
Foreign currency translation adjustments
Other reserves
Equity attributable to equity-holders of Swisscom Ltd
Non-controlling interests
Total equity
Total liabilities and equity
Note
31.12.2017
31.12.2016
3.1
3.1
6.1
3.2
3.3
3.4
5.3
6.1
2.2
3.1
3.5
3.1
6.1
2.2
4.3
3.5
2.2
6.1
2.1
2.1
2.1
525
2,389
729
78
10
3,731
10,697
5,186
1,758
152
337
197
18,327
22,058
1,834
1,753
177
1,165
213
5,142
6,452
1,048
900
146
725
9,271
14,413
52
136
9,155
(1,689)
2
7,656
(11)
7,645
22,058
329
2,425
680
177
18
3,629
10,177
5,156
1,756
193
262
281
17,825
21,454
1,125
1,597
182
1,123
125
4,152
7,371
1,850
780
158
621
10,780
14,932
52
136
8,148
(1,834)
12
6,514
8
6,522
21,454
95
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Consolidated statement
of cash flows
In CHF million
Net income
Income tax expense
Result of equity-accounted investees
Financial income
Financial expense
Depreciation, amortisation and impairment losses
Gain on sale of property, plant and equipment
Loss on disposal of property, plant and equipment
Expense for share-based payments
Change in provisions
Change in defined benefit obligations
Change in operating assets and liabilities
Change in deferred gain from the sale and leaseback of real estate
Interest received
Dividends received
Interest paid
Income taxes paid
Cash flow from operating activities
Note
6.1
5.3
2.4
2.4
3.2–3.4
1.2
3.5
4.3
3.1
2.2
5.3
2.2
6.1
Purchase of property, plant and equipment and intangible assets
3.2, 3.4
Sale of property, plant and equipment and intangible assets
Acquisition of subsidiaries, net of cash and cash equivalents acquired
Purchase of equity-accounted investees
Proceeds from sale of equity-accounted investees
Purchase of other financial assets
Proceeds from other financial assets
Cash flow used in investing activities
Issuance of financial liabilities
Repayment of financial liabilities
Dividends paid to equity holders of Swisscom Ltd
Dividends paid to non-controlling interests
Acquisition of non-controlling interests
Other cash flows from financing activities
Cash flow used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Foreign currency translation adjustments in respect of cash and cash equivalents
Cash and cash equivalents at 31 December
5.2
5.2
5.2
2.2
2.2
2.1
5.2
2017
1,568
392
11
(44)
204
2,164
(24)
2
2
51
36
165
(12)
26
20
(181)
(289)
4,091
(2,378)
30
(63)
(20)
76
(58)
158
(2,255)
757
(1,158)
(1,140)
(8)
(99)
(9)
2016
1,604
386
3
(80)
235
2,145
(20)
9
3
(141)
68
(17)
(5)
27
17
(184)
(328)
3,722
(2,416)
27
(38)
(3)
88
(196)
92
(2,446)
898
(999)
(1,140)
(8)
(4)
(16)
(1,657)
(1,269)
179
329
17
525
7
324
(2)
329
96
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m
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a
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a
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c
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a
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o
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C
Consolidated statement
of changes in equity
In CHF million
Share
capital
Capital
reserves
Foreign
currency
Retained translation
earnings adjustments
Balance at 31 December 2015
52
136
6,783
(1,733)
Net income
Other comprehensive income
Comprehensive income
Dividends paid
Treasury shares
Transactions with
non-controlling interests
Balance at 31 December 2016
Net income
Other comprehensive income
Comprehensive income
Dividends paid
Transactions with
non-controlling interests
Balance at 31 December 2017
–
–
–
–
–
–
52
–
–
–
–
–
52
–
–
–
–
–
–
1,604
919
2,523
(1,140)
(1)
(17)
–
(101)
(101)
–
–
–
136
8,148
(1,834)
–
–
–
–
–
1,570
679
2,249
(1,140)
(102)
–
145
145
–
–
136
9,155
(1,689)
Equity
attributable
to equity
Non-
Other holders of controlling
interests
Swisscom
reserves
(1)
–
13
13
–
–
–
12
–
(10)
(10)
5,237
1,604
831
2,435
(1,140)
(1)
(17)
6,514
1,570
814
2,384
–
(1,140)
5
–
–
–
(8)
–
11
8
(2)
–
(2)
(8)
Total
equity
5,242
1,604
831
2,435
(1,148)
(1)
(6)
6,522
1,568
814
2,382
(1,148)
–
2
(102)
7,656
(9)
(11)
(111)
7,645
97
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C
Notes to the consolidated
financial statements
This financial report is a translation from the original German version. In case of any inconsistency the German
version shall prevail.
About this report
Compared to the prior year, the contents and structure of the 2017 Swisscom consolidated financial statements
are fundamentally redesigned in order to enhance, for its addressees, the transparency and relevance of the financial
reporting information for decision-making purposes. These amendments encompass the following:
> modification of the structure of the notes.
> elimination of irrelevant and immaterial information.
> reduction of the complexity of note disclosures through highlighting and the use of tables.
In addition, the following changes were made to improve the presentation of the consolidated financial statements:
> expenses for materials and services used are now designated as «direct costs». Commissions paid to dealers
are now classified under contract acquisition costs as part of direct costs. In addition, usage charges for net-
works of other telecommunication providers abroad are now disclosed under traffic charges of subsidiaries
abroad. Until the present, dealer commissions and traffic charges were classified under other operating costs.
> all revenue and cost accruals which apply in the normal course of business are now disclosed as current items
in the balance sheet.
> dividends received as well as interest paid and received are now disclosed under cash flow from operating
activities.
The prior-year amounts were restated as follows:
98
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l
a
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c
n
a
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fi
d
e
t
a
d
i
l
o
s
n
o
C
s
t
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m
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t
a
t
s
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N
In CHF million
Income statement
Direct costs
Other operating expense
Balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Cash flow statement
Cash flow from operating activities
Cash flow used in investing activities
Cash flow used in financing activities
Reported
Adjustment
Restated
(2,323)
(2,548)
3,535
17,919
(3,978)
(10,954)
3,862
(2,402)
(1,453)
(436)
436
94
(94)
(174)
174
(140)
(44)
184
(2,759)
(2,112)
3,629
17,825
(4,152)
(10,780)
3,722
(2,446)
(1,269)
General information
The Swisscom Group (hereinafter referred to as “ Swisscom”) provides telecommunication services and is active
primarily in Switzerland and Italy. The consolidated financial statements as of and for the year ended 31 Decem-
ber 2017 comprise Swisscom Ltd, as parent company, and its subsidiaries. Swisscom Ltd is a limited-liability
company incorporated in accordance with Swiss law, under a private statute, and has its registered office in Ittigen
(Berne). Its address is: Swisscom Ltd, Alte Tiefenaustrasse 6, 3048 Worblaufen. Swisscom is listed on the SIX Swiss
Exchange. The number of issued shares, as in the prior year, aggregated 51,801,943. The shares have a nominal value
of CHF 1 and are fully paid-up. Each share entitles the holder to one vote. The majority shareholder of Swisscom Ltd
remains, as in the prior year, the Swiss Confederation (“Confederation”). The Confederation is obligated by current
law to hold the majority of the capital and voting rights. The Board of Directors of Swisscom has approved the issu-
ance of these consolidated financial statements on 6 February 2018. As of this date, no material post-balance-
sheet events had occurred. The consolidated financial statements will be submitted for approval to the Annual
General Meeting of Shareholders of Swisscom Ltd to be held on 4 April 2018.
Basis of preparation
The consolidated financial statements of Swisscom have been prepared in accordance with International Financial
Reporting Standards (IFRS) and in compliance with the provisions of Swiss law. The reporting period covers twelve
months. The consolidated financial statements are presented in Swiss francs (CHF) which corresponds to the
functional currency of Swisscom Ltd. Unless otherwise noted, all amounts are stated in millions of Swiss francs.
The consolidated financial statements are drawn up on the historical cost basis, unless a standard or interpreta-
tion prescribes another measurement basis for a particular caption in which case this is explicitly stated in the
financial statement reporting policies. Material financial statement reporting policies of relevance for an under-
standing of the consolidated financial statements are set out in the specific notes to the financial statements.
Significant accounting judgments, estimates and assumptions in applying the financial statement accounting
policies
The preparation of consolidated financial statements is dependent upon estimates and assumptions being made
in applying the accounting policies for which management can exercise a certain degree of judgment. This concerns
the following positions:
Description
Useful lives of property, plant and equipment and intangible assets
Recoverability of Goodwill
Provisions for dismantlement and restoration costs
Provision for regulatory and competition law procedures
Defined benefit obligations
Further information
Note 3.2 and 3.4
Note 3.3
Note 3.5
Note 3.5
Note 4.3
Amended International Financial Reporting Standards and Interpretations which are to be applied for the first time
in the accounting period
As from 1 January 2017 onwards, Swisscom adopted various amendments to existing International Financial
Reporting Standards (IFRS) and Interpretations, which have no material impact on the results or financial position
of the Group.
Standard
Name
Amendements to IAS 7
Disclosure initiative
Amendements to IAS 12
Recognition of deferred tax assets for unrealised losses
Further information as to the changes in IFRS which must be applied in 2018 or later are set out in Note 6.3.
99
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1 Operational performance
This chapter sets outs information on the operating performance of Swisscom for the current reporting year.
The classification according to operating segments corresponds to the reporting system used internally to
evaluate performance and allocate resources, as well as to Swisscom’s management structure.
1.1 Segment information
General
Swisscom has further increased the level of digitalisation within its organisational structure in order to strengthen
areas with close customer proximity and boost the company’s effectiveness in the ICT market. In this manner,
Swisscom strives to improve the customer experience from a single source, simplify processes and enhance effi-
ciency in order to create greater scope for innovation. As a result of the organisational changes, the Small and Medium-
Sized Enterprises segment (SME) of Swisscom Switzerland was split up. The SME telecommunications business is
now included in the Residential Customers segment as part of segment reporting. Swisscom Directories (local-
search) has been transferred to the new Digital Business division, which is reported under Other Operating
Segments. In addition, all field service functions of Swisscom Switzerland are reported under the Residential
Customers segment. Fleet management from the Participations division (Other Operating Segments) has also
been transferred to the IT, Network & Infrastructure segment and the Health division merged into the Enterprise
Customers segment. The prior-year amounts were restated accordingly. Segment reporting is now made in
accordance with the following segments:
Swisscom Group
Swisscom Switzerland
Residential
Customers
Enterprise
Customers
Wholesale
IT, Network
& Infrastructure
Fastweb
Other operating
segments
Segment
Activity
Residential Customers
Enterprise Customers
Wholesale
IT, Network & Infrastructure
Fastweb
Other Operating Segments
The segment Residential Customers comprises connection fees for broadband and TV services, fixed-
network and mobilephone subscriptions as well as national and international telephone and data traffic for
residential customers and customers from small- and medium size enterprises. Furthermore, the segment
includes the sale of merchandise.
Enterprise Customers focuses on complete communication solutions for large business customers. Its
product offering in the field of business ICT infrastructure covers the whole range of services from individual
products to complete business solutions.
This segment comprises the use of Swisscom fixed and mobile networks by other telecommunication
service providers and the use of third-party networks by Swisscom. It also includes roaming with foreign
operators whose customers use Swisscom’s mobile networks, as well as broadband services and regulated
products as a result of the unbundling of the “last mile” for other telecommunication service providers.
The segment IT, Network & Infrastructure is responsible for the planning, operation and maintenance of
Swisscom’s network infrastructure and all IT systems. It is responsible for the development and production
of standardised IT and network services in Switzerland. In addition, IT, Network & Infrastructure also
includes the support functions Finances, Human Resources and Strategy for Swisscom Switzerland as well
as the management of real estate and the vehicle fleet in Switzerland.
Fastweb is one of the largest providers of broadband services in Italy. Its product portfolio covers voice, data,
broadband and TV services as well as video-on-demand for residential and corporate customers. In addition,
Fastweb offers mobile phone services on the basis of an MVNO contract (as a virtual network operator). It
also provides comprehensive network services and customised solutions.
Other Operating Segments mainly comprise the areas Digital Business und Participations. Digital Business
comprises primarily Swisscom Directories AG (localsearch), which is active in the field of online and telephone
directories. Participations consist principally of the subsidiaries Billag Ltd, cablex Ltd and Swisscom Broadcast
Ltd. Billag Ltd collects radio and TV license fees on behalf of the Swiss Confederation. cablex Ltd operates in
the field of construction and maintenance of wired and wireless networks in Switzerland, primarily in the
field of telecommunication. Swisscom Broadcast Ltd is the leading provider in Switzerland of radio services,
of cross-platform services for customers in the media field and of securitised radio transmissions.
100
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Reporting is made on the basis of the segments “Residential Customers”, “Enterprise Customers”, “Wholesale”,
and “IT, Network & Infrastructure”, which are grouped under Swisscom Switzerland, as well as “Fastweb” and
“Other Operating Segments”. In addition, “Group Headquarters”, which includes non-allocated costs, is disclosed
separately in segment reporting.
Group Headquarters does not charge any management fees to other segments for its financial management
services, nor does the IT, Network & Infrastructure segment charge any network costs to other segments. The
remaining services between the segments are recharged at market prices. Segment expense encompasses the
direct and indirect costs which include personnel expense, other operating costs less capitalised costs of self-
constructed assets and other income. Retirement-benefit expense includes ordinary employer contributions. The
difference between the ordinary employer contributions and the pension cost as provided for under IAS 19 is
reported in the column “Eliminations”. In 2017, an expense of CHF 92 million is disclosed under “Eliminations” as a
pension cost reconciliation item in accordance with IAS 19 (prior year: CHF 72 million). The results of the segments
“Residential Customers”, “Enterprise Customers” and “Wholesale” correspond to a contribution margin prior to
network costs. The segment result of IT, Network & Infrastructure consists of operating expenses and deprecia-
tion and amortisation less revenues from the rental and administration of buildings and vehicles as well as capi-
talised costs of property, plant and equipment and other income. The segment results of Swisscom Switzerland
and of the other operating segments do not reflect the retirement-benefit reconciliation item in accordance with
IAS 19. The segment results of Fastweb correspond to the operating results.
Restatement of segment information 2016
In CHF million
Net revenue
financial year 2016
Residential Customers
Small and Medium-Sized Enterprises
Enterprise Customers
Wholesale
IT, Network & Infrastructure (before IT, Network & Innovation)
Elimination
Swisscom Switzerland
Fastweb
Other Operating Segments
Group Headquarters
Elimination
Total net revenue
Segment result
financial year 2016
Residential Customers
Small and Medium-Sized Enterprises
Enterprise Customers
Wholesale
IT, Network & Infrastructure (before IT, Network & Innovation)
Swisscom Switzerland
Fastweb
Other Operating Segments
Group Headquarters
Reconciliation pension cost
Elimination
Total segment result
Reported
Adjustment
Restated
5,160
1,367
2,611
989
129
(816)
9,440
1,957
594
2
(350)
11,643
2,748
847
722
388
(2,508)
2,197
124
27
(114)
(72)
(14)
2,148
1,105
(1,367)
(71)
(10)
44
116
(183)
–
195
–
(12)
–
753
(847)
32
(9)
17
(54)
–
54
–
–
–
–
6,265
–
2,540
979
173
(700)
9,257
1,957
789
2
(362)
11,643
3,501
–
754
379
(2,491)
2,143
124
81
(114)
(72)
(14)
2,148
101
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a
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n
a
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o
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o
C
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e
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e
t
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l
a
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n
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a
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Segment information 2017
2017, in CHF million
Residential customers
Corporate customers
Wholesale customers
Net revenue from external customers
Net revenue from other segments
Net revenue
Direct costs
Indirect costs 1
Segment result before depreciation and amortisation
Depreciation, amortisation and impairment losses
Segment result
Financial income and financial expense, net
Result of equity-accounted investees
Income before income taxes
Income tax expense
Net income
Swisscom
Switzerland
5,971
2,428
578
Fastweb
1,097
791
267
8,977
2,155
81
9
9,058
2,164
(1,943)
(3,615)
3,500
(1,485)
2,015
(716)
(603)
845
(589)
256
Other
Operating
Segments
Group
Head-
quarters
Elimi-
nation
Total
7,068
3,749
845
11,662
–
11,662
(2,666)
(4,701)
4,295
–
–
–
–
(411)
(411)
24
268
(119)
–
529
–
529
321
850
(31)
(639)
180
(96)
84
–
1
–
1
–
1
–
(112)
(111)
–
6
(2,164)
(111)
(113)
2,131
(160)
(11)
1,960
(392)
1,568
Segment result before depreciation and amortisation
3,500
845
180
(111)
(119)
4,295
Capital expenditure in property, plant and equipment
and intangible assets
Change in provisions
Change in defined benefit obligations
Change in operating net working capital
Other 2
Operating free cash flow
(1,654)
(692)
(58)
39
(56)
184
(11)
(4)
(1)
38
–
2,002
186
9
–
(50)
–
81
–
7
1
7
–
(96)
26
–
92
(14)
1
(14)
(2,378)
51
36
165
(10)
2,159
1 Including capitalised costs of self-constructed assets and other income.
2 Proceeds from the sale of property, plant and equipment, non-cash change in net working capital from operating activities, change in deferred gain from the sale and
leaseback of real estate, and dividend payments to owners of non-controlling interests.
Segment information Swisscom Switzerland 2017
2017, in CHF million
Telecom services
Solution business
Merchandise
Wholesale
Revenue other
Net revenue from external customers
Net revenue from other segments
Net revenue
Direct costs
Indirect costs 1
Segment result before depreciation and amortisation
Depreciation, amortisation and impairment losses
Segment result
Capital expenditure in property, plant and equipment
and intangible assets
1 Including capitalised costs of self-constructed assets and other income.
Residential
Customers
Enterprise
Customers
IT,
Whole- Network &
sale Infrastructure
Total
Elimi-
Swisscom
nation Switzerland
5,363
–
451
–
157
1,101
1,084
197
–
20
5,971
2,402
82
106
6,053
2,508
(1,397)
(1,144)
3,512
(126)
3,386
(728)
(948)
832
(84)
748
–
–
–
578
–
578
366
944
(478)
(20)
446
–
–
–
–
26
26
141
167
(12)
(1,445)
(1,290)
–
(1,275)
446
(2,565)
–
–
–
–
–
–
(614)
(614)
672
(58)
–
–
–
6,464
1,084
648
578
203
8,977
81
9,058
(1,943)
(3,615)
3,500
(1,485)
2,015
(186)
(72)
–
(1,396)
–
(1,654)
102
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a
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a
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Segment information 2016
2016, in CHF million, restated
Residential customers
Corporate customers
Wholesale customers
Net revenue from external customers
Net revenue from other segments
Net revenue
Direct costs
Indirect costs 1
Segment result before depreciation and amortisation
Depreciation, amortisation and impairment losses
Segment result
Financial income and financial expense, net
Result of equity-accounted investees
Income before income taxes
Income tax expense
Net income
Swisscom
Switzerland
Fastweb
Other
Operating
Segments
Group
Head-
quarters
Elimi-
nation
6,132
2,452
591
988
769
191
9,175
1,948
82
9
9,257
1,957
(2,028)
(3,613)
3,616
(1,473)
2,143
(721)
(515)
721
(597)
124
–
519
–
519
270
789
(34)
(591)
164
(83)
81
–
1
–
1
1
2
–
(116)
(114)
–
(114)
Total
7,120
3,741
782
11,643
–
11,643
(2,759)
(4,591)
4,293
–
–
–
–
(362)
(362)
24
244
(94)
8
(2,145)
(86)
2,148
(155)
(3)
1,990
(386)
1,604
Segment result before depreciation and amortisation
3,616
721
164
(114)
(94)
4,293
Capital expenditure in property, plant and equipment
and intangible assets
Change in provisions
Change in defined benefit obligations
Change in operating net working capital
Other 2
Operating free cash flow
(1,755)
(633)
(49)
(160)
(3)
(62)
4
1
–
45
–
4
1
–
–
–
14
(2)
(41)
–
1,640
134
120
(143)
21
–
72
41
–
40
(2,416)
(141)
68
(17)
4
1,791
1 Including capitalised costs of self-constructed assets and other income.
2 Proceeds from the sale of property, plant and equipment, non-cash change in net working capital from operating activities, change in deferred gain from the sale and
leaseback of real estate, and dividend payments to owners of non-controlling interests.
Segment information Swisscom Switzerland 2016
2016, in CHF million, restated
Telecom services
Solution business
Merchandise
Wholesale
Revenue other
Net revenue from external customers
Net revenue from other segments
Net revenue
Direct costs
Indirect costs 1
Segment result before depreciation and amortisation
Depreciation, amortisation and impairment losses
Segment result
Capital expenditure in property, plant and equipment
and intangible assets
1 Including capitalised costs of self-constructed assets and other income.
Residential
Customers
Enterprise
Customers
IT,
Whole- Network &
sale Infrastructure
Total
Elimi-
Swisscom
nation Switzerland
5,518
–
457
–
157
1,144
1,072
180
–
25
6,132
2,421
133
119
6,265
2,540
(1,427)
(1,187)
3,651
(150)
3,501
(772)
(920)
848
(94)
754
–
–
–
591
–
591
388
979
(562)
(38)
379
–
–
–
–
31
31
142
173
(12)
(1,423)
(1,262)
–
(1,229)
379
(2,491)
–
–
–
–
–
–
(700)
(700)
745
(45)
–
–
–
6,662
1,072
637
591
213
9,175
82
9,257
(2,028)
(3,613)
3,616
(1,473)
2,143
(187)
(126)
–
(1,442)
–
(1,755)
103
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i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
Disclosure by geographical regions
In CHF million
Switzerland
Italy
Other countries
Not allocated
Total
Disclosure by products and services
2017
Non-current
assets
14,400
3,359
34
534
2016
Non-current
assets
14,273
2,877
132
543
Net revenue
9,665
1,948
30
–
Net revenue
9,476
2,155
31
–
11,662
18,327
11,643
17,825
2017
8,269
1,084
699
845
765
2016
8,321
1,072
697
782
771
11,662
11,643
Revenue recognition
The telecom services include the provision of mobile and fixed-line telecommunications in Switzerland and
abroad.
Mobile phone services encompass basic subscription charges; and in addition, domestic and international
mobile phone traffic generated by Swisscom customers in Switzerland or abroad as well as roaming by
foreign operators whose customers use the Swisscom network. Swisscom offers subscriptions at a fixed
monthly flat-rate fee, the revenue from which is recognised on a straight-line basis over the term of the
contract. Depending on the subscription, revenue is recorded on the basis of the actual minutes used.
Connection fees are deferred and released to income over the minimum contract term on a straight-line
basis. If no minimum contract term has been agreed, revenue is recognised on the date of connection. If a
mobile handset is sold as a part of a bundled offering with a subscription, it is treated as a multi-component
transaction. The price of the entire multi-component transaction is spread on a pro-rata basis over the
various component parts on the basis of the respective individual sales prices thereof. In this respect, the
revenue to be recognised for each individual component is limited by that part of the total consideration
provided by the customer for the multi-component transaction whose payment is not dependent on the
provision of additional services.
Fixed-network services encompass primarily national and international telephony traffic for residential
and business customers, as well as business with prepaid calling cards. Revenue from telephony services is
recorded at the time the calls are made. Revenue from the sale of prepaid call cards is deferred and released
to income as and when actual minutes are used or when the cards expire.
Swisscom provides bundled service offerings which include Internet and TV as well as an optional fixed-line
connection with telephony services. The subscription fees are fixed (flat rate). Revenue is recognised on a
straight-line basis over the contractual term.
