Swisscom AG Annual Report 2019

← All annual reports

FY2019 Annual Report · Swisscom AG

Loading PDF…

Annual Report

2019

Annual Report
publications

Sustainability Report

2019

Annual Report

2019

at a glance2019

d5590b52ed634e379df52d595e9a3f72.indd 1

21.01.2020 11:21:09

ba4bf1cd544b4829bac2e63f455b14bb.indd 1

15.01.2020 16:01:44

The Annual Report, Sustainability Report and “2019 at a glance” together make up Swisscom’s reporting on 2019. The three
publications are available online at: swisscom.ch/report2019

Concept of “Simply using opportunities”
In the city and in the country, at home and on the road – people everywhere in Switzerland can take advantage of the
countless opportunities offered by the networked world. Swisscom wants to connect Switzerland and enable the Swiss
public to benefit from the opportunities offered by digitisation.

The pictures in the 2019 Annual Report show the diversity of digital needs and how easy it is for people to make use of the
opportunities available to them.

A big thank you to all who took time to pose for these photographs: Nina and Louis, 5th grade, Hagen primary school in
Altdorf, Dominique Bausback, Malik Hashim, Claudia Lenzi, Nils Kessler, Patric and Tatjana Fischli with Anais, Laurence Brun
from the Clinique de Genolier (Swiss Medical Network private clinic group) and Gérard Fornerod from Confiserie Fornerod.

Table of contents

Introduction

Management Commentary

Corporate Governance and Remuneration Report

Consolidated Financial Statements

Further Information

1 – 11

12 – 65

66 – 107

108 – 179

180 – 190

2019 in review

Net revenue
billion CHF

EBITDA
billion CHF

Capital expenditure
billion CHF

11.5
 2.2%

4.4
 3.4 %

2.4
 1.4 %

Net income
billion CHF

Net debt incl. lease
to EBITDA ratio

Equity ratio
%

1.7
 9.7 %

2.0



36.6
 0.3 PP

Employees
(full-time equivalent)

Dividend per share
CHF

19,317
 2.7 %



Total shareholder re-
turn Swisscom share
%

14.3
 19.5 PP

w
e
i
v
e
r
n

9
1
0
2
|

n
o
i
t
c
u
d
o
r
t
n

Number 1 confirmed in tests

Swisscom successful in
● the network test carried out by trade magazine connect

for the tenth time in 2019, achieving the grade “phenomenal”.
● the mobile phone test carried out by the trade magazine CHIP

for the fourth time in a row.

● the Ookla speed test for the fastest mobile network and the best coverage.

in Switzerland

On 17 April 2019, Swisscom
became the first provider
in Europe to put its 5G network
into operation.

Swisscom TV with

The subscription

voice
assistant

The voice assistant of the
new Swisscom Box also
controls smart home devices.

inOne
mobile

allows unlimited phone calls,
surfing and texting in
39 countries within Europe.

Even more protection

for SMEs

SMEs can protect themselves
efficiently against attacks from
the network and from data loss
with the new overall Managed
Security and Managed Backup
solution.

New partnership

in Italy

Fastweb is working together
with WindTre, and so is
expanding its mobile telephony
offering.

Exclusive

UEFA Champions
League

Teleclub will also exclusively
show all matches in the
2021/2022 season.

138 years

Publifon payphone

The last Swisscom telephone
booth has started its journey to
the Museum of Communication
in Berne.

KPIs of Swisscom
Group

In CHF million, except where indicated

Net revenue and results 1

Net revenue

Operating income before depreciation and amortisation (EBITDA) 2

EBITDA as % of net revenue

Operating income (EBIT)

Net income

Earnings per share

Balance sheet and cash flows 1

Equity

Equity ratio 2

Operating free cash flow proxy

Capital expenditure

Net debt incl. lease liabilities 2

Operational data

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

Broadband access lines wholesale in Switzerland

Broadband access lines in Italy

Mobile access lines in Italy

Swisscom share

Number of issued shares

Market capitalisation

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

2019

2018

Change

11,453

11,714

4,358

38.1

1,910

1,669

32.28

8,875

36.6

1,626

2,438

8,785

1,594

2,033

1,555

6,333

4,213

36.0

2,069

1,521

29.48

8,208

36.3

1,809

2,404

7,393

1,788

2,033

1,519

6,370

11,515

11,710

515

2,637

1,806

51,802

26,553

512.60

523.40

441.10

22.00

19,317

19,561

481

2,547

1,432

51,801

24,331

469.70

530.60

427.00

22.00

19,845

20,083

–2.2%

3.4%

–7.7%

9.7%

9.5%

8.1%

–10.1%

1.4%

18.8%

–10.9%

0.0%

2.4%

–0.6%

–1.7%

7.1%

3.5%

26.1%

–

9.1%

–

–2.7%

–2.6%

CHF

in thousand

CHF

number

1 Swisscom uses various alternative performance measures. The definition and
reconciliation of values in accordance with IFRS are set out in the chapter on
financial review.

2 Swisscom has been applying IFRS 16 “Leases” since 1 January 2019. The prior
year’s figures have not been adjusted. As a consequence of the first-time
application of IFRS 16, additional lease liabilities and right-of-use assets of

CHF 1,238 million were reported with effect from 1 January 2019. As a result,
the equity ratio fell to 34.4% as at 1 January 2019. EBITDA of the previous year
includes expenses of CHF 207 million from operating leasing in accordance
with IAS 17.

3 In accordance with the proposal of the Board of Directors to the Annual

General Meeting.

p
u
o
r
G
m
o
c
s
s
i
w
S
f
o
s
I
P
K

n
o
i
t
c
u
d
o
r
t
n

Business overview

Other Operating
Segments

With subsidiaries in the area of
network construction and
main tenance (cablex) and
broadcast services (Swisscom
Broadcast), Swisscom is supple-
menting the core business in
related areas. The Digital Business
area focusses on growth areas
in the field of Internet services
and digital business models,
and also includes business with
online directories and telephone
books (localsearch).

Swisscom
Switzerland

Fastweb

Fastweb is one of Italy’s largest
providers of broadband services.
The product portfolio comprises
voice, data, broadband and
TV services, as well as video-on-
demand for residential and
business customers. Fastweb also
delivers mobile services. This is
complemented by customer-spe-
cific solutions and wholesale
services for business customers.

Residential Customers
The Residential Customers
business unit provides mobile
and fixed services.
These include telephony,
broad band, TV and mobile
services and also holistic
ICT solutions for SMEs.

Enterprise Customers
Whether voice or data, mobile or
fixed network, individual
products or integrated solutions:
Enterprise Customers designs,
implements and operates entire
ICT infrastructures for corporate
customers.

IT, Network & Infrastructure
The IT, Network & Infrastructure
area plans, operates and
maintains the network and IT
infrastructure in Switzerland.

Wholesale
The Wholesale segment enables
other telecommunications
providers to use the Swisscom
fixed and mobile network.

Revenues

CHF 8.6 bn

CHF 2.5 bn

CHF 0.9 bn

EBITDA

CHF 3.5 bn

CHF 0.8 bn

CHF 0.2 bn

Shareholders’ letter
A year of innovations in a
challenging market environment

Hansueli Loosli, Chairman of the Board of Directors Swisscom Ltd and Urs Schaeppi, CEO Swisscom Ltd

Dear Shareholders

In 2019, Swisscom made impressive use of the opportunities that are
opening up for all of us thanks to digitisation. Our response to the
ongoing challenging environment was, and will remain, new offerings
and the expansion of our networks. Swisscom impressed the market
with innovations in the TV and mobile communications segments
and in subscriptions. Swisscom achieved a solid financial result. Group
sales declined in line with expectations, while consolidated operating
income before depreciation and amortisation (EBITDA) remained at
the previous year’s level. Our Italian subsidiary, Fastweb, continued to
grow, making gains among both residential and business customers.

r
e
t
t
e
l

’
s
r
e
d

o
h
e
r
a
h
S
|

n
o
i
t
c
u
d
o
r
t
n

Financial targets met
Swisscom generated net revenue of CHF 11,453 million in 2019. Consolidated operating income
before depreciation and amortisation (EBITDA) was CHF 4,358 million and thus above the previous
year; on an adjusted basis, EBITDA remained stable. Net income was CHF 1,669 million.

Swisscom is investing today in the networks of tomorrow
The Swiss market is saturated in the mobile communications and TV segments, while the number of
broadband connections is remaining constant due to high market penetration. At the same time, data
growth continues unabated. In mobile communications alone, the use of mobile data services has
increased 40-fold in the last seven years. What is more, security requirements are constantly growing.
We are meeting these challenges by consistently expanding and continuously developing our networks.

Swisscom makes over two thirds of the investments in the Swiss telecommunications infrastruc-
ture. In 2019, it invested around CHF 2.4 billion in network expansion, of which around CHF 1.8 bil-
lion in Switzerland.

As at the end of 2019, Swisscom had established 3.9 million ultra-fast broadband service connec-
tions with speeds in excess of 80 Mbps. Swisscom will continue to invest massively in its infrastruc-
ture in the coming years, to ensure the best experiences for its customers.

Investing in Swiss infrastructure is paying off. This is demonstrated by Swisscom’s top ranking in all
relevant network tests. For example, in 2019, Swisscom won connect magazine’s mobile network
test for the tenth time, achieving the rating of “outstanding”. Swisscom prevailed in the CHIP test for
the fourth time in a row. Swisscom also took first place in Ookla’s speed test for the fastest mobile
network and the best coverage.

The future of mobile communications
In February 2019, Swisscom successfully took part in the 5G frequencies auction. In April, Swisscom
was the first provider in Europe to commercially launch the new mobile communication standard. At
the end of 2019, Swisscom reached the next milestone: basic 5G coverage has since been extended
to 90% of the Swiss population. However, in order for data to be transmitted up to 1,000 times more
efficiently, and thus in a more energy-saving manner, the full version of 5G is needed. To draw an
analogy: expansion of the 5G network is like adding more lanes on the data highway. To ensure that
data traffic flows unhindered and to avoid data tailbacks and jams happening in future, it is essential
to have new antenna locations or to convert the existing installations. However, some segments of
the population have concerns about 5G. Swisscom is all the more aware of its responsibility in this
regard and is actively engaging in the social debate on mobile communications and the environ-
ment. Naturally, all mobile communications installations operated by Swisscom comply at all times
with Switzerland’s rigorous limits, which are exemplary in their strictness.

Swisscom TV – more than just television
The new Swisscom Box not only offers the best TV experience, but also networks smart home
objects such as lamps. Just like the television, these items can be controlled with the integrated
voice assistant. A total of 1.56 million customers use Swisscom TV, which corresponds to a market
share of 36%. This means that Swisscom TV is still Switzerland’s most popular TV offering. Swisscom
subsidiary Teleclub has reached an important milestone by securing the rights to the UEFA Champi-
ons League from the 2021/2022 season. Teleclub will continue to show all the football matches on
an exclusive basis.

New addition to the inOne family
The inOne combined package, introduced in 2017, continues to be extremely successful. inOne flex-
ibly combines mobile, broadband, TV and fixed-line telephony products. Launched in April 2019, the
new inOne mobile package allows unlimited phone calls, surfing and texting in 39 countries within
Europe. By the end of 2019, around 1.15 million customers had opted for this new subscription. In
total, Swisscom has 2.75 million inOne customers.

Tough competition in corporate business
The corporate customer market is fiercely contested, and the pressure on pricing remains high. Com-
pared to the previous year, revenue from telecommunications services fell by 10.9% or CHF 112 mil-
lion, to CHF 919 million. Swisscom holds a strong position as full service provider. It’s offerings meet
customers’ needs, and customer satisfaction is consistently high. Demand for cloud, security and IoT
solutions has continued to grow. In addition, Swisscom again succeeded in renewing contracts with
many existing customers in 2019. Revenue in the solutions business remained virtually stable at
EUR 1,021 million (–0.6%).

For SMEs, Swisscom has had Managed Security and Managed Backup in its portfolio since spring.
These two new product modules are designed to protect companies from attacks in the network
and data loss and to relieve them of their workload for security tasks. In order to provide all business
customers a customer experience tailored to their needs, Swisscom merged the SME segment and
the corporate customer segment.

Fastweb continues successful path in Italy
Fastweb grew again in 2019 and made gains among both residential and business customers. In the
fixed-network business, the number of customers rose to 2.64 million broadband customers. In
mobile communications, Fastweb posted an increase in customers of 26.1% to 1.81 million in total.
Fastweb also entered into a strategic partnership with WindTre for the construction of a nationwide
5G network. The two operators are keen to work together to accelerate the development of a nation-
wide ultramodern 5G network. For this reason, Fastweb is placing a stronger focus on convergence:
34% of subscribers already use a bundled offering combining fixed network and mobile services. The
business customer segment also continued to develop positively, with revenue growth of EUR 82 mil-
lion (+10.5%). Overall, Fastweb increased its revenues to EUR 2,218 million (+5.4%). Operating income
before interest, taxes, depreciation and amortisation (EBITDA) rose to EUR 750 million (+5.2% on an
adjusted basis).

A simple way to make use of opportunities
Our environment is changing rapidly. So, standing still is not an option for Swisscom. Instead, we are
sticking to our promise of enabling our customers to make simple use of the opportunities of a net-
worked future. What’s more, our employees and the company itself continue to develop steadily in
line with our values of being committed, trustworthy and inquisitive. That is why we have pooled
our efforts in Customer Field Service. Around 1,000 employees began working at the subsidiary
cablex in January 2020. Thanks to this merger, customers are now served on site for installations,
maintenance and troubleshooting, for example, by just one party. Also, as of 2020, we amalgamated
Sales & Services with Products & Marketing to form the new Residential Customers unit. Together,
we will focus on our three strategic ambitions on which we are working hard with our colleagues.

Offering the best experiences
We want to inspire our customers by providing them with the best service at all times, wherever
they are, for example in our shops. For this reason, we have been testing a new shop concept since
the end of 2019. In Uster and Thun, we advise residential and business customers in a cosy living
room atmosphere, inspire them with technological innovations and address their issues at the ser-
vice bar.

Operational excellence
Our industry is being transformed dramatically by digitisation. At the same time, Swisscom faces
tough competition from global, Internet-based companies that benefit from low costs. We are
responding to this development with rigorous cost management. In 2019, we exceeded the goal we
announced in 2016 of reducing our cost base by CHF 100 million annually. For the years 2020 to
2022, we are planning further cost reductions of CHF 100 million annually.

r
e
t
t
e
l

’
s
r
e
d

o
h
e
r
a
h
S
|

n
o
i
t
c
u
d
o
r
t
n

New growth
Swisscom is keen to grow in its core business and related areas, such as entertainment, cloud ser-
vices, the Internet of Things, wholesale and digital security. In selected areas, Swisscom is launching
new digital services, which in part are based on novel web-based business models. Here the focus is
on digital services for SMEs, digital marketing services as well as Swisscom Blockchain Ltd and the
fintech segment.

Fastweb plays a key role. Therefore, Swisscom wants to maintain its growth course in Italy and fur-
ther develop the company profitably.

Shareholder return
Swisscom pursues a payout policy with a stable dividend. In 2019, Swisscom paid an ordinary divi-
dend of CHF 22 per share. The Swiss Market Index (SMI) rose by 26% compared with the previous
year; the Swisscom share price increased by 9.1% to CHF 512.60.

Outlook
For 2020, Swisscom expects net revenue of around CHF 11.1 billion, EBITDA of around CHF 4.3 billion
and capital expenditure of around CHF 2.3 billion. Subject to achieving its targets, Swisscom will
propose payment of an unchanged, attractive dividend of CHF 22 per share for the 2020 financial
year at the 2021 Annual General Meeting.

Sincerest thanks
Shaping the future as the market leader means constantly developing and taking advantage of the
opportunities that present themselves. Together with our colleagues, we have had a successful year
and have achieved a lot. For this, we would like to thank our employees. It is thanks to their commit-
ment, knowledge and motivation that Swisscom has become what it is today: a reliable partner for
our customers, a sound investment for our shareholders and a pioneer in the networking of a mod-
ern Switzerland. We would also like to thank you, our valued shareholders, for the trust and confi-
dence you have in our company.

Yours sincerely

Hansueli Loosli
Chairman of the Board of Directors
Swisscom Ltd

Urs Schaeppi
CEO Swisscom Ltd

With Thymio, children learn how computers and
robots work. Through play, the pupils develop the skills
needed to navigate their way in the digital world
and to actively shape it.

Five school classes with 100 pupils from five cantons are
taking part in the pilot project called “Thymio goes to
the mountains”.

Media skills
swisscom.ch/learning2019

The Swisscom Academy trainers support everyone
who wants to make their everyday life easier with
the help of smartphones, tablets and Swisscom
products.

580,000 participants have attended Swisscom Academy
courses over the last 15 years.

Strategy and environment

Corporate strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Objectives and achievement of targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
General conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Data protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Infrastructure

Infrastructure in Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Infrastructure in Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Employees

Employees in Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Employees in Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Brands, products and services

Swisscom brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Products and services in Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Products and services in Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Customer satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Innovation and development

Innovation as an important driver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Innovation focused on specific topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Financial review

Alternative performance measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Segment results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Depreciation and amortisation, non-operating results . . . . . . . . . . . . . . . 52
Cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Net asset position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Value-oriented business management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Statement of added value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Financial outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Capital market

Swisscom share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Dividend policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Credit ratings and financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Risks

Risk situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Risk factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Strategy
and environment

Digitisation is having an ever greater impact on every area of life . The market
environment is influenced by increasing connectivity, changing customer require-
ments and technological progress . As a market, technology and innovation leader,
Swisscom seeks to hold its own in its competitive core business and conquer new
growth areas . In order to make its vision a reality, Swisscom has set out three
strategic aspirations in its corporate strategy: provide the best customer experience,
operational excellence and new growth . In doing this, Swisscom wants to secure its
market position and make it easy for its customers to seize the opportunities
presented by the networked world .

Corporate strategy

Swisscom is the Swiss market leader for mobile telecom-
munications, fixed-line telephony and television. It also
occupies a leading market position in a wide range of IT
business segments. The subsidiary Fastweb is an infra-
structure-based, alternative provider for residential and
business customers in Italy, offering both fixed-network
and mobile services.

Megatrends such as digitisation and connectivity, custo-
misation and demographic change are indelibly shaping
and altering our society and the economy and have a
long-term impact on the activities of Swisscom. The
increasing proliferation of the Internet of Things, the
rollout of the 5G mobile telephony standard, the grow-
ing importance of voice recognition and the advance-
ments made in the field of artificial intelligence are
short- to medium-term trends that impact Swisscom’s
business.

Swisscom and its environment are experiencing rapid
change. Characteristic examples of this include increas-
ing connectivity, the exponential growth in data, chang-
ing customer needs, the mounting importance of soft-
ware, content, security and data protection, and
technological progress. Digitisation is increasingly pene-

trating all areas of life and leading to new, rapidly devel-
oping business models. The core business is character-
ised by fierce competition with high price pressure. The
overall market for connectivity services is shrinking.
Global Internet companies are using their economies of
scale and forcing themselves into local ICT markets for
both residential and business customers.

Swisscom is a market, technology and innovation leader
in Switzerland with high quality standards, connecting
both residential and corporate customers. It is at the
heart of digitisation and enables its customers to seize
the opportunities presented by the networked world
without difficulty. In everything it does, Swisscom
focuses on people’s needs. Its employees work in con-
cert to provide inspirational experiences. Swisscom is
committed and trustworthy in its actions and consist-
ently seeks to learn new things and develop itself fur-
ther, without ever losing sight of what is important
its goals. What matters most to
when pursuing
Swisscom is its customers’ trust in it. That trust is
strengthened by Swisscom’s high level of reliability and
sustainability in everything it undertakes. To realise its
vision of being a leader in shaping the future and inspir-
ing people in a networked world, Swisscom has set out
three strategic aspirations that give tangible expression
to its strategy.

t
n
e
m
n
o
r
i
v
n
e
d
n
a
y
g
e
t
a
r
t
S
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Innovative products

Efficient operation

Best service

Digital transformation

Best customer
experience

Operational
excellence

Best infrastructure

Smart investments

New
growth

Internet & blockchain-
based business models

Core business

Expanding into
adjacent markets

Swisscom strategy

Best customer experience
Swisscom wants to inspire its customers by providing
them with the best service at all times, regardless of their
location. The customer experience is based on a high-per-
formance infrastructure: Swisscom offers its customers
the latest IT and communications infrastructure and
enhances these on an ongoing basis. Customer require-
ments for networks are constantly growing. As a result,
Swisscom is setting up and operating networks that are
second to none in terms of security, availability and perfor-
mance. Swisscom is expanding its fixed telephone and
mobile network infrastructure. In doing so, it is enabling
its customers to enjoy the best experiences when utilising
its offerings. and thereby consistently driving the expan-
sion of 5G forward in Switzerland. Following its successful
participation in the 5G auction in the spring of 2019,
Swisscom put into operation the first 5G network in
Europe to include commercial offerings and end devices.

The Swisscom Cloud forms the basis for new, scalable
offerings produced in Switzerland. Swisscom comple-
ments its own cloud with global solutions (such as Ama-
zon Web Services and Microsoft Azure), thereby operating
as a service provider that integrates solutions into hybrid
environments.

The key to the success enjoyed by Swisscom is its relation-
ships with customers. Swisscom’s main guiding principles
are to provide the best service and inspirational experi-

ences 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 touchpoints. In
order to create even more positive experiences and be
even closer to its customers, Swisscom has combined its
Customer Field Services at its subsidiary cablex with effect
from 1 January 2020. Swisscom is reducing complexity
and providing relevant, innovative offerings. The inOne
mobile go offering eliminates the much-acriticised charges
for mobile phone use in the EU, allowing Swisscom cus-
tomers to surf in the EU in the same carefree manner as
they do in Switzerland. The new generation of Swisscom
TV gives customers access to the top content of the broad
Teleclub portfolio, Netflix, as well as other popular TV apps
directly on their homescreens. Swisscom has also added
gaming and other features to the offering. The voice assis-
tant incorporated into the new Swisscom Box greatly sim-
plifies access to content, information and home network-
ing. Swisscom provides small and medium-sized enterprises
(SMEs) with in-depth, personal, local support thanks to a
nationwide network of SME specialists and certified part-
ners. Since spring 2018, Swisscom has been providing SMEs
with Smart ICT complete solutions for IT outsourcing that
significantly reduce these companies’ workloads. In the
business customer segment, customer needs are shifting
towards standardised products. In order to serve the
market even better in the future, Swisscom merged the
SME and corporate customer segments into one organi-
sation (Business Customers) as of 1 January 2020. This

t
n
e
m
n
o
r
i
v
n
e
d
n
a
y
g
e
t
a
r
t
S
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

reorganisation provides business customers with an even
more consistent product and customer experience. Also as
of 1 January 2020, it will be merging Swisscom Switzer-
land’s Sales & Services and Products & Marketing divisions
into the Residential Customers division.