Services in the field of communication and IT solutions primarily include consultancy services as well as
the implementation, maintenance and operation of communication infrastructures. Furthermore, they
include applications and services as well as the integration, operation and maintenance of data networks
and outsourcing services. Revenues from customer-specific construction contracts are accounted for using
the percentage-of-completion method which is based on the ratio of costs incurred to date to the estimated
total costs. Revenue for long-term outsourcing contracts is recorded based on the volume of services
provided to the customer. Start-up costs relating to and the integration of new outsourcing transactions are
capitalised as other assets and amortised on a straight-line basis over the duration of the contract. Revenue
from maintenance is recorded evenly over the term of the maintenance contracts.
Revenue arising from the sale of mobile phones, fixed-line devices, routers, TV-Boxes and other accessories
is recorded at the time of delivery and when the service is provided.
The services encompass primarily leased lines and the use of Swisscom’s fixed network by other
telecommunication service providers (roaming). Revenue from leased lines is recorded on a straight-line
basis over the duration of the contract. Roaming services are recorded as revenue on the basis of the minutes
used or the agreed contractual rates at the time the service is provided. Revenue from roaming services with
other telecommunication service providers is recorded gross.
In CHF million
Telecom services
Solution business
Merchandise
Wholesale
Revenue other
Total net revenue
Accounting policies
Category
Telecom services
Solution business
Merchandise
Wholesale
104
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m
e
t
a
t
s
l
a
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n
a
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fi
d
e
t
a
d
i
l
o
s
n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
1.2 Operating expenses
Direct costs
In CHF million
Customer premises equipment and merchandise
Services purchased
Traffic fees of foreign subsidiaries
International traffic fees
Costs of obtaining a contract
National traffic fees
Total direct costs
Indirect costs
In CHF million
Salary and social security expenses
Other personnel expense
Total personnel expense 1
Information technology cost
Maintenance expense
Rental expense
Energy costs
Advertising and selling expenses
Consultancy expenses and freelance workforce
Administration expense
Allowances for receivables
Miscellaneous operating expenses
Total other operating expense
Capitalised self-constructed assets
Income from litigations 2
Gain on sale of property, plant and equipment
Miscellaneous income
Total capitalised self-constructed assets and other income
Total indirect costs
1 See Note 4.1.
2 See Note 3.5.
2017
1,128
431
400
302
296
109
2016
1,141
471
392
282
304
169
2,666
2,759
2017
2,856
146
3,002
306
284
206
105
249
176
108
91
682
2016
2,868
79
2,947
271
256
199
114
216
191
122
94
649
2,207
2,112
(327)
(102)
(24)
(55)
(508)
(347)
(60)
(20)
(41)
(468)
4,701
4,591
Capitalised costs of self-constructed assets include personnel costs for the production of technical installations,
the construction of network infrastructures and the development of software for internal use.
Accounting policies
Subscriber acquisition costs
Swisscom pays commissions to dealers for the acquisition and retention of customers. The commission payable is
dependent on the type of subscription. Subscriber acquisition and loyalty-programme costs are expensed imme-
diately and disclosed as costs of obtaining a contract.
105
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a
d
i
l
o
s
n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
2 Capital and financial risk management
Set out below are the procedures and guidelines governing the active management of equity resources and of
the financial risks to which Swisscom is exposed. Swisscom strives to achieve a robust capital equity basis which
guarantees its ability to continue as a going concern and to offer its investors an appropriate return based on
the risks assumed. Furthermore, Swisscom maintains financial resources to enable it to make capital invest-
ments which will provide future benefits to customers and enhanced returns to investors.
2.1 Capital management and equity
Net-debt-to-EBITDA ratio
Swisscom strives to achieve a net indebtedness of approximately 1.9 x EBITDA (operating result before taxes,
interest and depreciation, amortisation and impairment losses). Exceeding this ratio temporarily is permitted.
Net debt consists of total financial liabilities less cash and cash equivalents, current financial assets as well as
non-current fixed interest-bearing certificates of deposit and derivative financial instruments for financing
received. The net-debt-to-EBITDA ratio is as follows:
In CHF million
Net debt
Operating income before depreciation, amortisation and impairment losses
Ratio net debt/EBITDA
31.12.2017
31.12.2016
7,447
4,295
1.7
7,846
4,293
1.8
Equity ratio
Swisscom strives to achieve an equity ratio of 30%, at a minimum. The equity ratio is computed as follows:
In CHF million
Equity
Total assets
Equity ratio in %
31.12.2017
31.12.2016
7,645
22,058
34.7
6,522
21,454
30.4
Dividend policy
Swisscom aims to achieve a stable dividend policy which is based on cash-flow generation and allocation of capital.
Distributable reserves are not determined on the basis of the equity as reported in the consolidated financial
statements but rather on the basis of equity as reported in the statutory financial statements of the parent company,
Swisscom Ltd. At 31 December 2017, Swisscom Ltd’s distributable reserves amounted to CHF 5,251 million.
The dividend is proposed by the Board of Directors and must be approved by the Annual General Meeting of
Shareholders. Treasury shares are not entitled to a dividend. Swisscom paid the following dividends in 2016 and 2017:
In CHF million, except where indicated
Number of registered shares eligible for dividend (in millions of shares)
Ordinary dividend per share (in CHF)
Dividends paid
2017
51.801
22.00
1,140
2016
51.800
22.00
1,140
The Board of Directors proposes to the Annual Shareholders’ Meeting of Swisscom Ltd to be held on 4 April 2018
the payment of an ordinary dividend of CHF 22 per share in respect of the 2017 financial year. This equates to an
aggregate dividend distribution of CHF 1,140 million. The expected dividend payment date is on 10 April 2018.
Earnings per share
In CHF million, except where indicated
Share of net income attributable to equity holders of Swisscom Ltd
Weighted average number of shares outstanding (number)
Basic and diluted earnings per share (in CHF)
2017
1,570
2016
1,604
51,800,771
51,800,352
30.31
30.97
106
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n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
Supplementary information on equity
Development of retained earnings and other reserves as well as comprehensive income 2017
Foreign
currency
Retained
translation
earnings adjustments
Fair value
reserve
Hedging
reserve
Equity
holders of
Swisscom
Non-
controlling
interests
In CHF million
Balance at 31 December 2016
Net income
Actuarial gains and losses from defined
benefit pension plans
Income tax expense
Items that will not be reclassified
to income statement
Foreign currency translation adjustments
of foreign subsidiaries
Change in fair value
Gains and losses transferred to income statement
Equity-accounted investees
Income tax expense
Items that are or may be reclassified
subsequently to income statement
Other comprehensive income
Comprehensive income
Dividends paid
Transactions with
non-controlling interests
8,148
1,570
850
(171)
679
–
–
–
–
–
–
679
2,249
(1,140)
(102)
(1,834)
–
–
–
–
166
–
(4)
2
(19)
145
145
145
–
–
Balance at 31 December 2017
9,155
(1,689)
9
–
–
–
–
–
(11)
5
–
1
(5)
(5)
(5)
–
–
4
3
–
–
–
–
–
–
(6)
–
1
(5)
(5)
(5)
–
–
(2)
6,326
1,570
850
(171)
679
166
(11)
(5)
2
(17)
135
814
2,384
(1,140)
(102)
7,468
Total
6,334
1,568
850
(171)
679
166
(11)
(5)
2
(17)
135
814
2,382
(1,148)
8
(2)
–
–
–
–
–
–
–
–
–
–
(2)
(8)
(9)
(11)
(111)
7,457
Development of retained earnings and other reserves as well as comprehensive income 2016
Foreign
currency
Retained
translation
earnings adjustments
Fair value
reserve
Hedging
reserve
Equity
holders of
Swisscom
Non-
controlling
interests
In CHF million
Balance at 31 December 2015
Net income
Actuarial gains and losses from defined
benefit pension plans
Equity-accounted investees
Income tax expense
Items that will not be reclassified
to income statement
Foreign currency translation adjustments
of foreign subsidiaries
Change in fair value
Gains and losses transferred to income statement
Equity-accounted investees
Income tax expense
Items that are or may be reclassified
subsequently to income statement
Other comprehensive income
Comprehensive income
Dividends paid
Treasury shares
Transactions with
non-controlling interests
6,783
1,604
1,162
(5)
(238)
919
–
–
–
–
–
–
919
2,523
(1,140)
(1)
(17)
(1,733)
–
–
–
–
–
(21)
–
5
(2)
(83)
(101)
(101)
(101)
–
–
–
Balance at 31 December 2016
8,148
(1,834)
5
–
–
–
–
–
–
7
(3)
–
–
4
4
4
–
–
–
9
(6)
–
–
–
–
–
–
8
2
–
(1)
9
9
9
–
–
–
3
5,049
1,604
1,162
(5)
(238)
919
(21)
15
4
(2)
(84)
(88)
831
2,435
(1,140)
(1)
(17)
6,326
5
–
–
–
–
–
–
–
–
–
–
–
–
–
(8)
–
11
8
107
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n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
Total
5,054
1,604
1,162
(5)
(238)
919
(21)
15
4
(2)
(84)
(88)
831
2,435
(1,148)
(1)
(6)
6,334
2.2 Financial liabilities
In CHF million
Balance at 1 January
New bank loans
Issuance of debenture bonds
Issuance of private placements
Issuance of other financial liabilities
Issuance of financial liabilities
Repayment of bank loans
Repayment of debenture bonds
Repayment of private placements
Repayment of finance lease liabilities
Repayment of other financial liabilities
Repayment of financial liabilities
Interest expense
Interest payments
Foreign currency translation adjustments
Change in finance lease liabilities
Change in fair value
Other changes
Balance at 31 December
Bank loans
Debenture bonds
Private placements
Finance lease liabilities
Derivative financial instruments 1
Other financial liabilities 2
Total financial liabilities
Thereof current financial liabilities
Thereof non-current financial liabilities
1 See Note 2.5.
2 See Note 5.1.
2017
8,496
177
500
–
80
757
(247)
(640)
(250)
(19)
(2)
(1,158)
160
(181)
224
(26)
(3)
17
2016
8,593
2
700
175
21
898
(599)
–
(375)
(22)
(3)
(999)
168
(184)
(20)
19
2
19
8,286
8,496
760
6,137
493
461
60
375
8,286
1,834
6,452
753
6,140
738
508
63
294
8,496
1,125
7,371
Credit lines
Swisscom has two confirmed lines of credit from banks each amounting to CHF 1,000 million maturing in 2020 and
2022, respectively. As of 31 December 2017, none of these lines of credit had been drawn down, as in the prior year.
Bank loans
In CHF million
Bank loans in CHF 1
Bank loans in EUR 1
Bank loans in EUR 1, 3
Bank loans in EUR 2
Bank loans in EUR 2, 3
Bank loans in USD 2
Bank loans in USD 2
Total bank loans
Maturity years
2016–2017
2016–2017
2013–2020
2015–2020
2017–2024
2009–2028
2009–2028
Par value
in currency
Nominal
interest rate
Effective
interest rate
31.12.2017
31.12.2016
Carrying amount
70
60
180
200
150
54
48
–0.20%
0.05%
Euribor
+0.386%
0.76%
0.67%
8.30%
7.65%
–0.20%
–0.22%
0.11%
–0.52%
0.67%
4.62%
4.63%
–
–
211
238
175
74
62
760
70
64
258
219
–
76
66
753
1 Variable interest-bearing.
2 Fixed interest-bearing.
3 Designated for hedge accounting of net investments in foreign operations.
108
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fi
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a
d
i
l
o
s
n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
During the fourth quarter of 2017, Swisscom took up a bank loan of EUR 150 million maturing in 2024. The financing
so received was applied to repay existing loans. In 2016, Swisscom took up short-term bank loans on a weekly and
monthly basis in the amounts of CHF 70 million and EUR 60 million.
The bank loans may become due for immediate repayment if the shareholding of the Swiss Confederation in the
capital of Swisscom falls below one third or if another shareholder can exercise control over Swisscom.
Debenture bonds
In CHF million
Maturity years
Par value
in currency
Nominal
interest rate
Effective
interest rate
31.12.2017
31.12.2016
Carrying amount
Debenture bond in CHF
(ISIN: CH0032254739)
Debenture bond in CHF
(ISIN: CH0104691628)
Debenture bond in EUR
(ISIN: XS0972165848)
Debenture bond in EUR
(ISIN: XS1051076922) 1
Debenture bond in CHF
(ISIN: CH0114695379)
Debenture bond in CHF
(ISIN: CH0268988174)
Debenture bond in CHF
(ISIN: CH0188335365)
Debenture bond in EUR
(ISIN: XS1288894691) 1
Debenture bond in CHF
(ISIN: CH0247776138)
Debenture bond in CHF
(ISIN: CH0344583783)
Debenture bond in CHF
(ISIN: CH0362748359)
Debenture bond in CHF
(ISIN: CH0317921663)
Debenture bond in CHF
(ISIN: CH0254147504)
Debenture bond in CHF
(ISIN: CH0336352775)
Debenture bond in CHF
(ISIN: CH0373476164)
Debenture bond in CHF
(ISIN: CH0268988182)
Total debenture bonds
2007–2017
600
3.75%
3.76%
–
610
2009–2018
1,385
3.25%
3.44%
1,396
1,434
2013–2020
2014–2021
2010–2022
2015–2023
2012–2024
2015–2025
2014–2026
2016–2027
2017–2027
2016–2028
2014–2029
2016–2032
2017–2033
2015–2035
500
500
500
250
500
500
200
200
350
200
160
300
150
150
2.00%
2.22%
1.88%
2.06%
2.63%
2.81%
0.25%
–0.37%
1.75%
1.77%
1.75%
–0.06%
1.50%
1.47%
0.38%
–0.39%
0.38%
0.38%
0.38%
0.30%
1.50%
1.47%
0.13%
0.14%
0.75%
0.71%
1.00%
0.96%
585
585
500
253
504
599
202
197
351
202
161
299
151
535
536
500
253
504
554
202
198
–
202
161
299
–
152
6,137
152
6,140
1 Designated for hedge accounting of net investments in foreign operations.
In the second quarter of 2017, Swisscom took up a debenture bond of a nominal amount of CHF 350 million with
a coupon rate of 0.375% and a duration of 10 years. In the fourth quarter of 2017, Swisscom issued a debenture
bond of a nominal amount of CHF 150 million with a coupon rate of 0.75% and a term of 16 years. The funds
received were applied to repay existing debt. In the third quarter of 2017, Swisscom repaid a debenture bond of a
nominal amount of CHF 600 million upon maturity.
In 2016, Swisscom issued three debenture bonds of an aggregate nominal amount of CHF 700 million. The financing
so received was applied to repay existing loans.
109
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a
d
i
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o
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n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
Private placements
In CHF million
Maturity years
Private placements in CHF
2007–2017
Private placements in CHF
2007–2018
Private placements in CHF
2007–2019
Private placements in CHF
2016–2031
Total private placements
Par value
in currency
Nominal
interest rate
Effective
interest rate
31.12.2017
31.12.2016
Carrying amount
250
72
278
150
0.80%
Variable
Variable
0.56%
1.56%
1.31%
1.25%
0.56%
–
71
272
150
493
249
70
269
150
738
In the fourth quarter of 2017, Swisscom repaid a private placement of CHF 250 million on maturity. In 2016, a
maturing private placement of CHF 150 million was prolonged for a further term of 15 years.
The Swiss-franc-denominated private placements with a carrying value of CHF 343 million maturing in 2018 to
2019 may become due for immediate repayment if the shareholding of the Swiss Confederation in the capital of
Swisscom falls below 35% or if another shareholder can exercise control over Swisscom. The investors in the
remaining private placements are entitled to resell their investments to Swisscom should the Swiss Confederation
permanently give up its majority shareholding in Swisscom.
Finance lease liabilities
Swisscom concluded two agreements in 2001 for the sale of real estate. At the same time, Swisscom entered into
long-term agreements to lease back part of the real estate sold which, in part, qualify as finance leases. The gain
realised on real estate classified as finance leases was deferred. As of 31 December 2017, the deferred gains
totalled CHF 146 million (prior year: CHF 158 million). The deferred gains are released to other income over the
term of the individual leases. The effective interest rate of the finance lease liabilities was 4.9%.
The minimum lease payments, financial liabilities and the future payment thereof, in terms of their net present
value, relating to these leaseback agreements are set out in the following table:
In CHF million
Within 1 year
Between 1 and 5 years
After 5 years
Total minimum lease payments/carrying amount
Thereof current finance lease liabilities
Thereof non-current finance lease liabilities
Net carrying amount of buildings acquired under finance lease
Minimum lease payments
Carrying amount
31.12.2017
31.12.2016
31.12.2017
31.12.2016
48
144
793
985
45
149
984
1,178
23
48
390
461
23
438
328
16
40
452
508
16
492
382
Accounting policies
Financial liabilities
Financial liabilities are initially measured at fair value less direct transaction costs. In subsequent accounting periods,
they are re-measured at amortised cost using the effective interest method.
Finance leases
A lease is recorded as a finance lease when substantially all of the risks and rewards incidental to ownership of an
asset are passed on. The asset is initially recorded at the lower of its fair value and the present value of the minimum
lease payments and is amortised over the lesser of the asset’s estimated useful life and the lease term. The interest
component of the lease payments is recognised as interest expense over the lease term computed on the basis of
the effective interest method. Lease contracts for land and buildings are recorded separately if the lease payments
can be reliably allocated. Gains on sale-and-leaseback transactions are deferred and released on a straight-line
basis over the lease term as other income. Losses on sale-and-leaseback transactions are expensed immediately.
110
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a
d
i
l
o
s
n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
2.3 Operating leases
Operating leases relate primarily to the rental of real estate held for business purposes. In 2017, payments for
operating leases amounted to CHF 201 million (prior year: CHF 198 million). Future minimum lease payments in
respect of operating lease contracts are as follows:
In CHF million
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
After 5 years
Total minimum lease payments from operating lease
31.12.2017
31.12.2016
178
157
138
112
85
317
987
162
142
126
113
88
305
936
Accounting policies
Lease arrangements which do not transfer all the significant risks and rewards of ownership are classified as operating
leases. Payments are recorded as other operating expense using the straight-line method over the lease period.
Gains and losses on sale-and-leaseback transactions are recorded directly in the income statement.
2.4 Financial result
In CHF million
Interest income on financial assets
Foreign exchange gains
Change in fair value of interest rate swaps 1
Gain from sale of equity-accounted investees 2
Capitalised borrowing costs
Other financial income
Total financial income
Interest expense on financial liabilities
Interest expense on defined benefit obligations 3
Present-value adjustments on provisions 4
Change in fair value of interest rate swaps 1
Other financial expense
Total financial expense
Financial income and financial expense, net
Net interest expense
1 See Note 2.5.
2 See Note 5.2.
3 See Note 4.3.
4 See Note 3.5.
2017
11
10
8
6
5
4
44
(160)
(11)
(6)
–
(27)
(204)
(160)
(149)
2016
13
7
–
42
6
12
80
(168)
(25)
(11)
(10)
(21)
(235)
(155)
(155)
111
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o
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n
o
C
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m
e
t
a
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a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
2.5 Financial risk management
Swisscom is exposed to various financial risks arising from its business and financing activities. Financial risk
management is conducted in accordance with established guidelines with the objective of containing the potential
adverse effects thereof on the financial situation of Swisscom. The identified risks and measures to minimise
them are presented below:
Risk
Source
Risk reduction
Currency risks
Swisscom is exposed to foreign exchange changes
which can impact the Group’s cash flows,
financial result and equity.
> Reduction in volatility by use of financial instruments
and designation for hedge-accounting purposes
(foreign-currency transaction and translation risk)
> Deployment of foreign currency forward transactions,
foreign-currency options and currency swaps
> Foreign-currency financing (EUR & USD)
Interest rate risk
Interest-rate risks result from changes in interest rates > Active interest-rate risk management
which can negatively impact the financial situation
of Swisscom. Interest-rate fluctuations can impact the
market value of certain financial assets, liabilities and
hedging instruments.
> Deployment of interest-rate swaps to reduce
the volatility of planned cash flows
Through its operating business activities and derivative > Guideline establishing minimum requirements
financial instruments and financial investments,
for counterparties
Credit risks
from operating
business activities Swisscom is exposed to the risk of default
and financial
of a counterparty.
transactions
> Designated counterparty limits
> Employment of netting agreements foreseen under
ISDA (International Swaps and Derivatives Association)
> Use of collateral agreements
Liquidity risk
Prudent liquidity management involves the holding
of adequate reserves of cash and cash equivalents,
negotiable securities as well as the possibility
of obtaining corresponding credits.
> Procedures and principles
to ensure adequate liquidity
> Two guaranteed bank credit lines
each of CHF 1,000 million
Foreign exchange risks
As regards financial instruments, the currency risks and hedging contracts for foreign currencies as of 31 Decem-
ber 2016 and 2017 are to be analysed as follows:
In CHF million
Cash and cash equivalents
Trade receivables
Other financial assets
Financial liabilities
Trade payables
Net exposure at carrying amounts
Net exposure to forecasted cash flows in the next 12 months
Net exposure before hedges
Forward currency contracts
Foreign currency swaps
Currency swaps
Hedges
Net exposure
31.12.2017
31.12.2016
EUR
89
7
103
(2,377)
(71)
(2,249)
1
(2,248)
–
83
819
902
(1,346)
USD
3
3
230
(144)
(80)
12
(405)
(393)
–
189
–
189
(204)
EUR
55
8
93
(2,161)
(66)
(2,071)
89
(1,982)
–
97
752
849
(1,133)
USD
3
10
244
(148)
(68)
41
(470)
(429)
(4)
406
–
402
(27)
In addition, Swisscom has financial liabilities outstanding as of 31 December 2017 with an aggregate nominal
value of EUR 1,330 million (CHF 1,555 million) (prior year: EUR 1,240 million; CHF 1,332 million) which were designated
as net investments in foreign shareholdings for hedge-accounting purposes.
112
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d
i
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t
s
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t
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N
Foreign currency sensitivity analysis
The following sensitivity analysis shows the impact on the income statement should the EUR/CHF and USD/CHF
exchange rates change in line with their implicit volatility over the next twelve months. This analysis assumes that
all other variables, in particular the interest rate level, remain constant.
In CHF million
31.12.2017
EUR volatility 6.25%
USD volatility of 7.78%
31.12.2016
EUR volatility of 7.47%
USD volatility of 10.35%
Income impact
on balance sheet
items
Hedges for
balance sheet
items
Planned
cash flows
Hedges for
planned
cash flows
140
(1)
155
(4)
(56)
5
(63)
7
–
32
(7)
49
–
(20)
–
(49)
The volatility of the balance sheet positions and planned cash flows is partially offset by the volatility of the related
hedging contracts.
Interest rate risks
The structure of interest-bearing financial instruments at nominal values is as follows:
In CHF million
Fixed interest-bearing financial liabilities
Variable interest-bearing financial liabilities
Total interest-bearing financial liabilities
Fixed interest-bearing financial assets
Variable interest-bearing financial assets
Total interest-bearing financial assets
Total interest-bearing financial assets and liabilities, net
Variable interest-bearing
Variable through interest rate swaps
Variable interest-bearing, net
Fixed interest-bearing
Variable through interest rate swaps
Fixed interest-bearing, net
Total interest-bearing financial assets and liabilities, net
31.12.2017
31.12.2016
7,220
655
7,875
(127)
(603)
(730)
7,145
52
1,244
1,296
7,093
(1,244)
5,849
7,145
7,331
765
8,096
(117)
(489)
(606)
7,490
276
1,177
1,453
7,214
(1,177)
6,037
7,490
Interest rate sensitivity analysis
A shift in interest rates by 100 basis points has no material impact on the income statement and equity as of
31 December 2016 and 2017.
Credit risks
Credit risks from financial transactions
The carrying values of cash and cash equivalents and other financial assets exposed to credit risk (excluding trade
debtors) may be analysed as follows:
In CHF million
Cash and cash equivalents
Loans and receivables
Derivative financial instruments
Other assets valued at fair value
Total carrying amount of financial assets
31.12.2017
31.12.2016
525
201
100
61
887
329
274
41
63
707
113
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o
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o
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m
e
t
a
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l
a
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a
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fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
The carrying amounts analysed by Standard & Poor’s rating of the counterparties may be summarised as follows:
In CHF million
AAA
AA– to AA+
A– to A+
BBB– to BBB+
Without rating
Total
31.12.2017
31.12.2016
34
433
342
22
56
887
14
351
243
57
42
707
Financial risks from operating activities
Credit risks on trade receivables and other receivables arise from the Group’s operating activities. Credit risks from
other receivables are insignificant. The split of trade receivables by operating segment is as follows:
In CHF million
Trade receivables
Residential Customers
Enterprise Customers
Wholesale
IT, Network & Infrastructure
Swisscom Switzerland
Fastweb
Other Operating Segments
Total trade receivables
Allowances for doubtful debts
Residential Customers
Enterprise Customers
Wholesale
IT, Network & Infrastructure
Swisscom Switzerland
Fastweb
Other Operating Segments
Total allowances for doubtful debts
Trade receivables, net
Total trade receivables, net
31.12.2017
31.12.2016
956
531
102
43
1,632
814
136
2,582
(47)
(3)
–
(2)
(52)
(131)
(10)
(193)
1,020
495
149
82
1,746
744
118
2,608
(48)
(3)
(1)
(2)
(54)
(116)
(13)
(183)
2,389
2,425
The due dates of trade receivables as well as the related valuation allowances are to be analysed as follows:
In CHF million
Not due
Past due up to 3 months
Past due 4 to 6 months
Past due 7 to 12 months
Past due over 1 year
Total
31.12.2017
31.12.2016
Gross amount
Allowances
Gross amount
Allowances
1,824
377
124
90
167
2,582
(4)
(18)
(17)
(24)
(130)
(193)
1,881
366
92
101
168
2,608
(7)
(3)
(7)
(25)
(141)
(183)
114
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a
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l
a
i
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n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
The table below presents the changes in valuation allowances for trade receivables.
In CHF million
Balance at 1 January
Additions to allowances
Write-off of irrecoverable receivables subject to allowance
Release of unused allowances
Foreign currency translation adjustments
Balance at 31 December
Liquidity risk
Contractual maturities including estimated interest payable
2017
183
93
(90)
(3)
10
193
2016
184
95
(92)
(4)
–
183
In CHF million
31.12.2017
Bank loans
Debenture bonds
Private placements
Finance lease liabilities
Other financial liabilities
Trade payables
Other payables
Derivative financial instruments
Total
In CHF million
31.12.2016
Bank loans
Debenture bonds
Private placements
Finance lease liabilities
Other financial liabilities
Trade payables
Other payables
Derivative financial instruments
Total
Carrying Contractual Due within Due within Due within
1 year 1 to 2 years 3 to 5 years
amount
payments
Due after
5 years
760
830
80
6,137
6,575
1,497
493
461
375
514
985
375
74
48
235
1,753
1,753
1,718
343
60
343
108
340
7
80
67
280
42
109
23
3
4
328
342
1,836
3,175
2
102
28
12
–
11
158
793
3
–
–
86
10,382
11,483
3,999
608
2,319
4,557
Carrying Contractual Due within Due within Due within
1 year 1 to 2 years 3 to 5 years
amount
payments
Due after
5 years
753
826
6,140
6,658
738
508
294
765
1,178
294
207
731
253
45
4
1,597
1,597
1,576
299
63
299
108
299
4
73
367
179
1,533
1,248
3,146
73
44
261
10
–
4
281
105
3
11
–
11
158
984
26
–
–
89
10,392
11,725
3,119
1,998
2,026
4,582
115
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a
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a
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n
a
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fi
d
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a
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i
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o
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n
o
C
s
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m
e
t
a
t
s
l
a
i
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n
a
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fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
Derivative financial instruments
In CHF million
Interest rate swaps in CHF
Currency swaps in EUR
Total fair value hedges
Currency swaps in USD
Total cash flow hedges
Interest rate swaps in CHF
Currency swaps in USD
Currency swaps in EUR
Forward currency contracts in USD
Total other derivative financial instruments
Contract value
Positive fair value
Negative fair value
31.12.2017 31.12.2016 31.12.2017 31.12.2016 31.12.2017 31.12.2016
425
819
425
752
1,244
1,177
149
149
200
210
101
–
511
235
235
200
335
97
4
636
2
97
99
–
–
–
1
–
–
1
100
1
99
3
29
32
4
4
–
5
–
–
5
41
9
32
(3)
–
(3)
(2)
(2)
(54)
(1)
–
–
(55)
(60)
(4)
(56)
(2)
–
(2)
–
–
(60)
(1)
–
–
(61)
(63)
(1)
(62)
Total derivative financial instruments
1,904
2,048
Thereof current derivative financial instruments
Thereof non-current derivative financial instruments
Accounting policies
Derivative financial instruments
Derivative financial instruments are initially recorded at fair value and subsequently re-measured at fair value. The
method of recording the fluctuations in fair value depends on the underlying transaction and the objective pursued
by entering such transaction. On the date a derivative contract is entered into, management designates the
purpose of the hedging relationship: hedge of the fair value of an asset or liability (“fair value hedge”) or a hedge
of future cash flows in the case of future transactions (“cash flow hedge”). Changes in the fair value of derivative
financial instruments that were designated as hedging instruments for “fair value hedges” are recognised in the
income statement. Changes in the fair value of derivative financial instruments that were designated as “cash
flow hedges” are dealt with in other comprehensive income and recognised in the hedging reserve as part of
equity. If a hedge of a future transaction subsequently results in the recording of a financial asset or financial
liability, the amount included in equity is recognised in the income statement in the same period in which the
financial asset or financial liability impacts the results. Otherwise, the amounts recorded in equity are recognised
in the income statement as income or expense in the same period the cash flows of the intended or agreed future
transaction occur. Changes in the fair value of derivative financial instruments that are not designated as hedging
instruments are taken immediately to income.
Valuation categories and fair value of financial instruments
Estimation of fair values
Fair values are allocated to one of the following three hierarchical levels:
> Level 1: exchange quoted prices in active markets for identical assets or liabilities;
> Level 2: other factors which are observable on markets for assets and liabilities, either directly or indirectly;
> Level 3: factors that are not based on observable market data.
The fair value of publicly traded equity and debt instruments of Level 1 is based upon their -exchange quotations
as of the balance-sheet date. The fair value of Level 2 financial assets and liabilities which are not quoted on
exchanges are computed on the basis of future maturing payments discounted at market interest rates. Level 3
assets consist of investments in various investment funds and individual companies. The fair value is determined
on the basis of a computational model. Interest-rate and currency swaps are discounted at market rates.
Foreign-currency forward transactions and foreign-currency swaps are valued by reference to foreign exchange
forward rates as of the balance sheet date.
116
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e
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a
d
i
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o
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n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
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n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
Valuation categories and fair value of financial instruments
The carrying amounts and fair values of financial assets and financial liabilities are summarised in the following
table. Not included therein are cash and cash equivalents, trade receivables and payables as well as miscellaneous
receivables and liabilities whose carrying amount corresponds to a reasonable estimation of their fair value.
In CHF million
Other financial assets
Term deposits
Certificates of deposit
Loans
Loans and receivables
Equity instruments valued at fair value
Equity instruments valued at fair value
Equity instruments valued at cost
Available-for-sale
Debt instruments held for trading
Derivative financial instruments
Fair value through profit or loss
Total other financial assets
Financial liabilities
Bank loans
Debenture bonds
Private placements
Finance lease liabilities
Derivative financial instruments
Other financial liabilities
Total financial liabilities
31.12.2017
31.12.2016
Carrying
amount
Fair
value
Level
Carrying
amount
Fair
value
Level
7
145
49
201
10
2
41
53
61
100
161
415
7
162
49
218
10
2
41
53
61
100
161
432
760
788
6,137
6,439
493
461
60
375
504
879
60
375
2
2
2
1
3
–
1
2
2
1
2
2
2
2
93
152
29
274
15
5
41
61
63
41
104
439
93
168
29
290
15
5
41
61
63
41
104
455
753
782
6,140
6,517
738
508
63
294
758
1,049
63
294
2
2
2
1
3
–
1
2
2
1
2
2
2
2
8,286
9,045
8,496
9,463
Financial assets amounting to CHF 145 million (prior year: CHF 152 million) are not freely available, as they serve
as security for bank loans.
117
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fi
d
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a
d
i
l
o
s
n
o
C
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
3 Operating assets and liabilities
The following section discloses information on the movement in net current assets as well as in material
non-current tangible and intangible assets. In addition, it provides information as to the allocation of goodwill
over the individual cash-generating units and on the results of any applicable impairment tests. Furthermore,
movements in provisions, contingent liabilities and contingent assets are presented in this section.
3.1 Net current operating assets
Movements in operating assets and liabilities
In CHF million
Financial year 2017
Trade receivables
Other operating assets
Trade payables
Other operating liabilities
Total operating assets and liabilities, net
1 Foreign currency translation and adjustments from acquisition and sale of subsidiaries.
In CHF million
Financial year 2016
Trade receivables
Other operating assets
Trade payables
Other operating liabilities
Total operating assets and liabilities, net
1 Foreign currency translation and adjustments from acquisition and sale of subsidiaries.
31.12.2016
Operational
changes
Other
changes 1
31.12.2017
2,425
680
(1,597)
(1,123)
385
(98)
29
(85)
(11)
(165)
62
20
(71)
(31)
(20)
2,389
729
(1,753)
(1,165)
200
31.12.2015
Operational
changes
Other
changes 1
31.12.2016
2,396
631
(1,486)
(1,171)
370
34
53
(117)
47
17
(5)
(4)
6
1
(2)
2,425
680
(1,597)
(1,123)
385
As of 31 December 2017, the portion of other operating assets which will be consumed 12 months after the
balance sheet date amounts to CHF 85 million (prior year: CHF 94 million) and that of other operating liabilities
CHF 145 million (prior year: CHF 174 million).
Trade receivables
In CHF million
Billed revenue
Accrued revenue
Allowances
Total trade receivables 1
1 Credit risks. See Note 2.5.
31.12.2017
31.12.2016
2,389
193
(193)
2,389
2,401
207
(183)
2,425
118
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e
m
e
t
a
t
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l
a
i
c
n
a
n
fi
d
e
t
a
d
i
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o
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o
C
s
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e
m
e
t
a
t
s
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a
i
c
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a
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fi
d
e
t
a
d
i
l
o
s
n
o
c
e
h
t
o
t
s
e
t
o
N
Other operating assets
In CHF million
Accruals from international roaming traffic
Receivables from construction contracts
Receivables from collection activities
Other receivables
Allowances
Total other receivables
Inventories
Prepaid expenses
Advance payments made
Costs to fulfill a contract
Value-added taxes receivable
Other non-financial assets
Total other non-financial assets
Total other operating assets
Other operating liabilities
In CHF million
Accruals for variable performance-related bonus
Accruals from international roaming traffic
Liabilities from collection activities
Liabilities from construction contracts
Miscellaneous liabilities
Total other liabilities
Deferred revenue
Value-added taxes payable
Accruals for annual holiday, overtime
Advance payments received
Other non-financial liabilities
Total other non-financial liabilities
Total other operating liabilities
31.12.2017
31.12.2016
35
41
10
34
(7)
113
168
277
74
69
20
8
448
729
45
29
9
31
(7)
107
154
263
51
67
4
34
419
680
31.12.2017
31.12.2016
157
43
16
8
119
343
460
91
66
19
186
822
143
32
18
14
92
299
440
94
62
30
198
824
1,165
1,123
Deferred revenues mainly comprise deferred payments for prepaid cards and prepaid subscription fees.
Accounting policies
Operating assets and liabilities
Total operating assets and liabilities used in the normal course of business are disclosed as current items in the
balance sheet.
Trade receivables
Trade and other receivables are measured at amortised cost less impairment losses. Impairment losses on trade
receivables are recognised, depending on the nature of the underlying transaction, in the form of individual
valuation allowances or portfolio-based general valuation allowances which cover the anticipated default risk.
As regards portfolio-based general valuation allowances, financial assets are grouped together based on hetero-
geneous credit-risk attributes and reviewed collectively for impairment and whenever required, valuation allowances
are recognised. In addition to contractually foreseen payment conditions, historical default rates are taken into
consideration in determining the expected future cash flows from the portfolio. Valuation allowances for trade
receivables are recognised as other operating expense.
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Technical
installations
Land, buildings
and leasehold
improvements 1
Advances made
and assets
Other assets under construction
3.2 Property, plant and equipment
In CHF million
At cost
Balance at 31 December 2015
Additions
Disposals
Adjustment to dismantlement and restoration costs
Reclassifications
Foreign currency translation adjustments
Balance at 31 December 2016
Additions
Disposals
Adjustment to dismantlement and restoration costs
Reclassifications
Foreign currency translation adjustments
26,129
1,423
(550)
(47)
108
(40)
27,023
1,298
(663)
36
95
386
2,762
7
(30)
–
5
(1)
3,838
242
(141)
(2)
82
–
2,743
4,019
4
(63)
–
4
8
270
(137)
13
107
1
Balance at 31 December 2017
28,175
2,696
4,273
Accumulated depreciation and impairment losses
Balance at 31 December 2015
Depreciation
Disposals
Reclassifications
Foreign currency translation adjustments
Balance at 31 December 2016
Depreciation
Disposals
Reclassifications
Foreign currency translation adjustments
(18,716)
(1,103)
550
1
21
(19,247)
(1,114)
668
21
(208)
(1,996)
(37)
13
1
–
(2,524)
(308)
136
–
–
(2,019)
(2,696)
(35)
17
–
(3)
(315)
132
(12)
–
Balance at 31 December 2017
(19,880)
(2,040)
(2,891)
362
197
(1)
–
(204)
–
354
234
–
–
(226)
2
364
–
–
–
–
–
–
–
–
–
–
–
Total
33,091
1,869
(722)
(49)
(9)
(41)
34,139
1,806
(863)
49
(20)
397
35,508
(23,236)
(1,448)
699
2
21
(23,962)
(1,464)
817
9
(211)
(24,811)
10,697
10,177
9,855
Net carrying amount
Net carrying amount at 31 December 2017
Net carrying amount at 31 December 2016
Net carrying amount at 31 December 2015
1 Buildings acquired under finance lease. See Note 2.2.
8,295
7,776
7,413
656
724
766
1,382
1,323
1,314
364
354
362
Commitments for future capital expenditures
Firm contractual commitments for future investments in property, plant and equipment as of 31 December 2017
aggregated CHF 857 million (prior year: CHF 741 million).
Non-cash investing and financing transactions
Additions to property, plant and equipment include additions from finance leases amounting to CHF 20 million
(prior year: CHF 19 million). As a result of changes in the assumptions made in estimating the provisions for
dismantlement and restoration costs, an increase of CHF 49 million (prior year: decrease of CHF 49 million) was
recognised in property, plant and equipment with no impact on the income statement. See Note 3.5.
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N
Material accounting judgements or estimation uncertainties
Management estimates the useful economic lives and residual values of technical facilities, real estate and other
installations and equipment on the basis of the anticipated period over which economic benefits will accrue to the
company from the use of the assets. Useful economic lives are reviewed annually on the basis of historical and
forecast expectations concerning future technological developments, economic and legal changes as well as
further external factors.
Accounting policies
Property, plant and equipment is recorded at acquisition or manufacturing cost less accumulated depreciation/
amortisation and impairment losses. In addition to the purchase cost and the costs directly attributable to bringing
the asset to the location and condition necessary for it to be capable of operating in the manner intended by
management, purchase or manufacturing cost also includes the estimated costs for dismantling and restoration
of the site. External borrowing costs are capitalised insofar as they can be allocated directly to the acquisition or
production of a qualifying asset. Costs of replacement, renewal or renovation of property, plant and equipment
are capitalised as replacement investments if a future inflow of economic benefits is probable and the purchase
or manufacturing costs can be measured reliably. The carrying amount of the parts replaced is de-recognised.
Systematic depreciation/amortisation is calculated using the straight-line method except for land, which is not
depreciated. The estimated useful lives for the main categories of property, plant and equipment are:
Category
Ducts 1
Cables 1
Transmission and switching equipment 1
Other technical installations 1
Buildings and leasehold improvements
Other installations
1 Technical installations.
Years
40
30
4 to 15
3 to 15
10 to 40
3 to 15
Whenever significant parts of an item of property, plant and equipment comprise individual components with
differing useful lives, each component is depreciated/amortised separately. The process for determining useful
estimated lives takes into account the anticipated use by the company, the expected wear and tear, technological
developments as well as empirical values with comparable assets. Leasehold improvements and installations in
leased premises are amortised on a straight-line basis over the shorter of their estimated useful lives and the
remaining minimum lease term. The impact from changing useful economic lives and residual values are recorded
on a prospective basis.
If indications exist that the value of an asset may be impaired, the recoverable amount of the asset is determined.
If the recoverable amount of the asset, which is the greater of the fair value less costs to sell and the value in use,
is less than its carrying amount, the carrying amount is written down to the recoverable amount.
The carrying amount of an item of property, plant and equipment is de-recognised upon disposal or whenever no
future economic benefits are expected from its use. Gains and losses arising on the disposal of property, plant and
equipment are recorded as other income or other operating expenses.
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3.3 Goodwill
In CHF million
At cost
Balance at 31 December 2015
Foreign currency translation adjustments
Balance at 31 December 2016
Additions
Reclassifications
Foreign currency translation adjustments
Balance at 31 December 2017
Accumulated impairment losses
Balance at 31 December 2015
Foreign currency translation adjustments
Balance at 31 December 2016
Impairment losses
Foreign currency translation adjustments
Balance at 31 December 2017
Net carrying amount
Net carrying amount at 31 December 2017
Net carrying amount at 31 December 2016
Net carrying amount at 31 December 2015
Small and
Enterprise
Residential medium-sized
Customers
Customers enterprises
Swisscom
Swisscom
Swisscom
Switzerland Switzerland 1 Switzerland
Other
cash-generating
units 2
Fastweb
2,620
–
2,620
–
656
1
3,277
–
–
–
–
–
–
656
–
656
–
(656)
–
–
–
–
–
–
–
–
907
1,916
–
(17)
907
1,899
–
25
–
2
–
169
932
2,070
–
–
–
–
–
–
(1,383)
13
(1,370)
–
(122)
(1,492)
Total
6,544
(18)
6,526
2
–
173
6,701
(1,383)
13
(1,370)
(23)
(122)
445
(1)
444
–
(25)
3
422
–
–
–
(23)
–
(23)
(1,515)
3,277
2,620
2,620
–
656
656
932
907
907
578
529
533
399
444
445
5,186
5,156
5,161
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1 Telecom business with small and medium-sized enterprises in Switzerland.
2 The cash-generating units include Wholesale Swisscom Switzerland, Swisscom Directories and Improve Digital.
Swisscom amended its organisational structure and dissolved the Small and Medium- Sized Enterprises Swisscom
Switzerland segment and merged the Health division into the segment Enterprise Customers Swisscom Switzer-
land (see Note 1.1). The segment Small and Medium- Sized Enterprises Swisscom Switzerland consisted of the
cash-generating units Telecommunications Business with small and medium- sized enterprises in Switzerland
(SME telecommunications business) and Swisscom Directories. The SME telecommunications business was fully
merged into the organisation and business processes of the Residential Customers Swisscom Switzerland unit.
Accordingly, the previous goodwill amounting to CHF 656 million was transferred to the cash-generating unit
Residential Clients Swisscom Switzerland. The goodwill of Swisscom Directories continues to be classified in the
consolidated financial statements under other cash-generating units. In connection with the merger of Health
division, goodwill amounting to CHF 25 million was transferred to the cash-generating unit Enterprise Customers
Swisscom Switzerland.
Impairment testing
In the fourth quarter of 2017 and after completion of business planning, individual goodwill amounts were sub-
jected to an impairment test. The recoverable amount of a cash-generating unit is determined based on its value
in use, using the discounted cash flow (DCF) method. The projected free cash flows are estimated on the basis of
the business plans approved by management. In general, the business plans cover a three-year period. A planning
horizon of five years is used for the impairment test of Fastweb. For the free cash flows extending beyond the
detailed planning period, a terminal value was computed by capitalising the normalised cash flows using an
assumed long-term constant growth rate. The growth rates applied are those customarily assumed for the country
or market. The discount rate is derived from the Capital Asset Pricing Model (CAPM). This latter comprises the
weighted cost of own equity and external borrowing costs. For the risk-free interest rate underlying the discount
rate, the yield from government bonds (abroad – Germany) with a duration of 10 years and a zero-interest rate is
used, subject to a minimum interest rate of 1.5% (Switzerland) and 2.0% (abroad). In the prior year, a minimum
interest rate of 2.5% (Switzerland) and 3.0% (abroad) was used. For cash-generating units abroad, a risk premium
for the country risk is then added.
Discount rates and long-term growth rates
Cash-generating unit
Residential Customers Swisscom Switzerland
Enterprise Customers Swisscom Switzerland
SME telecommunication business Switzerland
WACC
pre-tax
5.92%
5.88%
–
2017
WACC
post-tax
Long-term
growth rate
4.64%
4.64%
–
0%
0%
–
Fastweb
9.10%
7.02%
1.0%
WACC
pre-tax
6.66%
6.64%
6.66%
9.63%
2016
WACC
post-tax
Long-term
growth rate
5.25%
5.25%
5.25%
7.38%
0%
0%
0%
1.0%
Other cash-generating units
5.88–14.38% 4.64–9.72%
0–1.5% 6.6–12.2%
5.3–9.5%
0–1.0%
The discount rates used take into consideration the specific risks relating to the cash-generating unit being
considered. The projected cash flows and management assumptions are corroborated by external sources of
information.
Results and sensitivity of impairment tests
Residential Customers and Enterprise Customers Swisscom Switzerland
As of the measurement date, the recoverable amount at all cash-generating units, based on their value in use, was
higher than the carrying amount relevant for the impairment test. Swisscom believes none of the anticipated
changes in key assumptions which can rationally be expected would cause the carrying amount of the cash -
generating units to exceed the recoverable amount.
Fastweb
As of the date of the impairment test, no impairment of goodwill resulted. The recoverable amount exceeded the
net carrying amount by EUR 332 million (CHF 386 million). In the prior year, the difference amounted to EUR 710 mil-
lion (CHF 768 million). The following changes in material assumptions lead to a situation where the value in use
equates to the net carrying amount:
Average annual growth rate with the same EBITDA margin
as in the business plan
Normalised EBITDA margin
Normalised capital expenditure rate
Post-tax discount rate
Long-term growth rate
Assumptions
Sensitivity
Assumptions
Sensitivity
2017
2016
5.2%
33%
21%
7.02%
1.0%
2.8%
31%
23%
7.71%
0.1%
6.3%
34%
20%
7.38%
1.0%
4.3%
31%
23%
8.84%
–0.8%
Material accounting judgements or estimation uncertainties
The allocation of goodwill to the cash-generating units as well as the computation of the recoverable amount is
subject to Management’s judgement. This comprises the estimation of future cash flows, the determination of
the discounting factor and the rate of growth on the basis of historic data and forecast expectations.