Operational excellence
Due to fierce competition, revenues in the core business
are still under strong pressure. Swisscom wants to offset
these revenue losses as much as possible through growth
in new areas and strict cost management. Swisscom also
wants to further lower its cost base over the coming years
in order to secure long-term profitability. This will allow
Swisscom to free up funds for the exploration of new
business opportunities and make the investments neces-
sary to ensure success. Swisscom’s main approach in opti-
mising costs is to economise in a more focused manner
and create more efficient operating procedures, for
example by simplifying and adjusting the product port-
folio, reducing the number of interfaces, using agile
development methods, modernising and consolidating
the IT platforms, increasing the efficiency of staff deploy-
ments, and optimising processes through the All IP migra-
tion. The internal digital transformation and the higher
level of digitisation that accompanies it is also crucial for
Swisscom. In this context, Swisscom intends to virtualise
network functions, strengthen and expand the online
channel,
increasingly automate processes and use
enhanced artificial intelligence and analytics, among other
things. Swisscom is also making its investment activities
more efficient, for example through an intelligent mix of
technologies and value-oriented network expansion.

New growth
The market for telecommunications in Switzerland is
becoming increasingly saturated, especially for broad-
band and TV, but Swisscom expects further moderate
volume growth in the postpaid segment of mobile com-
munications. Price pressure will remain high in all mar-
kets, and Swisscom therefore expects revenue to decline
slightly in the telecommunications market as a whole. In
Italy, Swisscom anticipates further market growth, espe-
cially in the broadband area given that broadband pene-
tration in Italy is relatively low. Market experts believe
the IT services market will continue to enjoy moderate
growth over the next few years, being driven by the
growing use of ICT in many industries.

By further developing its core business and areas related
to its core business, Swisscom intends to exploit growth
opportunities, for example through the further expan-
sion of its TV/entertainment offering, growth in the
wholesale sector, the Cloud, Smart ICT for small and
medium-sized enterprises and the solutions business for
digital security. Swisscom is launching new digital ser-

vices in selected areas that in part are based on new
business models. This is especially true when it comes to
the Digital Business Unit (DBU). DBU focuses on digital
services for SMEs such as localsearch (Swisscom Directo-
ries Ltd), Swisscom Blockchain Ltd, fintech operations
and digital marketing services. When selecting growth
areas, Swisscom is guided by future customer require-
ments, focuses on future-oriented business models
offering growth and makes increased use of partner-
ships.

investments, particularly

Fastweb is making a significant contribution to growth
in Italy in the areas of broadband and mobile communi-
cations – both among residential and business custom-
ers. Swisscom is strengthening Fastweb’s market posi-
tion through targeted
in
mobile communications, so as to maintain its growth
course and further develop the company profitably.
Fastweb’s strategy is based on convergent offerings that
provide transparency, fairness and simplicity as well as
high service quality and partnerships. For business cus-
tomers, Fastweb is making strategic expansions to its
portfolio by employing horizontal solutions focused on
the cloud and digital security. The strategic partnership
with WindTre, which was concluded in the summer of
2019, and the acquisition of mobile spectrum constitute
key pillars in the further development of Fastweb. Fast-
web is thus strengthening both its mobile communica-
tions and convergent offerings and also further expand-
ing its market position.

Transformation
In order to deal with constant change and successfully
implement its strategy, Swisscom employs a systematic
customer focus in all of its customer interactions. It also
relies on agile work and organisational forms and on a
continuous reduction in complexity by promoting sim-
plicity. The desired changes in behaviour within the
organisation are supported by targeted communication
and training measures.

Sustainability strategy
Digitisation is having a growing impact on the economy
and society. As one of Switzerland’s leading ICT compa-
nies, Swisscom bears a special responsibility in this
respect. That is why it wants to recognise the opportuni-
ties and risks of digitisation and play as full a role as pos-
sible in helping shape the future of the country in a
trustworthy, attentive, committed manner. Swisscom
has identified three fields of activity in which it wants to
make contributions: Promotion digital competency, con-
tributing to climate protection and a reliable and secure
ICT infrastructure. Swisscom has formulated three stra-
tegic priorities with corresponding objectives to address
these fields of activity: More for the people, more for the

environment and more for Switzerland. These objectives
also make a contribution towards the 17 Sustainable
Development Goals of the United Nations. Further infor-
mation can be found in the separate Sustainability
Report.
N See www.swisscom.ch/sustainability

Contributing to climate protection
Climate change is turning out to be a global problem of
the first order, affecting the basic resources needed to
sustain life in Switzerland. All countries must contribute
to climate protection. Digitisation harbours promising
possibilities for this effort.

Promoting digital competency
While technologies advance at great speed, people’s
skills do not simply change without help. Competent
handling of digital media is important in all areas of life.
Whether at school, at work, as parents, in politics or in
retirement – contact with the networked world is inevi-
table and we would do well to keep pace with these new
demands.

More for the people
Swisscom enables people in Switzerland to make use of
the opportunities presented by a networked world. It is
helping two million people a year to develop their digital
skills and is improving working conditions in its supply
chain, a focus it will maintain until at least 2025.

More for the environment
Swisscom cares about the environment. It is working
with its customers to reduce its CO2 emissions by
450,000 tonnes. This corresponds to 1% of Switzerland’s
greenhouse gas emissions.

Reliable and secure ICT infrastructure
Reliable, secure infrastructure is fundamental to Swit-
zerland’s competitiveness, prosperity and quality of life.

More for Switzerland
Swisscom uses the best networks and progressive solu-
tions to create added value for its customers, employees,
shareholders and suppliers, and for all of Switzerland. It
provides people and businesses in Switzerland with
reliable ultra-fast broadband, thus making Switzerland a
more competitive country and a better place to live.

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 2019

Financial targets

Net revenue

Operating income before depreciation
and amortisation (EBITDA)

Capital expenditure

Operational Excellence

Other targets

Ultra-fast broadband in Switzerland 2

Net revenue for 2019
of around CHF 11 .4 bn

EBITDA for 2019
of more than CHF 4 .3 bn

Capital expenditure for 2019
1
of around CHF 2 .5 bn

Reduction of CHF 100 million in cost base
in the Swiss business in 2019

Coverage of 90% by the end of 2021
in excess of 80 Mbps

Coverage of 75% by the end of 2021
in excess of 200 Mbps

CHF 11,453 mn

CHF 4,358 mn

CHF 2,438 mn

CHF 127 mn

74%

47%

1 Incl. expenditure of CHF 0.2 bn on mobile frequencies in Switzerland.

2 Basis: 4.3 mn homes and 0.7 mn businesses (Swiss Federal Statistical Office –

SFSO).

t
n
e
m
n
o
r
i
v
n
e
d
n
a
y
g
e
t
a
r
t
S
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

General conditions

Market environment
The three macroeconomic factors of the economy (in Switzerland and in 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

Unit

in %

in CHF

2015

2016

2017

2018

2019

1 .2

0 .8

(0 .04)

1 .08

1 .00

1 .4

0 .9

(0 .14)

1 .07

1 .02

1 .0

1 .5

(0 .07)

1 .17

0 .98

2 .8

0 .1

(0 .24)

1 .13

0 .99

0 .9

0 .2

(0 .46)

1 .09

0 .97

2 Forecast Istat

Economy
Economic growth in 2019 slowed throughout the world
as well as in Switzerland. Inflation remains very low. Eco-
nomic developments are having a wide range of impacts
on Swisscom’s customer segments. A high share of the
revenues generated in the Residential Customers seg-
ment can be attributed to products with fixed monthly
charges, meaning the impact of economic fluctuations is
low. Project business with business customers is more
sensitive to cyclical factors. Economic fluctuations tend
to have a greater impact on the revenue generated by
Italian subsidiary Fastweb for both residential and busi-
ness 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 constitute a key
assumption for the impairment assessment of recog-
nised goodwill and other items in the financial state-
ments. The returns on ten-year government bonds fell
further in 2019 and are at an historically low level.
Swisscom issued two bonds totalling CHF 405 million in
2019. The average interest expense on these financial
liabilities (excl. lease liabilities) was 1.0% at the end of
2019. Of these financial liabilities, 78% have a fixed
interest rate, and the average term is 5.5 years. This
financing structure offers considerable protection
against a potential rise in interest rates.

Currencies
Exchange rate fluctuations have very little impact on
Swisscom’s income or financial position. Transaction
risks on operational cash flows exist primarily in the pur-
chase of end devices and technical equipment and ser-
vices from network operators outside of Switzerland
(e.g. for roaming). In the core business in Switzerland,
the amount of money paid out in foreign currencies is

higher than the income in the corresponding currencies
(primarily in USD). The net cash flows in foreign currency
are partly hedged by foreign currency forward contracts,
and hedge accounting is applied in the consolidated
financial statements. Swisscom funds itself for the most
part in Swiss francs and to a lesser extent in EUR. In
recent years, the share of the funding denominated in
EUR has gradually increased to 43%. The net assets of
Fastweb and other foreign subsidiaries are also subject
to a currency translation risk in the consolidated finan-
cial statements. At the end of 2019, Fastweb’s net assets
were EUR 3.0 billion. The balance sheet items of the for-
eign subsidiaries were translated into Swiss francs at the
exchange rate on the balance sheet date, and differ-
ences arising in translation were recognised directly in
equity. Cumulative currency translation losses in respect
of foreign subsidiaries amounted to CHF 1.8 billion at
the end of 2019. A portion of the financial liabilities in
EUR has been classified as a currency hedge of the Fast-
web net assets.

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, in particular, the Telecommunications
Enterprise Act (TEA). In its capacity as a listed company,
Swisscom also observes capital market law and the pro-
visions concerning management remuneration. The
legal framework for Swisscom’s business activities is pri-
marily derived from 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 person-
nel 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.
N See www.swisscom.ch/targets_2018-2021

Telecommunications Act (TCA)
The TCA and the associated legislation primarily govern
network access, basic service provision and the use of
radio frequencies. During the reporting period, Parlia-
ment debated a revision of the TCA and adopted an
amended version, which is expected to come into force
as of 2021.
N See www.admin.ch

Network access
The intention of the legislators is that network access
regulation should not be expanded to include newly
built fibre-optic-based fixed networks (no technolo-
gy-neutral network access). This means that Swisscom is
required to allow other providers physical network
access only to copper lines at cost-based prices. Access to
fibre-optic lines continues to be on the basis of commer-
cial agreements.

Basic service provision
The aim of the basic service is to provide reliable, afforda-
ble basic telecommunications to all sections of the pop-
ulation in all regions of the country. The scope of ser-
vices as well as the related quality and pricing
requirements are determined periodically by the Federal
Council. The current licence (2018 to 2022) comprises a
multifunctional telephone line, Internet access, and bar-
rier-free services such as transcription, SMS messaging
and directory services for people with disabilities. Dur-
ing the reporting period, the Federal Council decided to
increase the minimum data transmission rate as of
1 January 2020 from 3 Mbps (download) and 300 Kbps
(upload) to 10 Mbps and 1 Mbps, respectively.

Mobile phone licence
The Federal Communications Commission (ComCom)
normally grants mobile radio licences within the frame-
work of public tenders. In 2012, all of the frequencies
available for mobile communications were sold in an
auction. Swisscom acquired 44% of the auctioned fre-
quencies. The licences run until the end of 2028 and can
be used with all technologies. In February 2019, further
mobile radio frequencies, which, for example, could be
used for the new 5G technology, were auctioned off to
Swisscom and other bidders. Together with the spectrum
already acquired in 2012, Swisscom now holds a total of

45% of all the frequencies in operation with mobile com-
munications providers. The licence for the frequency
spectrum auctioned in 2019 is valid until April 2034.

Federal Cartel Act (CartA)
Particularly as a result of Swisscom’s market position,
competition law (the Federal Cartel Act) is highly rele-
vant for several of its products and services. The Federal
Cartel Act allows for direct sanctions to be imposed for
unlawful conduct by market-dominant companies. The
Swiss competition authorities (COMCO) have classified
Swisscom as being market-dominant in a wide range of
submarkets. In its ruling of 9 December 2019, the Fed-
eral Supreme Court dismissed Swisscom’s appeal in the
ADSL case and confirmed the CHF 186 million sanction
imposed by the Federal Administrative Court in 2015.
Swisscom had already had to pay the penalty in 2016.
The Federal Supreme Court’s ruling has no impact on the
2019 annual financial statements. Proceedings concern-
ing two other matters are currently underway, within
the context of which COMCO has classified Swisscom as
being market-dominant and its conduct as being unlaw-
ful, and has thus imposed direct financial sanctions. The
proceedings relate to 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
the consolidated financial statements
to
(Note 3.5).

The Federal Copyright Act (CopA)
Swiss copyright law protects the rights of creators of
works while also facilitating the fair use of works subject
to copyright, which may generally be used only with the
copyright holder’s consent and in return for a considera-
tion. An exception to this rule is made for private use
and for copying for private use. The compensation paya-
ble to the copyright holder for certain types of use pro-
tected by copyright law (collective management of
rights) is determined by reference to collectively negoti-
ated copyright tariffs. These apply to distribution of tel-
evision programmes and to the use of time-delayed tel-
evision viewing (Replay TV). After a legislative process
lasting many years, Parliament adopted a draft revision
of the CopA in autumn 2019. The primary aim of this bill
was to adapt copyright law to the Internet age and to
combat Internet piracy. Contrary to the demands of the
television broadcasters, the revised CopA forgoes restric-
tive provisions in connection with Replay TV.

The Federal Radio and Television Act (FRTA)
Switzerland’s Radio and Television Act governs the pro-
duction, presentation, transmission and reception of
radio and television programmes. It is primarily on
account of Swisscom TV that Swisscom is affected by

t
n
e
m
n
o
r
i
v
n
e
d
n
a
y
g
e
t
a
r
t
S
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

the rules on the transmission and broadcasting of media
offerings. The various privileges (known as the “must
carry” provisions) applicable to certain broadcasters are
relevant to Swisscom.

Federal Act on Data Protection (FADP)
The Federal Act on Data Protection (FADP) regulates the
treatment of personal data. The draft of the revised
Data Protection Act (FADP) was published in September
2017 and is currently progressing through Parliament on
its way to becoming law. It is not yet known when the
revised FADP will enter into force. Swisscom is working
on the assumption that the new FADP will more closely
resemble the European Union’s General Data Protection
Regulation (GDPR).

The European Union’s General Data Protection
Regulation (GDPR)
The GDPR governs the processing of personal data and
has been in force since May 2018. The GDPR is relevant
to Swisscom especially as regards its provision of ser-
vices to residential customers within the European Eco-
nomic Area (EEA) and its provision of IT services to busi-
ness customers directly subject to the GDPR. The actions
required to comply with the GDPR’s requirements, in so
far as it impacts Swisscom’s operations, were taken by
Swisscom within the specified time period.

Legal and regulatory environment in Italy
The legal framework for Fastweb’s business activities is
determined primarily by Italy’s telecommunications leg-
islation and the EU. Based on a market analysis, the
national regulatory authority AGCOM published a deci-
sion in August 2019 on the wholesale access services of
Telecom Italia (TIM) for the period from 2018 to 2021.
The decision also includes a reduction in prices for vir-
tual unbundled access (VULA) based on FTTS for the
period from 2019 to 2021. In addition, AGCOM approved
TIM’s reference offer for the fixed-network access ser-
vices for 2018.

Swiss market trends in telecoms and
IT services
The Swiss telecommunication market is characterised
by a wide range of voice and data products and services.
The continuing advance of digitisation and connectivity
is a key trend. In addition to the established regional and
national telecommunications companies, internation-
ally active companies are entering the Swiss telecommu-
nications market, offering both free and paid-for Inter-
net-based services around
including
telephony, SMS messaging and streaming services.
Cloud solutions also play an important role, with storage
capacity, processing power, software and services all
relocating to the Internet. These developments are gen-

the world,

erating constant growth in demand for high bandwidths
that enable fast, high-quality access to data and applica-
tions. The uninterrupted availability of data and ser-
vices, as well as the security involved in ensuring this
availability, play a key role. Modern, highly effective
network infrastructures provide the ideal foundations
for this. Swisscom is therefore setting up the networks
of the future for both fixed-line and mobile communi-
cations.

The Swiss telecoms market is broken down into the sub-
markets of relevance to Swisscom – mobile and fixed-
line telephony. The total revenue it generates is esti-
mated at around CHF 11 billion, but this remains under
pressure. Market saturation is ramping up the fierce
competition in all markets. The individual submarkets
are characterised by a high level of promotional activity
on the part of the individual market participants and
corresponding price pressure. Bundled offerings play an
important role here, as they tie these customers more
effectively to the company. At the heart of the portfolio
of offerings are convergent offerings which can also con-
tain one or more mobile lines, in addition to a fixed
broadband connection with Internet, TV and fixed-line
telephony. Swisscom also offers products and services
from the core business using secondary and third-party
brands.

Market share Swisscom
Swiss telecommunication market

75%

50%

25%

59%

53%

35%

36%

2018

2019

2018

2019

2018

2019

Mobile

Broadband retail

Mobile communications market
Switzerland has three separate, wide-area mobile net-
works on which the operators of those networks market
their own products and services. Other market players
also offer their own mobile services as MVNOs (mobile
virtual network operators) on these networks. Swisscom
makes its mobile communications network available to
selected third-party providers so that they can offer pro-
prietary products and services to their customers via the
Swisscom network. The expansion of the mobile com-
munications networks with the introduction of the
modern 5G standard, which began in 2019, increases the
technical possibilities. 5G technology is the basis for a

variety of applications. For example, it allows a wired
connection based on fibre optics or VDSL to be replaced
by a wireless connection (fixed wireless access) on the
last mile. Due to the high level of market penetration,
the mobile communications market in Switzerland is
showing signs of saturation. The number of mobile lines
(SIM cards) in Switzerland is thus stagnating at around
11 million, and mobile access line penetration in Swit-
zerland remains at 126%. As in the previous year, the
number of postpaid subscriptions taken out increased,
while the number of prepaid customers fell. The propor-
tion of mobile users with postpaid subscriptions stands
at approximately 75% (prior year: 71%). Swisscom’s mar-
ket share remains unchanged from the previous year at
59% (postpaid: 59%; prepaid: 58%).

Fixed-line market
Close to 100% of Switzerland is covered by fixed broad-
band networks. Alongside the fixed-line networks of tel-
ecoms companies, there are also networks provided by
cable network operators. Moreover, market players such
as utilities operating in particular cities and municipali-
ties are building and operating fibre-optic networks on
their own initiative at a regional level. These network
infrastructures are by and large also made available to
other market participants so that they can supply their
products and services. This has made the fixed broad-
band connection the key access point for many custom-
ers. It is the basis for a wide-ranging product offering
from both national and global competitors. Competition
in the fixed-network segment has gained momentum
due to the entry of new providers.

Broadband market
The most widespread access technologies for fixed
broadband connections in Switzerland are infrastruc-
tures based on the networks of telecommunications
providers and cable network operators. At the end of
2019, the number of retail broadband access lines in
Switzerland totalled 3.8 million, corresponding to
around 85% of homes and offices. Due to market satura-
tion, the number of broadband connections remained
virtually constant, as in the previous year. The growth in
broadband connections supplied by telecommunica-
tions providers contrasted with a decrease in connec-
tions supplied by cable network operators. Swisscom’s
market share remains unchanged at 53%.

from established national market participants. Offerings
from other national and international companies are also
available on the market, including TV and streaming ser-
vices that can be used over an existing broadband con-
nection, regardless of the Internet provider. The compet-
itive dynamics in the saturated TV market remains high,
driven by the large number of different offerings. 94% of
TV connections are provided via cable or broadband net-
works. Swisscom has steadily increased the market share
of its own TV offering, Swisscom TV, over the past few
years. It is the market leader, and further expanded on
this leading position at the end of 2019 with a market
share of 36% (prior year: 35%).

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 teleph-
ony connections is steadily declining. This trend contin-
ued in 2019, with the number of Swisscom fixed-line con-
nections falling by around 11% to 1.6 million. The main
reason for the decline was the substitution of mobile
phones for fixed-line telephony.

IT services market in Switzerland
The market for IT services and software generated reve-
nue of around CHF 17 billion in 2019 and, taken as a
whole, will continue to grow in the coming years. The
areas in which Swisscom expects the most growth are
the cloud, security, the Internet of Things (IoT) and busi-
ness applications. This growth results from the increas-
ing number of business-driven ICT projects, the growing
willingness to purchase external services, an increase in
the threat situation in IT security and new technological
opportunities in the IoT area (e.g. new sensors and
improved connectivity). Customers usually expect ser-
vices customised to their individual sector and business
processes with appropriate advice.

In the IT services sector Swisscom did not grow as
planned. The decline in sales led to a loss of market share
in the year under review. This development was mainly
attributable to the relocation of applications to the
cloud, a trend that will continue in the coming years.
Growth themes performed positively, however, with
market revenues rising for areas such as the cloud, data
centres and security services.

TV market
In Switzerland, TV signals are transmitted via cable,
broadband, satellite and mobile. The broadcasting of TV
programmes via antennas (terrestrial) was discontinued
in the course of 2019. This enables consumers to watch
television programmes on a very wide variety of devices.
The Swiss TV market features a wide range of offerings

Italian market trends in telecoms services
Italian broadband market
With revenue of EUR 15 billion, including wholesale, Italy’s
broadband market is the fourth largest in Europe. Broad-
band provision in homes and offices has increased steadily
in recent years. The broadband market comprises more
than 16 million lines distributed among four main com-

petitors and other smaller providers. Fastweb is the sec-
ond largest fixed-network broadband provider, with a
market share of around 15% in the residential segment.

Italian mobile communications market
The Italian mobile phone market currently has a volume
of around 82 million SIM cards, with an aggregate sales
volume of around EUR 15 billion. Competitive and price
pressure are enormous. Despite the difficult environ-
ment, Fastweb increased its customer base in mobile
communications to 1.8 million.

Data protection

Swisscom attaches great importance to the legally com-
pliant and responsible processing of personal data. In
order to meet its own requirements, Swisscom increased
the number of staff in the organisational unit responsi-
ble for compliance with data protection in the past

financial year and implemented a large number of pro-
tective measures. The responsible teams now have a
tool with which they can periodically check their prod-
ucts or business processes for compliance with data pro-
tection. Swisscom significantly improved the transpar-
ency of data processing for new products. Several
training sessions were conducted to increase employees’
awareness of data protection. In addition, new roles
were created and trained in all divisions of Swisscom and
the Group companies in order to also embed data pro-
tection within operations. Finally, Swisscom started to
implement the requirements of the new Swiss Data Pro-
tection Act early.

Swisscom works continuously to extend its data protec-
tion measures. Data protection within Swisscom is con-
trolled and monitored by a central data governance unit,
which works closely with all the divisions and other staff
units.
N See www.swisscom.ch/dataprotection

t
n
e
m
n
o
r
i
v
n
e
d
n
a
y
g
e
t
a
r
t
S
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Infrastructure

The Swiss information society is supported by telecommunications networks .
Swisscom continues to invest heavily in infrastructure to meet the broadband needs
of the Swiss fixed and mobile network . The majority of people in every Swiss munic-
ipality should have access to increased bandwidths by the end of 2021, and FTTH
coverage will nearly double by the end of 2025 . At the end of 2019, Swisscom supplied
90% of the Swiss population with the basic version of 5G . commensurate with its
strategy of building the best networks and laying a solid foundation for the digital
transformation for Switzerland .

Infrastructure in Switzerland

Network infrastructure
The telecommunications networks form the backbone
of the Swiss information society. This makes Swisscom
the largest network operator in Switzerland by far, in
both fixed and mobile networks. Swisscom wants to
provide Swiss customers with the best fixed and mobile
network, and is focusing on a smart combination of dif-
ferent network technologies so that the whole of Swit-
zerland can benefit from the opportunities offered by
the digital world. Swisscom currently operates three
networks: the fixed network, the mobile network and
the low-power network.

A new age of communication has begun
Swisscom has replaced conventional fixed-line teleph-
ony with the Internet protocol (IP), and thus geared its
network towards the future. All Swiss municipalities
have already switched to IP telephony. Private custom-
ers benefit from significantly improved voice quality,
automatic name display and the ability to block annoy-
ing advertising calls. Swisscom wants to have trans-
ferred the last business customer locations to IP by the
end of the first quarter of 2020. The dismantling of the
old TDM systems is progressing, and large quantities of
valuable materials such as copper, aluminium and pre-
cious metals are being recycled.

Leading international position thanks to constant
expansion
Switzerland boasts one of the best IT and telecoms infra-
structures worldwide, as international studies carried
out by the OECD and IHS (Information Handling Ser-
vices) regularly show. 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 IHS (Broadband Coverage in Europe
2018), the availability of broadband in rural regions of
Switzerland is about twice as high as the EU average. By
the end of 2019, 74% of homes and offices were already
using bandwidths of more than 80 Mbps, over 47% of
more than 200 Mbps and over 29% of up to 1 Gbps. The
Swisscom mobile network is one of the best by interna-
tional standards. It currently supplies around 99% of the
Swiss population with 4G, 3G and 2G coverage. 97% of
the population currently has 4G+ with speeds of up to
300 Mbps, 72% 4G+ with speeds of up to 500 Mbps, and
27% 4G+ with speeds of up to 700 Mbps.

Network expansion
Bandwidth requirements in the Swiss fixed and mobile
telephone network continue to grow. In order to main-
tain such a high level of service provision, further invest-
ments in the networks are necessary. Swisscom there-
fore invests around CHF 1.6 billion in IT and infrastructure
in Switzerland every year. In the fixed network segment,
Swisscom is continuing to expand ultra-fast broadband
coverage with minimum bandwidths of 80 Mbps by the
end of 2021, and has now set itself new expansion tar-
gets to be achieved by the end of 2025. In doing so, it is
focusing on a mix of fibre-optic technologies and con-
vergent approaches that intelligently combine different
network
term
technologies. Swisscom uses
“fibre-optic technologies” to mean Fibre to the Home
(FTTH) as well as network architectures in which copper
cables are used in the last few metres of the connection,
such as 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.

the

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 10,000 Mbps

Fibre

Copper

The majority of people in every Swiss municipality
should have access to increased bandwidths by the end
of 2021: by the end of 2021, some 90% of all homes and
offices will have a minimum bandwidth of 80 Mbps –
with around 85% of connections achieving speeds of
100 Mbps or higher.

Compared to 2019, FTTH coverage will also nearly double
by the end of 2025. This means that 50% to 60% of all
homes and offices will have a bandwidth of up to
10 Gbps. At the same time, Swisscom will continue to
modernise its existing network in the coming years, giv-
ing 30% to 40% of homes and offices access to a band-
width of 300 to 500 Mbps. Bonding technology is also
helping to noticeably improve broadband provision in
certain regions. Bonding combines the performance of
the fixed-line network with that of the mobile network,
thus ensuring a significantly better customer experience.

The volume of data transferred on the mobile network is
constantly on the rise. As a result and owing to the strin-
gent 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. Progress continues
to be made on expanding 4G+. The expansion of the
fifth generation of mobile communications (5G) will be
a key topic for Swisscom in the coming years. In February
2019, the Swiss Confederation auctioned off the mobile-
phone licences for additional frequencies. Swisscom suc-
cessfully participated in the auction and on 17 April 2019
became the first company in Switzerland and one of the
first in the world to put its 5G network into operation.
N See www.swisscom.ch/networkcoverage

5G is the mobile communication standard of digitisation
and is therefore vitally important to Switzerland as a
business centre, enabling speeds of up to 10 Gbps, real-
time reaction and much larger capacities than current
standards. By putting in place the first 5G infrastructure,
Swisscom is highlighting its leadership in technology
and laying the foundation for the further development
of 5G applications. Swisscom has been working together
with Ericsson since 2015 on the introduction of 5G in
Switzerland. Its expectation is that 5G will drive forward
the networking of the Internet of Things.

e
r
u
t
c
u
r
t
s
a
r
f
n

|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Antenna in the
cable duct

DSL/LTE
bonding

Antennas for
in-house amplification

Macro
antenna

Micro
antenna

Mobile signal
amplifier

4G| 5G

3G | 4G| 5G

3G | 4G | 5G

3G | 4G| 5G

Swisscom is introducing 5G on various frequencies. The
full version of 5G is based on the new 5G frequencies
(3.5 GHz), while the basic version of 5G uses the existing
mobile spectrum. With the basic 5G version, Swisscom
has achieved its goal of covering 90% of the population by
the end of 2019. That means we will be ready when
devices capable of using 5G enter the market, which is
expected to be in the first quarter of 2020. Despite the
rapid nationwide introduction of 5G, it is not possible to
use 5G to its full potential because of the strict legal limits
that apply (ONIR – Ordinance on Protection against
Non-Ionising Radiation). Furthermore, Swisscom takes
the concerns many people have about 5G and mobile net-
works very seriously. Swisscom complies at all times with
the strict precautionary limits in force, while working to
clarify misunderstandings regarding 5G and mobile net-
works in the general public.

The Internet of Things (IoT) has long connected an
immense number of objects and devices to one another
and to users. Swisscom has further expanded its IoT
portfolio. The dedicated IoT technologies Narrowband
IoT and LTE-M have been introduced throughout Swit-
zerland. The low-power network (LPN) now offers cover-
age of 97%. The entry of international cloud providers
into the IoT market has given new impetus to the inte-
gration and scaling of IoT. Thanks to strong partnerships
with Amazon and Microsoft, Swisscom is well positioned
in this respect. It is already the leading provider of IoT
system solutions required for cloud and analytics imple-
mentations as well as for operating them.

Swisscom is continually expanding its broadband net-
work, extending the product range and increasing the
number of antenna sites. It coordinates site expansions
with other mobile providers wherever feasible, and now
shares nearly a quarter of its approximately 8,600 antenna
sites with other providers. At the end of 2019, Swisscom
had around 5,900 exterior units and 2,700 mobile commu-
nication antennas in buildings. With around 5,900 hot-
spots in Switzerland, it is also the country’s leading pro-
vider of public wireless local area networks.

Mobile frequencies
Transmission of mobile signals requires the availability
of suitable frequencies. In Switzerland, such frequencies
are allocated on a technology-neutral basis, i.e. any
mobile communications technology can be transmitted
on the available frequencies. In 2012, the Federal Com-
munications Commission (ComCom) allocated the fre-
quencies 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz and
2,600 MHz. Swisscom currently uses these frequencies
to offer its customers services via the 4G, 3G and 2G
mobile communications technologies. In February 2019,
further mobile radio frequencies – 700 MHz, 1,400 MHz,
2,600 MHz and 3,500 MHz – were allocated in Switzer-
land, primarily for transmission via 5G. Swisscom cur-
rently uses these mobile radio frequencies to offer its
customers services via the 5G, 4G, 3G and 2G mobile
communications technologies. It always does this within
the legal limits, which in Switzerland are ten times
stricter than those recommended by the World Health
Organisation.

IT infrastructure and platforms
Not only are bandwidths in the networks constantly
increasing, but so is the usage of cloud services. Swisscom
is positioning itself as a trustworthy provider of private,
public and hybrid cloud services and expanding its port-
folio with the help of internationally renowned partners.

With its cloud strategy, Swisscom is positioning itself as
a reliable IT partner with a broad range of services. Exist-
ing Swisscom IT platforms such as the Enterprise Service
Cloud are becoming increasingly well established on the
Swiss market and are being supplemented by innovative
solutions such as Container as a Service. In addition,
Swisscom is expanding its services with public cloud ser-
vices (such as Amazon Web Services and Microsoft
Azure) in order to address customers’ individual needs.

The switch to data transmission only by means of Inter-
net Protocol (All IP), together with the expansion of con-
nectivity services,
increasing the requirements
imposed on locations that previously provided telephony

services. In order to meet the additional requirements,
Swisscom has distributed the virtualisation of the net-
work functions across four locations. This enables the
transfer of large amounts of data with short response
times.

Swisscom consistently uses its cloud platforms to pro-
vide internal and external communication services. It
operates these cloud platforms in its own geographi-
cally redundant data centres, which thus enables effi-
cient, automated use and improves the customer expe-
rience in a targeted manner. Swisscom is expanding its
existing connectivity offering to include modern soft-
ware-defined networking (SDN), paying special atten-
tion to the combination of modern and established
services.

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 infrastructure, Swisscom
is increasingly making use of the standardised systems
created by its partners The focus on the development of
market-specific value-adding services based on such
infrastructure has proven sound. The industrialisation of
IT continues to make headway, as does the development
of modern applications that benefit from the opportuni-
ties offered by the platforms, cut costs and ensure max-
imum stability.

Nevertheless, the old and new technologies will con-
tinue to exist and function side-by-side over the coming
years. Here Swisscom is establishing its role in the digital
transformation through specific services such as the
“Journey to the Cloud” portfolio. By combining different
generations of technology to meet its needs, Swisscom
is building upon its experience and expertise to provide
the best possible support to its customers as they make
their way into the digital world.

Infrastructure in Italy

Network infrastructure
Coverage with next-generation access (NGA) networks
has grown significantly in Italy. Fastweb has made a sig-
nificant contribution to this development by investing
heavily in its network. Fastweb’s ultra-fast broadband
(FTTH and FTTS) is available to eight million homes and
offices, the equivalent of 30% of the population. Moreo-
ver, Fastweb provides an additional 10 million homes
and offices with ultra-fast broadband services based on
wholesale services. Over the next few years, Fastweb
will continue to improve and expand its ultra-fast broad-
band (UBB) coverage. It is doing this by setting up a 5G
fixed wireless access (FWA) on the one hand, and by
entering into a long-term agreement with Open Fibre to
use their FTTH network infrastructure on the other.
Until 2023, Fastweb’s network will achieve UBB cover-
age of 60%, respectively 90% until 2026.

In 2018, Fastweb acquired in a public auction 200 MHz
of the 26 GHz mobile spectrum and 40 MHz of the 3.5
GHz from another company. In 2019, Fastweb signed an
agreement with WindTre for the construction and oper-
ation of a nationwide 5G network, and received a licence
from the Italian authorities to operate as a mobile pro-
vider. In December 2019, Fastweb and Linkem concluded
an agreement on a long-term cooperation. The subject
of the cooperation is the joint expansion of the 5G fixed
wireless access network infrastructure in medium-sized
and small towns in Italy, as well as the mutual provision
of wholesale services.

IT infrastructure
Fastweb operates four large data centres in Italy. The IT
infrastructure comprises around 6,000 virtual servers
and physical servers. One data centre is managed by a
technology partner with responsibility for setting up
and developing the data centre further, as well as for the
operational areas of Fastweb’s IT infrastructure. Two
data centres are mainly used for the corporate business
segment, including housing, the cloud, and other
ICT-managed services.

e
r
u
t
c
u
r
t
s
a
r
f
n

|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Employees

In an environment that is changing at a rapid pace, Swisscom is getting to grips with
the working models of the future, making targeted investments in professional
training for its employees in order to maintain and improve their employability and
the company’s competitiveness in the long term . Swisscom grants its employees
five training days a year . As a family-friendly company, Swisscom offers a wide range
of options such as mobile working and flexible working hours . At the end of 2019,
Swisscom had 19,317 full-time equivalent employees, of whom 16,628 or 86% were
employed in Switzerland . Swisscom is also training around 900 apprentices in
Switzerland .

Employees in Switzerland

Introduction
The digital transformation is happening everywhere – it
presents many opportunities as well as great challenges
for employees and companies. To take advantage of
these opportunities and to overcome the challenges
requires motivated employees who use their individual
skills and experience to inspire people in the networked
world on a daily basis. Swisscom supports its employees
in enhancing and supplementing their skills so that the
necessary competencies and resources will continue to
be available in the future. In turn, it is key for employees
to continuously develop and educate themselves. For
this reason, Swisscom grants all employees five training
and development days per year, for which a provision is
included in the Collective Employment Agreement (CEA).
Swisscom also offers a wide range of training courses.
These are aimed at strengthening the employability of
employees. Swisscom has also signed Digital Switzer-
land’s “Lifelong Learning” initiative, and supports life-
long learning in the public domain.

Swisscom positions itself on the ICT job market as an
attractive employer, offering its employees the opportu-
nity to assume responsibility, utilise their potential and
further develop their abilities. Swisscom staff are
employed under private law on the basis of the Code of
Obligations. Swisscom management employees in Swit-
zerland are subject to general terms and conditions of
employment, while all other employees are subject to
Swisscom’s Collective Employment Agreement (CEA).
The terms and conditions of employment exceed the
minimum standard defined by the Code of Obligations.
In the year under review, 98.7% of the employees in
Switzerland were on open-ended contracts (prior year:

99.7%). Part-time employees made up 20.1% (prior year:
20.2%). The fluctuation rate, representing departing
employees in Switzerland, was 6.1% of the workforce
(prior year: 6.8%). Further information on HR matters
can be found in the Sustainability Report.

Collective Employment Agreement (CEA)
Swisscom is committed to fostering constructive dia-
logue with its social partners (the syndicom union and
the transfair staff association) as well as the employee
associations (employee representatives in the various
divisions). The Collective Employment Agreement (CEA)
and the social plan, with their fair and jointly drafted
provisions, are negotiated by Swisscom Ltd and its social
partners and applicable to Swisscom Ltd’s employees.
Subsidiaries adopt the CEA, either in its original form or
as adapted to specific sectors or lines of business, by
means of an affiliation agreement. cablex Ltd negotiates
its own CEA with the social partners. The present cablex
CEA has been in force since 1 January 2019.

Under the Telecommunications Enterprise Act (TEA),
Swisscom is obliged to draw up a collective employment
agreement in consultation with the employee associa-
tions. In the event of any controversial issues, an arbitra-
tion commission must be convened which will support
the social partners by providing suggestions for solu-
tions. The present CEA has been in force since 1 July 2018.
At the end of December 2019, 81% of the workforce in
Switzerland were covered by the CEA (prior year: 82%).

The Swisscom CEA includes progressive employment
conditions and benefits such as five days of further
training per year, 18 weeks of maternity leave and three
weeks of paternity leave. The CEA also accords the social
partners and employee representations a greater or

s
e
e
y
o

p
m
E
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

lesser degree of entitlement to information, participa-
tion and co-decision making in various areas.

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. The social plan
also makes use of instruments to increase the employa-
bility 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 place-
ments. The services it offers include skill assessments,
career advice and coaching. Swisscom also supports spe-
cial employment schemes, such as phased partial retire-
ment or temporary placements in similar areas of exper-
tise, in line with its commitment to providing fair
solutions for older employees. In 2019, 83% of those
affected by personnel reduction measures had found a
new job before the social plan programme ended (prior
year: 88%). For employees with management contracts,
there is an arrangement comparable to the social plan
which supports them in their professional reorientation.

Employee remuneration

Salary system
Competitive remuneration packages help to attract and
retain highly skilled and motivated specialists and man-
agerial staff. Swisscom’s salary system comprises a basic
salary, a variable performance-related component and
bonuses. The basic salary is determined based on func-
tion, individual performance and the job market. The
performance-related salary component is contingent on
business performance as well as individual performance
in the case of executive functions. The company’s suc-
cess is measured by the achievement of overriding
objectives such as financial parameters, customer loy-
alty and the implementation of the Swisscom Group’s
strategy. Individual performance is measured on the
basis of the achievement of results- and conduct-related
contributions. Details on remuneration paid to mem-
bers of the Group Executive Board are provided in the
Remuneration Report.
D See report page 96

Pay round and payroll development
In 2019, Swisscom and its social partners signed an
agreement on the pay round for the year under review.
With effect from April 2019, salaries for employees sub-
ject to the CEA were increased by 1.4% of the total
payroll, dependent on performance. Employees with

salaries in the entry-level or market segment received a
salary increase of at least 0.9%, subject to their perfor-
mance. The performance of employees whose salaries
are in the upper range of the respective salary band was
rewarded by a one-off payment. Specific adjustments
were made to salaries that needed to be brought in line
with the market. The total payroll for managers
increased by 1.25% to allow for individual salary adjust-
ments. Compared to the prior year, the total payroll in
Switzerland fell by 1% to CHF 2.0 billion, as a result of the
reduced headcount.

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 compet-
itiveness in the long term. Employees have the opportu-
nity to attend internal and external training pro-
grammes. As a pioneer in the field of digitisation in
Switzerland, Swisscom is dedicated to getting to grips
with the working models of the future. By doing this, it
provides employees and management with a learning
environment in which they can develop new skills and
shape their own professional development. In 2019,
every Swisscom employee spent an average of 3.3 days
on learning, training and development.

Employee satisfaction
The Pulse survey gives Swisscom employees an opportu-
nity to submit their feedback on a wide variety of issues
relating to their personal work situation twice a year.
The results and the comments in which employees give
their assessments are available to all employees in real
time. They enable every employee, the teams and the
organisation as a whole to respond quickly to the feed-
back and start to make improvements. A survey of this
type fosters a culture of feedback which creates a basis
on which Swisscom and its employees can grow
together. The rate of responses to the Pulse survey is
constantly rising: the average employee participation
rate for the two surveys in 2019 was 70% (2018: 67%).
Some 90% of the employees participating in the survey
said they were highly likely to recommend Swisscom as
an employer. Swisscom’s ratings are generally higher
than the comparative figures for the sector in the factors
surveyed.

Diversity
The different points of view, experiences, ideas and skills
that every single employee brings to bear on their every-
day work are what make Swisscom a successful and
innovative company. To promote diversity, Swisscom
focuses in its activities on the factors of gender, inclu-
sion, generations and language regions. In relation to

gender, for example, Swisscom also endeavours to make
work compatible with family life. Flexible working mod-
els and the option of reducing working hours on an
experimental basis are making part-time working more
acceptable. Swisscom is also committed to making jobs
available to people with physical or psychological
impairments in order to (re)integrate them into the
workforce (inclusion). The proportion of such posts
increased from 0.93% to 0.97% versus the previous year.
Swisscom tries to earmark at least 1% of jobs for inclu-
sion employment solutions. Swisscom also works
towards integration where generation management is
concerned, with flexible working models and many
development measures in place to help older employees
keep working for as long as possible. Swisscom is repre-
sented in all of Switzerland’s language regions. It
attaches great importance to ensuring that the various
languages are adequately represented on the governing
bodies.

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 Lav-
oro (CCNL), a state Collective Employment Agreement.
The CCNL defines the terms and conditions of employ-
ment between Swisscom’s Italian subsidiary Fastweb
and its employees. It also contains provisions governing
relations between Fastweb and the unions. Fastweb
engages in dialogue with the unions and the employee
representatives and, in the event of major operational
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 salary for
180 days and payment of 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-re-
lated component for managerial staff which is contin-
gent 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 complies with the legal minimum sal-
ary defined by the CCNL.

Stay well connected even in the most remote
locations, and make sure that loved ones
can be part of your life.

Swisscom is improving broadband connections
in every municipality by constantly expanding
the network and increasingly combining
the performance of the fixed line and mobile
networks.

Best network

Share the most beautiful moments
at any time – no matter when, where
and with whom.

Each year, Swisscom invests around
CHF 1.6 billion in its infrastructure
in Switzerland.

Brands, products
and services

The Swisscom brand builds a bridge between the familiar and the new . It brings
together all products and services from the core business under a single roof .
Swisscom constantly adapts the range of services and products it offers to its
customers’ needs . Both residential and business customers have benefited from
changes and improvements to their inOne, Swisscom TV and other services . In line
with the current trend in Italy, Fastweb strengthens the customer base with
convergent products .

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 guid-
ance to customers and partners, and also acts to attract
and motivate current and potential staff.

The Swisscom brand is implemented across all units in a
consistent and high-quality manner. At the same time, it
has to be extremely flexible, bridging the gap between
known and new concepts and likewise standing for net-
work and infrastructure, best experiences and enter-
tainment, as well as ICT and digitisation.