Accounting policies
For the purposes of the impairment test, goodwill is allocated to the cash-generating units. The impairment test
is performed annually on a mandatory basis. If there is any indication during the year that goodwill may be
impaired, the cash-generating unit is tested for impairment at that time. An impairment loss is recognised if the
recoverable amount of a cash-generating unit is lower than its carrying amount. The recoverable amount is the
greater of the fair value less costs of disposal and the value in use.
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3.4
Intangible assets
In CHF million
At cost
Purchased
software
Internally
generated
software
Brands and
customer
relations
Licenses
Other
intangible
assets
Balance at 31 December 2015
2,035
1,471
454
1,332
Additions
Disposals
Reclassifications
Business combinations
Foreign currency translation adjustments
187
(75)
31
–
(12)
138
(202)
71
–
(1)
Balance at 31 December 2016
2,166
1,477
Additions
Disposals
Reclassifications
Business combinations
Sales of subsidiaries
Foreign currency translation adjustments
215
(105)
39
2
(4)
115
152
(443)
228
1
–
12
–
(3)
–
–
–
451
5
(52)
9
–
–
–
–
(12)
–
22
(10)
1,332
–
(852)
–
53
–
27
Balance at 31 December 2017
2,428
1,427
413
560
612
247
(51)
(93)
–
(1)
714
225
(61)
(256)
–
–
14
636
Total
5,904
572
(343)
9
22
(24)
6,140
597
(1,513)
20
56
(4)
168
5,464
Accumulated amortisation and impairment losses
Balance at 31 December 2015
Amortisation
Impairment losses
Disposals
Reclassifications
Foreign currency translation adjustments
(1,586)
(234)
(2)
75
(1)
10
(970)
(246)
–
200
2
1
(143)
(1,120)
(224)
(4,043)
(29)
–
3
–
–
(94)
–
12
–
10
(86)
(6)
45
(3)
2
(689)
(8)
335
(2)
23
Balance at 31 December 2016
(1,738)
(1,013)
(169)
(1,192)
(272)
(4,384)
Amortisation
Impairment losses
Disposals
Sales of subsidiaries
Reclassifications
Foreign currency translation adjustments
(234)
(2)
105
4
9
(93)
(277)
(5)
442
–
(33)
(9)
(26)
–
52
–
(7)
–
Balance at 31 December 2017
(1,949)
(895)
(150)
Net carrying amount
Net carrying amount at 31 December 2017
Net carrying amount at 31 December 2016
Net carrying amount at 31 December 2015
479
428
449
532
464
501
263
282
311
(55)
–
852
–
–
(26)
(421)
139
140
212
(78)
–
46
–
22
(9)
(670)
(7)
1,497
4
(9)
(137)
(291)
(3,706)
345
442
388
1,758
1,756
1,861
As of 31 December 2017, other intangible assets included advance payments made and uncompleted development
projects of CHF 171 million (prior year: CHF 215 million).
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N
Commitments for future capital expenditures
As of 31 December 2017, firm contractual commitments for future investments in intangible assets aggregated
CHF 84 million (prior year: CHF 104 million).
Material accounting judgements or estimation uncertainties
Management estimates the useful economic lives and residual values of intangible assets on the basis of the
anticipated period over which economic benefits will accrue to the company from the use of the assets. Useful
economic lives are reviewed annually on the basis of historical and forecast expectations concerning future
technological developments, economic and legal changes as well as further external factors.
Accounting policies
Mobile phone licenses, self-developed software as well as other intangible assets are recorded at purchase or
manufacturing cost less accumulated amortisation. Intangible assets resulting from business combinations, such
as brands and customer relationships, are recorded at fair market value as of the date of acquisition, less accumu-
lated amortisation and impairment losses. Systematic amortisation of mobile phone licenses is based on the term
of the contract. It begins as soon as the related network is operational, unless other information is at hand which
would suggest the need to modify the useful lives. The impact from changing useful economic lives and residual
values are recorded on a prospective basis. Systematic amortisation is computed on a straight-line basis over the
following estimated useful economic lives:
Category
Software internally generated and purchased
Brands and customer relationships
Licenses
Other intangible assets
Years
3 to 7
5 to 10
2 to 16
3 to 10
If indications exist that the value of an asset may be impaired, the recoverable amount of the asset is determined.
If the recoverable amount of the asset, which is the greater of the fair value less costs to sell and the value in use,
is less than its carrying amount, the carrying amount is written down to the recoverable amount.
3.5 Provisions, contingent liabilities and contingent assets
Provisions
In CHF million
Balance at 31 December 2016
Additions to provisions
Present-value adjustments
Release of unused provisions
Use of provisions
Foreign currency translation adjustments
Balance at 31 December 2017
Thereof current provisions
Thereof non-current provisions
1 See Note 4.1.
Dismantlement
and restoration
costs
Regulatory
and competition
law proceedings
Termination
benefits 1
542
61
8
(8)
(3)
–
600
–
600
150
6
–
–
–
–
156
–
156
79
95
–
(34)
(28)
–
112
98
14
Other
191
85
(1)
(36)
(32)
2
209
79
130
Total
962
247
7
(78)
(63)
2
1,077
177
900
Provisions for dismantling and restoration costs
The provisions are computed by reference to estimates of future anticipated dismantling costs and are discounted
using an average interest rate of 1.19% (prior year: 1.18%). The effect of using different interest rates amounted to
CHF 1 million (prior year: CHF 47 million). The cost index used for computing the dismantling costs was amended
resulting in an impact of CHF 55 million (prior year: CHF –103 million). In 2017, as a result of reassessments, adjust-
ments totalling CHF 53 million (prior year: CHF 49 million) were recorded under property, plant and equipment,
without impacting the income statement, and CHF 1 million (prior year: CHF 4 million) which was recognised in
the income statement. The non-current portion of the provisions is expected to be settled after 2020. An increase
of estimated costs by 10% would result in an increase of CHF 57 million in the amount of the provision. A shift in
the timing of dismantling by a further ten years would lead to a reduction in the provision by CHF 76 million.
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Provisions for regulatory and competition-law proceedings
In accordance with the revised Telecommunications Act, Swisscom provides access services (incl. interconnection)
to other telecommunication service providers in Switzerland. In previous years, several telecommunication service
providers demanded from the Federal Communications Commission (ComCom) a reduction in the prices charged
to them by Swisscom. The determination of the prices for access services during 2013 to 2017 is still pending.
In 2009, the Competition Commission (Weko) levied a penalty totalling CHF 220 million on Swisscom for abuse of
a market-dominant position in the case of ADSL services during the period through to the end of 2007. Swisscom
has appealed against the ruling to the Federal Administrative Court. In September 2015, the Federal Administrative
Court in principle upheld the Weko decision and reduced the penalty imposed on Swisscom by Weko from CHF 220
million to CHF 186 million. As a result of the decision, Swisscom recognised a provision of CHF 186 million in the
third quarter of 2015. Swisscom does not consider the penalty to be justified and has lodged an appeal to the
Federal Court. At the beginning of 2016, it paid the penalty of CHF 186 million as no suspensive effect was granted.
In the event that a legally enforceable finding as to market abuse is reached, civil-law claims might be asserted
against Swisscom.
On the basis of legal opinions, Swisscom has established provisions for regulatory and competition-law proceedings.
Any applicable payments will depend upon the date on which legally-binding decrees and decisions are issued and
could occur within five years.
Other provisions
Other provisions include provisions for environmental, contractual and non-income-related tax risks. Any applicable
payments of the non-current portion of the provisions could likely occur within three years.
Contingent liabilities arising from competition-law proceedings
The Competition Commission (Weko) is conducting several proceedings against Swisscom. In the event that a
legally enforceable finding of market abuse is reached, Weko can impose a penalty on Swisscom. In addition, claims
under civil law might be asserted against Swisscom. In April 2013, Weko initiated an investigation against Swisscom
pursuant to the Anti-Trust Law in the area of broadcasting live-sport events on pay TV. In May 2016, Weko decreed a
penalty of CHF 72 million on Swisscom in these proceedings.
In November 2015, in its investigation as to the invitation to tender for the corporate network of the Swiss Post in
2008, Weko reached the conclusion that Swisscom has a market-dominant position on the market for broadband
access for business clients. Because of this conduct judged to be unlawful under Competition Law, Weko ruled a
penalty of CHF 8 million.
Swisscom has challenged the rulings of Weko concerning live sports broadcasts on pay TV as well as of the invitation
to tender for the corporate network of the Swiss Post in the Federal Administrative Court as it considers that it has
conducted itself in a lawful manner. Swisscom considers the levying of sanctions in the court of last appeal as
improbable for which reason no provisions have been recognised in the consolidated financial statements as of and
for the year ended 31 December 2017, as in the prior year. In view of the past proceedings conducted by Weko,
further proceedings against Swisscom might be initiated.
Contingent assets from litigation
In 2015, the Italian competition authorities (AGCM) found TIM (formerly Telecom Italia) guilty of unlawful conduct
as a market-dominant company and imposed a penalty of EUR 104 million. Related to the same matter, Fastweb has
claimed damages from TIM and initiated legal action in connection therewith. In the fourth quarter of 2015, Fastweb
and TIM reached an out-of-court settlement which encompassed the contested receivables of both parties due
from each other. In the second quarter of 2017, TIM made a payment of EUR 95 million (CHF 102 million). For Fastweb,
there exists no further uncertain receivable arising from the settlement to which conditions are attached.
See Note 1.2.
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Material accounting judgements or estimation uncertainties
The provisions for dismantling and restoration costs relate to the dismantling of telecommunication installations
and transmitter stations as well as the restoration to its original state of land held by third party owners. The level
of the provisions is determined to a significant degree by the estimation of future dismantling and restoration
costs as well as the timing of the dismantling.
Provisions for pending litigation are measured on the basis of available information and an estimate of probable
expected cash outflows. Depending on the outcome of these proceedings, claims may be made against the group
which are not or not fully be covered by provisions or existing insurance. The provisions so established constitute
the best possible estimate of the ultimate liability.
Possible liabilities whose occurrence as of the balance-sheet date cannot be assessed, or liabilities, the level of
which cannot be reliably estimated, are disclosed as contingent liabilities.
Accounting policies
Provisions are raised whenever a legal or de facto liability exists as a result of an occurrence in the past, the
outflow of resources to settle the liability is probable and the amount of the liability can be estimated reliably.
Provisions are discounted if the effect is material.
Provisions for dismantling and restoration costs
Swisscom is legally obligated to dismantle transmitter stations and telecommunication installations located on
land belonging to third parties following decommissioning and to restore to its original state the property owned
by third parties in the locations where these installations are erected. The costs of dismantling are capitalised as
part of the acquisition costs of the installations and are amortised over the useful lives of the installations. The
provisions are measured at the present value of the aggregate future costs and are reported under long-term
provisions. Whenever the provision is re-measured, the present value of the changes in the liability are either added
to or deducted from the cost of the related capitalised asset. The amount deducted from the cost of the related
capitalised asset shall not exceed its net carrying amount. Any excess is taken directly to income.
Provisions for termination benefits
Costs relating to the implementation of personnel downsizing programmes are expensed in the period when
management commits itself to a downsizing plan, it is probable that a liability has been incurred, the amount
thereof can be reliably estimated, and the implementation of the programme has started or the individuals
involved have been advised in sufficient detail as to the main terms of the downsizing programme. A public
announcement and/or communication to personnel associations are deemed to be equivalent to commencing
the implementation of the programme.
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4 Employees
Swisscom has over 20,000 employees, of which 17,700 are in Switzerland. In this section is to be found information
about the employee headcount and personnel expense, the compensation paid to individuals in key positions,
as well as retirement-benefit obligations.
4.1 Employee headcount and personnel expense
Employee headcount
In full-time equivalent
Residential Customers
Enterprise Customers
Wholesale
IT, Network & Infrastructure
Swisscom Switzerland
Fastweb
Other Operating Segments
Group Headquarters
Total headcount
Thereof Switzerland
Thereof foreign countries
31.12.2017
31.12.2016
5,638
4,605
88
4,826
15,157
2,504
2,580
265
20,506
17,688
2,818
6,065
4,651
88
5,072
15,876
2,468
2,493
290
21,127
18,372
2,755
Average number of employees
20,836
21,453
Personnel expense
In CHF million
Salary and wage costs
Social security expenses
Expense of defined benefit plans 1
Expense of defined contribution plans
Expense for share-based payments
Termination benefits
Other personnel expense
Total personnel expense
Thereof Switzerland
Thereof foreign countries
1 See Note 4.3.
2017
2,214
257
375
10
2
61
83
3,002
2,759
243
Change
–7.0%
–1.0%
0.0%
–4.9%
–4.5%
1.5%
3.5%
–8.6%
–2.9%
–3.7%
2.3%
–2.9%
2016
2,268
253
338
9
3
20
56
2,947
2,718
229
Termination benefits
Swisscom supports employees affected by downsizing through a social plan. Depending on the relevant social
plan as well as age and length of service, certain employees affected by downsizing may transfer to the employment
company Worklink AG. The employment company Worklink AG hires out participating employees to third parties
on a temporary basis.
The net expense for personnel reduction plans amounts to CHF 61 million. This amount consists of newly estab-
lished provisions of CHF 95 million, less the release of provisions no longer required of CHF 34 million. During 2016,
Swisscom announced that the cost basis in Switzerland is to be reduced by CHF 60 million per annum until 2020.
In view of the sustained market pressure in its core business, higher efficiency potential through digitalisation and
the necessary time and means for developing new business in growth areas, such as the Cloud and security,
Swisscom has raised this target for 2018 to 2020 to CHF 100 million per annum. Swisscom continues to achieve
cost savings principally through a streamlining of work processes and an on-going reduction of job vacancies in
declining business areas. The measures planned will result in the elimination of positions in Switzerland and in
employees participating in the social plan.
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4.2 Key management compensation
In CHF million
Current compensation
Share-based payments
Social security contributions
Total compensation to members of the Board of Directors
Current compensation
Share-based payments
Benefits paid following retirement from Group Executive Board
Pension contributions
Social security contributions
Total compensation to members of the Group Executive Board
2017
2016
1.4
0.7
0.1
2.2
5.8
0.9
0.6
0.9
0.6
8.8
1.4
0.7
0.1
2.2
5.5
1.0
–
1.1
0.5
8.1
Total compensation to members of the Board of Directors and of the Group Executive Board
11.0
10.3
Individuals in key positions of Swisscom are the members of the Group Executive Board and the Board of Directors
of Swisscom Ltd. Compensation paid to members of the Board of Directors consists of basic emoluments plus
functional allowances and meeting attendance fees. One third of the entire compensation of the Board of Directors
(excluding meeting allowances) is paid in the form of equity shares. Compensation paid to the members of the
Group Executive Board consists of a fixed basic salary component settled in cash, a variable performance-related
portion settled in cash and shares, payments in kind and non-cash benefits as well as pension and social insurance
benefits. 25% of the variable performance-related share of the members of the Group Executive Board is paid out
in shares. The Group Executive Board members may elect to increase this share to 50%.
The disclosures required by the Swiss Ordinance against Excessive Compensation in Listed Companies (OaEC) are
set out in the chapter containing the Remuneration Report. Shares in Swisscom Ltd held by the members of the
Board of Directors and Group Executive Board are set out in the notes to the consolidated financial statements of
Swisscom Ltd.
4.3 Post-employment benefits
Defined benefit plans
comPlan
The majority of employees in Switzerland is insured for the risks of old age, death and disability by the Swisscom
retirement-benefit scheme. The retirement-benefit scheme is implemented through the medium of the comPlan
pension plan which has the legal form of a foundation. The supreme governing body of the pension plan is the
Foundation Council which is made up of an equal number of representatives of the employees and the employer.
The pension-fund rules, together with the legal provisions concerning occupational pension plans, constitute the
formal regulatory framework of the pension plan. Individual retirement-savings accounts are maintained for each
beneficiary, to which are credited savings contributions varying with age as well as interest accruing. The rate of
interest to be applied to the retirement-savings accounts is set each year by the Foundation Council, having regard
to the financial situation of the pension fund. The amounts credited to the individual savings accounts are funded
by savings contributions of the employer and employees. In addition, the employer pays risk contributions to fund
death and disability benefits. The standard retirement age is 65. Employees are entitled to early retirement with a
reduced old-age pension. The amount of the old-age pension results from multiplying the individual retire-
ment-savings account by a conversion rate set out in the pension-fund rules. The retirement benefits can also be
paid out, in full or in part, in the form of a capital payment. In case of early retirement, the employer finances
additionally a OASI bridging pension until the standard retirement age. The amount of disability pensions is deter-
mined as a percentage of the insured salary and is independent of the number of service years.
The formal regulatory framework contains various provisions concerning risk sharing between the beneficiaries
and the employer. In the event of a funding shortfall, computed in accordance with Swiss financial statement
accounting principles (Swiss GAAP ARR), the Foundation Council lays down measures which lead to an elimination
of the funding deficit and a restoration of a financial equilibrium within a timeframe of 5 to 7 years. The measures
may consist of the levying of restructuring contributions, a lower level of interest or zero interest accruing on the
accumulated employee savings, the lowering of benefits or in a combination of such measures. Should a structural
funding shortfall exist as a result of insufficient current interest-induced funding, the top priority is to remedy this
situation by adapting future benefits. The employer’s restructuring contributions must, at a minimum, be equal
to the sum of employee restructuring contributions. Under the formal regulatory framework, the employer has no
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legal obligation to pay additional contributions to eliminate more than 50% of a funding shortfall. In the case of
Swisscom, a de-facto obligation over and above the legal minimum obligation to pay additional or restructuring
contributions derives from customary company-specific practice in the past. The upper limit of the employer’s
share of future benefit costs within the meaning of IAS 19.87(c) is assumed to be at the level of the de-facto
obligation.
As a result of the low interest-rate level and increasing life expectancy, the Foundation Council decided in 2016
upon various measures to ensure a financial equilibrium. The core elements of the measures comprise a lowering
of the conversion rate and an increase in recurring savings contributions of the employees and employer. In addition
to this, special contributions are to be credited to the savings accounts of older beneficiaries over a maximum
period of 5 years in order to cushion the impact of future pension reductions. Swisscom bears a share of the costs
of the special contributions through an extraordinary payment of CHF 50 million in 2017. The remaining costs of
an anticipated amount of approx. CHF 250 million will be financed by using freely available funds of comPlan. The
various measures gave rise in 2016 to a past-service cost of CHF 3 million. This is based on a revaluation of the net
pension-fund obligations using the market values of the plan assets valid as of the date of the pension-fund
amendment and the current actuarial assumptions which take into account the risk-sharing features. Ignoring the
risk-sharing features, a negative past-service cost of CHF 546 million would have resulted in 2016 from the plan
amendment.
In accordance with the Swiss accounting standards relevant for the pension fund (Swiss GAAP ARR), the funding
surplus at 31 December 2017 amounts to CHF 0.8 billion with a coverage ratio of around 108% (prior year: 101%).
The main reasons for the difference compared with IFRS are the use of a higher discount rate as well as a different
actuarial measurement method with a deferred recognition of the costs of future retirement-benefit benefits.
Other pension plans
Other pension plans exist for individual Swiss subsidiary companies which are not affiliated to comPlan and for
Fastweb. Employees of the Italian subsidiary Fastweb have acquired entitlements to future pension benefits up to
the end of 2006 which are recorded in the balance sheet as defined-benefit obligations.
Pension cost from defined-benefit pension plans
In CHF million
Current service cost
Plan amendments
Administration expense
Total recognised in personnel expense
Interest expense on net defined benefit obligations
Total recognised in financial expense
Total expense of defined benefit plans
recognised in income statement
comPlan Other plans
2017
comPlan Other plans
368
–
4
372
11
11
383
2
–
1
3
–
–
3
370
322
–
5
375
11
11
3
4
329
25
25
386
354
8
–
1
9
–
–
9
2016
330
3
5
338
25
25
363
In CHF million
comPlan Other plans
2017
comPlan Other plans
2016
Actuarial gains and losses from
Change of the demographical assumptions
Change of the financial assumptions
Experience adjustments to defined benefit obligations
Change in share of employee contribution (risk sharing) 1
Return on plan assets excluding the part
recognised in financial result
Expense (income) of defined benefit plans
recognised in other comprehensive income
(131)
(72)
(17)
246
(879)
(853)
–
–
–
–
3
3
(131)
(72)
(17)
246
102
(280)
36
(711)
–
2
(3)
–
102
(278)
33
(711)
(876)
(308)
–
(308)
(850)
(1,161)
(1)
(1,162)
1 The reason behind the decrease in the share of employee contribution of CHF 246 million is the reduction in the structural funding shortfall, which is mainly
attributable to the positive result on plan assets.
In 2016, the impact of the initial application of risk-sharing features in the financial assumptions totalled
CHF 856 million, of which CHF 711 million is attributable to the limit on the employer share and CHF 145 million
to required amendments of future benefits.
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Status of pension plans
In CHF million
comPlan Other plans
2017
comPlan Other plans
2016
Defined benefit obligations
Balance at 1 January
Current service cost
Interest cost on defined benefit obligations
Employee contributions
Benefits paid
Actuarial losses (gains)
Business combinations
Plan amendments
Transfer of pension plans to comPlan
Balance at 31 December
Plan assets
Balance at 1 January
Interest income on plan assets
Employer contributions
Employee contributions
Benefits paid
Return (expense) on plan assets excluding the part
recognised in financial result
Administration expense
Transfer of pension plans to comPlan
Balance at 31 December
Net defined benefit obligations
11,635
105
11,740
12,183
117
12,300
368
78
186
(471)
26
–
–
72
11,894
2
–
–
(1)
–
1
–
(72)
35
370
78
186
(472)
26
1
–
–
322
113
178
(325)
(853)
–
3
14
11,929
11,635
8
1
2
(9)
(1)
1
–
(14)
105
330
114
180
(334)
(854)
1
3
–
11,740
9,826
64
9,890
9,307
74
9,381
67
335
186
(471)
879
(4)
46
10,864
–
3
–
–
(3)
(1)
(46)
17
67
338
186
88
268
178
(471)
(325)
876
308
(5)
–
(4)
6
10,881
9,826
1
3
2
(9)
–
(1)
(6)
64
89
271
180
(334)
308
(5)
–
9,890
Net defined benefit obligations recognised at 31 December
1,030
18
1,048
1,809
41
1,850
Movements in recognised defined-benefit obligations are to be analysed as follows:
In CHF million
Balance at 1 January
Pension cost, net
Employer contributions and benefits paid
Business combinations
Expense (income) of defined benefit plans
recognised in other comprehensive income
Transfer of pension plans to comPlan
Balance at 31 December
comPlan Other plans
2017
comPlan Other plans
1,809
383
(335)
–
(853)
26
1,030
41
3
(4)
1
3
(26)
18
1,850
2,876
386
(339)
1
354
(268)
–
(850)
(1,161)
–
8
1,048
1,809
43
9
(3)
1
(1)
(8)
41
2016
2,919
363
(271)
1
(1,162)
–
1,850
The weighted average duration of the net present value of the recorded defined-benefit obligations is 17 years
(prior year: 18 years).