Core business products and services are offered under
the Swisscom brand, as well as under the secondary
brand Wingo and the third-party brands Coop Mobile
and M-Budget. Its portfolio also includes other brands
which are associated with other themes and business
areas. Swisscom operates the Teleclub, Kitag and Cinet-
rade brands, which help to position the Group in the
entertainment field. Outside Switzerland, Swisscom’s
main market is Italy, where it operates under the Fast-
web brand. The strategic management and develop-
ment of the entire brand portfolio is an integral part of
corporate communications.

Extract of the brand portfolio

Auszug aus dem Markenportfolio

s
e
c
i
v
r
e
s
d
n
a
s
t
c
u
d
o
r
p

,
s
d
n
a
r
B

|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Society, technology and the environment are changing
ever more rapidly. A brand must absorb these changes
while offering direction and stability. Swisscom expects its
employees to demonstrate trustworthiness, commitment
and curiosity in everything they do. Based on these foun-
dations, Swisscom presents itself as a reliable provider,
builds on its position as market leader and opens up new
business areas. Swisscom gives its customers the opportu-
nity to take advantage of the networked future easily.

The year under review was shaped by the strategic deci-
sions taken in the previous year. The more flexible corpo-
rate design, which is increasingly geared to digital appli-
cations and is intended to spotlight customers and their
options even more, has been extended to a wide range
of touchpoints. The Swisscom promise and design are
visible and tangible in all of Swisscom’s offerings, prod-
ucts and communication measures.

Trustworthiness and service remain important factors
in confirming to existing customers that they made the
right decision in opting for Swisscom and in winning
new customers, while also helping to underscore the
importance 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
telecommunications sector by global standards.

External rankings also confirm this image. In the
“Switzerland 50” survey carried out by Brand Finance,
Swisscom ranks in eighth place. This makes it one of the
most valuable brands in Switzerland, worth around
CHF 6 billion according to Brand Finance.

Products and services in Switzerland

Residential Customers
In order to provide its customers with the best commu-
nications experiences, Swisscom is constantly adjusting
its portfolio of offerings to meet customer needs. It has
further developed the successful inOne subscriptions
and made them even more attractive. The modular
structure of inOne subscriptions enables customers to
select the performance of
individual components
according to their needs and to easily deploy new mobile
devices such as smart watches, trackers or tablets.

Thanks to inOne, Swisscom is able to provide private
individuals with a bundled offering with a choice of TV,

mobile and fixed-line telephony on top of the broad-
band connection. Customers can choose from three sep-
arately priced profiles with varying levels of service for
each of the components. As the profiles differ mainly in
terms of Internet speed, the number of TV channels
available, the recording and replay functions, and the
billing of call minutes/SMS messages, inOne can be eas-
ily adapted to individuals’ needs.

In 2019, Swisscom further expanded the inOne mobile
subscription. The new inOne mobile go subscription
allows customers unlimited use of their smartphones in
Switzerland. But that’s not all. Swisscom is the first pro-
vider to also include use in the EU/Western Europe in its
subscription. Swisscom customers thus enjoy carefree
calling, SMS messaging and surfing in the Internet in
Switzerland and on most trips abroad. Plus, customers
can add on devices such as tablets, laptops, smart
watches, GPS trackers or a second smartphone easily
and inexpensively, all under their existing contract. Cus-
tomers are increasingly keen to have devices of this kind
with a mobile connection.

Swisscom TV also once again significantly enhanced its
appeal to customers during the year. Thanks to a new
user interface and improved integration of the various
content providers, content can be found and enjoyed
even more easily on Swisscom TV. The new Swisscom
Box also creates a completely new TV experience. With
the new, integrated language assistant, customers not
only control Swisscom TV more easily than before, but
also operate smart home devices such as lamps and
music systems linked via the Swisscom Home app simply
by voice command. The new Swisscom Box thus creates
an ecosystem that offers customers more freedom and
options in the digital world.

Swisscom targets its other brands – Wingo, Coop Mobile
and M-Budget – at customers who do not want the
high-quality service and extensive range offered by
Swisscom products. M-Budget and Wingo offer custom-
ers straightforward and attractive mobile, Internet and
fixed-line services. Coop Mobile is exclusively a mobile
subscription. What sets it apart is that the data allow-
ance 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. Swisscom
is also continually upgrading its service offerings, thus
catering to changing customer needs.

s
e
c
i
v
r
e
s
d
n
a
s
t
c
u
d
o
r
p

,
s
d
n
a
r
B

|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Through integrated and innovative offerings, Swisscom
aims to relieve the burden on Swiss SMEs and enable
them to take advantage of the opportunities offered by
the networked world. Swisscom also gives SMEs access
to information and directory services in the form of
localsearch, which makes it easy to find addresses, tele-
phone numbers and detailed information on companies
– on the Internet, via the mobile app and in the printed
telephone directory (Local Guide).

Wholesale
Swisscom provides a variety of copper- and fibre-optic-
based connectors as per customer requirements. With
its Carrier Ethernet and Carrier Line services and lines
leased under the TCA, Swisscom Wholesale offers tele-
coms service providers high-quality, transparent, point-
to-point connections tailored to their needs with a range
of bandwidths and interfaces and/or a flexible Ethernet
service allowing tailored bandwidths and service level
agreements. Swisscom Wholesale also provides basic
offerings for the connection (interconnection) of tele-
coms systems and services as well as infrastructure
products such as the shared use of cable ducts. In addi-
tion, Swisscom Wholesale is opening up advanced busi-
ness areas in the over-the-top (OTT) content field.

Products and services in Italy

In the residential customer segment, Fastweb further
strengthened its fixed-mobile convergent business and
its go-to-market approach based on transparency and
simplicity. As a result, it confirmed its leading position in
customer satisfaction in fixed-line services and also
achieved a top ranking in mobile communications. In
addition, Fastweb supplemented its portfolio for resi-
dential customers with the personal cloud service
“WOW Space”.

In the business customer segment, Fastweb maintained
its leading role, particularly in the area of public admin-
istration, where it won major national public framework
contracts for wireline and ICT services. Fastweb has
launched UBB wholesale services for corporate custom-
ers, with the aim of becoming a strong alternative to the
incumbent.

Business customers
The digital transformation continues to be a key issue
for companies and is changing their business processes,
business models, customer experiences and working
environments. The digital transformation depends on
solid communication networks. Swisscom makes use of
its many years of experience as an integrated telecom-
munications and IT company in supporting customers
through the digitisation process. It works together with
customers to develop future-oriented solutions, sup-
ported by one of the most comprehensive ICT portfolios
in Switzerland, which comprises cloud, outsourcing,
workplace and IoT solutions, as well as mobile phone
solutions, networking solutions, location networking,
business process optimisation, SAP solutions, security
and authentication solutions and a full range of services
tailored to the banking industry. In 2019, Swisscom pri-
marily extended its global cloud offering with Microsoft
Azure and expanded security and IoT solutions. The
company makes hospitals more efficient by providing
them with support in the digitisation of their processes.
It also helps health insurance companies by assuming
the operation of their core IT systems. Swisscom is driv-
ing digitisation in the healthcare sector by providing its
networking solutions for service providers and imple-
menting the electronic patient dossier system.

Standardised yet individual: Swisscom offers small busi-
nesses a bundled package for Internet and telephony
called “inOne SME”. Larger SMEs or those with more
complex needs can use “Smart Business Connect”, an
individualised communication solution with collabora-
tion and networking features. Both offerings include
integrated services such as Internet failure protection
and can be supplemented with Swisscom TV, Swisscom
TV Public or, most recently, Swisscom TV Host for hotels
and homes. SMEs also depend on a reliable IT infrastruc-
ture for their business operations, because IT infrastruc-
ture is increasingly becoming the lifeline of companies.
However, IT should not only run flawlessly throughout,
but should also be easily and flexibly adaptable to mar-
ket and company changes at any time. “Smart ICT” pro-
vides customers with a complete IT outsourcing package
as a modular integrated solution. Together with IT part-
ners in the regions, Swisscom handles the operation of
the customer’s ICT infrastructure and takes care of data
security in a professional manner. In 2019, Swisscom
launched “Managed Security” and “Managed Backup”,
two new IT security products aimed at offering SMEs
maximum security against attacks and loss. The SME
portfolio is completed by mobile subscriptions tailored
to the needs of business customers along with software
and Internet services.

Customer satisfaction

Swisscom Switzerland conducts segment-specific sur-
veys and studies in order to measure customer satisfac-
tion. It measures customer satisfaction twice a year, in
the second and fourth quarters of the year. The Whole-
sale segment measures customer satisfaction once a
year. For all segments, the most important metrics are
the extent to which customers are willing to recom-
mend Swisscom to others and the related Net Promoter
Score (NPS), which depicts the emotional aspects of cus-
tomer loyalty as well as revealing customers’ attitudes
towards Swisscom. It 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 repre-
sentative surveys to determine customer satisfaction
and customers’ willingness 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 inter-
action 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 satisfac-
tion along the entire customer experience chain.

The results of these studies and surveys help Swisscom
formulate measures to further improve its services and
products. They also influence the variable perfor-
mance-related component of remuneration for employ-
ees and management.

Hey Swisscom – the new Swisscom Box
not only offers the best TV entertainment,
it now also allows additional networked
smart home devices to be voice-controlled.

1.56 million customers have signed up to
Switzerland’s most popular television service.

Swisscom TV
swisscom.ch/tv2019

Even when on the move, no one has to miss
their favourite programme or recordings –
with TV Air, Swisscom TV is always with them.

Almost 650,000 customers watch Swisscom TV
every month on their laptop, tablet or
smartphone app.

Innovation and
development

Globalisation, new technologies and changing customer needs are leading to an
ever more rapid pace of change . By constantly investing in innovation, Swisscom
brings new products and services to market, optimises processes and secures its
long-term market position .

Innovation as an important driver

Innovation has continually gained in importance in
recent years. In addition to the ongoing optimisation of
existing resources, Swisscom is investing in disruptive
innovations, thereby creating new markets and main-
taining its corporate value in the long term. Swisscom
strives to anticipate strategic challenges, new growth
areas and future customer needs early on and to formu-
late solutions that create added value and inspire peo-
ple. To this end, it works closely with partners, universi-
ties, start-ups and established technology companies:

Swisscom Outposts in Silicon Valley, Shanghai and Berlin
conduct technology scouting and transfers for Swisscom.
Swisscom Ventures networks start-ups with Swisscom’s
business units in order to stimulate innovation. Invest-
ments in over 61 new companies since 2007 have already
created more than 1,300 jobs in Switzerland. The Digital
Transformation Fund, launched in 2018, will continue
this story. In addition, the internal intrapreneurship pro-
gramme, “Kickbox”, supports the company’s internal
innovation process. It provides employees with tools, a
clear process and resources for innovation projects. The
programme is available to other corporate customers via
getkickbox.com.
N See www.swisscom.ch/innovation

Innovation focused on specific topics

Swisscom is focusing its innovation activities on seven areas of innovation, which in turn directly help the Group
achieve its goals:

Analytics and artificial intelligence

Entertainment

Internet of Things

Security

Digital business

Network and infrastructure

Digital Swisscom

t
n
e
m
p
o

l
e
v
e
d
d
n
a
n
o
i
t
a
v
o
n
n

|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Within these areas of innovation, Swisscom continually
invests in progressive solutions to meet its strategic
goals. In doing so, its primary goal is to provide the best
ICT infrastructure for a digital Switzerland, tap new
growth markets, and offer its customers the best ser-
vices and products.

Network and infrastructure
Swisscom is focusing on a technology mix so that the
whole of Switzerland can benefit from the best infra-
structure. Its innovative architecture also enables it to
renew all components from the core network to the con-
nection. Swisscom is thus laying the foundations to ena-
ble the rapid introduction of new services in the future
and to be the first provider to make new developments
available to customers.

Mobile telephony
Swisscom has strongly promoted 5G as the next genera-
tion of mobile communications standards. In November
2018, its connection of the first prototype of a 5G mobile
handset with a 5G network was a world premiere. The
first international 5G call was made to Australia in Feb-
ruary 2019. In April 2019, Swisscom became the first
mobile operator in Switzerland and one of the first oper-
ators worldwide to launch the commercial 5G live net-
work and also presented the first commercially available
5G mobile device in Europe.

XGS-PON
Swisscom is one of the first Swiss companies to use XGS-
PON fibre-optic technology, which significantly increases
the available bandwidths on a fibre- optic connection.
With XGS-PON, several customers use one fibre optic
cable at the same time until the manhole near the
building. In the manhole, Swisscom applies a splitter in
an advanced architecture.

Internet of Things (IoT)
The innovation potential of IoT accelerates lucrative
business models, automated processes and the creation
of novel customer interactions and intelligent products.
Swisscom also supports companies and start-ups
through various formats to successfully enter the IoT
and to develop it further.

First IoT overall solution
Swisscom has further expanded its IoT portfolio and also
positioned itself as a provider of system solutions.
Swisscom’s “Data driven” service supports companies to
collect and process data and shows them the resulting
added value. For example, Swisscom partnered with the
international goods inspection company SGS to develop
a system solution for monitoring the degree of fermen-
tation of grain in Egyptian silos. The data is collected on
site and then transmitted securely and reliably, pro-
cessed in the Microsoft Azure Cloud, analysed and finally
fed into the customer’s data system (ERP). With this
solution, Swisscom ensures that huge quantities of grain
do not ferment and become unusable.
N See www.swisscom.ch/lpn

Analytics and artificial intelligence
Artificial intelligence (AI)
Swisscom makes targeted use of artificial intelligence to
offer its customers an even better service. AI is used in
areas such as customer service to detect network faults
and to enhance the efficiency of internal processes. In
future, customers will be able to control the automated
voice dialogue on the Swisscom hotline via AI-based
voice recognition instead of the classic numeric input.
This will allow customer concerns to be identified more
quickly and customers to be forwarded directly to the
appropriate agent.

Security
Security thanks to automation
Threats from the Internet are constantly growing in
number and becoming increasingly intelligent. Swisscom
is already using automation technologies and artificial
intelligence (AI) to help repel attacks by automatically
detecting attacks and dangers and promptly initiating
appropriate countermeasures to protect the company,
its infrastructure and customers. In early 2019, Swisscom
opened the Security Operations Center (SOC) in Zurich.
For business customers, Swisscom offers dedicated
facilities through Managed Security Services to monitor
the infrastructure. Swisscom is also increasing the trans-
parency of the data processed by building an extensive
data inventory.

Entertainment
Swisscom Box with Voice Assistant
The innovative Swisscom Box opens up brand-new pos-
sibilities for customers. It combines the content from
streaming and classic television on one screen and, with
an integrated language assistant, enables the control of
Swisscom TV functions and the first smart home appli-
cations. The new Entertainment OS4 user interface also
makes Swisscom TV even more personal.

Digital Swisscom
In a dynamic market environment characterised by com-
petition and price pressure, the speed of change is accel-
erating rapidly due to
increasing digitisation. For
Swisscom, this means adapting its forms of cooperation
and structures accordingly. In 2019, Swisscom therefore
took further steps to digitise its network, its workplaces
and its processes. Swisscom Message Services was
expanded in 2019 to include the WhatsApp platform.
Swisscom is thus meeting a growing customer need. In
the future, it will systematically develop its communi-
cation channels even more efficiently, digitally and auto-
matically. Swisscom is also consolidating its leading role
in service among Swiss telecommunications providers.

Digital business
In the field of digital business innovation, Swisscom sup-
ported developments within and outside its own com-
pany in 2019 by setting up and further developing joint
ventures with strategic partners and promoting intra-
preneurship. Swisscom is focusing on the fintech, digital
marketing and blockchain segments. It is also continu-
ously researching other segments that could become
relevant to its activities.

Swisscom Directories Ltd (localsearch)
Many Swiss SMEs have yet to experience any substantial
benefits of digitisation. Swisscom’s subsidiary Swisscom
Directories Ltd (localsearch) helps SMEs in the digital
world achieve success, enabling them to be found online,
to acquire new customers and secure their loyalty; in
these ways, localsearch helps SMEs use digital marketing
to make their mark. With SWISS LIST, localsearch is taking
classical directory entries into the digital era. SWISS LIST
was launched in 2019 and has already amassed more
than 100,000 customers. In addition, localsearch operates
the local.ch and search.ch platforms, the directories
with the most extensive reach in Switzerland.

FinTech
Swisscom and Sygnum Bank Ltd want to build a compre-
hensive ecosystem for digital assets. The core elements
of this ecosystem are the issue of securities, safekeeping
and access to liquidity and banking services. It is based
on a distributed ledger technology developed and oper-
ated by Swisscom. Included in the ecosystem is daura Ltd,
in which Swisscom holds a minority interest, and the
subsidiary Custodigit Ltd. The daura Ltd platform is
designed to enable unlisted companies to register or
issue equities via blockchain and to transfer them
securely worldwide. Certain functions are still subject to
the approval of the supervisory authority. Custodigit Ltd
offers regulated financial service providers a technical
solution for the safekeeping of digital assets. The
integrated platform enables customers to manage the
entire lifecycle of their digital assets. In addition to
assets, Swisscom also intends to digitise documents on
the basis of the blockchain infrastructure. In the future,
it should be possible to digitally issue, verify, transfer
and archive not only registers, but also contracts and
certificates.

t
n
e
m
p
o

l
e
v
e
d
d
n
a
n
o
i
t
a
v
o
n
n

|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Intelligent networking
Founded by Swisscom and AMAG, autoSense Ltd focuses
on the development of advanced automotive services,
and has quickly established itself as one of the most
important players in this segment. The company offers
services related to the intelligent networking of cars for
private individuals and companies as well as partner
services, which are constantly being expanded. These
include a driver’s logbook, remote diagnosis with
warnings in the event of engine problems, an app for
cashless refuelling, pay-per-kilometre insurance and
digital assistance for driving instructors and students.

Digital identity
Swisscom holds a stake in the SwissSign Group Ltd.
SwissSign is widely supported by state-owned enterprises
as well as by finance and insurance companies. Its share-
holders want SwissID to become a means of establishing
an open and simple system for digital identification.
SwissID can already be used easily and securely on
numerous online portals, including those of Swiss Post,
St. Galler Kantonalbank and the cantons of Jura, Grau-
bünden and Zug.

Digital advertising
The interactive platform “Beem” allows users to interact
with objects in their vicinity. Once Beem is activated,
one click takes users to additional information on their
smartphones, e.g. excursion tips, background information
on art exhibitions, exclusive tickets and ordering options
for products. Beem has been available since October 2019
in the apps of partners 20Minuten and Bluewin and in
the Beem app. In the first half of 2020, Blick.ch will follow
as a further partner.

Drones
Swisscom is digitising airspace, and wants to automate
drone flights and make them safe. One of the functions
of the Swisscom Drone Hub is to identify ways of using
the mobile network to control drones. In the second half
of 2019, Swisscom Broadcast launched “Drone Spotter”,
a modular protection solution for detecting, tracking
and monitoring drones. Swisscom also cooperates with
start-ups and the Zurich Federal Institute of Technology
(ETH), for example in the projects Smart Farming (use of
drones for more sustainable agriculture) and Illgraben
(early warning system for natural hazards). Swisscom,
together with other partners, is also part of the U-Space
initiative launched by the Federal Office of Civil Aviation
(FOCA). This nationwide cooperation, commenced at the
end of March 2019, promotes the safe integration of
drones in airspace.

“We prefer to spend our time exciting our customers with
exclusive chocolate creations – we leave the technical work
to the professionals.”

Confiserie Fornerod, Morges

Swisscom eases the burden on small and medium-sized companies
with standardised and modular products for telephony and IT infrastructure.
This allows SMEs to focus on their core business.

Business customers
swisscom.ch/b2b2019

“Networking 21 clinics right now throughout Switzerland makes
it easier for our 2,000 users to collaborate digitally. It is important
for us to be able to rely on a strong partner when it comes to
security as well.”

Clinique de Genolier, a private clinic of Swiss Medical Network

Business customers can count on comprehensive support from Swisscom, whether
this is for telephony, workstation networking or integrated and secure IT solutions.

Financial review

Alternative performance measures
Swisscom uses key indicators defined in the Interna-
tional Financial Reporting Standards (IFRS) throughout
its entire financial reporting, as well as selected alterna-
tive performance measures (APMs). These alternative
measures provide useful information on the Group’s
financial situation and are used for financial manage-
ment and control purposes.

As these measures are not defined under IFRS, the calcu-
lation may differ from the published APMs of other com-
panies. For this reason, comparability across companies
may be limited.

The key alternative performance measures used at Swisscom for the 2019 financial reporting are defined as follows:

Key performance measure

Adjustments

Adjusted and at constant exchange rates

Swisscom definition

Significant items that, due to their exceptional nature, cannot be considered part of the
Swisscom Group’s ongoing performance, such as termination benefits and significant positions
in connection with legal cases or other non-recurring items . In addition, the application of
changes in the IFRS accounting principles and standards can have an impact on comparability
with the previous year if these principles are not applied retrospectively .

Key performance measures considering adjustments and the currency effects (figures for 2019
are translated at the 2018 exchange rate to calculate the currency effect) .

Operating income before depreciation and amortisation (EBITDA) Operating income before depreciation of property, plant and equipment, amortization of
intangible assets and rights of use, financial expenses and financial income, income from
investments accounted for using the equity method and income tax expense .

Operating income (EBIT)

Capital expenditure

Operating free cash flow proxy

Free cash flow

Net debt

Operating income before depreciation and amortisation of property, plant and equipment,
intangible assets and right-of-use assets, financial expense and financial income, result of
equity-accounted investees and income tax expense .

Purchase of property, plant and equipment and intangible assets and payments for indefeasible
rights of use (IRU) which are classified as leases under IFRS 16 . In general, IRUs are paid in full at
the beginning of use .

Operating income before depreciation and amortisation (EBITDA) less purchase of property,
plant and equipment and intangible assets and payments for indefeasible rights of use (IRU)
and lease expense . Lease expense for 2019 include interest expense on lease liabilities and
depreciation of right-of-use assets excl . depreciation of IRUs . In 2018, lease expense according
to IAS 17 is included in operating free cash flow proxy .