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Breakdown of pension plan assets
comPlan
Category
Government bonds Switzerland
Corporate bonds Switzerland
Investment
strategy
8.0%
6.0%
Government bonds developed markets, World
10.0%
Corporate bonds developed markets, World
Government bonds emerging markets, World
Private debt
Third-party debt instruments
Equity shares Switzerland
9.0%
7.0%
6.0%
Equity shares developed markets, World
12.0%
13.2%
Equity shares emerging markets, World
8.0%
8.4%
Quoted
1.8%
5.7%
7.4%
10.0%
7.4%
0.0%
46.0%
32.3%
5.0%
5.5%
25.0%
27.1%
11.0%
6.0%
7.1%
3.6%
17.0%
10.7%
4.0%
7.0%
2.1%
0.0%
0.0%
31.12.2017
31.12.2016
Not
quoted
Total
Quoted
5.3%
5.7%
7.4%
10.0%
7.4%
6.2%
2.3%
6.0%
8.4%
9.2%
7.2%
0.0%
Not
quoted
4.5%
0.0%
0.0%
0.0%
0.0%
6.2%
Total
6.8%
6.0%
8.4%
9.2%
7.2%
6.2%
42.0%
33.1%
10.7%
43.8%
5.5%
5.2%
13.2%
13.3%
8.4%
8.4%
27.1%
26.9%
11.8%
6.1%
7.5%
3.7%
17.9%
11.2%
4.1%
8.3%
0.6%
1.9%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
4.6%
1.2%
5.8%
2.0%
7.0%
1.4%
5.2%
13.3%
8.4%
26.9%
12.1%
4.9%
17.0%
3.9%
7.0%
1.4%
3.5%
0.0%
0.0%
0.0%
0.0%
6.2%
9.7%
0.0%
0.0%
0.0%
0.0%
4.7%
2.5%
7.2%
2.0%
8.3%
0.6%
Equity instruments
Real estate Switzerland
Real estate World
Real estate
Commodities
Private markets
Cash and cash equivalents and other investments 1.0%
Cash and cash equivalents and
alternative investments
12.0%
2.1%
10.9%
13.0%
1.9%
10.4%
12.3%
Total plan assets
100.0%
72.2%
27.8%
100.0%
73.1%
26.9%
100.0%
The Foundation Council determines the investment strategy and tactical bandwidths within the framework of
the legal provisions. Within its terms of reference, the Investment Commission undertakes the asset allocation
and is the central steering, coordination and monitoring body for the management of the pension-plan assets.
The investment strategy pursues the goal of achieving the highest possible return on assets within the framework
of its risk tolerance and thus of generating income on a long-term basis to meet all financial obligations. This is
achieved through a broad diversification of risks over various investment categories, markets, currencies and
industry segments in both developed and emerging markets. The interest rate duration of interest-bearing assets
is 6.56 years (prior year: 5.52 years) and the average rating of these assets is A–. Within the overall portfolio, all
foreign currency positions are hedged against the Swiss franc following a currency strategy to the extent neces-
sary to meet a pre-determined ratio of 88% (CHF or CHF-hedged). The unquoted and therefore lesser liquid invest-
ments make up 27.8% of total plan assets. Following this investment strategy, comPlan anticipates a target value
for the value fluctuation reserve of 17.8% (basis: 2018 financial year).
Additional information on plan assets
As of 31 December 2017, plan assets include Swisscom Ltd shares and bonds with a fair value of CHF 6 million
(prior year: CHF 5 million). The effective return on plan assets in 2017 amounted to CHF 943 million (prior year:
CHF 397 million).
In 2018, Swisscom expects to make payments to the pension funds for regulatory employee contributions totalling
CHF 270 million.
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Assumptions underlying actuarial computations
Assumptions
Discount rate at 31 December
Expected rate of salary increases
Expected rate of pension increases
Interest on old age savings accounts
Share of employee contribution to funding shortfall
Life expectancy at age of 65 – men (number of years)
Life expectancy at age of 65 – women (number of years)
2017
2016
comPlan
Other plans
comPlan
Other plans
0.69%
1.08%
–
0.69%
40%
22.10
23.90
1.30%
–
–
–
–
22.10
23.90
0.64%
1.08%
–
0.64%
40%
22.26
24.32
0.91%
0.74%
–
1.03%
–
22.26
24.32
The discount rate is based upon CHF-denominated corporate bonds with an AA rating of domestic and foreign
issuers and listed on the Swiss Exchange SIX. The development of salaries corresponds to the historical average of
recent years. No future growth in pensions is anticipated as comPlan has insufficient fluctuation reserves avail-
able. The interest rate used to compute interest accruing on the individual retirement savings is the discount rate.
In 2017, life-expectancy assumptions are arrived at for the first time through a projection of future mortality
improvements in accordance with the continuous mortality investigation model (CMI), based on the mortality
improvements actually observed in Switzerland in the past. The computations are made with a future long-term
mortality improvement rate of 1.75%. The first-time application of the CMI model gave rise to a reduction in net
retirement-benefit obligations by CHF 100 million, which was recognised in other comprehensive income as a
change in accounting estimate. In the previous year, BVG 2015 generation tables were used for the life- expectancy
assumption.
The risk-sharing attributes contained in the formal regulatory framework relating to the handling of funding
shortfalls were taken into account in the financial assumptions in two steps. As a first step, it is assumed that the
Foundation Council will decide on a gradual lowering of future pensions by 5.4% (prior year: 5.6%) over a period of
10 years in order to close the interest-induced structural funding gap. This is based upon a forecast for the future
conversion rate using a mixed rate for the mandatory and extra-mandatory portions. The conversion rate in the
mandatory portion applies the current legal conversion rate. In the extra-mandatory portion, the conversion rate
is computed with the discount rate of 0.69%. As a second step, the present value of the remaining funding gap
between the regulatory contributions and the benefits amended in the first step are spread over the employer
and the employees. The legal and de-facto obligation of the employer to pay additional contributions is unchanged
and assumed to be limited to 60% of the funding gap. This is based on the legal and regulatory provisions concerning
the elimination of funding shortfalls as well as the measures actually decided upon by the Foundation Council and
the employer in the past. Assuming the limitation of the employer’s share of the funding shortfall, this results in
a reduction in defined-benefit obligations of CHF 465 million (prior year: CHF 711 million), which corresponds to
the expected employee contribution. The effect of taking this into consideration for the first time was dealt with
as a change in accounting estimate in 2016 and recognised in other comprehensive income. In 2017, the reduction
of the employee contribution was recognised in other comprehensive income.
Sensitivity analysis comPlan
Sensitivity analysis 2017
In CHF million
Discount rate (change +/–0.5%)
Expected rate of salary increases (change +/–0.5%)
Expected rate of pension increases (change +0.5%; –0.0%)
Interest on old age savings accounts (change +/–0.5%)
Share of employee contribution to funding shortfall (change +/–10%)
(116)
Life expectancy at age of 65 (change +/–0.5 year)
126
1 The sensitivity refers to the current service cost recorded in personnel expense.
Defined benefit obligations
Current service cost 1
Increase
Assumption
Decrease
Assumption
Increase
Assumption
Decrease
Assumption
(556)
44
536
21
650
(41)
–
(19)
116
(127)
(39)
7
29
8
–
5
47
(7)
–
(7)
–
(5)
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Sensitivity analysis 2016
In CHF million
Discount rate (change +/–0.5%)
Expected rate of salary increases (change +/–0.5%)
Expected rate of pension increases (change +0.5%; –0.0%)
Interest on old age savings accounts (change +/–0.5%)
Share of employee contribution to funding shortfall (change +/–10%)
(178)
Life expectancy at age of 65 (change +/–0.5 year)
128
1 The sensitivity refers to the current service cost recorded in personnel expense.
Defined benefit obligations
Current service cost 1
Increase Assumption Decrase Assumption Increase Assumption Decrase Assumption
(574)
47
547
25
670
(45)
–
(23)
178
(129)
(40)
7
30
8
–
5
48
(7)
–
(8)
–
(5)
The sensitivity analysis takes into consideration the movement in defined-benefit obligations as well as current-
service costs in adjusting the actuarial assumptions by half a percentage point and half a year, respectively. In the
process, only one of the assumptions is adjusted each time, the other parameters remaining unchanged. In the
sensitivity analysis, in view of a negative movement in pension increases, no change was made as the reduction
in pension benefits is not possible.
Material accounting judgements or estimation uncertainties
The determination of post-employment retirement benefit obligations requires an estimation of the future service
periods, the development of future salaries and pensions as well as interest accruing on the accumulated employee
savings accounts, the timing of contractual pension benefit payments and the employees’ share of the funding
shortfall. This evaluation is made on the basis of prior experience and anticipated future trends. Anticipated
future payments are discounted with the yields of Swiss-franc-denominated corporate bonds of domestic and
foreign issuers and quoted on the Swiss Exchange with a AA rating. The discount rates match the anticipated
payment maturities of the liabilities.
Accounting policies
Actuarial computations of the pension expense and related defined-benefit obligations are undertaken using the
projected unit credit method. Current service costs, past service costs arising from pension-plan amendments
and plan settlements as well as administrative costs are reported in the income statement under personnel
expense and interest accruing on net obligations as finance expense. Actuarial gains and losses and the return on
plan assets, except for amounts reflected in net interest income, are reported under other comprehensive income.
The assumptions regarding net future benefits are set out in the formal set of regulations governing the pension
plan in compliance with legal provisions. As regards the Swiss pension plans, the relevant formal regulations com-
prise the rules of the pension fund as well as the relevant laws, ordinances and directives concerning occupational
benefit plans, in particular the provisions contained therein concerning funding and measures to be taken to
eliminate funding shortfalls. From 2016 onwards, risk-sharing features are taken into account in defining financial
assumptions in the formal regulatory framework which limits the employer’s share of the costs of future benefits
as well as imposing obligations on employees, where applicable, to make additional contributions to eliminate
funding deficits.
Should the level of committed long-term disability benefits (disability pensions), irrespective of the number of
service years, be the same for all insured employees, the costs for these benefits are recognised on the date on
which the event causing the disability occurs.
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5 Scope of consolidation
The following section sets out details of the Group structure of Swisscom as well as note disclosures concerning
subsidiary companies, joint ventures and associated companies. In addition, material changes in Group structure
are discussed, together with their impact on the consolidated financial statements.
5.1 Group structure
Swisscom Ltd is the parent company of the Group and holds principally direct majority shareholdings in Swisscom
(Switzerland) Ltd, Swisscom Broadcast Ltd and Swisscom Directories Ltd. Fastweb S.p.A. (Fastweb) is held indirectly
via Swisscom (Switzerland) Ltd as well as an intermediate company in Italy. Swisscom Re Ltd in Liechtenstein is the
Group’s in-house reinsurance company.
Swisscom holds a 69% shareholding in Swisscom Directories Ltd, the remaining shares being held by Tamedia.
Swisscom has granted Tamedia a put option, and Tamedia has granted Swisscom a call option for Tamedia’s 31%
shareholding. The put and call options may be exercised as from mid-2018, respectively. As of 31 December 2017,
the fair value of the put option amounts to CHF 231 million (prior year: CHF 233 million), which has been recognised
in the consolidated financial statements of Swisscom Ltd under other financial liabilities. See Note 2.2.
5.2 Material changes in scope of consolidation
Net cash flows from the acquisition and disposal of participations may be analysed as follows:
In CHF million
Expenses for business combinations net of cash and cash equivalents acquired
Expenses for deferred consideration arising on business combinations
Expenses for shareholdings accounted for using the equity method
Proceeds from sale of equity-accounted investees
Acquisition of non-controlling interests
Total cash flow from the purchase and sale of shareholdings, net
2017
(44)
(19)
(20)
76
(99)
(106)
2016
(6)
(32)
(3)
88
(4)
43
In order to accelerate the development of blockchain applications, Swisscom Ltd has established Swisscom Block-
chain Ltd, of which Swisscom holds 70% of the capital as majority shareholder, the remaining 30% shares being
owned by management.
In 2017, the Italian subsidiary Fastweb acquired the large corporate-client business of Tiscali for a purchase price
of EUR 45 million (CHF 50 million). In November 2017, Swisscom acquired the remaining minority shares in Mila Ltd,
of Sellbranch AB as well as of CT Cinetrade Ltd with its subsidiary companies Teleclub AG, Kitag Kino-Theater AG
and of PlazaVista Entertainment AG. Furthermore, in 2017 Swisscom increased its shareholding in Swisscom Digital
Technology SA from 51% to 75%.
In September 2017, Swisscom sold its shareholding in AWIN AG for a sales price of EUR 62 million (CHF 71 million).
This sale resulted in a gain on disposal of CHF 1 million which was recognised in other financial income in the third
quarter of 2017. In December 2016, Swisscom sold its shareholding in Metroweb S.p.A. for a sales price of
EUR 80 million (CHF 86 million) resulting in a gain on disposal of CHF 41 million which was recognised in other
financial income.
Accounting policies
Consolidation
Subsidiaries are all companies over which Swisscom Ltd has the effective ability of controlling their financial and
business policies. Control is generally assumed where Swisscom Ltd directly or indirectly holds the majority of the
voting rights or potential voting rights of the company. Companies acquired and sold are included in consolidation
from the date on which they are acquired and deconsolidated from the date they are disposed of, respectively.
Intercompany balances and transactions, income and expenses, shareholdings and dividends as well as unrealised
gains and losses are fully eliminated. Non-controlling interests in subsidiary companies are reported in the consol-
idated balance sheet within equity separately from that attributable to the shareholders of Swisscom Ltd. The
non-controlling interests in net income or loss are shown in the consolidated income statement as a component
of the consolidated net income or loss. Movements in shareholdings of subsidiary companies are reported as
transactions within equity insofar as control existed previously and continues to exist. Put options granted to
owners of non-controlling interests are disclosed as financial liabilities. The balance sheet date for all consolidated
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subsidiaries is 31 December. There are no material restrictions on the transfer of funds from the subsidiaries to the
parent company.
Shareholdings over which Swisscom exercises significant influence but does not have control, are accounted for
using the equity method. A significant influence is generally assumed to exist whenever between 20% and 50% of
the voting rights are held.
Business combinations
Business combinations are accounted for using the acquisition method. As of the date of the business combination,
acquisition costs are recognised at fair value. The purchase consideration includes the amount of cash paid as well
as the fair value of the assets ceded, liabilities incurred or assumed as well as own equity instruments ceded.
Liabilities depending on future events based upon contractual agreements are recognised at fair value. At the
time of acquisition, all identifiable assets and liabilities that satisfy the recognition criteria are recognised at their
fair values. The difference between the cost of acquisition and the fair value of the identifiable assets and liabilities
acquired or assumed is accounted for as goodwill after taking into account any non-controlling interests.
5.3 Equity-accounted investees
In CHF million
Balance at 1 January
Additions
Disposals
Dividends
Share of net results
Share of other comprehensive income
Foreign currency translation adjustments
Balance at 31 December
2017
193
26
(76)
(20)
17
2
10
152
2016
223
11
(41)
(17)
26
(7)
(2)
193
In 2017, an aggregate negative amount of CHF 11 million (prior year: CHF 3 million) was recognised as the attributable
share of net results in equity-accounted investees. Included therein are impairment losses of CHF 28 million (prior
year: CHF 29 million) on loans which are considered as net investments in equity-accounted investees.
Selected key performance indicators for equity-accounted investees
In CHF million
Income statement
Net revenue
Operating expense
Operating income
Net income
Balance sheet at 31 December
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
2017
2016
2,120
(2,065)
55
17
942
860
(926)
(485)
391
2,453
(2,371)
82
34
1,178
202
(899)
(113)
368
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5.4 Group companies
Group companies in Switzerland
Registered name
Switzerland
Admeira Ltd 1,3
Ad Unit Ltd. 2
BFM Business Fleet Management Ltd 1
Billag Ltd 1
cablex Ltd 2
CT Cinetrade AG 1
Datasport Ltd 2
finnova ltd bankware 2,3
Global IP Action Ltd 2
kitag kino-theater Ltd 2
Medgate Ltd 2,3
Medgate Technologies Ltd 2,3
Mila AG 2
Mona Lisa Capital AG 2
MyStrom Ltd 2
PlazaVista Entertainment AG 2
SEC consult (Switzerland) Ltd 2,3
siroop Ltd 2,3
SmartLife Care Ltd 2
Swisscom Blockchain Ltd 2
Swisscom Broadcast Ltd 1
Swisscom Digital Technology SA 1
Swisscom Directories Ltd 1
Swisscom eHealth Invest GmbH 2
Swisscom Energy Solutions Ltd 2
Swisscom Event & Media Solutions Ltd 2
Swisscom Health AG 2
Swisscom Real Estate Ltd 1
Share of capital
Registered and voting right
in %
office
Currency
Share capital
in million
Segment 4
Berne
Zurich
Ittigen
Fribourg
Berne
Zurich
Gerlafingen
Lenzburg
Pfäffikon
Zurich
Basel
Zug
Zurich
Ittigen
Ittigen
Zurich
Zurich
Zurich
Wangen
Zurich
Berne
Geneva
Zurich
Ittigen
Ittigen
Ittigen
Ittigen
Ittigen
33
69
100
100
100
100
100
9
75
100
40
40
100
100
52
100
47
50
48
70
100
75
69
100
52
100
100
100
100
100
100
100
100
33
83
100
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
CHF
0.3
0.1
1.0
0.1
5.0
0.5
0.2
0.5
0.2
1.0
0.7
0.1
0.4
5.0
0.1
0.1
0.1
0.1
0.2
0.1
25.0
0.1
2.2
1.4
13.3
0.1
0.1
100.0
0.1
1,000.0
0.1
2.0
1.2
0.6
1.1
0.5
OTH
OTH
SCS
OTH
OTH
SCS
SCS
SCS
OTH
SCS
SCS
SCS
SCS
OTH
OTH
SCS
OTH
OTH
OTH
SCS
OTH
SCS
OTH
GHQ
OTH
OTH
SCS
SCS
SCS
SCS
SCS
GHQ
SCS
SCS
OTH
GHQ
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Swisscom IT Services Finance Custom Solutions Ltd 2 Olten
Swisscom (Switzerland) Ltd 1
Swisscom Services Ltd 2
Swisscom Ventures Ltd 2
Teleclub AG 2
Teleclub Programm AG 2,3
VirtualAds AG 2
Worklink AG 1
Ittigen
Ittigen
Ittigen
Zurich
Zurich
Basel
Berne
1 Participation directly held by Swisscom Ltd.
2 Participation indirectly held by Swisscom Ltd.
3 Investment is accounted for using the equity method. Through its representation on the Board of Directors of the company, Swisscom can exercise a significant
influence.
4 SCS = Swisscom Switzerland, FWB = Fastweb, OTH = Other, GHQ = Group Headquarters (unallocated costs).
Group companies in other countries
Registered name
Belgium
Share of capital
Registered and voting right
in %
office
Currency
Share capital
in million
Segment 4
Belgacom International Carrier Services Ltd 2,3
Brussels
22
EUR
1.5
SCS
Germany
Abavent GmbH 2
Mila Europe GmbH 2
Swisscom Telco GmbH 2
VirtualAds Services GmbH 2
France
local.fr SA 2
SoftAtHome SA 2,3
Italy
Fastweb S.p.A. 2
Flash Fiber S.r.l. 2,3
Swisscom Italia S.r.l. 2
Liechtenstein
Swisscom Re Ltd 1
Luxembourg
DTF GP S.A.R.L 2
Digital Transformation Fund
Initial Limited Partner SCSp 2
Netherlands
Improve Digital B.V. 2
NGT International B.V. 2
Austria
Kempten
Berlin
Leipzig
Leipzig
100
100
100
83
Bourg-en-Bresse
100
Colombes
10
Milan
Milan
Milan
100
20
100
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
0.3
–
–
–
0.9
6.5
41.3
–
505.8
SCS
SCS
GHQ
OTH
OTH
SCS
FWB
FWB
GHQ
Vaduz
100
CHF
5.0
GHQ
Luxembourg
100
Luxembourg
100
Amsterdam
100
Capelle a/d IJssel
100
EUR
CHF
EUR
EUR
–
–
–
–
OTH
OTH
OTH
OTH
Swisscom IT Servics Finance SE 2
Vienna
100
EUR
3.3
SCS
Sweden
Sellbranch AB 2
Singapore
Stockholm
100
SEK
0.1
OTH
Swisscom IT Services Finance Pte Ltd 2
Singapore
100
SGD
0.1
USA
Swisscom Cloud Lab Ltd 2
Delaware
100
USD
–
SCS
SCS
1 Participation directly held by Swisscom Ltd.
2 Participation indirectly held by Swisscom Ltd.
3 Investment is accounted for using the equity method. Through its representation on the Board of Directors of the company, Swisscom can exercise a significant
influence.
4 SCS = Swisscom Switzerland, FWB = Fastweb, OTH = Other, GHQ = Group Headquarters (unallocated costs).
138
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6 Other disclosures
This section sets out information which is not already disclosed in the other parts of the report. It includes,
for instance, disclosures regarding income taxes and related parties.
6.1
Income taxes
Income tax expense
In CHF million
Current income tax expense
Adjustments recognised for current tax of prior periods
Deferred tax expense
Total income tax expense recognised in income statement
Thereof Switzerland
Thereof foreign countries
2017
349
20
23
392
338
54
2016
305
–
81
386
339
47
In addition, other comprehensive income includes current and deferred income taxes which may be analysed as
follows:
In CHF million
Foreign currency translation adjustments of foreign subsidiaries
Actuarial gains and losses from defined benefit pension plans
Change in the fair value of available-for-sale financial investments
Gains and losses from cash flow hedges transferred to income statement
Total income tax expense recognised in other comprehensive income
2017
19
171
(1)
(1)
188
2016
83
238
1
–
322
In the past, income taxes on foreign-currency related impairment losses on Group subsidiaries were recognised
under other comprehensive income. As a result of restructuring in 2016, these impairment losses can no longer be
asserted for tax purposes. The resultant effect on income taxes in other comprehensive income in 2016 amounts
to CHF 79 million.
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Analysis of income taxes
The applicable income tax rate which serves to prepare the following analysis of income tax expense is the
weighted average income tax rate calculated on the basis of the Group’s operating subsidiaries in Switzerland. The
applicable income-tax rate is 20.4% (prior year: 20.9%). The decrease in the applicable income tax rate is a conse-
quence of lower cantonal tax rates.
In CHF million
Income before income taxes in Switzerland
Income before income taxes foreign countries
lncome before income taxes
Applicable income tax rate
Income tax expense at the applicable income tax rate
Reconciliation to reported income tax expense
Effect from result of shareholdings accounted for using the equity method
Effect of tax rate changes on deferred taxes
Effect of use of different income tax rates in Switzerland
Effect of use of different income tax rates in foreign countries
Effect of non-recognition of tax loss carry-forwards
Effect of recognition and offset of tax loss carry-forwards not recognised in prior years
Effect of exclusively tax-deductible expenses and income
Effect of non-taxable income and non-deductible expenses
Effect of income tax of prior periods
Total income tax expense
Effective income tax rate
Current income tax assets and liabilities
In CHF million
Current income tax liabilities at 1 January, net
Recognised in income statement
Recognised in other comprehensive income
Income taxes paid in Switzerland
Income taxes paid in foreign countries
Current income tax liabilities at 31 December, net
Thereof current income tax assets
Thereof current income tax liabilities
Thereof Switzerland
Thereof foreign countries
2017
1,724
236
1,960
20.4%
400
2
(12)
2
20
11
(14)
(37)
–
20
392
2016
1,817
173
1,990
20.9%
416
1
(2)
(8)
5
6
(12)
(26)
6
–
386
20.0%
19.4%
2017
107
369
16
(279)
(10)
203
(10)
213
198
5
2016
125
305
5
(324)
(4)
107
(18)
125
105
2
140
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Deferred income tax assets and liabilities
In CHF million
Property, plant and equipment
Intangible assets
Provisions
Defined benefit obligations
Tax loss carry-forwards
Other
Total tax assets (tax liabilities)
Thereof deferred tax assets
Thereof deferred tax liabilities
Thereof Switzerland
Thereof foreign countries
Assets
Liabilities
34
–
102
186
90
153
565
(623)
(309)
(51)
–
–
(110)
(1,093)
31.12.2017
Net
amount
(589)
(309)
51
186
90
43
(528)
197
(725)
(588)
60
Assets
Liabilities
36
–
78
359
118
138
729
(568)
(326)
(76)
–
–
(99)
(1,069)
31.12.2016
Net
amount
(532)
(326)
2
359
118
39
(340)
281
(621)
(435)
95
Tax loss carry-forwards for which no deferred tax assets were recognised, expire as follows:
In CHF million
Expiring within 1 year
Expiring within 2 to 7 years
No expiration
Total unrecognised tax loss carry-forwards
Thereof Switzerland
Thereof foreign countries
31.12.2017
31.12.2016
–
125
39
164
114
50
–
86
27
113
72
41
Deferred tax liabilities of CHF 6 million (prior year: none) were recognised on the undistributed earnings of subsidiaries
as of 31 December 2017. Temporary differences of subsidiaries and equity-accounted investees, on which no
deferred income taxes are recognised as of 31 December 2017, amounted to CHF 1,117 million (prior year:
CHF 1,390 million).