Cash flows from operating and investing activities excl . cash flows from the purchase and
sale of subsidiaries and purchase of and proceeds from equity-accounted investees and other
financial assets . In prior year, dividends received are not included in free cash flow .

Financial liabilities less cash and cash equivalents, current financial assets, derivative financial
instruments held to hedge financial liabilities and other non-current financial assets directly
related to non-current financial liabilities (certificates of deposit and U .S . treasury bond strips) .
See annual report page 56 .

Net debt incl. lease liabilities

Net debt and lease liabilities .

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Reconciliation of alternative performance measures

In CHF million

Net revenue

Foreign currency translation

Net revenue at constant exchange rates

Operating income before depreciation and amortisation (EBITDA)

EBITDA

Termination benefits

Operating lease expense according to IAS 17

Other adjustments from first-time application of IFRS 16

EBITDA adjusted

Foreign currency translation

EBITDA adjusted and at constant exchange rates

Capital expenditure

Capital expenditure in property, plant and equipment and intangible assets

Payments for indefeasible rights of use (IRU)

Capital expenditure

Foreign currency translation

Capital expenditure at constant exchange rates

Operating free cash flow proxy

Cash inflow from operating activities

Capital expenditure

Depreciation of right-of-use assets

Depreciation of indefeasible rights of use (IRU)

Change in deferred gain from the sale and leaseback of real estate

Change in operating assets and liabilities

Change in provisions

Change in defined benefit obligations

Gain on sale of property, plant and equipment

Loss on disposal of property, plant and equipment

Expense for share-based payments

Revenue from finance leases

Interest received

Interest paid on financial liabilities

Interest paid on lease liabilities

Dividends received

Income taxes paid

Operating free cash flow proxy

Free cash flow

Cash inflow from operating activities

Cash flow used in investing activities

Repayment of lease liabilities

Acquisition of subsidiaries, net of cash and cash equivalents acquired

Sale of subsidiaries, net of cash and cash equivalents sold

Purchase of equity-accounted investees

Purchase of other financial assets

Proceeds from other financial assets

Dividends received

Free cash flow

2019

2018

Change

11,453

11,542

11,714

–

11,714

–2.2%

–1.5%

4,358

4,213

3.4%

–

4,414

4,443

2,390

2,438

2,462

3,981

(2,438)

(282)

(100)

(58)

(48)

–

(1)

101

(25)

–

(18)

371

–

207

4,439

–

4,439

2,404

–

2,404

–

2,404

3,720

(2,404)

–

(64)

(7)

(1)

–

(24)

133

(18)

294

1,626

1,809

3,981

(2,733)

(276)

394

(52)

–

3,720

(2,495)

–

(32)

(18)

1,345

1,319

–0.6%

0.1%

1.4%

2.4%

261

(34)

(282)

–

(170)

(115)

(4)

–

101

(1)

(45)

(24)

–

(183)

261

(238)

(276)

316

(20)

(18)

(20)

11,662

11,714

11,453

Net revenue
in CHF million

12,000

8,000

4,000

EBITDA
in CHF million

4,500

3,000

1,500

4,295

4,213

4,358

2017

2018

2019

2017

2018

2019

Capital expenditure
in CHF million

Headcount
in full-time equivalents

2,378

2,404

2,438

3,000

2,000

1,000

24,000

16,000

8,000

20,506

19,845

19,317

2017

2018

2019

2017

2018

2019

Operating free cash flow proxy
in CHF million

Net income
in CHF million

1,917

1,809

1,626

2,250

1,500

750

2,250

1,500

750

1,568

1,521

1,669

2017

2018

2019

2017

2018

2019

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Summary

In CHF million, except where indicated

Net revenue

Operating income before depreciation and amortisation (EBITDA) 1

EBITDA as % of net revenue

Operating income (EBIT)

Net income

Earnings per share (in CHF)

Operating free cash flow proxy

Capital expenditure

Net debt incl . lease liabilities 1

Equity ratio 1

2019

11,453

4,358

38 .1

1,910

1,669

32 .28

1,626

2,438

8,785

36 .6

2018

11,714

4,213

36 .0

2,069

1,521

29 .48

1,809

2,404

7,393

36 .3

Change

–2 .2%

3 .4%

–7 .7%

9 .7%

9 .5%

–10 .1%

1 .4%

18 .8%

Full-time equivalent employees at end of year

19,317

19,845

–2 .7%

1 Swisscom has been applying IFRS 16 “Leases” since 1 January 2019. The prior
year’s figures have not been adjusted. As a consequence of the first-time
application of IFRS 16, additional lease liabilities and right-of-use assets of
CHF 1,238 million were reported with effect from 1 January 2019. As a result,

the equity ratio fell to 34.4% as at 1 January 2019. EBITDA of the previous year
includes expenses of CHF 207 million from operating leasing in accordance with
IAS 17.

Swisscom’s net revenue decreased by 2.2% to CHF 11,453
million. On the basis of constant exchange rates, the
decrease was 1.5%. The year-on-year comparison of
operating income before depreciation and amortisation
(EBITDA) is affected by the application of new require-
ments for the recognition of leases (IFRS 16). At CHF 4,358
million, reported EBITDA was up by 3.4% or CHF 145 mil-
lion, and was unchanged from the previous year on an
adjusted basis and at constant exchange rates (+0.1%).
Net income increased by 9.7% to CHF 1,669 million due
to one-off effects in income tax expense. Payment of an
unchanged dividend of CHF 22 per share for the 2019
financial year will be proposed to the Annual General
Meeting.

In the Swiss core business, revenue fell by CHF 243 million
or 2.8% to CHF 8,563 million as a result of ongoing price
pressure and the decline in the number of connections in
fixed-line telephony. The number of revenue generating
units (RGU) dropped by 1.7% compared with the previous
year to 11.5 million. In contrast, revenue at Italian subsid-
iary Fastweb increased in local currency by EUR 114 mil-
lion or 5.4% to EUR 2,218 million, driven by revenue
growth in business with residential and business cus-
tomers. The number of customers in the broadband busi-
ness rose by 3.5% to 2.64 million and in mobile telephony
by 26.1% to 1.81 million.

In the Swiss core business, EBITDA decreased by 2.4% to
CHF 3,491 million; on an adjusted basis the decline was
0.6%. This decrease, which is attributable to lower reve-
nue, was largely offset by ongoing cost-cutting meas-
ures. At Fastweb, EBITDA rose in local currency by 7.8%
to EUR 750 million as a result of the growth in revenue;
on an adjusted basis the increase was 5.2%.

Swisscom’s capital expenditure increased by 1.4% or
CHF 34 million to CHF 2,438 million. This figure includes
CHF 196 million paid for mobile radio frequencies which
Swisscom acquired at auction in Switzerland. The fre-
quencies were allocated in April 2019 and will remain
with Swisscom until 2034. Due to the expenses for the
mobile frequencies acquired, capital expenditure rose in
Switzerland to CHF 1,770 million. At Fastweb, capital
expenditure decreased by 8.8% or EUR 58 million to
EUR 599 million. The previous year’s figure included
expenses of EUR 64 million for the acquisition of mobile
radio frequencies.

Operating free cash flow proxy declined by CHF 183 mil-
lion or 10.1% to CHF 1,626 million, mainly as a result of
expenses of CHF 196 million for mobile radio frequen-
cies in Switzerland. Net debt including lease liabilities
amounted to CHF 8,785 million, while the net debt/
EBITDA ratio remained stable at 2.0.

The number of employees declined by 2.7% year-on-
year, to 19,317 FTEs. In Switzerland, headcount fell by
519 FTEs or 3.0% to 16,628 FTEs as a result of the declin-
ing core business. Over half of the reduction was
achieved through natural fluctuation and vacancy man-
agement.

For 2020, Swisscom expects net revenue of around
CHF 11.1 billion, EBITDA of around CHF 4.3 billion and
capital expenditure of around CHF 2.3 billion. Subject to
achieving its targets, Swisscom will propose payment of
an unchanged, attractive dividend of CHF 22 per share
for the 2020 financial year at the 2021 Annual General
Meeting.

Segment results

In CHF million, except where indicated

2019

2018

Change

Net revenue

Residential Customers

Enterprise Customers

Wholesale 1

IT, Network & Infrastructure

Intersegment elimination

Swisscom Switzerland

Fastweb

Other Operating Segments

Group Headquarters

Intersegment elimination

5,691

2,312

968

(493)

8,563

2,468

929

(508)

5,924

2,408

894

(499)

8,806

2,426

909

(429)

Revenue from external customers

11,453

11,714

Operating income before depreciation and amortisation (EBITDA)

–3 .9%

–4 .0%

8 .3%

7 .6%

–1 .2%

–2.8%

1 .7%

2 .2%

–50 .0%

18 .4%

–2.2%

–1 .4%

–12 .3%

17 .4%

1 .4%

–2.4%

3 .9%

–4 .6%

–5 .3%

–21 .7%

–100 .0%

80 .0%

3.4%

3,415

705

525

(1,154)

3,491

834

188

(72)

(47)

–

(36)

4,358

3,463

804

447

(1,138)

3,576

803

197

(76)

(60)

(207)

(20)

4,213

Residential Customers

Enterprise Customers

Wholesale

IT, Network & Infrastructure

Swisscom Switzerland

Fastweb

Other Operating Segments

Group Headquarters

Reconciliation pension cost 2

Reconciliation lease expense (IAS 17) 3

Intersegment elimination

Operating income before depreciation and amortisation (EBITDA)

1 Incl. intersegment recharges 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.

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 Switzerland 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 Oper-
ating Segments primarily comprises the Digital Business
division, Swisscom Broadcast Ltd (radio transmitters)
and cablex Ltd (network construction and maintenance).

3 Swisscom has been applying IFRS 16 “Leases” since 1 January 2019. The operating
result before depreciation and amortisation (EBITDA) of the segments for 2018
does not include any expenses for operating leases in accordance with IAS 17.
The 2018 expense for operating leases in accordance with IAS 17 is shown as a
reconciliation item.

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. The remaining services between the seg-
ments are recharged at market prices. Network costs in
Switzerland are budgeted, monitored and controlled by
the IT, Network & Infrastructure division, which is man-
aged as a cost centre. For this reason, no revenue is cred-
ited 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 segments “Residential Customers”, “Enterprise
Customers” and “Wholesale” correspond to a contribu-
tion margin prior to network costs.

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

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

Lease expense

Depreciation

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)

Broadband access lines wholesale

Capital expenditure and headcount

Capital expenditure

Full-time equivalent employees at end of year (number)

1 Includes expenses for operating and finance leases in accordance with IAS 17.

Net revenue for Swisscom Switzerland fell by CHF 243
million or 2.8% to CHF 8,563 million as a result of contin-
uing price pressure and the decline in the number of con-
nections in fixed-line telephony. Revenue from telecom-
munications services decreased by CHF 290 million or
4.7% to CHF 5,932 million. Of this decline, CHF 178 mil-
lion (–3.4%) was attributable to the Residential Custom-
ers segment and CHF 112 million (–10.9%) to the Enter-
prise Customers segment. In Enterprise Customers,
revenue from the solutions business remained relatively
stable (–0.6%). The decline as a result of price pressure
and lower volumes in the workplace and banking areas
was nearly offset by growth in the areas of security and
the cloud. Incoming orders in 2019 amounted to around
CHF 3.1 billion. In Wholesale, revenues increased due to
higher demand for broadband connections, additional
mobile network customers and higher inbound roaming
volumes.

2019

2018

Change

5,932

1,021

808

643

8,484

8,563

(1,897)

(3,175)

(5,072)

3,491

40 .8

(226)

(1,515)

1,750

1,594

2,033

1,555

6,333

11,515

515

1,761

13,979

6,222

1,027

718

566

202

8,735

8,806

(1,971)

(3,259)

(5,230)

3,576

40 .6

(221) 1

(1,471)

1,884

1,788

2,033

1,519

6,370

11,710

481

1,620

14,448

–4 .7%

–0 .6%

12 .5%

13 .6%

–60 .4%

–2.9%

11 .3%

–2.8%

–3 .8%

–2 .6%

–3.0%

–2.4%

2 .3%

3 .0%

–7.1%

–10 .9%

0 .0%

2 .4%

–0 .6%

–1 .7%

7 .1%

8 .7%

–3 .2%

The number of revenue-generating units decreased by
1.7% or 0.2 million to 11.5 million, chiefly as a result of
the downward trend in fixed-line telephony. The number
of fixed-line telephony connections fell by 194,000 or
10.9% to 1.6 million. In the saturated mobile telephony
market, the subscriber base remained almost stable at
6.33 million (–0.6%). The number of prepaid lines declined
by 7.8% to 1.56 million, while postpaid lines increased by
2.0% to a total of 4.77 million. The broadband and TV
markets are also saturated. Nevertheless, the number of
TV customers rose by 2.4% to 1.56 million, while the
number of broadband connections remained stable at
2.03 million. The number of inOne customers is continu-
ing to increase. In 2019, the inOne customer base grew by
0.4 million to 2.8 million. These customers are using a
total of 5.4 million products, which represents an increase
of 0.9 million within the space of a year. inOne mobile,
which was launched in February 2019 and integrates
roaming (voice and data) in Europe into the basic charge,
had 1.15 million customers at the end of 2019.

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Segment expense fell by CHF 158 million or 3.0% to
CHF 5,072 million. Direct costs decreased by CHF 74 mil-
lion or 3.8% to CHF 1,897 million. Lower costs for acquir-
ing and retaining customers were offset by higher costs
for the purchase of services and goods. Indirect costs
were CHF 84 million or 2.6% lower at CHF 3,175 million.
Adjusted for provisions of CHF 62 million recognised for
headcount reduction, the decrease was CHF 146 million
or 4.5%. This was mainly driven by the declining head-
count and lower costs for external staff and the opera-
tion of IT systems. Headcount fell as a result of efficiency
measures by 469 FTEs or 3.2% to 13,979. The segment
result before depreciation and amortisation was CHF 85

million or 2.4% lower at CHF 3,491 million. This decrease,
which is attributable to lower revenue, was largely off-
set by ongoing cost-cutting measures. Capital expendi-
ture climbed by CHF 141 million or 8.7% to CHF 1,761
million as a result of the expenditure on the mobile radio
frequencies acquired. Capital expenditure for the expan-
sion of the broadband networks remained at a high
level. As at the end of 2019, 74% of all households and
businesses were connected with ultra-fast broadband
exceeding 80 Mbps. 47% of all homes and offices benefit
from fast connections with bandwidths of more than
200 Mbps.

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

Lease expense

Depreciation

Segment result

Capital expenditure

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

1 Includes expenses for operating and finance leases in accordance with IAS 17.

Fastweb’s net revenue rose by EUR 114 million or 5.4%
year-on-year to EUR 2,218 million. Despite difficult mar-
ket conditions, Fastweb’s broadband customer base
grew year-on-year by 90,000 or 3.5% to around 2.64 mil-
lion. Fastweb is also growing in the fiercely competitive
mobile telephony market. The number of mobile access
lines increased by 374,000 or 26.1% year-on-year to 1.81
million. The focus is increasingly on bundled offerings.
Around 34% of subscribers already use a bundled offer-
ing combining a fixed broadband line and a mobile
access line. Residential customer revenue rose by EUR 54
million or 5.1% to EUR 1,104 million as a result of cus-
tomer growth. Fastweb held its strong position in the
market for business customers, with revenue from busi-
ness customers up by EUR 82 million or 10.5% to EUR 862
million as a result of higher revenue with public adminis-

2019

1,104

862

245

2,211

2,218

(1,468)

750

33 .8

(50)

(560)

140

599

2,456

2,637

1,806

2018

1,050

780

267

2,097

2,104

(1,408)

696

33 .1

(23) 1

(509)

164

657

2,484

2,547

1,432

Change

5 .1%

10 .5%

–8 .2%

5.4%

0 .0%

5.4%

4 .3%

7.8%

117 .4%

10 .0%

–14.6%

–8 .8%

–1 .1%

3 .5%

26 .1%

trations. Revenue from wholesale business, by contrast,
decreased by EUR 22 million or 8.2% to EUR 245 million.

The segment result before depreciation and amortisa-
tion increased by EUR 54 million or 7.8% to EUR 750 mil-
lion, or by 5.2% on an adjusted basis, on the back of the
growth in revenue. Capital expenditure decreased year-
on-year by EUR 58 million or 8.8% to EUR 599 million.
The previous year’s figure includes expenses for the
acquisition and extension of mobile radio frequencies in
the amount of EUR 64 million. The investment volume
remains at a high level overall, driven by the further
expansion of the broadband networks. Fastweb’s
headcount was practically unchanged year-on-year at
2,456 FTEs.

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

Lease expense

Depreciation

Segment result

Capital expenditure

Full-time equivalent employees at end of year (number)

1 Includes expenses for operating and finance leases in accordance with IAS 17.

2019

509

420

929

(741)

188

20 .2

(11)

(63)

114

2,685

2018

560

349

909

(712)

197

21 .7

(13) 1

(59)

125

2,679

Change

–9 .1%

20 .3%

2.2%

4 .1%

–4.6%

–15 .4%

6 .8%

–8.8%

2 .2%

0 .2%

The net revenue of the Other Operating Segments rose
year-on-year by CHF 20 million or 2.2% to CHF 929 mil-
lion. The increase was mainly due to higher revenue
from construction services rendered by cablex. The
decline in revenue from external customers was attrib-
utable to the loss of Billag’s mandate to collect national
radio and television licence fees. The segment result

before depreciation and amortisation decreased accord-
ingly by CHF 9 million or 4.6% to CHF 188 million, while
the profit margin fell to 20.2% (prior year: 21.7%). Head-
count rose by 6 FTEs or 0.2% to 2,685 FTEs, driven pri-
marily by the hiring of new employees at cablex due to
higher order volumes. This increase was partly offset by
the reduction in personnel at Billag.

Group Headquarters and reconciliation

In CHF million, except where indicated

Group Headquarters

Reconciliation pension cost

Reconciliation lease expense (IAS 17)

Intersegment elimination

Operating income before depreciation and amortisation (EBITDA)

2019

(72)

(47)

–

(36)

(155)

2018

(76)

(60)

(207)

(20)

(363)

Change

–5 .3%

–21 .7%

–100 .0%

80 .0%

–57.3%

In 2018, the payment obligations arising from operating
lease were recognised as an operating expense and are
shown here as a reconciliation item. As of 1 January
2019, this expense will be replaced by depreciation and
interest. The other net costs not allocated to the operat-
ing segments, which comprise Group Headquarters,
pension cost reconciliation and inter-segment elimina-
tions, declined by CHF 1 million overall year-on-year. The

reconciliation item for pension cost is the difference
between the total of employer contributions and the
cost under IFRS. The cost reduction here of CHF 13 mil-
lion came about mainly as a result of changes in assump-
tions
(in particular regarding the discount rate).
Inter-segment eliminations pertain to unrealised profits
on capitalised work of other Group companies.

Depreciation and amortisation, non-operating results

In CHF million, except where indicated

Operating income before depreciation and amortisation (EBITDA)

Depreciation and amortisation of property, plant and equipment and intangible assets

Depreciation of right-of-use assets

Operating income (EBIT)

Net interest expense for financial assets and liabilities

Interest expense on lease liabilities

Other financial result

Result of equity-accounted investees

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)

Due to the application of IFRS 16 Leases as of 1 January
2019, right-of-use assets are recognised and depreci-
ated. In 2019, the depreciation of right-of-use assets
amounted to CHF 282 million. The depreciation and
amortisation of property, plant and equipment and
intangible assets increased by CHF 22 million or 1.0%
year-on-year to CHF 2,166 million, mainly reflecting an
increase in depreciation and amortisation at Swisscom
Switzerland and at Fastweb. Net interest expense
excluding lease fell from CHF 104 million to CHF 62 mil-
lion as a result of lower average interest costs. Negative
effects of CHF 23 million from the change in the fair
value of interest rate swaps and foreign exchange losses
of CHF 12 million impacted the other financial result in
2019. Income tax expense amounted to CHF 55 million
(prior year: CHF 395 million) as a result of the positive tax
effects related to the adoption of the Swiss tax reform.
Swisscom’s net income increased by CHF 148 million or
9.7% to CHF 1,669 million, and earnings per share rose
accordingly from CHF 29.48 to CHF 32.28.

Swiss tax reform
Income tax expense was CHF 55 million (prior year:
CHF 395 million) in 2019, corresponding to an effective
consolidated tax rate of 3.2% (prior year: 20.6%). The rea-
sons for the significantly lower tax expense are tax law

2019

4,358

(2,166)

(282)

1,910

(62)

(42)

(54)

(28)

1,724

(55)

1,669

1,672

(3)

32 .28

2018

4,213

(2,144)

–

2,069

(104)

(24)

(30)

1,916

(395)

1,521

1,527

(6)

29 .48

Change

3.4%

1 .0%

–7.7%

–40 .4%

75 .0%

80 .0%

–10.0%

–86 .1%

9.7%

9 .5%

–50 .0%

9 .5%

changes, adjustments from previous years and a CHF 192
million lower pre-tax result. In a federal referendum in
May 2019, a bill with far-reaching changes in corporate
taxation was adopted. In connection with this tax
reform, most of the cantons decided to reduce the cor-
porate income tax rates. As a result of the tax reform
and the tax rate reductions, positive effects of CHF 269
million will be recognised in Swisscom’s 2019 consoli-
dated financial statement. These result from the recog-
nition of deferred taxes in accordance with International
Financial Reporting Standards (IFRS). Existing deferred
tax liabilities were adjusted at the lower cantonal tax
rates, while valuation adjustments pertaining to the
holding company’s transition to ordinary profit taxation
led to the recognition of new deferred tax assets. The
recognised deferred tax effects of CHF 269 million do
not affect the taxes due for 2019 and are spread over a
period of approximately ten years. Swisscom paid
CHF 357 million in income taxes in Switzerland in 2019
(prior year: CHF 277 million). An out-of-period reduction
in tax expense for 2019 totalling CHF 16 million also
resulted from various adjustments to tax accruals for
prior years. Based on the changes in legislation and tax
rates that have been decided, Swisscom anticipates a
future effective consolidated tax rate of around 19.5%.

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Cash flows

In CHF million

Operating income before depreciation and amortisation (EBITDA)

Capital expenditure

Lease expense

Operating free cash flow proxy

Change in net working capital

Change in defined benefit obligations

Net interest payments for financial assets and liabilities

Interest payments on finance lease liabilities

Income taxes paid

Other operating cash flow

Free cash flow

Net expenditures for company acquisitions and disposals

Other cash flows from investing activities, net

Issuance of financial liabilities

Repayment of financial liabilities

Repayment of financial lease liabilities according to IAS 17

Dividends paid to equity holders of Swisscom Ltd

Other cash flows from financing activities

Net decrease in cash and cash equivalents

2019

4,358

(2,438)

(294)

1,626

146

(63)

–

(371)

(41)

1,345

(413)

417

(374)

–

(1,140)

(16)

(142)

2018

4,213

(2,404)

–

1,809

(139)

(109)

(24)

(294)

1,319

(113)

1,451

(1,545)

(26)

(1,140)

(10)

(45)

Change

145

(34)

(294)

(183)

285

(16)

(77)

(53)

(300)

(1,034)

1,171

–

(6)

(97)

The operating free cash flow proxy declined year-on-
year by CHF 183 million to CHF 1,626 million, owing
largely to higher capital expenditure. Capital expendi-
ture rose by CHF 34 million to CHF 2,438 million. This
was driven by the expenditure of CHF 196 million for the
mobile radio frequencies purchased by Swisscom Swit-
zerland at auction in the first half of 2019. Excluding
Swisscom’s purchase of mobile radio frequencies, the
operating free cash flow proxy rose by CHF 13 million.

Free cash flow increased year-on-year by CHF 26 million
to CHF 1,345 million, fuelled largely by the improvement
in net working capital. Net working capital decreased by

CHF 146 million compared to the end of 2018 (prior year:
increase of CHF 139 million).

Net expenditure for company acquisitions and disposals
amounted to CHF 413 million (prior year: CHF 113 mil-
lion). This includes the payment for the purchase price of
CHF 240 million paid to Tamedia for the acquisition of the
outstanding share of 31% in Swisscom Directories Ltd.
Also included are payments for the acquisition of Tiscali’s
Fixed Wireless division by Fastweb as well as investments
in equity-accounted investee Flash Fiber in connection
with the network expansion in Italy. Swisscom issued
various bonds totalling CHF 405 million in 2019. The
funds received were used to repay existing loans.

Development of free cash flow
in CHF million

4,358

–2,438

–294

1,626

146

–371

–63

1,345

EBITDA

Capital
expenditure

Lease expense

Operating
free cash
flow proxy

Change in net
working capital

Taxes
paid

Interest
payments

Other effects

Free
cash flow

Capital expenditure

In CHF million, except where indicated

Fixed access and infrastructure

Expansion of the fibre-optic network

Mobile network

Mobile frequencies

Customer driven

Projects and others

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

2019

459

494

270

196

261

1,761

667

(37)

2,438

1,770

668

21 .3

2018

496

490

307

–

250

1,620

757

(19)

2,404

1,645

759

20 .5

Change

–7 .5%

0 .8%

–12 .1%

5 .2%

4 .4%

8.7%

–11 .9%

2 .2%

94 .7%

1.4%

7 .6%

–12 .0%

Capital expenditure rose year-on-year by CHF 34 million
or 1.4% to CHF 2,438 million, corresponding to 21.3% of
net revenue (prior year: 20.5%). Swisscom Switzerland
accounted for 72% of 2019 capital expenditure, while
Fastweb accounted for 27% and Other Operating Seg-
ments for 1%.

Capital expenditure incurred by Swisscom Switzerland
increased year-on-year by CHF 141 million or 8.7% to
CHF 1,761 million, corresponding to 20.6% of net reve-
nue (prior year: 18.4%) and included expenditure of
CHF 196 million in connection with the mobile radio fre-
quencies acquired auction in the first half of 2019. Capi-
tal expenditure on broadband expansion with fibre

optics remained stable at a high level, while capital
expenditure on mobile communications and other fixed
network and infrastructure declined.

Fastweb decreased its capital expenditure by CHF 90
million or 11.9% to CHF 667 million. In local currency,
capital expenditure decreased by EUR 58 million or 8.8%
to EUR 599 million. The decrease is mainly due to the
expenses for the acquisition and extension of mobile
radio frequencies in the amount of EUR 64 million in the
previous year. The investment volume remains at a high
level overall, driven by the further expansion of the
broadband networks. The ratio of capital expenditure to
net revenue fell as a result to 27.0% (prior year: 31.2%).

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Net asset position

In CHF million

Property, plant and equipment

Intangible assets

Goodwill

Right-of-use assets

Trade receivables

Trade payables

Provisions

Deferred gain on sale and leaseback of real estate

Other operating assets and liabilities, net

Net operating assets

Net debt

Lease liabilities

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

1 Incl. effect of the initial application of IFRS 16.

31.12.2019

01 .01 .2019

Change

10,529

10,425

1,842

5,163

2,177

2,183

(1,614)

(1,146)

(122)

(26)

18,986

(6,758)

(2,027)

(1,058)

(607)

339

8,875

36 .6

1,772

5,167

1,786

2,189

(1,658)

(1,028)

(134)

194

18,713

(7,009)

(1,622)

(1,196)

(873)

217

8,230

34 .4

104

(4)

391

(6)

(118)

(220)

273

251

(405)

138

266

122

645

Operating assets
Net operating assets rose by CHF 0.3 billion to CHF 19.0
billion. The increase was mainly attributable to increased
property, plant and equipment, intangible assets and
right-of-use assets. The net carrying amount of goodwill
was CHF 5.2 billion, the bulk of which relates to Swisscom
Switzerland (CHF 4.2 billion). This goodwill arose primar-
ily 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 com-
bined 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 Fast-
web’s goodwill is EUR 0.5 billion (CHF 0.5 billion). Fast-
web’s carrying amount in the consolidated financial
statements totals EUR 3.0 billion (CHF 3.3 billion).

Net debt
Net debt is composed of financial liabilities minus cash
and cash equivalents, current financial assets, derivative
financial instruments held to hedge financial liabilities
and other non-current financial assets directly related to
non-current financial liabilities (certificates of deposit,
U.S. treasury bond strips). Net debt and the net debt to
EBITDA ratio are presented both with and without clas-
sification of leases as financial liabilities. For credit rating
purposes, rating agencies include lease liabilities in the
calculation of net debt. However, for the financial target
of the Federal Council’s financing structure, leases are
not classified as financial liabilities or part of net debt.

In CHF million

31.12.2019

01 .01 .2019

5,915

1,080

151

314

7,460

(328)

(142)

(94)

(73)

(65)

6,758

4,358

(294)

4,064

1 .7

6,758

2,027

8,785

4,358

–

4,358

2 .0

5,554

1,233

426

570

7,783

(474)

(145)

–

(81)

(74)

7,009

4,213

–

4,213

1 .7

7,009

1,622

8,631

4,213

207

4,420

2 .0

Ratio of net debt/EBITDA after lease expense

Debenture bonds

Bank loans

Private placements

Other financial liabilities

Total financial liabilities

Cash and cash equivalents

Non-current certificates of deposit

Non-current listed debt instruments

Non-current derivative financial instruments for financing

Other current financial assets

Net debt

Operating income before depreciation and amortisation (EBITDA)

Lease expense

EBITDA after lease expense

Ratio of net debt/EBITDA after lease expense

Ratio of net debt incl. lease liabilities/EBITDA before lease expense

Net debt

Lease liabilities

Net debt incl. lease liabilities

Operating income before depreciation and amortisation (EBITDA), excl . lease expense

Operating lease expense according to IAS 17

EBITDA before lease expense

Ratio of net debt incl . lease liabilities/EBITDA before lease expense

1 Incl. effect of the initial application of IFRS 16.

The ratio of net debt including lease liabilities to EBITDA
was 2.0 at the end of 2019 (prior year: 2.0). Without clas-
sification of the leases as financial liabilities, the ratio of
net debt to EBITDA after lease expense is 1.7 (prior year:
1.7). Both ratios reflect a stable debt situation compared
to the previous year. Swisscom’s goal of maintaining its
single-A credit rating was achieved. The limit on net

Development of net debt incl. lease liabilities
in CHF million

debt set by the Federal Council in the financial targets of
2.1 x EBITDA after lease expense was also adhered to.

In recent years, Swisscom has taken advantage of favour-
able capital market conditions with a view to optimising
the interest and maturity structure of the Group’s finan-
cial obligations. The share of the Group’s variable inter-
est-bearing financial liabilities amounts to 22%.

8,631

1,140

371

207

8,785

–1,626

Net debt
incl . lease
liabilities
01/01/2019

Operating
free cash flow
proxy

Dividends

Net interest
expense

Taxes paid

M&A and
other effects

Net debt
incl . lease
liabilities
31/12/19

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Financial liabilities
The nominal amount of the financial liabilities excl.
derivative financial instruments as at 31 December 2019
was CHF 7.3 billion. Around 81% of the financial liabili-
ties have a residual term to maturity of more than one

year. Financial liabilities with a term of one year or less
amounted to CHF 1.4 billion at 31 December 2019. In
2019, the average interest expense on all financial liabil-
ities was 1.0%, and the average residual term to matu-
rity was 5.5 years.

Nominal value (in CHF million)

Bank loans

Debenture bonds

Private placements

Other financial liabilities

Total financial liabilities 1

1 Excl. derivative financial instruments

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

781

543

–

264

–

543

1,250

2,544

–

955

150

–

Total

1,045

5,835

150

230

1,363

637

1,527

2,628

1,105

7,260

Post-employment benefits
Defined benefit obligations recognised in the consoli-
dated financial statements are measured in accordance
with IFRS provisions. Net defined benefit obligations
amounted to CHF 1.1 billion, which represents a CHF 0.1
billion decline year-on-year. This is mainly due to the
positive return on plan assets. In accordance with the
Swiss accounting standards applicable to the pension
fund (Swiss GAAP ARR), the funding surplus amounts to
CHF 1.1 billion, corresponding to a coverage ratio of
110% on the plan’s assets of CHF 11.6 billion. The main
reasons for the difference of CHF 2.2 billion compared to
the measurement according to IFRS are twofold. Firstly,
the use of different assumptions, in particular the inter-
est rate for discounting future pension benefits less the
financing share of employees (risk sharing), has a net
effect of CHF 1.5 billion. Secondly, the valuation method
treats future salary levels, contribution rates scaled by
age group and early retirement differently, resulting in a
net effect of CHF 0.7 billion.

Equity
Equity of CHF 8.9 billion (prior year: CHF 8.2 billion) and
an equity ratio of 36.6% (as at 1 January 2019: 34.4%)
were reported in the 2019 consolidated balance sheet.
The increase of CHF 0.7 billion reported in equity resulted
primarily from the fact that the net income of CHF 1.7
billion was higher than the dividend payment of CHF 1.1
billion. The foreign currency differences arising from the
translation of foreign subsidiaries are recognised in
equity. On 31 December 2019, the cumulative currency
translation losses amounted to CHF 1.8 billion (after
tax). Distributable reserves are not determined on the
basis of the equity as reported in the consolidated finan-
cial statements but rather on the basis of equity as
reported
in the separate financial statements of
Swisscom Ltd. The equity totalled CHF 6.8 billion in the
2019 separate financial statement of Swisscom Ltd. The
difference of CHF 2.1 billion as compared to the equity
disclosed in the consolidated balance sheet is largely due
to earnings retained by subsidiaries and different
accounting methods. Under Swiss company law, share
capital and that part of the general reserves represent-
ing 20% of the share capital may not be distributed. On
31 December 2019, Swisscom Ltd held distributable
reserves of CHF 6.7 billion.

Value-oriented business management

Key performance indicators for planning and managing
business operations are revenue, operating income
before depreciation and amortisation (EBITDA) and cap-
ital 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 telecommuni-
cations 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 share-
holding requirement. Variable remuneration based on
financial and non-financial targets, the partial settle-
ment 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

Enterprise value

Market capitalisation

Net debt incl . lease liabilities

Defined benefit obligations

Income tax assets and liabilities, net

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

31.12.2019

01 .01 .2019

26,553

8,785

1,058

607

(339)

36,667

4,358

8.4

24,331

8,631

1,196

873

(217)

(15)

34,799

4,420

7.9

1 Incl. effect of the initial application of IFRS 16.

2 Excl. operating lease expense according to IAS 17.

Swisscom’s enterprise value increased by 5.4% or CHF 1.9
billion to CHF 36.7 billion in 2019. The main reason for
this was the CHF 2.2 billion increase in market capitalisa-
tion. On a comparable basis, EBITDA declined, however.
Nevertheless, the ratio of total enterprise value to
increased slightly to 8.4 (prior year: 7.9).
EBITDA
Swisscom’s relative market valuation is therefore well

above the average for comparable companies in Europe’s
telecoms sector. The higher relative valuation is sup-
ported by Swisscom’s solid market position and attrac-
tive dividend. In addition, the lower interest rates and
lower profit tax rates in Switzerland compared to other
European countries have a positive effect.

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Statement of added value

Thanks to a modern, high-performance network infra-
structure 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 ser-
vices 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

Switzer-
land

Other
countries

2019

Total

Switzer-
land

Other
countries

2018

Total

8,969

2,484

11,453

9,274

2,440

11,714

Capitalised self-constructed assets and other income

Direct costs

Other operating expense 1

Lease expense

378

(1,925)

(1,314)

(238)

131

(890)

(662)

(86)

509

347

(2,815)

(2,001)

(1,976)

(1,390)

(294)

(181)

Depreciation and amortisation 2

(1,542)

(594)

(2,136)

(1,521)

114

(953)

(575)

(26)

(586)

461

(2,954)

(1,965)

(207)

(2,107)

(6,772)

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

(4,641)

(2,101)

(6,742)

(4,746)

(2,026)

4,328

383

4,711

4,528

414

4,942

2,522

317

231

(154)

4,557

2,753

2,531

335

328

1,141

273

4,557

224

(62)

4,880

2,755

360

1,141

128

496

4,880

1 Other operating expense: excl. taxes on capital and other taxes not based on

4 Employees: employer contributions are reported as pension cost, rather than as

income.

expenses according to IFRS.

2 Depreciation and amortisation: excl. amortisation of acquisition-related intangi-

5 Public sector: current income tax expense, capital taxes and other taxes not

ble assets such as brands or customer relations.

3 Other non-operating result: financial result excl. net interest expense, result of
equity-accounted investees, and amortisation of acquisition-related intangible
assets.

based on income. Excl. payments for VAT and mobile communication frequencies.
6 Company: incl. changes in deferred income taxes and defined benefit obligations.

Of the consolidated operating added value of CHF 4.7
billion, 91.9% or CHF 4.3 billion was generated in Swit-
zerland, which was 4.4% less than in the previous year.
At the same time, added value per FTE was 1.5% lower at
CHF 257,000. In addition to direct added value, pur-
chases from suppliers provide significant indirect added

value for Switzerland’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 2019, with added
value contributed by suppliers in Switzerland of approx-
imately 60% or CHF 2.9 billion.

Swisscom development of value added per
employee in Switzerland
in CHF thousand

300

200

100

262

261

257

2017

2018

2019

Allocation of added value
in %

● 1% Third-party lenders
● 7% Public sector
● 6% Company

● 25% Shareholders

● 61%
Employees

Financial outlook

In CHF million, except where indicated

Net revenue

Swisscom Group

Swisscom w/o Fastweb

Fastweb

Operating income before depreciation and amortisation (EBITDA)

Swisscom Group

Swisscom w/o Fastweb

Fastweb

Capital expenditure

Swisscom Group

Swisscom w/o Fastweb

Fastweb

2019 Change Swisscom
reported without Fastweb

Change
Fastweb

2020
outlook

11,453

< 0

> 0

4,358

< 0

> 0

2,438

–

~ CHF 11.1 bn
~ CHF 8 .7 bn
~ EUR 2 .3 bn

~ CHF 4.3 bn
~ CHF 3 .5 bn
~ EUR 0 .8 bn

~ CHF 2.3 bn
~ CHF 1 .6 bn
~ EUR 0 .6 bn

1 Exchange rate CHF/EUR 1.07 (2019: CHF/EUR 1.11).
2 2020 outlook for EBITDA after lease expense ~ CHF 4.0 bn.

3 Incl. expenditure of CHF 196 mn for mobile radio frequencies in Switzer-

land.

For 2020, Swisscom expects net revenue of around
CHF 11.1 billion, EBITDA of around CHF 4.3 billion and
capital expenditure of around CHF 2.3 billion. Due to
strong competition and price pressure and the ongoing
decline in the number of fixed-line telephone connec-
tions, Swisscom expects revenue to be lower without
Fastweb. Fastweb’s revenue is expected to increase
slightly from 2019. For Swisscom, excluding Fastweb,
the decline in revenue cannot be fully compensated by
cost savings. In contrast, an increase in EBITDA is antici-
pated for Fastweb on a like-for-like basis. Capital

expenditure in Switzerland, excluding costs for acquir-
ing additional mobile radio frequencies at auction, will
be slightly less than in the previous year. Capital expend-
iture at Fastweb is expected to be lower. Subject to
achieving its targets, Swisscom will propose payment of
an unchanged, attractive dividend of CHF 22 per share
for the 2020 financial year at the 2021 Annual General
Meeting.

w
e
i
v
e
r

l
a
i
c
n
a
n
i
F
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Capital market

By consistently implementing its strategy, Swisscom has achieved its financial
ambitions for 2019, which will enable it to create added value for shareholders once
again this year . With ratings of A (stable) from Standard & Poor’s and A2 (stable)
from Moody’s, Swisscom is one of the best-rated telecommunications companies in
Europe .

Swisscom share

Swisscom’s market capitalisation as at 31 December
2019 amounted to CHF 26.6 billion (previous year:
CHF 24.3 billion). 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 2019
in CHF

610

540

470

400

Swisscom

SMI (indexed)

Stoxx Europe 600 Telcos (in CHF, indexed)

9
1
1
0
1
0

9
1
2
0
8
2

9
1
3
0
1
3

9
1
4
0
0
3

9
1
5
0
1
3

9
1
6
0
0
3

9
1
7
0
1
3

9
1
8
0
1
3

9
1
9
0
0
3

9
1
0
1
1
3

9
1
1
1
0
3

9
1
2
1
1
3

The Swiss Market Index (SMI) rose by 26.0% compared
with the previous year. The Swisscom share price
increased by 9.1% to CHF 512.60, outperforming the
Stoxx Europe 600 Telecommunications Index (+0.4% in
EUR). Average daily trading volume fell by 1.5% to
148,913 shares. The total trading volume of Swisscom
shares in 2019 amounted to CHF 18.0 billion.
N See www.swisscom.ch/shareprice

Shareholder return
On 8 April 2019, Swisscom paid out an ordinary dividend
of CHF 22 per share. Based on the closing price at the end
of 2018, this equates to a return of +4.7%. Taking into

account the increase in the share price, the Swisscom
share achieved a total shareholder return (TSR) of +14.3%
in 2019. The TSR for the SMI was +30.2% and for the Stoxx
Europe 600 Telecommunications Index +5.5% 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).

Ownership structure

Confederation

Natural persons

Institutions

Total

Number of
shareholders

Number of
shares

26,394,000

68,008

4,718,542

2,733

20,689,401

31.12.2019

Share
in %

51 .0%

9 .1%

39 .9%

Number of
shareholders

Number of
shares

26,394,000

70,206

4,995,716

2,904

20,412,227

31 .12 .2018

Share
in %

51 .0%

9 .6%

39 .4%

70,742

51,801,943

100.0%

73,111

51,801,943

100.0%

The majority shareholder as at 31 December 2019 was
the Swiss Confederation, which is obligated by current
law to hold the majority of the capital and voting rights.
The free float is divided between around 40% institu-
tional investors and around 9% natural persons. As at
31 December 2019, some 20% of the shares were held in
unregistered shareholdings.

Analysts’ recommendations
Investment specialists analyse Swisscom’s business per-
formance, results and market situation on an ongoing
basis. Their findings and recommendations offer valua-
ble indicators for investors. Twenty-three analysts regu-
larly publish studies on Swisscom. At the end of 2019, 9%
of the analysts issued a buy rating for the Swisscom
share, 39% a hold rating and 52% a sell rating. The aver-
age price target at 31 December 2019, according to the
analysts’ estimates, was CHF 469 per share.

Dividend policy

Swisscom pursues a return policy with a stable dividend.
At the forthcoming Annual General Meeting on 6 April
2020, the Board of Directors will propose an unchanged
ordinary dividend of CHF 22 per share for the 2019 finan-
cial 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 33.0 billion to its shareholders: CHF 21.0 bil-
lion 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 411 per share since
the initial public offering. Together with the overall
increase in share price of CHF 173 per share, this amounts
to an average annual total return of 5.1%.

Credit ratings and financing

Swisscom enjoys good ratings from the Standard &
Poor’s and Moody’s rating agencies, at A (stable) and A2
(stable) respectively. Swisscom aims to maintain the sin-
gle-A credit rating. To avoid structural downgrading,
Swisscom endeavours to raise financing at the level of
Swisscom Ltd. Swisscom aims to have a broadly diversi-
fied debt portfolio. This involves paying particular atten-
tion to balancing maturities and diversification of
currencies.
instruments, markets and
financing
Swisscom’s solid financial standing gave it unrestricted
access to money and capital markets again in 2019.

t
e
k
r
a
m

l
a
t
i

p
a
C
|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

Risks

Risks are driven by changes in the market and competitive environment, in the legal
and economic framework and in technology . Swisscom’s risk management system
is aimed at safeguarding the company’s enterprise value . Over the long term, market
trends will necessitate major changes in the approach to risks related to the business
model, technology and human capital .

Risk situation

Risks are driven by changes in markets, competition,
technology, the regulatory environment and govern-
ment policy. The importance of traditional telecommu-
nications services is declining. New offerings in the areas
of digitisation and IT services, such as cloud services, IT
security and IoT solutions, are intended to compensate
for sagging revenue from the traditional core business.
Over the long term, the market trends will necessitate
major changes in the approach to risks related to the
business model, technology and human capital. The key
risk factors are addressed below. The main risk factors in
the supply chain are described separately in the Sustain-
ability Report.

Risk factors

Telecommunications market
Infrastructure providers and service providers which do
not have their own network infrastructure are driving
competition, which is gaining momentum and exerting
transformation pressure on the business. During this
transformation, the complexity resulting from the paral-
lel 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 busi-
ness will not be secured sustainably during the transfor-
mation process, while technical complexity remains
undiminished.