Accounting policies
Income taxes encompass all current and deferred taxes which are based on income. Taxes which are not based on
income, such as taxes on real estate and on capital are recorded as other operating expenses. Deferred taxes are
computed using the balance sheet liability method whereby deferred taxes are recognised in principle on all temporary
differences. Temporary differences arise from differences between the carrying amount of a balance sheet position
in the consolidated financial statements and its value as reported for tax purposes and which will reverse in future
periods. Deferred tax assets are only recognised as assets to the extent that it is probable that they can be offset
against future taxable income. Income tax liabilities on undistributed profits of Group companies are only recognised
if the distribution of profits is to be made in the foreseeable future. Current and deferred tax assets and liabilities
are netted whenever they relate to the same taxing authority and taxable entity.
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6.2 Related parties
Majority shareholder and equity-accounted investees
Majority shareholder
Pursuant to the Swiss Federal Telecommunication Enterprises Act (TEA), the Swiss Confederation (“the Confederation”)
is obligated to hold a majority of the share capital and voting rights of Swisscom. On 31 December 2017, the
Confederation, as majority shareholder, continued to hold 51% of the issued shares of Swisscom Ltd. Any reduction
of the Confederation’s holding below a majority shareholding would require a change in law which would need to
be voted upon by the Swiss Parliament and would also be subject to a facultative referendum by Swiss voters. As
the majority shareholder, the Swiss Confederation has the power to control the decisions of the annual general
meetings of shareholders which are taken by the absolute majority of validly cast votes. This relates primarily to
resolutions concerning dividend distributions and the election of the members of the Board of Directors. Swisscom
supplies telecommunication services to and in addition, procures services from the Confederation. The Confederation
comprises the various ministries and administrative bodies of the Confederation and the other companies
controlled by the Confederation (primarily the Swiss Post, Swiss Federal Railways, RUAG as well as Skyguide). All
transactions are conducted on the basis of normal customer/supplier relationships and on conditions applicable to
unrelated third parties. In addition, financing trans actions are entered into with the Swiss Post on normal commercial
terms.
Equity-accounted investees
Services provided to/by equity-accounted investees are based upon market prices. Such participations are listed
in Note 5.3.
Transactions and balances
In CHF million
Financial year 2017
Confederation
Equity-accounted investees
Total 2017/Balance at 31 December 2017
In CHF million
Financial year 2016
Confederation
Equity-accounted investees
Total 2016/Balance at 31 December 2016
Income
Expense
Receivables
Liabilities
247
77
324
127
88
215
269
20
289
163
3
166
Income
Expense
Receivables
Liabilities
233
36
269
131
146
277
164
11
175
233
6
239
Occupational pension schemes and compensation payable to individuals in key positions
Transactions between Swisscom and the various pension funds are detailed in Note 4.3. Compensation paid to
individuals in key positions are disclosed in Note 4.2.
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6.3 Other accounting policies
Foreign currency translation
Foreign-currency transactions which are not denominated in the functional currency are translated into the functional
currency using the exchange rates prevailing at the dates of the transactions. Monetary items as of the balance
sheet date are translated into the functional currency at the exchange rate prevailing at the balance sheet date
and non-monetary items are translated using the exchange rate on the date of the transaction. Translation
differences are recognised in the income statement. Assets and liabilities of subsidiaries and associates reporting
in a different functional currency are translated at the exchange rates prevailing on the balance sheet date
whereas the income statement and the cash flow statement are translated at average exchange rates. Translation
differences arising from the translation of net assets and income statements are recorded in other
comprehensive income.
Significant foreign-currency translation rates
Currency
1 EUR
1 USD
Closing rate
Average rate
31.12.2017
31.12.2016
31.12.2015
1.170
0.976
1.074
1.019
1.084
0.995
2017
1.113
0.985
2016
1.090
0.990
Amended International Financial Reporting Standards and Interpretations, whose application is not yet mandatory
The following Standards and Interpretations published up to the end of 2017 are mandatory for accounting periods
beginning on or after 1 January 2018:
Standard
IFRIC 22
IFRIC 23
Name
Foreign currency transactions and advance consideration
Uncertainty over income tax treatments
Amendements to IAS 28
Long-term investments in associates and joint ventures
Amendements to IFRS 2
Classification and measurement of share-based payment transactions
IFRS 9
IFRS 15
IFRS 16
Various
Various
Financial instruments
Revenue from contracts with customers and related clarifications to IFRS 15
Leases
Amendements to IFRS 2014–2016
Amendements to IFRS 2015–2017
Effective from
1 January 2018
1 January 2019
1 January 2019
1 January 2018
1 January 2018
1 January 2018
1 January 2019
1 January 2018
1 January 2019
Swisscom will review its financial reporting for the impact of those new and amended standards which take
effect on or after 1 January 2018 and for which Swisscom did not make voluntary early application. At present,
Swisscom anticipates no material impact on consolidated financial reporting except for the amendments
described in the following paragraphs.
IFRS 9 Financial Instruments
The Standard includes new rules to classify and measure financial assets and liabilities, the recognition of value
impairments and the recording of hedging relationships. In certain cases, changes in classification will result from
the new provisions and also in certain cases, the new provisions regarding value impairment will lead to the earlier
recording of losses impacting income. Swisscom expects a pre-tax decrease in equity of some CHF 20 million from
the conversion as of 1 January 2018.
IFRS 15 Revenue from Contracts with Customers
In contrast to the provisions currently in force, the new standard provides for a single, principles-based, five-step
model which is to be applied to all contracts with customers. In accordance with IFRS 15, the amount which is
expected to be received from customers as consideration for the transfer of goods and services to the customer
is to be recognised as revenue. As regards determining the date or period, it is no longer a question of the transfer
of risks and opportunities but of the transfer of control over the goods and services to the customers. With regards
to multi-component contracts, IFRS 15 explicitly rules that the transaction price is to be allocated to each distinct
performance obligation in relation to the relative stand-alone selling prices. Furthermore, the new standard
contains new rules regarding the costs of fulfilment and acquiring a contract as well as guidelines as to the
question when such costs are to be capitalised. In addition, the new standard requires new, more detailed note
disclosure information.
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IFRS 15 will have the following material impact on the consolidated financial statements of Swisscom:
> Revenues: In the case of multi-component contracts (mobile-phone contract with a subsidised mobile handset),
the revenue will be reallocated over the pre-delivered components (mobile handset) with the result that the
revenue will be recognised earlier. The total revenue remains unchanged over the duration of the contract.
> Contract costs: Handset subsidies and commissions paid to dealers (contract acquisition costs) as well as costs
of routers and set-top boxes (contract performance costs) are capitalised and expensed over the term of the
contract.
Swisscom has elected to apply the modified retroactive approach for the initial adoption of IFRS 15. In accordance
with this transitional method, Swisscom must apply IFRS 15 retroactively only for those contracts which have not
been fulfilled as of 1 January 2018. The resultant impact of conversion will be recognised in equity as of 1 Janu-
ary 2018, thus having no effect on the income statement. The prior year’s amounts will not be restated.
Swisscom anticipates a pre-tax increase in equity of some CHF 400 million as of 1 January 2018 resulting from
conversion. This impact flows from the initial recognition of contractual assets and liabilities as well as accrued
contract acquisition and contract performance costs. For financial year 2018, Swisscom estimates that from
applying IFRS 15 net revenue will decrease by around CHF 10 million and direct costs will increase by around
CHF 40 million. How IFRS 15 will impact future results will depend on future business models and products, the
mix of distribution channels as well as future movements in volumes, prices and costs.
IFRS 16 Leases
For the lessee, IFRS 16 (effective from 1 January 2019) provides for a comprehensive model for dealing with lease
arrangements in financial statements. The differentiation between finance and operating lease arrangements
required until now under IAS 17 is thus dropped in future for the lessee. The lessee shall recognise leasing obligations
in its balance sheet for all future lease payments to be made as well as recognising a right to use the underlying
asset. For financial reporting purposes, the lessor shall continue to differentiate between finance and operating
lease arrangements. In this regard, the accounting model foreseen under IFRS 16 does not materially differ from
the previous provisions under IAS 17. Swisscom expects that the comprehensive modifications will have a mate-
rial impact on the consolidated financial statements. However, a reliable estimate of the impact of applying IFRS
16 can only be made once a detailed analysis is completed.
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Statutory Auditor’s Report
Bericht der Revisionsstelle
To the General Meeting of Swisscom Ltd, Ittigen (Berne)
An die Generalversammlung der Swisscom AG, Ittigen (Bern)
Report on the Audit of the Consolidated Financial Statements
Bericht zur Prüfung der Konzernrechnung
Opinion
Prüfungsurteil
We have audited the consolidated financial statements of Swisscom Ltd and its subsidiaries (the Group), which
Wir haben die Konzernrechnung der Swisscom AG und ihrer Tochtergesellschaften (der Konzern) – bestehend
comprise the consolidated balance sheet as at 31 December 2017, the consolidated statement of comprehensive
aus der konsolidierten Bilanz zum 31. Dezember 2017, der konsolidierten Gesamtergebnisrechnung, der
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then
konsolidierten Eigenkapitalveränderungsrechnung und der konsolidierten Geldflussrechnung für das dann
ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
endende Jahr sowie dem Anhang der Konzernrechnung einschliesslich einer Zusammenfassung bedeutsamer
Rechnungslegungsgrundsätze – geprüft.
In our opinion the consolidated financial statements (pages 94 to 144) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2017, and its consolidated financial performance and its
Nach unserer Beurteilung vermittelt die Konzernrechnung (Seiten 96 bis 147) ein den tatsächlichen Verhältnissen
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards
entsprechendes Bild der Vermögens- und Finanzlage des Konzerns zum 31. Dezember 2017 sowie dessen
(IFRS) and comply with Swiss law.
Ertragslage und Cashflows für das dann endende Jahr in Übereinstimmung mit den International Financial
Reporting Standards (IFRS) und entspricht dem schweizerischen Gesetz.
Basis for Opinion
Grundlage für das Prüfungsurteil
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss
Auditing Standards. Our responsibilities under those provisions and standards are further described in the
Wir haben unsere Prüfung in Übereinstimmung mit dem schweizerischen Gesetz, den International Standards on
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
Auditing (ISA) sowie den Schweizer Prüfungsstandards (PS) durchgeführt. Unsere Verantwortlichkeiten nach
independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit
diesen Vorschriften und Standards sind im Abschnitt "Verantwortlichkeiten der Revisionsstelle für die Prüfung der
profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our other
Konzernrechnung" unseres Berichts weitergehend beschrieben. Wir sind von dem Konzern unabhängig in Über-
ethical responsibilities in accordance with these requirements.
einstimmung mit den schweizerischen gesetzlichen Vorschriften und den Anforderungen des Berufsstands sowie
dem Code of Ethics for Professional Accountants des International Ethics Standards Board for Accountants
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
(IESBA Code), und wir haben unsere sonstigen beruflichen Verhaltenspflichten in Übereinstimmung mit diesen
opinion.
Anforderungen erfüllt.
Wir sind der Auffassung, dass die von uns erlangten Prüfungsnachweise ausreichend und geeignet sind, um als
Key Audit Matters
Grundlage für unser Prüfungsurteil zu dienen.
Revenue recognition
Besonders wichtige Prüfungssachverhalte
Capitalization of technical facilities and software
Umsatzerfassung
Fastweb goodwill
Aktivierung von technischen Anlagen und Software
Provisions and contingent liabilities for regulatory and competition-law proceedings
Goodwill Fastweb
Pension fund obligations comPlan
Rückstellungen und Eventualverbindlichkeiten für regulatorische und wettbewerbsrechtliche Verfahren
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Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Personalvorsorgeverpflichtung comPlan
Besonders wichtige Prüfungssachverhalte sind solche Sachverhalte, die nach unserem pflichtgemässen Ermes-
sen am bedeutsamsten für unsere Prüfung der Konzernrechnung des aktuellen Zeitraums waren. Diese Sach-
verhalte wurden im Zusammenhang mit unserer Prüfung der Konzernrechnung als Ganzes und bei der Bildung
unseres Prüfungsurteils hierzu berücksichtigt, und wir geben kein gesondertes Prüfungsurteil zu diesen Sach-
verhalten ab.
1
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Revenue recognition
Bericht der Revisionsstelle
Key Audit Matter
An die Generalversammlung der Swisscom AG, Ittigen (Bern)
Our response
Prüfungsurteil
Swisscom’s telecommunication business is
Bericht zur Prüfung der Konzernrechnung
characterized by a high volume of IT-based
transactions. The contracts underlying these
transactions often contain various elements that are
recorded separately. The correct recognition of the
identified contractual elements in the appropriate
period and the accuracy of invoicing are highly
dependent on IT systems.
We analyzed the process from the conclusion of a
contract to the receipt of payment and assessed
whether transactions are completely and accurately
recorded in the general ledger. We identified key
controls relating to revenue recognition and tested, on a
sample basis, their operating effectiveness. We tested
Wir haben die Konzernrechnung der Swisscom AG und ihrer Tochtergesellschaften (der Konzern) – bestehend
the operating effectiveness of IT controls of accounting-
aus der konsolidierten Bilanz zum 31. Dezember 2017, der konsolidierten Gesamtergebnisrechnung, der
relevant systems, with the assistance of our IT
konsolidierten Eigenkapitalveränderungsrechnung und der konsolidierten Geldflussrechnung für das dann
specialists, to reflect the high degree of integration of
endende Jahr sowie dem Anhang der Konzernrechnung einschliesslich einer Zusammenfassung bedeutsamer
service performance and recording by various IT
Rechnungslegungsgrundsätze – geprüft.
systems.
In addition, we performed analytical procedures. Based
Nach unserer Beurteilung vermittelt die Konzernrechnung (Seiten 96 bis 147) ein den tatsächlichen Verhältnissen
on internal reports, we analyzed trends related to the
entsprechendes Bild der Vermögens- und Finanzlage des Konzerns zum 31. Dezember 2017 sowie dessen
most important key performance indicators per revenue
Ertragslage und Cashflows für das dann endende Jahr in Übereinstimmung mit den International Financial
segment and product category, and we critically
Reporting Standards (IFRS) und entspricht dem schweizerischen Gesetz.
assessed deviations from our expectations.
Grundlage für das Prüfungsurteil
With respect to significant newly introduced products,
we assessed whether the Group appropriately
determined the point in time and amount of revenue to
Wir haben unsere Prüfung in Übereinstimmung mit dem schweizerischen Gesetz, den International Standards on
be recognized for the individual components.
Auditing (ISA) sowie den Schweizer Prüfungsstandards (PS) durchgeführt. Unsere Verantwortlichkeiten nach
diesen Vorschriften und Standards sind im Abschnitt "Verantwortlichkeiten der Revisionsstelle für die Prüfung der
Konzernrechnung" unseres Berichts weitergehend beschrieben. Wir sind von dem Konzern unabhängig in Über-
einstimmung mit den schweizerischen gesetzlichen Vorschriften und den Anforderungen des Berufsstands sowie
— Notes to the consolidated financial statements, No. 1.1 – Segment information
dem Code of Ethics for Professional Accountants des International Ethics Standards Board for Accountants
(IESBA Code), und wir haben unsere sonstigen beruflichen Verhaltenspflichten in Übereinstimmung mit diesen
Anforderungen erfüllt.
For further information on revenue recognition refer to the following:
Wir sind der Auffassung, dass die von uns erlangten Prüfungsnachweise ausreichend und geeignet sind, um als
Grundlage für unser Prüfungsurteil zu dienen.
Capitalization of technical facilities and software
Key Audit Matter
Our response
Besonders wichtige Prüfungssachverhalte
Umsatzerfassung
Given the technological change in the
telecommunication sector, investment in new technical
facilities and software plays a strategic role in the
development of Swisscom’s business. In this regard, it
is important that the costs capitalized in relation to
acquired and self-developed technical facilities and
software fulfil the IFRS criteria.
Aktivierung von technischen Anlagen und Software
Goodwill Fastweb
We tested whether Swisscom’s capitalization
guidelines comply with IFRS and whether the key
controls over the compliance with these guidelines
operated effectively.
Among others, using a statistical sampling procedure
we assessed whether the capitalization of costs
relating to a sample of technical facilities and software
met the criteria and took place at the appropriate point
in time.
Furthermore, in relation to the development of material
new projects, we analyzed the amount and proper
identification of hours of work rendered by Swisscom
employees. We recalculated, on a sample basis, the
hourly rates used by Swisscom based on actual
personnel expenses and analyzed any variances.
Rückstellungen und Eventualverbindlichkeiten für regulatorische und wettbewerbsrechtliche Verfahren
Personalvorsorgeverpflichtung comPlan
Besonders wichtige Prüfungssachverhalte sind solche Sachverhalte, die nach unserem pflichtgemässen Ermes-
sen am bedeutsamsten für unsere Prüfung der Konzernrechnung des aktuellen Zeitraums waren. Diese Sach-
verhalte wurden im Zusammenhang mit unserer Prüfung der Konzernrechnung als Ganzes und bei der Bildung
unseres Prüfungsurteils hierzu berücksichtigt, und wir geben kein gesondertes Prüfungsurteil zu diesen Sach-
verhalten ab.
1
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Bericht der Revisionsstelle
On the basis of monthly budgets we also compared
for significant projects the expected costs to be
capitalized and those to be expensed with the actual
amounts and critically assessed any deviations.
An die Generalversammlung der Swisscom AG, Ittigen (Bern)
For further information on capitalization of technical facilities and software refer to the following:
Bericht zur Prüfung der Konzernrechnung
— Notes to the consolidated financial statements, No. 3.2 – Property, plant and equipment
— Notes to the consolidated financial statements, No. 3.4 – Intangible assets
Prüfungsurteil
Our response
Wir haben die Konzernrechnung der Swisscom AG und ihrer Tochtergesellschaften (der Konzern) – bestehend
aus der konsolidierten Bilanz zum 31. Dezember 2017, der konsolidierten Gesamtergebnisrechnung, der
Fastweb goodwill
konsolidierten Eigenkapitalveränderungsrechnung und der konsolidierten Geldflussrechnung für das dann
endende Jahr sowie dem Anhang der Konzernrechnung einschliesslich einer Zusammenfassung bedeutsamer
Rechnungslegungsgrundsätze – geprüft.
Key Audit Matter
Nach unserer Beurteilung vermittelt die Konzernrechnung (Seiten 96 bis 147) ein den tatsächlichen Verhältnissen
entsprechendes Bild der Vermögens- und Finanzlage des Konzerns zum 31. Dezember 2017 sowie dessen
At 31 December 2017 the goodwill related to the
Ertragslage und Cashflows für das dann endende Jahr in Übereinstimmung mit den International Financial
operating segment Fastweb amounted to CHF 578
Reporting Standards (IFRS) und entspricht dem schweizerischen Gesetz.
million (2016: CHF 529 million).
In the course of our audit, we assessed whether an
appropriate valuation method was used for the
Fastweb goodwill impairment test, the calculation was
coherent and management’s assumptions were
appropriate.
The annual impairment test on the Fastweb goodwill is
Grundlage für das Prüfungsurteil
significantly affected by management’s judgements
regarding the expected future cash flows, the discount
In particular, we challenged the input data and
Wir haben unsere Prüfung in Übereinstimmung mit dem schweizerischen Gesetz, den International Standards on
rate (WACC) used and the expected growth.
assumptions related to the underlying cash flows and
Auditing (ISA) sowie den Schweizer Prüfungsstandards (PS) durchgeführt. Unsere Verantwortlichkeiten nach
the expected growth rates, as based on written
diesen Vorschriften und Standards sind im Abschnitt "Verantwortlichkeiten der Revisionsstelle für die Prüfung der
statements from local as well as Group management.
Konzernrechnung" unseres Berichts weitergehend beschrieben. Wir sind von dem Konzern unabhängig in Über-
In addition, we retrospectively assessed the accuracy
einstimmung mit den schweizerischen gesetzlichen Vorschriften und den Anforderungen des Berufsstands sowie
of past business plans by a multi-year comparison of
dem Code of Ethics for Professional Accountants des International Ethics Standards Board for Accountants
forecasted and actual amounts.
(IESBA Code), und wir haben unsere sonstigen beruflichen Verhaltenspflichten in Übereinstimmung mit diesen
Anforderungen erfüllt.
We analyzed the individual parameters underlying the
discount rate, with assistance from our valuation
specialists, and compared them with the peer group.
Wir sind der Auffassung, dass die von uns erlangten Prüfungsnachweise ausreichend und geeignet sind, um als
Grundlage für unser Prüfungsurteil zu dienen.
We evaluated the model used for the impairment test
with respect to mathematical accuracy and
methodological adequacy.
Besonders wichtige Prüfungssachverhalte
Umsatzerfassung
We also considered the appropriateness of
disclosures in relation to the impairment test and
assessed whether the disclosed sensitivity analyses
adequately reflect the risks embedded in the
impairment test.
Aktivierung von technischen Anlagen und Software
For further information on the Fastweb goodwill refer to the following:
— Notes to the consolidated financial statements, No. 3.3 – Goodwill
Goodwill Fastweb
Rückstellungen und Eventualverbindlichkeiten für regulatorische und wettbewerbsrechtliche Verfahren
Personalvorsorgeverpflichtung comPlan
Besonders wichtige Prüfungssachverhalte sind solche Sachverhalte, die nach unserem pflichtgemässen Ermes-
sen am bedeutsamsten für unsere Prüfung der Konzernrechnung des aktuellen Zeitraums waren. Diese Sach-
verhalte wurden im Zusammenhang mit unserer Prüfung der Konzernrechnung als Ganzes und bei der Bildung
unseres Prüfungsurteils hierzu berücksichtigt, und wir geben kein gesondertes Prüfungsurteil zu diesen Sach-
verhalten ab.
1
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Provisions and contingent liabilities for regulatory and competition-law proceedings
Bericht der Revisionsstelle
Key Audit Matter
An die Generalversammlung der Swisscom AG, Ittigen (Bern)
Our response
We tested the operating effectiveness of the controls
implemented to identify, assess and recognize legal
proceedings related to the regulatory and competition-
law environment.
Swisscom provides regulated access services to
Bericht zur Prüfung der Konzernrechnung
other telecommunication service providers. The
pricing of such services is the outcome of regulatory
proceedings.
Prüfungsurteil
In addition, the Federal Competition Commission
(WEKO) is conducting various proceedings against
Wir haben die Konzernrechnung der Swisscom AG und ihrer Tochtergesellschaften (der Konzern) – bestehend
Swisscom.
aus der konsolidierten Bilanz zum 31. Dezember 2017, der konsolidierten Gesamtergebnisrechnung, der
konsolidierten Eigenkapitalveränderungsrechnung und der konsolidierten Geldflussrechnung für das dann
In case of a final verdict establishing market abuse,
endende Jahr sowie dem Anhang der Konzernrechnung einschliesslich einer Zusammenfassung bedeutsamer
civil law claims may also be brought against Swisscom.
Rechnungslegungsgrundsätze – geprüft.
With the assistance of our legal specialists, we
The recognition of provisions or disclosure of
assessed the probability of cash outflows resulting from
contingent liabilities related to such proceedings
Nach unserer Beurteilung vermittelt die Konzernrechnung (Seiten 96 bis 147) ein den tatsächlichen Verhältnissen
legal proceedings, the point in time for recognizing
requires management to apply significant judgment.
entsprechendes Bild der Vermögens- und Finanzlage des Konzerns zum 31. Dezember 2017 sowie dessen
related provisions and the corresponding amount of
Ertragslage und Cashflows für das dann endende Jahr in Übereinstimmung mit den International Financial
such provisions or the disclosure of contingent liabilities.
Reporting Standards (IFRS) und entspricht dem schweizerischen Gesetz.
We additionally obtained and critically assessed written
statements of Swisscom’s external legal counsel for
significant proceedings.
Specifically, we participated in the quarterly meetings
where legal proceedings were addressed with the
relevant departments, and we discussed and
challenged the summaries of the legal proceedings
prepared by Swisscom Group.
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Grundlage für das Prüfungsurteil
We furthermore tested the amount of the provisions and
contingent liabilities by assessing whether the internal
Wir haben unsere Prüfung in Übereinstimmung mit dem schweizerischen Gesetz, den International Standards on
and external data was correctly fed into the calculations
Auditing (ISA) sowie den Schweizer Prüfungsstandards (PS) durchgeführt. Unsere Verantwortlichkeiten nach
and whether the underlying assumptions were
diesen Vorschriften und Standards sind im Abschnitt "Verantwortlichkeiten der Revisionsstelle für die Prüfung der
adequate.
Konzernrechnung" unseres Berichts weitergehend beschrieben. Wir sind von dem Konzern unabhängig in Über-
einstimmung mit den schweizerischen gesetzlichen Vorschriften und den Anforderungen des Berufsstands sowie
We assessed whether the disclosures on contingent
dem Code of Ethics for Professional Accountants des International Ethics Standards Board for Accountants
liabilities in the notes to the consolidated financial
(IESBA Code), und wir haben unsere sonstigen beruflichen Verhaltenspflichten in Übereinstimmung mit diesen
statements appropriately reflect the risks involved.
Anforderungen erfüllt.
For further information on provisions and contingent liabilities for regulatory and competition-law proceedings
Wir sind der Auffassung, dass die von uns erlangten Prüfungsnachweise ausreichend und geeignet sind, um als
refer to the following:
Grundlage für unser Prüfungsurteil zu dienen.
— Notes to the consolidated financial statements, No. 3.5 – Provisions, contingent liabilities and contingent
assets
Besonders wichtige Prüfungssachverhalte
Umsatzerfassung
Aktivierung von technischen Anlagen und Software
Goodwill Fastweb
Rückstellungen und Eventualverbindlichkeiten für regulatorische und wettbewerbsrechtliche Verfahren
Personalvorsorgeverpflichtung comPlan
Besonders wichtige Prüfungssachverhalte sind solche Sachverhalte, die nach unserem pflichtgemässen Ermes-
sen am bedeutsamsten für unsere Prüfung der Konzernrechnung des aktuellen Zeitraums waren. Diese Sach-
verhalte wurden im Zusammenhang mit unserer Prüfung der Konzernrechnung als Ganzes und bei der Bildung
unseres Prüfungsurteils hierzu berücksichtigt, und wir geben kein gesondertes Prüfungsurteil zu diesen Sach-
verhalten ab.
1
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Pension fund obligations comPlan
Bericht der Revisionsstelle
Key Audit Matter
An die Generalversammlung der Swisscom AG, Ittigen (Bern)
Our response
We assessed the completeness and accuracy of
Swisscom maintains several pension plans for its
Bericht zur Prüfung der Konzernrechnung
personnel data underlying the actuary’s expert report by
employees in Switzerland and Italy. The majority of
Swisscom’s employees in Switzerland are insured
testing the operating effectiveness of internal controls
against the risks of old age, death and disability by
and reconciled the data on a sample basis. We used
Prüfungsurteil
our own specialists to challenge the actuarial
the independent pension plan ‘comPlan’. The defined
benefit obligation resulting from this plan is calculated
calculation. We particularly audited the consistent
Wir haben die Konzernrechnung der Swisscom AG und ihrer Tochtergesellschaften (der Konzern) – bestehend
application of the risk sharing methodology and the
based on a number of financial and demographic
aus der konsolidierten Bilanz zum 31. Dezember 2017, der konsolidierten Gesamtergebnisrechnung, der
assumptions. The most significant assumptions are
accounting impacts resulting from the underlying
konsolidierten Eigenkapitalveränderungsrechnung und der konsolidierten Geldflussrechnung für das dann
the discount rate, expected rates of salary and
assumptions in the second year of the consideration of
endende Jahr sowie dem Anhang der Konzernrechnung einschliesslich einer Zusammenfassung bedeutsamer
pension increases, the interest rates on old age
risk sharing features. In addition, we assessed the
Rechnungslegungsgrundsätze – geprüft.
competence and independence of the actuary engaged
savings accounts, longevity and the expected
by Swisscom.
development of the conversion rate. In accordance
Nach unserer Beurteilung vermittelt die Konzernrechnung (Seiten 96 bis 147) ein den tatsächlichen Verhältnissen
with Swiss regulations, Swisscom’s assumptions also
entsprechendes Bild der Vermögens- und Finanzlage des Konzerns zum 31. Dezember 2017 sowie dessen
include the principle of risk sharing of the remaining
Ertragslage und Cashflows für das dann endende Jahr in Übereinstimmung mit den International Financial
IAS 19 deficit between employer and employee. The
Reporting Standards (IFRS) und entspricht dem schweizerischen Gesetz.
calculation of the employer’s share of the deficit is
based on, among other things, experience relating to
measures implemented in the past to improve the
Grundlage für das Prüfungsurteil
pension plan’s financial situation.
Supported by our specialists, we analysed in detail the
conformity with IAS 19 of the expected development of
the conversion rate and the allocation of the remaining
deficit between employer and employee. We critically
assessed the expected development of the conversion
rate and the determination of the employer’s share of
the remaining deficit based on Swisscom specific
empirical information and assessments.
Management determines these assumptions, which
Wir haben unsere Prüfung in Übereinstimmung mit dem schweizerischen Gesetz, den International Standards on
involve judgement that has a significant impact on the
Auditing (ISA) sowie den Schweizer Prüfungsstandards (PS) durchgeführt. Unsere Verantwortlichkeiten nach
Furthermore, we challenged Management’s other
amount of the pension obligation and cost recognised
diesen Vorschriften und Standards sind im Abschnitt "Verantwortlichkeiten der Revisionsstelle für die Prüfung der
assumptions used in the calculation of the actuary
related to comPlan.
Konzernrechnung" unseres Berichts weitergehend beschrieben. Wir sind von dem Konzern unabhängig in Über-
mandated by Swisscom. In doing so, we examined the
einstimmung mit den schweizerischen gesetzlichen Vorschriften und den Anforderungen des Berufsstands sowie
methodology used to define the parameters and the
dem Code of Ethics for Professional Accountants des International Ethics Standards Board for Accountants
consistency with prior year and compared these
(IESBA Code), und wir haben unsere sonstigen beruflichen Verhaltenspflichten in Übereinstimmung mit diesen
parameters with the range of observable market
Anforderungen erfüllt.
information.
Wir sind der Auffassung, dass die von uns erlangten Prüfungsnachweise ausreichend und geeignet sind, um als
For further information on the pension obligation related to comPlan refer to the following:
Grundlage für unser Prüfungsurteil zu dienen.
— Notes to the consolidated financial statements, No. 4.3 – Post-employment benefits
Besonders wichtige Prüfungssachverhalte
Umsatzerfassung
Aktivierung von technischen Anlagen und Software
Goodwill Fastweb
Rückstellungen und Eventualverbindlichkeiten für regulatorische und wettbewerbsrechtliche Verfahren
Personalvorsorgeverpflichtung comPlan
Besonders wichtige Prüfungssachverhalte sind solche Sachverhalte, die nach unserem pflichtgemässen Ermes-
sen am bedeutsamsten für unsere Prüfung der Konzernrechnung des aktuellen Zeitraums waren. Diese Sach-
verhalte wurden im Zusammenhang mit unserer Prüfung der Konzernrechnung als Ganzes und bei der Bildung
unseres Prüfungsurteils hierzu berücksichtigt, und wir geben kein gesondertes Prüfungsurteil zu diesen Sach-
verhalten ab.
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Other Information in the Annual Report
Bericht der Revisionsstelle
The Board of Directors is responsible for the other information in the annual report. The other information
comprises all information included in the annual report, but does not include the consolidated financial
statements, the stand-alone financial statements of the Company, the remuneration report and our auditor’s
An die Generalversammlung der Swisscom AG, Ittigen (Bern)
reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and
Bericht zur Prüfung der Konzernrechnung
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information in the annual report and, in doing so, consider whether the other information is materially inconsistent
Prüfungsurteil
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be
Wir haben die Konzernrechnung der Swisscom AG und ihrer Tochtergesellschaften (der Konzern) – bestehend
materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement
aus der konsolidierten Bilanz zum 31. Dezember 2017, der konsolidierten Gesamtergebnisrechnung, der
of this other information, we are required to report that fact. We have nothing to report in this regard.
konsolidierten Eigenkapitalveränderungsrechnung und der konsolidierten Geldflussrechnung für das dann
endende Jahr sowie dem Anhang der Konzernrechnung einschliesslich einer Zusammenfassung bedeutsamer
Rechnungslegungsgrundsätze – geprüft.
Responsibility of the Board of Directors for the Consolidated Financial Statements
Nach unserer Beurteilung vermittelt die Konzernrechnung (Seiten 96 bis 147) ein den tatsächlichen Verhältnissen
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true
entsprechendes Bild der Vermögens- und Finanzlage des Konzerns zum 31. Dezember 2017 sowie dessen
and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board
Ertragslage und Cashflows für das dann endende Jahr in Übereinstimmung mit den International Financial
of Directors determines is necessary to enable the preparation of consolidated financial statements that are free
Reporting Standards (IFRS) und entspricht dem schweizerischen Gesetz.
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
Grundlage für das Prüfungsurteil
going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease
Wir haben unsere Prüfung in Übereinstimmung mit dem schweizerischen Gesetz, den International Standards on
operations, or has no realistic alternative but to do so.
Auditing (ISA) sowie den Schweizer Prüfungsstandards (PS) durchgeführt. Unsere Verantwortlichkeiten nach
diesen Vorschriften und Standards sind im Abschnitt "Verantwortlichkeiten der Revisionsstelle für die Prüfung der
Konzernrechnung" unseres Berichts weitergehend beschrieben. Wir sind von dem Konzern unabhängig in Über-
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
einstimmung mit den schweizerischen gesetzlichen Vorschriften und den Anforderungen des Berufsstands sowie
dem Code of Ethics for Professional Accountants des International Ethics Standards Board for Accountants
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
(IESBA Code), und wir haben unsere sonstigen beruflichen Verhaltenspflichten in Übereinstimmung mit diesen
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
Anforderungen erfüllt.
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material
Wir sind der Auffassung, dass die von uns erlangten Prüfungsnachweise ausreichend und geeignet sind, um als
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
Grundlage für unser Prüfungsurteil zu dienen.
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
Besonders wichtige Prüfungssachverhalte
—
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
Umsatzerfassung
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Aktivierung von technischen Anlagen und Software
— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
Goodwill Fastweb
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made.
Rückstellungen und Eventualverbindlichkeiten für regulatorische und wettbewerbsrechtliche Verfahren
— Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
Personalvorsorgeverpflichtung comPlan
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
Besonders wichtige Prüfungssachverhalte sind solche Sachverhalte, die nach unserem pflichtgemässen Ermes-
in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
sen am bedeutsamsten für unsere Prüfung der Konzernrechnung des aktuellen Zeitraums waren. Diese Sach-
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
verhalte wurden im Zusammenhang mit unserer Prüfung der Konzernrechnung als Ganzes und bei der Bildung
events or conditions may cause the Group to cease to continue as a going concern.
unseres Prüfungsurteils hierzu berücksichtigt, und wir geben kein gesondertes Prüfungsurteil zu diesen Sach-
verhalten ab.
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— Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Bericht der Revisionsstelle
— Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
An die Generalversammlung der Swisscom AG, Ittigen (Bern)
activities within the Group to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely responsible
for our audit opinion.
Bericht zur Prüfung der Konzernrechnung
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
Prüfungsurteil
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
Wir haben die Konzernrechnung der Swisscom AG und ihrer Tochtergesellschaften (der Konzern) – bestehend
relevant ethical requirements regarding independence, and to communicate with them all relationships and other
aus der konsolidierten Bilanz zum 31. Dezember 2017, der konsolidierten Gesamtergebnisrechnung, der
matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
konsolidierten Eigenkapitalveränderungsrechnung und der konsolidierten Geldflussrechnung für das dann
endende Jahr sowie dem Anhang der Konzernrechnung einschliesslich einer Zusammenfassung bedeutsamer
From the matters communicated with the Board of Directors or its relevant committee, we determine those
Rechnungslegungsgrundsätze – geprüft.
matters that were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report, unless law or
Nach unserer Beurteilung vermittelt die Konzernrechnung (Seiten 96 bis 147) ein den tatsächlichen Verhältnissen
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
entsprechendes Bild der Vermögens- und Finanzlage des Konzerns zum 31. Dezember 2017 sowie dessen
that a matter should not be communicated in our report because the adverse consequences of doing so would
Ertragslage und Cashflows für das dann endende Jahr in Übereinstimmung mit den International Financial
reasonably be expected to outweigh the public interest benefits of such communication.
Reporting Standards (IFRS) und entspricht dem schweizerischen Gesetz.
Report on Other Legal and Regulatory Requirements
Grundlage für das Prüfungsurteil
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an
Wir haben unsere Prüfung in Übereinstimmung mit dem schweizerischen Gesetz, den International Standards on
internal control system exists, which has been designed for the preparation of consolidated financial statements
Auditing (ISA) sowie den Schweizer Prüfungsstandards (PS) durchgeführt. Unsere Verantwortlichkeiten nach
according to the instructions of the Board of Directors.
diesen Vorschriften und Standards sind im Abschnitt "Verantwortlichkeiten der Revisionsstelle für die Prüfung der
Konzernrechnung" unseres Berichts weitergehend beschrieben. Wir sind von dem Konzern unabhängig in Über-
einstimmung mit den schweizerischen gesetzlichen Vorschriften und den Anforderungen des Berufsstands sowie
dem Code of Ethics for Professional Accountants des International Ethics Standards Board for Accountants
(IESBA Code), und wir haben unsere sonstigen beruflichen Verhaltenspflichten in Übereinstimmung mit diesen
Anforderungen erfüllt.
We recommend that the consolidated financial statements submitted to you be approved.
KPMG AG
Wir sind der Auffassung, dass die von uns erlangten Prüfungsnachweise ausreichend und geeignet sind, um als
Grundlage für unser Prüfungsurteil zu dienen.
Hanspeter Stocker
Licensed Audit Expert
Auditor in Charge
Besonders wichtige Prüfungssachverhalte
Daniel Haas
Licensed Audit Expert
Gümligen-Berne, 6 February 2018
Umsatzerfassung
Aktivierung von technischen Anlagen und Software
Goodwill Fastweb
Rückstellungen und Eventualverbindlichkeiten für regulatorische und wettbewerbsrechtliche Verfahren
Personalvorsorgeverpflichtung comPlan
Besonders wichtige Prüfungssachverhalte sind solche Sachverhalte, die nach unserem pflichtgemässen Ermes-
sen am bedeutsamsten für unsere Prüfung der Konzernrechnung des aktuellen Zeitraums waren. Diese Sach-
verhalte wurden im Zusammenhang mit unserer Prüfung der Konzernrechnung als Ganzes und bei der Bildung
unseres Prüfungsurteils hierzu berücksichtigt, und wir geben kein gesondertes Prüfungsurteil zu diesen Sach-
verhalten ab.
KPMG AG, Hofgut, PO Box 112, CH-3073 Gümligen-Berne
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss legal entity. All rights reserved.
1
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Financial statements of Swisscom Ltd
Income statement
In CHF million
Net revenue from the sale of goods and services
Other income
Total operating income
Personnel expense
Other operating expense
Total operating expenses
Operating income
Financial expense
Financial income
Income from participations
Income before taxes
Income tax expense
Net income
2017
231
29
260
(79)
(92)
(171)
89
(129)
140
105
205
(8)
197
2016
229
66
295
(78)
(92)
(170)
125
(135)
140
2,567
2,697
(15)
2,682
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Balance sheet
In CHF million
Assets
Cash and cash equivalents
Current financial assets
Derivative financial instruments
Trade receivables
Other current receivables
Accrued dividends receivable from subsidiaries
Accrued income and deferred expense
Total current assets
Financial assets
Derivative financial instruments
Participations
Total non-current assets
Total assets
Liabilities and equity
Current interest-bearing liabilities
Derivative financial instruments
Trade payables
Other current liabilities
Accrued expense and deferred income
Provisions
Total current liabilities
Non-current interest-bearing liabilities
Derivative financial instruments
Other non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Share capital
Legal capital reserves/capital surplus reserves
Voluntary retained earnings
Treasury shares
Total equity
Total liabilities and equity
Note
31.12.2017
31.12.2016
3.1
3.1
3.1
2.2
3.2
3.2
3.2
3.2
3.2
3.3
290
–
4
7
2
–
110
413
6,045
73
7,973
14,091
14,504
180
86
9
17
7
2,500
100
2,899
4,967
29
7,884
12,880
15,779
2,211
1,868
5
8
39
70
11
2,344
6,782
52
2
11
6,847
9,191
52
21
5,240
–
5,313
14,504
6
5
48
84
10
2,021
7,403
84
4
12
7,503
9,524
52
21
6,183
(1)
6,255
15,779
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Notes to the financial statements
1 General information
1.1 Name, legal form and domicile
> Swisscom Ltd, Ittigen (canton of Berne)
> Parent company of the Swisscom Group
>
Swisscom Ltd is a limited-liability company established under a special statute pursuant to the Telecommunication
Enterprises Act (TEA) (German: “Telekommunikationsunternehmungs gesetz”) of 30 April 1997.
> Company identification number (UID) CHF-102.753.938
1.2 Share capital
As of 31 December 2017, the share capital comprised 51,801,943 registered shares of a par value of CHF 1 per share,
as in the previous year.
1.3 Significant shareholders
As at 31 December 2017, the Swiss Confederation (Confederation), as majority shareholder, held 51% of the issued
shares of Swisscom Ltd which is unchanged from the prior year. The Telecommunications Enterprises Act (TEA)
provides that the Confederation shall hold the majority of the share capital and voting rights of Swisscom Ltd.
1.4 Number of full-time employees
The average number of employees of Swisscom Ltd during the financial year, expressed as full-time equivalents,
exceeded 250, as in the prior year.
1.5 Approval and release of Annual Financial Statements
The Board of Directors of Swisscom Ltd approved the present Annual Financial Statements on 6 February 2018 for
release. No material post-balance-sheet events occurred up to this date. The Annual Financial Statements are
subject to approval by the shareholders of Swisscom Ltd in its Annual General Meeting to be held on 4 April 2018.
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2 Summary of significant accounting policies
2.1 General
Significant financial statement reporting policies which are not prescribed by law are described below. The possibility
to create and release hidden reserves for the purpose of ensuring the sustainable development of the company
should be taken into account in this respect.
2.2 Participations and recording of dividend distributions by subsidiary companies
Participations are accounted for at acquisition cost less valuation allowances, as required. Dividend distributions
from subsidiary companies are accrued in the financial statements of Swisscom Ltd provided that the annual
general meetings of the subsidiary companies approve the payment of the dividend prior to the approval of the
Annual Financial Statements of Swisscom Ltd by its Board of Directors.
A list of participations held directly or indirectly by Swisscom Ltd is included in Note 5.4 to the Consolidated Financial
Statements.
2.3 Derivative financial instruments and hedging transactions (hedge accounting)
Derivative financial instruments which are deployed to hedge foreign currencies and interest rates, are measured
at market price. Movements in market values are recorded in the income statement. Derivatives which meet the
conditions for recognition as a hedging transaction, are measured using the same valuation principles as those
which apply to the underlying transaction. Gains and losses arising from the underlying and hedging transactions
are dealt with on a joint basis (collective valuation approach with regard to valuation units).
2.4 Treasury shares
At the time of acquisition, treasury shares are recorded at purchase cost as a deduction from shareholders’ equity.
In the event of a subsequent disposal, the resultant gain or loss is taken to income as financial income or financial
loss, respectively.
3 Disclosures on balance sheet and income statement positions
3.1 Receivables and financial assets
In CHF million
Trade receivables
Other current receivables
Financial assets
3.2 Liabilities
Trade payables and other liabilities
In CHF million
Trade payables
Other current liabilities
Other non-current liabilities
31.12.2017
Thereof from
participations
31.12.2016
Thereof from
participations
7
2
7
1
17
7
17
5
6,045
5,934
4,967
4,855
31.12.2017
Thereof
to
participations
31.12.2016
Thereof
to
participations
8
39
2
4
11
–
5
48
4
1
10
–
155
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Interest-bearing liabilities
In CHF million
Bank loans
Debenture bonds
Private placements
Interest-bearing liabilities to participations
Other interest-bearing liabilities to third parties
Total interest-bearing liabilities
Of which current interest-bearing liabilities
Of which non-current interest-bearing liabilities
Debenture bonds
In CHF million or EUR million
Debenture bond in CHF 2007–2017
Debenture bond in CHF 2009–2018
Debenture bond in EUR 2013–2020
Debenture bond in EUR 2014–2021
Debenture bond in CHF 2010–2022
Debenture bond in CHF 2015–2023
Debenture bond in CHF 2012–2024
Debenture bond in EUR 2015–2025
Debenture bond in CHF 2014–2026
Debenture bond in CHF 2016–2027
Debenture bond in CHF 2017–2027
Debenture bond in CHF 2016–2028
Debenture bond in CHF 2014–2029
Debenture bond in CHF 2016–2032
Debenture bond in CHF 2017–2033
Debenture bond in CHF 2015–2035
3.3 Treasury shares
Balance at 31 December 2015
Purchases on the market
Allocated for share-based compensation
Balance at 31 December 2016
Purchases on the market
Allocated for share-based compensation
Balance at 31 December 2017
31.12.2017
31.12.2016
736
6,106
500
1,556
95
8,993
2,211
6,782
Par value
in currency
600
1,425
500
500
500
250
500
500
200
200
–
200
160
300
–
150
721
6,101
750
1,676
23
9,271
1,868
7,403
31.12.2016
Nominal
interest rate
3.75
3.25
2.00
1.88
2.63
0.25
1.75
1.75
1.50
0.38
–
0.38
1.50
0.13
–
1.00
Average price
in CHF
In CHF million
–
520
520
520
468
468
468
–
4
(3)
1
3
(4)
–
Par value
in currency
–
1,385
500
500
500
250
500
500
200
200
350
200
160
300
150
150
31.12.2017
Nominal
interest rate
–
3.25
2.00
1.88
2.63
0.25
1.75
1.75
1.50
0.38
0.38
0.38
1.50
0.13
0.75
1.00
Number
–
8,000
(6,486)
1,514
7,200
(8,090)
624
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4 Further information
4.1 Collateral given to secure third-party liabilities
As of 31 December 2017, guarantee obligations exist for Group companies in favour of third parties totalling
CHF 290 million (prior year: CHF 228 million).