Politics and regulation
The manner in which regulations are implemented
entails risks for Swisscom, which could have an adverse
impact on the company’s financial position and results
of operations. Sanctions by the Competition Commis-
sion could also reduce Swisscom’s operating results and
cause reputational damage to the company. Finally,
excessively high political demands (e.g. those imposed
on universal service provision) threaten to fundamen-
tally undermine the current competitive system.

Increasing bandwidth in the access network
Customer demand for broadband access is growing rap-
idly, as is the popularity of mobile devices and IP-based
services (smartphones, IPTV, OTTs, etc.). Swisscom faces
tough competition from cable companies and other net-
work operators as it strives to meet current and future
customer needs and defend its own market share. The
network expansion this necessitates calls for major
investments. To mitigate financial risks and ensure opti-
mum network coverage, network expansion is geared
towards population density and customer demand. Sub-
stantial 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 expan-
sion of the access network to changing conditions and
technical opportunities on an ongoing basis.

Employees
Constant changes in background conditions and mar-
kets mean that corporate culture also has to continu-
ously adapt. The key challenges in this context lie in
maintaining employee motivation and high staff loyalty
despite the pressure on costs, 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 that could have a
detrimental impact on Fastweb’s strategy and jeopard-
ise projected revenue growth. The impairment test per-
formed in 2019 confirmed the recoverable value of Fast-
web’s assets. The recoverability of Fastweb’s net assets
recognised in the consolidated financial statements is
contingent above all on achieving the financial targets
set out in the business plan (revenue growth, improve-
ment in EBITDA margin and reduction in capital expend-
iture ratio). If future growth is lower than projected,
there is a risk that this will result in an impairment loss.
Major uncertainty also surrounds the future trend in
interest rates and the country risk premium. An increase
in interest rates or the country risk premium could lead
to an impairment loss. Fastweb’s business operations
are also influenced by European and Italian telecommu-
nications 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 net-
works and IT platforms. Any major disruption to busi-
ness operations poses a financial risk as well as a sub-
stantial 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 interde-
pendence of modern technologies can cause damage or
interruption to operations. Built-in redundancy, contin-
gency plans, deputising arrangements, alternative loca-
tions, 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 switching analogue telephony to Internet
Protocol
(IP). This transformation should enable
Swisscom to produce more flexibly and efficiently than
before. The experience with IP technology to date has
been positive. Swisscom’s complex IT architecture
entails risks during both the implementation and oper-
ating phases. These risks have the potential to delay the
rollout of new services, increase costs and impact com-
petitiveness. The transformation is being closely moni-
tored by the Group Executive Board. The area of Internet
security has developed and changed with immense
speed with respect to technology, economics and soci-
ety 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,
making it even more important for potential threats to
be recognised at an early stage, systematically under-
stood and quickly averted.

s
k
s
i
R

|
y
r
a
t
n
e
m
m
o
C
t
n
e
m
e
g
a
n
a
M

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 Radi-
ation (ONIR), Switzerland has adopted the precautionary
principle and introduced limits for base stations that are
ten times stricter than those prescribed by the EU. The
public’s wary attitude, in particular towards mobile
antenna sites, is impeding Swisscom’s network expan-
sion. Even without stricter legislation, public concerns
about the effects of electromagnetic radiation on the
environment and health could further hamper the
construction of wireless networks in the future and
drive up costs.

temperatures and

Climate change poses risks for Swisscom. These risks are
driven by changes in the legal framework and in physical
climatic parameters (increased levels of precipitation,
higher average
temperature
extremes, and melting permafrost) and by other eco-
nomic and reputational factors. The resulting develop-
ments could impact the operability of Swisscom’s tele-
coms infrastructure, particularly in view of the potential
risk to base stations, transmitter stations and local
exchanges. The analysis of the risks posed by climate
change is largely based on the official reports of the Fed-
eral Office for the Environment (FOEN) on climate change
(CH2014
Impacts and CH2018 Climate Scenarios).
Swisscom also publishes its own annual climate report.
N See www.cdp.net

Corporate Governance

1
Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
2 Group structure and shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Capital structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
3
4
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
5 Group Executive Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Remuneration, shareholdings and loans . . . . . . . . . . . . . . . . . . . . . . . . 92
6
Shareholders’ participation rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
7
8
Change of control and defensive measures . . . . . . . . . . . . . . . . . . . . . 93
9 Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Information policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Financial calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

10
11

Remuneration Report

1 Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Remuneration of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 98
2
3
Remuneration of the Group Executive Board . . . . . . . . . . . . . . . . . .101
4 Other remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
Statutory Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107

Corporate Governance

Corporate governance is a fundamental component of Swisscom’s corporate policy .
Swisscom is committed to 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 man-
agement. 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, transparent
corporate governance, which is characterised by clearly
assigned responsibilities and based on recognised stand-
ards. In this regard, Swisscom complies with the recom-
mendations of the Swiss Code of Best Practice for Corpo-
rate 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 divi-
sions allows the Board of Directors to identify trends at
an early stage and to adjust its corporate governance 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 Proce-
dure 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 superseded versions can be
viewed online on the Swisscom website under “Basic
principles”.
N See www.swisscom.ch/basicprinciples

2 Group structure and shareholders

2.1 Group structure

Operational Group structure
Swisscom Ltd is a holding company. It comprises five
Group divisions: Group Business Steering, Group Human
Resources, Group Strategy & Board Services, Group
Communications & Responsibility and Group Security.
The Board of Directors delegates the day-to-day busi-
ness management to the CEO of Swisscom Ltd. The
Group Executive Board is comprised of the CEO, the
heads of the Group divisions Group Business Steering
(CFO) and Group Human Resources (CPO), plus the heads
of the business divisions Sales & Services, Products &
Marketing, Enterprise Customers, and IT, Network &
Infrastructure. As of 1 January 2020, the Sales & Services
(SAS) and Products & Marketing (PMK) divisions were
merged into the new Residential Customers division,
and the Enterprise Customers division was renamed
“Business Customers”. The Group also includes the Digi-
tal Business division and Group companies such as the
Italian subsidiary Fastweb S.p.A.

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

The operational Group structure as at 1 January 2020 is shown in the diagram below.

Residential
Customers

Business
Customers

IT, Network
& Infrastructure

Group Business
Steering

Group Human
Resources

Digital
Business

Fastweb

Group Communications
& Responsibility

Group Strategy
& Board Services

Group Security

CEO Swisscom Ltd

Internal Audit

Group Executive Board

Board of Directors

Swisscom Ltd structure

The business activities are carried out by Swisscom
Group companies. Strategic and financial management
is assured through the rules governing the assignment
of powers and responsibilities set by the Board of Direc-
tors of Swisscom Ltd. The Group companies are divided
into three categories: strategic, important and other.
Swisscom Ltd, Swisscom (Switzerland) Ltd and the sub-
sidiary Fastweb S.p.A. are classified as strategic Group
companies. The Board of Directors of Swisscom (Switzer-
land) Ltd comprises the CEO of Swisscom Ltd as Chair-
man, the CFO of Swisscom Ltd and the Head of Enter-
prise Customers (renamed “Business Customers” as of
1 January 2020). The CEO of Swisscom Ltd is responsible
for the executive management of Swisscom (Switzer-
land) Ltd. Seats on the Board of Directors of Fast-
web S.p.A. are held by the CEO of Swisscom Ltd, who acts
as Chairman, together with the CFO of Swisscom Ltd and
other representatives of Swisscom. The Board of Direc-
tors also includes an external member. The Board of
Directors of Fastweb S.p.A. has empowered the Dele-
gate of the Board of Directors with the executive man-
agement of the company. All other Group companies are
assigned to a Group division or business division for
management purposes. The members of the Board of
Directors of the other Group companies are appointed
by the CEO. In some cases, external parties also serve as
members of the Board of Directors. A list of Group com-
panies, including company name, registered office, per-
centage of shares held and share capital, is provided in
Note 5.4 to the consolidated financial statements.
D See report pages 165—166

For financial reporting purposes, the business divisions
of Swisscom are allocated to individual segments. Fur-
ther information on segment reporting can be found in
the Management Commentary.
D See report page 48

Listed company
Swisscom Ltd is a company governed by Swiss law and has
its registered office in Ittigen (Canton of Berne, Switzer-
land). 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 that represent
Swisscom shares. Ten ADS correspond to one share. The
ADS are evidenced by American Depositary Receipts (ADR).

As at 31 December 2019, the stock market capitalisation
of Swisscom Ltd was CHF 26,553 million. There are no
other listed companies in the Swisscom Group.

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

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

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 require-
ments 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 are not required
to disclose when any of their shareholdings reach,
exceed or fall below these limits. As shareholders are
only required to notify the company and SIX Swiss
Exchange if their shareholdings exceed or fall below one
of the limits indicated above, the percentage of shares
actually held by significant shareholders may differ from
the percentage most recently disclosed.

The shareholding notifications can be viewed on the
website of the SIX Exchange Regulation at:
https://www.six-exchange-regulation.com/en/home/
publications/significant-shareholders.html

In the 2019 reporting year, no shareholdings subject to
Article 120 FMIA were reported to Swisscom. In August
2017, BlackRock, Inc., New York, reported a shareholding
of 3.44% of the voting rights in Swisscom Ltd. According
to the Swisscom share register, Chase Nominees Ltd.,
London, held 4.74% of the voting rights in Swisscom Ltd
on 31 December 2019.

The Swiss federal government (Swiss Confederation), as
majority shareholder, held 50.95% of the issued share
capital of Swisscom Ltd on 31 December 2019, which
was unchanged from the previous year. The Telecommu-
nications Enterprises Act (TEA) provides that the Swiss
Confederation shall hold the majority of the share capi-
tal and voting rights of Swisscom Ltd. The Federal Coun-
cil defines the goals which the Confederation as princi-
pal shareholder of the company aims to achieve in the
next four years. As a rule, stakeholder talks with the
Chairman of the Board and the CEO are conducted three
times a year by the responsible federal government
departments – the Federal Department of the Environ-
ment, Transport, Energy and Communications (DETEC)
and Federal Department of Finance (FEF) – led by the
Head of DETEC, in which the status of target achieve-
ment is examined. After the close of the business year,
target achievement is assessed by the Federal Council.
N See www.swisscom.ch/targets_2018-2021

2.3 Cross-participations
No cross-shareholdings exist between Swisscom Ltd and
other public limited companies.

3 Capital structure

3.1 Capital
The share capital of Swisscom AG has remained
unchanged since 2009, totalling CHF 51,801,943. There
is no authorised or conditional share capital. Informa-
tion concerning equity can be found in the financial
statements of Swisscom Ltd.
D See report page 182

3.2 Shares, participation and profit-sharing
certificates
All of the shares issued by Swisscom Ltd are fully paid-up
registered shares with a par value of CHF 1. Each share
entitles the holder to one vote. Shareholders may only
exercise their voting rights, however, if their shares 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 divi-
dend. 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. Share-
holders 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).

The holder of an ADR possesses the rights listed in the
Deposit Agreement (e.g. the right to issue instructions
for the exercise of voting rights and the right to divi-
dends). 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 or 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.

Swisscom Ltd has issued neither participation nor profit-
sharing certificates.

Further information on the shares is available in Sec-
tion 7 “Shareholders’ participation rights” as well as in
the Management Commentary.
D See report page 92
D See report page 61

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 the 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. For the shares
in excess of the limit, 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 Corporate Governance report, “Voting right restric-
tions and proxies”.
N See www.swisscom.ch/basicprinciples
D See report page 92

Swisscom has issued special regulations governing the
registration of trustees and nominees in the share regis-
ter. 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 unrelated parties. They must also be able to pro-
vide 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 nomi-
nees in the Swisscom Ltd share register.
N See www.swisscom.ch/basicprinciples

The entry of trustees and nominees as shareholders
with voting rights is subject to application and the con-
clusion of an agreement by which the trustee or nomi-
nee acknowledges the applicable entry restrictions and
disclosure obligations as binding. Trustees and nominees
related in terms of capital or voting rights either con-
tractually or through common management or other
means are treated as a single shareholder (trustee or
nominee).

3.4 Convertible bonds, debenture bonds
and options
Swisscom has no convertible bonds outstanding. Details
of the debenture bonds are given in Note 2.2 to the con-
solidated financial statements.
D See report page 128

Swisscom does not issue options on registered shares of
Swisscom Ltd to its employees.

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

4 Board of Directors

4.1 Members of the Board of Directors

As of 31 December 2019, the Board of Directors comprised the following non-executive members:

Name

Hansueli Loosli 1

Roland Abt

Alain Carrupt

Frank Esser

Barbara Frei

Nationality

Switzerland

Germany

Switzerland

Sandra Lathion-Zweifel 2

Switzerland

Anna Mossberg

Michael Rechsteiner 2

Renzo Simoni 3

Sweden

Switzerland

1 Since 1 September 2011 Chairman.
2 Elected to the Board of Directors as of 2 April 2019.

Year of birth

Function

Taking office at the Annual General Meeting

1955

1957

1955

1958

1970

1976

1972

1963

1961

Chairman

Member

Member, representative of the employees

Deputy Chairman

Member

Member, representative of the employees

Member

Member, representative of the Confederation

3 Designated by the Swiss Confederation.

2009

2016

2014

2012

2019

2018

2019

2017

Valérie Berset Bircher, the representative of the employ-
ees, resigned from her position on the Board of Directors
on 31 December 2018 for professional reasons. Sandra
Lathion-Zweifel was elected as her replacement by the
Annual General Meeting on 2 April 2019. The Board of
Directors therefore comprised only eight members from
1 January 2019 until the Annual General Meeting. At the

Annual General Meeting on 2 April 2019, Catherine
Mühlemann retired from the Board of Directors, having
served the maximum permitted term of office. On the
same date, the shareholders elected Michael Rech-
steiner as her successor to the Board of Directors.
N See www.swisscom.ch/cgreport2018

4.2 Education, professional activities and
affiliations
Key details of the career and qualifications of each mem-
ber of the Board of Directors are provided in the sum-
mary 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 compa-
nies 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 per-
formed by a Board member by order of Swisscom or to
mandates in interest groups, charitable associations,
institutions and foundations, or employee retire-
ment-benefit foundations. The number of mandates
held by order of Swisscom is limited to ten, while the
number of mandates in interest groups, charitable asso-
ciations, institutions and foundations, and employee
benefit foundations is limited to seven. The Board mem-
bers are obligated to consult the Chairman of the Board
of Directors prior to accepting new mandates and to
immediately advise him of any changes in their profes-
sional lives. The issue of affiliations is addressed with the
Board of Directors as part of an annual internal training
session that focuses on stock exchange regulations.
Details on the regulation of external mandates, in par-
ticular the definition of the term “mandate” and infor-
mation 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.
N See www.swisscom.ch/basicprinciples

The members of the Board of Directors are required to
order their personal and business affairs and take what-
ever measures necessary to ensure that conflicts of
interest are avoided as far as possible. Should a conflict
of interest nevertheless arise, the member concerned
must inform the Chairman of the Board of Directors
immediately. The members of the Board of Directors are
obliged to abstain from negotiations in business which
conflict with their own interests or with the interests of
natural or legal persons closely associated to them.

Hansueli Loosli
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 Director; 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 Committee and Coop Group Executive
Committee; January 2001–August 2011 Coop Genossen-
schaft, Basel, Chairman of the Executive Committee

Mandates in listed companies
Mandate 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 mandate: member of the Advisory
Board, Deichmann SE, Essen

Other significant activities
–

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

Roland Abt
Doctorate in Business Administration (Dr. oec.)

Alain Carrupt
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 Secretary of the Tele-
communications 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–February 2016 Chairman

Mandates
–

Other significant activities
–

Career history
1985–1987 CFO of a group of companies with opera-
tions in the areas of IT and real estate; 1987–1996 Eter-
nit Group (later Nueva Group): 1987–1991 Head of Con-
trolling, 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 Machining Solutions), 2004–2016 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, Eisenberg-
werk Gonzen AG, Sargans; member of the Board of
Directors and since June 2019 Chairman of the Board of
Aargau Verkehr AG (AVA), Aarau

Other significant activities
–

Frank Esser
Graduate in Business Administration, Doctorate
in Economics (Dr. rer. pol.)

Barbara Frei
Degree in mechanical engineering, ETH;
Doctorate (Dr. sc. techn.), ETH; Master of Business
Administration, IMD Lausanne

Career history
1988–2000 Mannesmann Deutschland, most recently
from 1996 member of the Executive Board of Mannes-
mann Eurokom; 2000–2012 Société Française du Radio-
téléphone (SFR): 2000–2002 Chief Operating Officer
(COO), 2002–2012 CEO, in this function from 2005–2012
also a member of the Group Executive Board of the
Vivendi Group

Mandates in listed companies
Member of the Board of Directors of interXion Holding
N.V., Amsterdam

Mandates in non-listed companies
–

Other significant activities
–

Career history
1998–2016 ABB Group in various managerial positions,
including, in particular, 2008–2010 ABB s.r.o., Prague,
Country Manager; 2010–2013 ABB S.p.A., Sesto San Gio-
vanni (Italy), Country Manager and Regional Manager
Mediterranean; November 2013–December 2015 Drives
and Control Unit, Managing Director; 2016 Head of Stra-
tegic Portfolio Reviews for the Power Grids division;
since December 2016 Schneider Electric, Paris: Chairman
of the Executive Committee of Schneider Electric GmbH,
Germany, in which capacity she was also Zone President
Germany until June 2017; from July 2017–December
2018 Zone President Germany, Austria and Switzerland
for the group Schneider Electric, Paris; since January
2019 Executive Vice President Europe Operations

Mandates in listed companies
Member of the Board of Directors, Swiss Prime Site, Olten

Mandates in non-listed companies
Mandate for Schneider Electric Group: CEO of ELSO
GmbH until October 2018, of Merten GmbH until April
2019, of Schneider Electric GmbH until April 2019, of
Schneider Electric Holding Germany GmbH until July
2019, of SE Real Estate GmbH until April 2019, of Schnei-
der Electric “Austria” Ges.m.b.H until April 2019, and
member of the Supervisory Board of Schneider Electric
Sachsenwerk GmbH until April 2019; Chairman of the
Board of Directors, Schneider Electric (Schweiz) AG, Itti-
gen until March 2019; Delegate of the Board of Direc-
tors, Feller AG, Horgen until June 2019; since February
2019 Chairman of Schneider Nordic Baltic A/S

Other significant activities
–

Sandra Lathion-Zweifel
Degree in law, attorney-at-law; Master of Laws
from the University of Zurich and Columbia
University, New York; trader’s licence from SIX
Swiss Exchange

Anna Mossberg
Executive MBA for Growing Companies, Stanford
Business School, Palo Alto, USA; Master of Science
in Industrial Engineering and Management, Lulea
University of Technology, Lulea, Sweden

Career history
2005–2010 lawyer for Mergers & Acquisitions, Lenz &
Staehelin law firm, Zurich; 2010–2014 Head of Financial
Products, Legal & Compliance, Credit Suisse AG, Zurich;
2014–2018 Head of the Institutions and Products sec-
tion of the Asset Management division of the Swiss
Financial Market Supervisory Authority (FINMA); 2018–
June 2019 counsel for Banking & Finance, Lenz & Staehelin
law firm, Geneva

Career history
1996–2010 Telia: in various roles, in particular Vice Pres-
ident and Head of Business & Product Management,
Head of Internet, Consumer Segment, Director Data Ser-
vices, Product & Services; 2010 Bahnhof AB, CEO; 2011
Stanley Securities AB, Senior Advisor; 2012–2014
Deutsche Telekom, Senior Vice President Strategy and
Portfolio Management; 2015–March 2018 Google Ltd,
Sweden, member of the Management Team

Mandates in listed companies
Member of the Board of Directors, Banque Cantonale du
Valais, Sion

Mandates in listed companies
Member of the Board of Directors, Swedbank AB, Sweden;
since May 2019, member of the Board of Directors,
Schibsted ASA, Oslo

Other significant activities
Member of the Advisory Board of the Capital Markets
and Technology Association, Geneva

Other significant activities
–

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

Renzo Simoni
Doctorate in Mechanical Engineering (Dr. sc. techn.),
Zurich Federal Institute of Technology (ETH)

Career history
1985–1989 Gruner Group, technical assistant in Civil
Engineering and Building Construction; 1989–1995 Fed-
eral Institute of Technology in Zurich (ETH Zurich), scien-
tific 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 Man-
agement 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;
member of the Board of Directors, Rhätische Bahn AG;
Chairman of the Board of the Psychiatric Hospital of the
University of Zurich

Other significant activities
Member of the Advisory Committee of DB Stuttgart-Ulm
GmbH (PSU) Project Company (“Stuttgart 21”) of the
Deutsche Bahn until November 2019

Michael Rechsteiner
Master of Science in Mechanical Engineering,
Zurich Federal Institute of Technology (ETH);
Master of Business Administration, University of
St. Gallen (HSG).

Career history
1990–2000 various roles at ABB Kraftwerke AG, most
recently General Manager of ABB Power Generation,
Kuala Lumpur; 2000–2002 Head of Power Plants, Vice
President Project Execution, Alstom Power; 2003–2007
Chief Operating Officer, Sultex; 2007–2015 various roles
at Alstom Power, most recently CEO and Senior Vice Pres-
ident; 2015–2017 General Electric (GE) Officer and Vice
President of Global Product Lines at GE Power Services;
since April 2017 regional managerial responsibility for
GE Power Services Europe and CEO of GE Gas Power
Europe

Mandates in non-listed companies
GE mandates: President of the Executive Board, General
Electric (Switzerland) Gmbh, Baden, Switzerland; member
of the Supervisory Board, GE Power Sp z.o.o., Warsaw,
Poland

Mandates in interest groups, charitable
associations, institutions and foundations, and
employee benefit foundations
GE mandate: Board of Trustees of General Electric Swit-
zerland Pension Fund

Other significant activities
Member of the Board of Swissmem

Valérie Berset Bircher hat ihr Mandat aus beruflichen

Verwaltungsrat nach Werdegang, Erfahrung,

Gründen per 31. Dezember 2018 niedergelegt. Der

Fähigkeiten und Kenntnissen

Verwaltungsrat der Swisscom AG wird – mit Ausnahme

per 31.Dezember 2019

sinkt die Anzahl Mitglieder des Vergütungsausschusses

Geschäftskunden (B2B)

77,8%

Die maximale Amtsdauer der von der Generalversamm-

lung gewählten Mitglieder beträgt in der Regel

insgesamt zwölf Jahre. Diese flexible Regelung ermög-

Recht

licht es den Aktionären, bei Vorliegen von besonderen

Nachhaltigkeit

des Bundesvertreters – durch die General versammlung

gewählt. Die Generalversammlung wählt die Mitglieder

und den Präsidenten des Verwaltungsrats sowie die

Mitglieder des Vergütungsausschusses einzeln für ein

Jahr. Die Amtsdauer endet nach Abschluss der nächsten

ordentlichen General versammlung. Eine Wiederwahl

ist möglich. Ist das Amt des Präsidenten vakant oder

unter die minimale Anzahl von drei Mitgliedern,

bezeichnet der Verwaltungsrat bis zum Abschluss der

nächsten Generalversammlung aus seiner Mitte den

Präsidenten bzw. das oder die fehlenden Mitglieder des

Vergütungsausschusses. Der Verwaltungsrat konstitu-

iert sich im Übrigen selbst.