4.2 Assets used to secure own commitments as well as assets subject to retention of title
As of 31 December 2017, financial assets totalling CHF 105 million (prior year: CHF 109 million) were not freely
available. These assets serve to secure commitments arising from bank loans.
4.3 Shareholdings of the members of the Board of Directors and Group Executive Board
The following table discloses the number of unrestricted and restricted shares held by the members of the Board
of Directors and Group Executive Board as well as parties related to them, as of 31 December 2016 and 2017:
Number
Hansueli Loosli
Roland Abt
Valérie Berset Bircher
Alain Carrupt
Frank Esser
Barbara Frei
Catherine Mühlemann
Theophil Schlatter
Renzo Simoni 1
Hans Werder 2
Total shares held by the members of the Board of Directors
1 Elected to the Board of Directors as of 3 April 2017.
2 Resigned from the Board of Directors as of 3 April 2017.
Number
Urs Schaeppi (CEO)
Mario Rossi
Hans C. Werner
Marc Werner
Urs Lehner 1
Christian Petit 2
Heinz Herren
Dirk Wierzbitzki
Total shares held by the members of the Group Executive Board
1 Joined the Group Executive Board as of 21 June 2017.
2 Resigned from the Group Executive Board as of 21 June 2017.
31.12.2017
31.12.2016
2,733
2,350
205
213
213
478
784
1,443
1,419
160
–
7,648
88
96
96
332
648
1,326
1,225
–
1,128
7,289
31.12.2017
31.12.2016
3,964
1,236
1,068
750
115
–
1,586
234
8,953
3,229
1,027
897
382
–
1,337
1,333
64
8,269
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In 2017, 1,493 shares (CHF 0.7 million) were issued to the members of the Board of Directors and 2,121 shares
(CHF 0.9 million) to the members of the Group Executive Board.
None of the individuals required to make notification holds voting shares exceeding 0.1% of the share capital.
Proposed appropriation
of retained earnings
Proposal of the Board of Directors
The Board of Directors proposes to the Annual General Meeting of Shareholders to be held on 4 April 2018 that
the available retained earnings of CHF 5,240 million as of 31 December 2017 be appropriated as follows:
In CHF million
Appropriation of retained earnings
Retained earnings from previous year
Ordinary dividend 1
Balance carried forward from prior year
Net income for the year
Change in treasury shares
Retained earnings available to the Annual General Meeting
Ordinary dividend of CHF 22.00 per share on 51,801,319 shares 1
Balance to be carried forward
1 Excluding treasury shares.
31.12.2017
6,182
(1,140)
5,042
197
1
5,240
(1,140)
4,100
In the event that the proposal is approved, a dividend per share will be paid to shareholders on 10 April 2018 as
follows:
158
Per registered share
Ordinary dividend, gross
Less 35% withholding tax
Net dividend payable
CHF
22.00
(7.70)
14.30
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Statutory Auditor’s Report
To the General Meeting of Swisscom Ltd, Ittigen (Berne)
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Swisscom Ltd, which comprise the balance sheet as at
31 December 2017, and the income statement for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion the financial statements (pages 152 to 157) for the year ended 31 December 2017 comply with
Swiss law and the company’s articles of incorporation.
Basis for Opinions
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under
those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the entity in accordance with the provisions of Swiss law
and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Report on Key Audit Matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. We have determined that there are no key audit matters to
communicate in our report.
Responsibility of the Board of Directors for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the
provisions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
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As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
—
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
— Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
internal control.
— Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made.
— Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the entity to cease to continue as a going concern.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors or its relevant committee, we determine those
matters that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report, unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an
internal control system exists, which has been designed for the preparation of financial statements according to
the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the
company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
KPMG AG
Hanspeter Stocker
Licensed Audit Expert
Auditor in Charge
Daniel Haas
Licensed Audit Expert
Gümligen-Berne, 6 February 2018
KPMG AG, Hofgut, PO Box 112, CH-3073 Gümligen-Berne
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss legal entity. All rights reserved.
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Further information
Glossary
________________________________________________________ 162
Swisscom Group
five-year review
________________________________________________________ 167
Glossary
Technical terms
4G/LTE (Long Term Evolution): 4G/LTE is the fourth generation of mobile technology. At present, LTE enables
mobile broadband data speeds of up to 150 Mbps.
4G+/LTE Advanced: 4G+/LTE+ enables a theoretical bandwidth of up to 300 Mbps using the mobile phone network.
To do so, it bundles 4G/LTE frequencies to achieve the required capacity. In the near future, theoretical bandwidths
of up to 450 Mbps will be achieved through the further bundling of 4G/LTE frequencies.
5G: 5G is the next generation of mobile network technology. While no international definition of a 5G standard
exists to date, tests are constantly being carried out around the world.
ADSL (Asymmetric Digital Subscriber Line): A broadband data transmission technology that uses the existing
copper telephone cable for broadband access to the data network.
All IP: All IP means that all services such as television, the Internet or fixed-line telephony use the same IT network.
Swisscom is switching all existing communications network to IP. This means that all IP services within Switzer-
land are provided via Swisscom’s own network, ensuring a higher level of security and better availability than
other online voice service providers.
Bandwidth: Bandwidth refers to the transmission capacity of a medium, also known as the data transmission
rate. The higher the bandwidth, the more information units (bits) can be transmitted per unit of time (second). It is
defined in bps, kbps or Mbps.
Bitstream Access: Bitstream Access denotes an upstream product for third-party providers in the telecommunication
sector. It enables a telecommunications provider to make a data stream available to a specific end customer of
a third-party provider. This enables the third-party provider to provide its services to a customer that it has not
connected with its own physical network.
BPO (Business Process Outsourcing): BPO is a special form of outsourcing, of entire business processes.
Cloud: Cloud computing is an approach in which IT infrastructure such as computing capacity, data storage, and
even finished software and platforms can be accessed dynamically and according to need via the Internet. The
data centres, along with the resources and databases, are distributed via the cloud. The cloud is also synonymous
for hardware that does not have a precise location.
Connectivity: Connectivity is the generic term used to denote IP services or the connection to the Internet and the
ability to exchange data with any partner on the network.
Convergence: The term “convergence” is generally understood in the telecommunications sector to mean the
interplay of mobile and fixed-line technologies or products that comprise both mobile and fixed-line services.
DSL (Digital Subscriber Line): DSL is the generic term for transmission technologies that use subscriber lines based
entirely or partly on copper. Examples of DSL technologies: ADSL or VDSL.
EDGE (Enhanced Data Rates for GSM Evolution): EDGE is part of the second generation of mobile telephony and
is a radio modulation technology used to enhance data transmission speeds in GSM mobile networks. EDGE enables
data transfer rates of up to 256 kbps. EDGE is currently available to over 99% of the Swiss population.
FTTH (Fibre to the Home): FTTH refers to the end-to-end connection of homes and businesses using fibre-optic
cables instead of traditional copper cables.
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FTTS (Fibre to the Street)/FTTB (Fibre to the Building)/FTTC (Fibre to the Curb): FTTS, FTTB and FTTC with vectoring
refer to innovative, hybrid broadband connection technologies (optical fibre and copper). Using these techno-
logies, fibre-optic cables are laid as close as possible to the building, or up to the basement in the case of FTTB,
while the existing copper cabling is used for the remaining section. VDSL2’s upcoming evolution to G.fast will
significantly increase bandwidths for FTTS and FTTB.
G.fast (pronounced “gee dot fast”): G.fast, the latest technology for copper lines, is capable of providing far more
bandwidth than VDSL2. The use of G.fast for FTTS and FTTB is part of Swisscom’s access strategy.
GPRS (General Packet Radio Service): GPRS is part of the second generation of mobile telephony and increases the
transfer rates of GSM mobile networks. GPRS enables speeds of 30 to 40 kbps.
GSM (Global System for Mobile communications) network: GSM is a global digital mobile communication standard
of the second mobile generation. In addition to voice and data transmission, it enables services such as SMS
messages and phone calls to other countries and from abroad (international roaming).
Housing: Housing is defined as the placement and network connection of server infrastructure in a data centre.
HSPA (High Speed Packet Access): HSPA is an enhancement of the third generation of the UMTS mobile communi-
cations standard. Compared to UMTS, HSPA enables large volumes of data to be transmitted at faster speeds.
HSPA enables far more customers to use the same radio cell simultaneously, and at a consistently high speed, than
would be possible with UMTS. At locations where mobile Internet use is particularly concentrated, HSPA has been
upgraded to HSPA+ (also referred to as HSPA Evolution). The maximum transmission speed currently delivered by
this technology is 42 Mbps.
ICT (Information and Communication Technology): A term that became current in the 1980s, combining the
terms “information technology” and “communication technology”. It denotes the convergence of information
technology (information and data processing and the related hardware) and communication technology (technically
aided communications).
Inbound/Outbound (see Roaming)
IP (Internet Protocol): IP enables different types of services to be integrated on a single network. Typical applications
are virtual private networks (VPN), telephony (Voice over IP) and fax (Fax over IP).
IPTV (Internet Protocol Television): IPTV refers to the digital broadcasting of broadband applications (for example,
television programmes and films) over an IP network.
ISP (Internet Service Provider): An ISP is a provider of Internet-based services. Also referred to as an Internet
provider. Services include Internet connection (using DSL, for example), hosting (registration and operation of
Internet addresses, websites and web servers) and content provision.
LAN (Local Area Network): A LAN is a local network for interconnecting computers, usually based on Ethernet.
MVNO (Mobile Virtual Network Operator): MVNO denotes a business model for mobile communications. In this
case, the corresponding business (the MVNO) has either a limited network infrastructure or no network
infrastructure at all. It therefore accesses the infrastructure of other mobile communication providers.
Net Promoter Score (NPS): NPS is a key figure that gives an indication of customer satisfaction directly and
willingness to recommend the service to other customers indirectly. As such, it is a tool used to determine customer
satisfaction.
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Network convergence: Network convergence is the dismantling and reorganisation of previously separated
networks to form a large, convergent network – such as the Swisscom fixed-line and mobile network.
Optical fibre: Fibre-optic cables enable optical data transmission, unlike copper cables, which use electrical signals
to transmit data.
OTT (Over the Top): OTT refers to content distributed by service providers over an existing network infrastructure
that they do not themselves operate. OTT companies offer proprietary services on the basis of the infrastructures
of other companies in order to reach a broad range of users quickly and cost-efficiently.
Petabyte: Unit of measurement for data size. 1 petabyte is equivalent to approximately 1,000 terabytes, 1,000,000 giga-
bytes or 1,000,000,000 megabytes.
PWLAN (Public Wireless Local Area Network): PWLAN denotes a wireless, local public network based on the
IEEE 802.11 WiFi standard family. A PWLAN typically offers data transmission speeds of 5-10 Mbps.
Roaming: Roaming enables mobile network subscribers to use their mobile phones when travelling abroad. The
mobile telephone of a subscriber outside Switzerland automatically selects the best-quality partner network.
Information indicating the country and region where the mobile phone is located at any given time is sent imme-
diately to the exchange in Switzerland where the mobile phone is registered. On receipt of the calling signal, the
exchange in Switzerland transmits it within a fraction of a second to the right region in the respective country,
where the signal is forwarded to the base station near where the mobile phone is at that moment. The base
station then forwards the signal to the mobile phone, and the call can be taken. Roaming works only if all countries
involved operate on the same frequency bands. In Europe, all GSM networks use the same frequency bands. Other
countries such as the USA or countries in South America use a different frequency range. Most mobile telephones
today are triband or quadband and support 900 MHz and 1,800 MHz networks (which are most commonly used
in Europe) as well as 850 MHz and 1,900 MHz networks.
Router: A router is a device for connecting or separating several computer networks. The router analyses incoming
data packets according to their destination address, and either blocks them or forwards them accordingly (routing).
Routers come in different forms, from large-scale network devices to small devices for the home.
Smart data: Primarily refers to the processing and understanding of large, complex and rapidly changing data
volumes with the aim of creating added value.
Streaming: Denotes the transmission of audio and video signals via a network or the Internet without the need to
store the data on the local device.
TDM (Time Division Multiplexing): Multiplexing is a method that allows the simultaneous transmission of multi-
ple signals over a single communications medium (line, cable or radio link), for example, by means of classic
telephony (using an ISDN or analogue line). Multiplexing methods are often combined to achieve even higher
utilisation. The signals are multiplexed once the user data have been modulated on a carrier signal. At the receiver
end the information signal is first demultiplexed and then demodulated.
Terabyte: Unit of measurement of data size. 1 terabyte is equivalent to approximately 1,000 gigabytes or
1,000,000 megabytes.
TIME: Acronym for Telecommunication, Information, Multimedia and Entertainment. It refers to the way in which
these areas grow together in the course of digitisation.
Ultra-fast broadband: Ultra-fast broadband denotes broadband speeds of more than 50 Mbps – on both the
fixed-line and mobile networks.
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UMTS (Universal Mobile Telecommunications System): UMTS is an international third-generation mobile
communications standard that combines mobile multimedia and voice services. A further development of GSM,
UMTS complements GSM and Public Wireless LAN in Switzerland. Today the UMTS network covers around 99% of
the Swiss population.
Unified Communications: An attempt used to integrate the wide variety of modern communication techno-
logies. Different telecommunication services such as e-mail, unified messaging, telephony, mobile telephony,
PDAs, instant messaging and presence functions are coordinated to improve the reachability of communication
partners working on distributed projects.
Vectoring: Vectoring is a technology used in conjunction with VDSL2. It eliminates interference between pairs of
copper lines, thereby achieving up to a twofold increase in bandwidth.
VDSL (Very High Speed Digital Subscriber Line): VDSL is currently the fastest DSL technology, allowing data trans-
mission speeds of up to 100 Mbps. The current form of VDSL is called VDSL2.
VoIP (Voice over Internet Protocol): VoIP is used to set up telephone connections via the Internet.
VoLTE (Voice over LTE): LTE is, in effect, a pure data network. VoLTE enables phone calls to be made via the LTE data
network.
WiFi Calling: WiFi Calling enables users to make calls via their mobile phone and the WLAN/WiFi network and
thereby significantly improves mobile phone reception from inside buildings.
WLAN (Wireless Local Area Network): A wireless local area network (WLAN) connects several computers
wirelessly to a central information system, printer or scanner.
Other terms
Bitstream access (BSA): Regulated bitstream access is a high-speed link that travels the last mile from the local
exchange to the customer’s home connection via a metallic pair cable. BSA is set up by Swisscom and is provided
to other telecoms service providers (TSP) as an upstream service at a price regulated by the government. TSPs can
use this link, for example, to offer their customers broadband services such as fast Internet access.
ComCo (Competition Commission): ComCo enforces the Federal Cartel Act, the aim of which is to safeguard
against the harmful economic or social impact of cartels and other constraints on competition in order to foster
competition. ComCo combats harmful cartels and monitors market-dominant companies for signs of anti-
competitive conduct. It is responsible for monitoring mergers and also provides opinions on official decrees that
affect competition.
ComCom (Federal Communications Commission): ComCom is the decision-making authority for telecommuni-
cations. Its primary responsibilities include issuing concessions for use of the radio frequency spectrum as well as
basic service licences. It also provides access (unbundling, interconnection, leased lines, etc.), approves national
numbering plans and regulates the conditions governing number portability and freedom of choice of service
provider.
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Ex-ante: In an ex-ante regime, the particulars of the regulated offerings (commercial, technical and operating
conditions) must be approved by a government authority (authorisation obligation). The conditions approved by
the authority (such as price) are known to the parties using the regulated services. There is legal provision for the
affected providers to establish that the price has been correctly determined.
Ex-post: In an ex-post regulation approach, the parties must agree all possible aspects of the contractual content
(primacy of negotiation). In the event of a dispute, the authorities decide only on the points on which the parties
have been unable to agree (objection principle).
Federal Office of Communications (OFCOM): OFCOM deals with issues related to telecommunications and broad-
casting (radio and television), and performs official and regulatory tasks in these areas. It prepares the groundwork
for decisions by the Federal Council, the Federal Department for Environment, Transport, Energy and Communications
(DETEC) and the Federal Communications Commission (ComCom).
FTE (full-time equivalent): Throughout this report, FTE is used to denote the number of full-time equivalent
positions.
Full access: Full access in connection with unbundling means providing alternative telecommunications service
providers with access to subscriber lines for the purpose of using the entire frequency spectrum of metallic pair
cables.
Hubbing: Hubbing denotes the trading of telephone traffic with other telecommunication operators.
Interconnection: Interconnection means linking up the systems and services of two telecoms providers so as to
enable the logical interaction of the connected telecoms components and services and to provide access to third-
party services. Interconnection allows the customer of one telecoms provider to communicate with the subscribers
of another provider. Under the terms of the Federal Telecommunications Act, market-dominant telecoms providers
are required to allow their competitors interconnection at cost-based prices (LRIC, see below).
Last mile: Also referred to as the local loop, the last mile denotes the subscriber access line between the subscriber
access point and the local exchange (access network, see above). In Switzerland, as in most other countries, access to
the last mile is regulated (unbundling).
Unbundling: Unbundling of the last mile (Unbundling of the Local Loop, ULL) enables fixed-line-network competitors
without their own access infrastructure to access customers directly at non-discriminatory conditions based on
original cost. The prerequisite for ULL is the presence of a market-dominant provider. There are two types of
unbundling: unbundling at the exchange (unbundling of the local loop/ULL or LLU, referred to as TAL in Switzer-
land), currently available at around 600 unbundled locations, and unbundling at the neighbourhood distribution
cabinet (sub-loop unbundling, referred to as T-TAL in Switzerland), in which Swisscom’s competitors have so far
shown no interest.
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Swisscom Group
five-year review
In CHF million, except where indicated
2013
2014
2015
2016
2017
Net revenue and results
Net revenue
Operating income before depreciation and amortisation (EBITDA)
EBITDA as % of net revenue
Operating income (EBIT)
Net income
Earnings per share
Balance sheet and cash flows
Equity at end of year
Equity ratio at end of year
Cash flow from operating activities
Capital expenditure in property, plant and equipment
and intangible assets
Net debt at end of period
Employees
%
CHF
%
11,434
11,703
11,678
11,643
11,662
4,302
37.6
2,258
1,695
32.53
6,002
29.3
3,931
2,396
7,812
4,413
37.7
2,322
1,706
32.70
5,486
26.2
3,565
2,436
8,120
4,098
35.1
2,012
1,362
26.27
5,242
24.8
3,702
2,409
8,042
4,293
36.9
2,148
1,604
30.97
6,522
30.4
3,722
2,416
7,846
4,295
36.8
2,131
1,568
30.31
7,645
34.7
4,091
2,378
7,447
Full-time equivalent employees at end of year
Average number of full-time equivalent employees
number
number
20,108
21,125
21,637
19,746
20,433
21,546
21,127
21,543
20,506
20,836
Operational data at end of period
Fixed telephony access lines in Switzerland
Broadband access lines retail in Switzerland
Mobile access lines in Switzerland
Swisscom TV access lines in Switzerland
in thousand
in thousand
in thousand
in thousand
2,879
1,811
6,407
1,000
2,778
1,890
6,540
1,165
2,629
1,958
6,625
1,331
2,367
1,992
6,612
1,418
2,047
2,014
6,637
1,467
Revenue generating units (RGU) Switzerland
in thousand
12,097
12,373
12,543
12,389
12,165
167
Unbundled fixed access lines in Switzerland
Broadband access lines wholesale in Switzerland
in thousand
in thousand
256
215
180
262
128
315
128
364
107
435
Broadband access lines in Italy
in thousand
1,942
2,072
2,201
2,355
2,451
Swisscom share
Number of issued shares at end of period
in million of shares
Market capitalisation at end of year
Closing price at end of period
Closing price highest
Closing price lowest
Ordinary dividend per share
Ratio payout/earnings per share
Informations Switzerland
Net revenue
Operating income before depreciation and amortisation (EBITDA)
Capital expenditure in property, plant and equipment
and intangible assets
CHF
CHF
CHF
CHF
%
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51.802
24,394
470.90
474.00
390.20
22.00
67.63
51.802
27,067
522.50
587.50
467.50
22.00
67.27
51.802
26,056
503.00
580.50
51.802
23,627
456.10
528.50
471.10
426.80
22.00
83.75
22.00
71.04
51.802
26,859
518.50
527.00
429.80
22.00 1
72.59
9,358
3,685
9,586
3,788
9,764
3,461
9,665
3,572
9,476
3,451
1,686
1,751
1,822
1,774
1,678
Full-time equivalent employees at end of year
number
17,362
18,272
18,965
18,372
17,688
1 In accordance with the proposal of the Board of Directors to the Annual General Meeting.
Forward-looking statements
This Annual Report contains forward-looking statements. In this Annual Report, such forward-looking statements
include, without limitation, statements relating to our financial condition, results of operations and business and
certain of our strategic plans and objectives.
Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ
materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to
factors which are beyond Swisscom’s ability to control or estimate precisely, such as future market conditions,
currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and
other risk factors detailed in Swisscom’s and Fastweb’s past and future filings and reports, including those filed
with the U.S. Securities and Exchange Commission and in past and future filings, press releases, reports and other
information posted on Swisscom Group Companies’ websites.
Readers are cautioned not to put undue reliance on forward-looking statements, which speak only of the date of
this communication.
Swisscom disclaims any intention or obligation to update and revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
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Publishing details
Key dates
> 7 February 2018
Publication of 2017 Annual Results and
Annual Report
> 4 April 2018
Annual General Meeting in Fribourg
> 6 April 2018
Ex dividend date
> 10 April 2018
Dividend payment
> 2 May 2018
2018 First-Quarter Results
> 16 August 2018
2018 Second-Quarter Results
> 1 November 2018
2018 Third-Quarter Results
> February 2019
Publication of 2018 Annual Results and
Annual Report
Published and produced by
Swisscom Ltd, Berne
Translation
CLS Communication AG, Basel
Production
MDD Management Digital Data AG, Lenzburg
Printing
Stämpfli AG, Berne
Photographer
Stefan Walter, Zurich
Christian Grund, Zurich
Printed on chlorine-free, bleached paper
© Swisscom AG, Berne
The Annual Report is published in English,
French and German.
Further copies of the Annual Report can be ordered from
E-mail: annual.report@swisscom.com
A Swisscom company brochure
is also available in English, French,
German and Italian.
www.swisscom.ch/inkuerze2017
The Sustainability Report 2017 is published online
at www.swisscom.ch/cr-report2017
General information
Swisscom Ltd
Head office
CH-3050 Berne
Telephone: + 41 58 221 99 11
Financial information
Swisscom Ltd
Investor Relations
CH-3050 Berne
Telephone: + 41 58 221 99 11
E-mail:
Internet: www.swisscom.ch/investor
investor.relations@swisscom.com
Social and environmental information
Swisscom Ltd
Group Communications & Responsibility
CH-3050 Berne
E-mail: corporate.responsibility@swisscom.com
Internet: www.swisscom.com/responsibility
For the latest information,
visit our website
www.swisscom.ch
The online version of the Swisscom
Annual Report is available at
German: www.swisscom.ch/bericht2017
English: www.swisscom.ch/report2017
French: www.swisscom.ch/rapport2017
P E R F O R M A N C E
neutral
Printed Matter
No. 01-18-157193 – www.myclimate.org
© myclimate – The Climate Protection Partnership
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