Umständen die maximale Amtsdauer ausnahmsweise

zu verlängern. Bei Voll endung des 70. Alters jahres

scheiden die Mitglieder auf das Datum der nächsten

ordentlichen Generalversammlung aus dem Verwal-
tungsrat aus. Die maximale Amtsdauer und die
Altersgrenze des Bundesvertreters werden vom
Bundesrat be stimmt.

Verwaltungsrat nach Geschlecht
Board of Directors by gender
per 31.Dezember 2019
In % and (number of members) as of 31 December 2019

67% (6)
67%

33% (3)
33%

Male
Männlich
Weiblich
Female

Telekommunikation, IT, Media

und/oder Entertainment

Innovation, Technologie

und/oder Digitalisierung

33,3%

55,6%

Privatkundengeschäft ( B2C )

33,3%

Internationale

Geschäftserfahrung

Finanzen, Risk Management

und/oder M & A

Strategie und/oder

Transformation

Human Resources

Führungsposition im

Top Management

VR-Mitglied in börsen-
kotiertem Unternehmen

66,7%

88,9%

22,2%

55,6%

88,9%

55,6%

Sektor

Spezialisierung

Rolle

4.4 Unabhängigkeit
Zur Bestimmung der Unabhängigkeit wendet der
Verwaltungsrat die Kriterien des Swiss Code of Best
Practice for Corporate Governance an. Als unabhängig
gelten demnach nicht-exekutive Mitglieder des
Verwaltungsrats, die der Geschäftsführung nie oder vor
mehr als drei Jahren angehört haben und die mit der
Gesellschaft in keinen oder nur verhältnismässig
geringfügigen geschäftlichen Beziehungen stehen. Die
Amtsdauer eines Verwaltungsratsmitglieds ist kein
Kriterium für die Beurteilung seiner Unabhängigkeit.
Kein Mitglied des Verwaltungsrats ist exekutiv für den
Swisscom Konzern tätig oder ist es in den drei dem
Berichtsjahr vorangegangenen Geschäfts jahren
gewesen. Die Mitglieder des Verwaltungsrats unterhal-
ten keine wesentlichen geschäft lichen Beziehungen zur
Swisscom AG bzw. zum Swisscom Konzern. Die
Schweizerische Eidgenossenschaft, die durch Renzo
Simoni im Verwaltungsrat vertreten ist, besitzt gemäss
TUG die kapital- und stimmenmässige Mehrheit an
Swisscom. Zwischen der Eidgenossenschaft und
Swisscom bestehen Kunden- und Lieferantenbeziehun-
gen. Angaben dazu sind in der Erläuterung 6.2 im
Anhang zur Konzernrechnung enthalten.
D Siehe Bericht Seite 159

zwischen 4
und 8 Jahren

44%

22%

unter 4
Jahren

zwischen 8
und 12 Jahren

4.4 Independence
Verwaltungsrat nach Länge der Amtszeit
To determine independence, the Board of Directors
per 31.Dezember 2019
applies the criteria set out in the Swiss Code of Best Prac-
60
tice for Corporate Governance of economiesuisse. Inde-
pendent members are thus understood to mean non-ex-
40
ecutive members of the Board of Directors who were
33%
never a member of the executive management or who
20
have not been a member of the executive management
for at least three years and who have no or only compar-
0
atively 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 Confeder-
ation and Swisscom. Details of these are provided in
Note 6.2 to the consolidated financial statements.
D See report page 170

4.3 Composition of the Board of Directors
The Board of Directors regularly examines its composi-
tion and plans the appointments to the committee posi-
tions on an annual basis. The members of the Board of
Directors possess comprehensive expertise in important
areas and broad experience.

The following diagrams show breakdowns of the Board
of Directors by competency, term of office and gender.

Board of Directors by career, experience, skills
and knowledge
In % and (number of members) as of 31 December 2019

Telecommunications, IT, Media
and/or entertainment

33%
(3)

Innovation, technology
and/or digitisation

Residential Customers (B2C)

Business Customers (B2B)

International
business experience

Finance, Risk Management
and/or M&A

Strategy and/or
Transformation

Human Resources

Legal

Sustainability

Leadership position in
top management

Member of the Board of
Directors in stock exchange
listed companies

56%
(5)

33%
(3)

78%
(7)

67%
(6)

89%
(8)

11%
(1)

56%
(5)

89%
(8)

67%
(6)

Sector

Specialization

Role

Board of Directors by length of term of office
In % and (number of members) as of 31 December 2019

60%

40%

20%

67% (6)

22% (2)

11% (1)

under
4 years

between
4 and 8 years

between
8 and 12 years

4.5 Election and term of office
Under the terms of the Articles of Incorporation, the
Board of Directors comprises between seven and nine
members 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. At present, only one representative is
appointed. Under the terms of the Telecommunications
Enterprise Act (TEA), employees must be granted appro-
priate representation on the Board of Directors of
Swisscom Ltd. The Articles of Incorporation also stipu-
late that the Board of Directors is to include two
employee representatives and that employees are
entitled to make proposals
for their employee
representatives. Alain Carrupt was nominated as
employee representative by the syndicom trade union

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

and Sandra Lathion-Zweifel was nominated as employee
representative by the transfair staff association. The
employee representatives are elected by the sharehold-
ers at the Annual General Meeting upon a motion pro-
posed by the Board of Directors, the same as the other
members of the Board of Directors are, with the excep-
tion of the representative of the Swiss Confederation,
who is appointed by the Federal Council.

The Annual General Meeting elects the members and
the Chairman of the Board of Directors as well as the
members of the Compensation Committee individually
for a term of one year. The term of office runs until the
conclusion 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 mem-
ber(s) of the Compensation Committee to serve until the
conclusion of the next Annual General Meeting. Other-
wise, the Board of Directors constitutes itself. The maxi-
mum 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 representative of the Swiss
Confederation are determined by the Federal Council.

4.6 Succession planning
The Board of Directors regularly examines whether its
members’ qualifications, abilities and experience are
still aligned with the Board’s needs and requirements.
The Board commences the evaluation of potential new
members early on so as to ensure that it has access to
the expertise it requires, is well-diversified and can nom-
inate new members as needed in the future. As a guide
for the ad-hoc Nomination Committee, the Board of
Directors formulates a requirements profile specifying
the qualifications and experience that are desired. On
the basis of this, the Nomination Committee evaluates
potential candidates and makes recommendations to
the Board of Directors regarding motions for the elec-
tion of new Board members to be submitted to the
Annual General Meeting. The Board of Directors submits
a motion to the Annual General Meeting regarding the
approval of new Board members.

4.7 Ongoing development and continuing
education
The Board of Directors attaches great importance to the
ongoing development and continuing education of the
Board and its individual members. The Board of Direc-
tors and its individual committees assess themselves in
terms of their performance and efficiency once a year in
January. They assess the work of the respective body and
the performance of the Board or Committee Chairman.
Each body conducts a self-evaluation on the basis of a
questionnaire. The self-assessment covers the issues of
composition, organisation, work processes, responsibili-
ties under the Organisational Rules and the priorities
and goals for the reporting year. The Board of Directors
and the Committees discuss the results of the survey
and formulate goals and measures for the coming year.
The Chairman also conducts a one-on-one annual dis-
cussion with each member in which possibilities for fur-
ther individual development may be addressed.

Once a year, a one-day mandatory training course is held
such as the one in January 2019. At least four times per
year, the members of the Board of Directors also have
the opportunity to explore the upcoming challenges fac-
ing 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, all the members of the Board
of Directors attend the Swisscom Group’s annual man-
agement meeting whenever possible. New Board mem-
bers are given a task-specific introduction to their duties.
At a one-day introduction, they are provided with an
overview of Group management and the current opera-
tional challenges. In addition, they are introduced to top-
ics related to the Italian subsidiary Fastweb and attend
task-related training courses.

4.8 Chairman of the Board of Directors
Hansueli Loosli has been a member of the Board of
Directors since 2009 and Chairman of the Board since
September 2011. The tasks and responsibilities of the
Chairman are defined in the Organisational Rules. In the
event that the Chairman of the Board of Directors is una-
vailable or there is a potential conflict of interest, the
Vice-Chairman, Frank Esser, takes over the Chairman’s
tasks and responsibilities.
N See www.swisscom.ch/basicprinciples

4.9 Internal organisation and modus operandi
The Board of Directors is responsible for the strategic
and financial management of Swisscom and for moni-
toring the company’s executive management. As the
supreme governing body of the company, it has deci-
sion-making authority unless such authority is granted
to the Annual General Meeting by virtue of law.

The Board of Directors is usually convened once per
month by the Chairman (except in July and November)
for a one-to-two-day meeting. Further meetings are
convened as business requires. In the event that the
Chairman is hindered, the meeting is convened by the
Vice-Chairman. The Chairman sets the agenda. Any
Board member may request the inclusion of further
items on the agenda. The Board members receive the
agenda and supporting documentation approximately
ten days prior to the meetings, so that they can prepare.
The CEO, the CFO and the Head of Group Strategy &
Board Services always attend the Board meetings as
well. At every Board of Directors’ meeting, the Chairman
of the Board, the CEO and the Chief Personnel Officer
report on particular events, on the general course of
business and major business transactions, as well as on

any measures that have been implemented. To further
ensure appropriate reporting to the members of the
Board, the Board of Directors invites members of the
Group Executive Board and senior employees of
Swisscom as well as auditors and other internal and
external experts, as necessary, to all its meetings as dic-
tated by the specific issues being addressed. The Board
of Directors did not call on any external consultants dur-
ing the reporting year.

The duties, responsibilities and modus operandi of the
Board of Directors and its conduct with respect to con-
flicts of interest are defined in the Organisational Rules
and in the rules governing the standing committees.
N See www.swisscom.ch/basicprinciples

The following table gives an overview of the Board of Directors’ meetings, conference calls and circular resolutions in 2019.

Meetings

Conference calls

Circular resolutions

Total

Average duration (in hours)

Participation:

Hansueli Loosli, Chairman

Roland Abt

Alain Carrupt

Frank Esser, Deputy Chairman

Barbara Frei

Sandra Lathion-Zweifel 1

Anna Mossberg

Catherine Mühlemann 2

Michael Rechsteiner 1

Renzo Simoni

06:53

00:35

–

1 Elected to the Board of Directors as of 2 April 2019.

2 Resigned from the Board of Directors as of 2 April 2019.

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

4.10 Committees of the Board of Directors
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 2019:

Board of Directors

Audit Committee
Roland Abt 1
Sandra Lathion-Zweifel 2
Renzo Simoni
Hansueli Loosli

Compensation Committee
Barbara Frei 1
Roland Abt
Frank Esser
Renzo Simoni
Hansueli Loosli 3

Finance Committee
Frank Esser 1
Alain Carrupt
Anna Mossberg
Michael Rechsteiner 2
Hansueli Loosli

1 Chairman of the Board Committee
2 Elected to the Board of Directors on 02 April
3 Without voting right

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 commit-
tees usually consist of three to six members. As a rule,
each member of the Board of Directors 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 standing
committees are chaired by other members, however.
The chairs of the committees report verbally on the lat-
est committee meetings at the next meeting of the
Board of Directors. All members of the Board of Direc-
tors also receive copies of all Finance and Audit Commit-
tee 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 sig-
nificant Group companies, acquiring or disposing of

significant shareholdings, and entering into or terminat-
ing strategic alliances. The Committee also acts in an
advisory capacity on matters relating to major invest-
ments 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 and responsibilities are set
out in the Finance Committee rules of procedure.
N See www.swisscom.ch/basicprinciples

The Finance Committee is convened by the Chairman or
at the request of a Committee member as often as busi-
ness requires, but as a rule once per quarter for a half-
day meeting. The CEO, the CFO and the Head of Group
Strategy and Board Services always attend the meetings
of the Finance Committee. In 2019, all the meetings
were attended by other members of the Group Execu-
tive Board, members of the Management Boards of the
strategic Group companies or project managers,
depending on the agenda items. The Finance Committee
did not call on any external consultants during the
reporting year.

The following table gives an overview of the Finance Committee’s composition, meetings, conference calls and circular
resolutions in 2019.

Total

Average duration (in hours)

Participation:

Frank Esser, Chairman

Alain Carrupt

Anna Mossberg

Catherine Mühlemann 1

Michael Rechsteiner 2

Hansueli Loosli

Meetings

Conference calls

Circular resolutions

04:55

–

1 Resigned from the Board of Directors as of 2 April 2019.

2 Elected to the Board of Directors as of 2 April 2019.

Audit Committee
The Audit Committee handles all business relating to
financial management (for example, accounting, finan-
cial controlling, financial planning, tax strategy and
financing), assurance (risk management, the internal
control system, compliance and internal audit), security
and the external audit. It also handles matters dealt
with by the Board of Directors that call for specific finan-
cial expertise (dividend policy, for example). The Com-
mittee is the Board of Directors’ most important con-
trolling instrument and is responsible for monitoring the
Group-wide assurance functions. It formulates positions
on business matters which lie within the decision-mak-
ing authority of the Board of Directors and has the final
say on those business matters for which it has the deci-
sion-making authority. Details of the Committee’s activ-
ities and responsibilities are set out in the Audit Com-
mittee rules of procedure.
N See www.swisscom.ch/basicprinciples

The Audit Committee is composed of four independent
members. 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 Com-
mittee is convened by the Chairman or at the request of
a Committee member as often as business requires, but
at least once per quarter and one additional time in
December. The meetings usually last between three and
six hours. The CEO, CFO, Head of Group Strategy & Board
Services, Head of Accounting, Head of Internal Audit and
the external auditors always attend the Audit Commit-
tee meetings. In 2019, the Board of Directors called upon
other members of the Group Executive Board and
Swisscom management to attend, depending on the
agenda. The Audit Committee can also involve inde-
pendent third parties such as lawyers, public account-
ants and tax experts as required. The Audit Committee
did not call on any external consultants during the
reporting year.

The following table gives an overview of the Audit Committee’s composition, meetings, conference calls and circular
resolutions in 2019.

Total

Average duration (in hours)

Participation:

Roland Abt, Chairman 1

Sandra Lathion-Zweifel 2

Renzo Simoni

Hansueli Loosli 1

1 Financial expert.

Meetings

Conference calls

Circular resolutions

04:27

–

2 Elected to the Board of Directors as of 2 April 2019.

–

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

Compensation Committee
For information on the Compensation Committee, refer
to the section “Remuneration Report”.
D See report page 96

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 car-
ries out its work based on a specific requirements profile
defined by the Board of Directors outlining the qualifica-
tions and experience being sought and presents suitable
candidates to the Board of Directors. It has no deci-
sion-making power. The Board of Directors appoints the
members of the Group Executive Board and decides
upon the motion to be submitted to the Annual General
Meeting for the election and approval of members of
the Board of Directors. The Nomination Committee is
convened by the Chairman or at the request of a Com-
mittee member as often as business requires. In Decem-
ber 2019, the Board of Directors appointed a Nomina-
tion Committee composed of the following members:
Hansueli Loosli (Chairman), Frank Esser, Anna Mossberg
and Michael Rechsteiner. The Nomination Committee
did not convene in the 2019 financial year.

4.11 Assignment of powers of authority
The Telecommunications Enterprise Act (TEA) refers to
the Swiss Code of Obligations regarding the non-trans-
ferable 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 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
sets the strategic, organisational, financial planning and
accounting guidelines, including the tax strategy, 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.
N See www.swisscom.ch/targets_2018-2021

The Board of Directors has delegated day-to-day busi-
ness management to the CEO in accordance with the
TEA and the Articles of Incorporation. In addition to the
duties reserved for it under law, the Board of Directors
decides on business transactions of major importance to
the Group, including, for example, the acquisition or dis-
posal of companies with a financial exposure in excess
of CHF 20 million and capital investments or divest-

ments thereof 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 Organisa-
tional Rules, “Rules of Procedure and Accountability”
(see function diagram).
N See www.swisscom.ch/basicprinciples

Information and controlling

4.12
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 tasks 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
Executive Board as well as the heads of other Group and
business divisions at least once a year for an in-depth
discussion of topical issues.

The CEO also provides the Board of Directors at every
ordinary meeting 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 indica-
tors relating to the Group and the segments. In addition,
the Board of Directors receives a quarterly report on the
course of business, financial position, results of opera-
tions and risk position of the Group and the segments. It
also receives projections for operational and financial
developments for the current financial year. The man-
agement reporting is carried out in accordance with the
same financial statement reporting policies as for exter-
nal financial reporting. It also includes key non-financial
information that is important for controlling and steer-
ing 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 obligations.
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 at least once a year.

Risk management
The Board of Directors has set the objective of protect-
ing the company’s enterprise value through the imple-
mentation of Group-wide risk management. A corpo-
rate culture that promotes the conscious handling of

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

risks facilitates the achievement of this objective.
Accordingly, Swisscom has implemented a Group-wide,
central risk management system that is based on ISO
Standard 31000 and takes account of both external and
internal events. Swisscom engages in level-appropriate,
comprehensive reporting and maintains the appropriate
documentation. Its 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 Controlling, works closely
with the Controlling and Strategy departments and
other assurance functions and line functions. The risk
management system is examined periodically by an
external auditor. Swisscom assesses its risks in terms of
the probability that they will occur and their quantita-
tive and qualitative effects in the event that they do
occur. It manages risks on the basis of a risk strategy. The
risks are evaluated in terms of their impact on key per-
formance indicators. Swisscom reviews and updates its
risk profile on a quarterly basis. The Audit Committee
and the Group Executive Board are provided a report on
risks every quarter, as well as in-depth information in
April and December on significant risks, their potential
effects and the status of remedial measures. The Board
of Directors is briefed on an annual basis. In urgent
cases, the Chairman of the Audit Committee is informed
without delay about any significant new risks. Signifi-
cant risk factors are described in the Risks section of the
Management Commentary.
D See report pages 63-65

Internal control system and financial reporting
The internal control system (ICS) ensures the reliability
of financial reporting with an appropriate degree of
assurance. It acts to prevent, uncover and correct sub-
stantial errors in the consolidated financial statements,
the financial statements of the Group companies and
the remuneration report. The ICS encompasses the fol-
lowing internal control components: control environ-
ment, assessment of accounting risks, control activities,
monitoring controls, information and communication.
The Accounting unit, which is attached to Group Busi-
ness Steering, and Internal Audit periodically monitor
the functioning and effectiveness of the ICS. Significant
shortcomings in the ICS identified during the monitor-
ing 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 signifi-
cantly, the Chairman of the Audit Committee is informed
without delay. Corrective measures to remedy the short-
comings are monitored centrally. The Audit Committee
assesses the performance and effectiveness of the ICS
on the basis of the periodic reporting.

Compliance management
The Board of Directors has set the objective of safeguard-
ing the Swisscom Group and its executive bodies and
employees from legal sanctions, financial losses and rep-
utational damage by ensuring Group-wide compliance. A
corporate culture that promotes willingness to behave in
a way that complies with the relevant regulations facili-
tates the achievement of this objective. The principles
underlying this are laid down in the Code of Conduct
approved by the Board of Directors. Swisscom has there-
fore implemented a Group-wide, central compliance sys-
tem. Within the framework of this system, every year
Group Compliance, a specialist unit of the Group legal
department, applies a risk-based approach towards iden-
tifying areas of legal compliance that require monitoring
by the central system. Within these areas of legal compli-
ance, the business activities of the Group companies are
reviewed periodically in a proactive manner in order to
identify risks in good time and determine the required
corrective measures. The employees affected are
informed of the measures and their implementation is
monitored. The decentralised Compliance organisational
units independently monitor compliance with the Group
regulations that affect them, and they report to Group
Compliance. Once every year, Group Compliance reviews
the appropriateness and effectiveness of the system. In
certain areas, an annual audit of the implemented meas-
ures is also performed by external auditors (financial
intermediation in accordance with the Money Launder-
ing Act). Group Compliance reports to the Audit Commit-
tee and the Board of Directors once per annum on its
activities and its risk assessments. Should there be signif-
icant changes in the risk assessment or if serious breaches
are identified, the Chairman of the Audit Committee is
informed without delay.
N See www.swisscom.ch/basicprinciples

Internal auditing
Internal auditing is carried out by the Internal Audit unit.
Internal Audit supports the Swisscom Ltd Board of Direc-
tors and its Audit Committee in fulfilling their statutory
and regulatory supervisory and controlling obligations.
Internal Audit also supports management by highlight-
ing areas of potential for improving business processes
and the assurance functions. It documents the audit
findings and monitors the implementation of measures.

Internal Audit is responsible for planning and perform-
ing audits throughout the Group in compliance with
professional auditing standards and possesses maxi-
mum independence. It is under the direct control of the
Chairman of the Board of Directors and provides reports
to the Audit Committee. 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 files of
Internal Audit. Internal Audit closely coordinates audit
planning with the external auditors. The integrated stra-
tegic audit plan, which includes the coordinated annual
plan of both the internal and external auditors, is pre-
pared annually on the basis of a risk analysis and pre-
sented to the Audit Committee for approval. Notwith-
standing the above, the Audit Committee can
commission special audits based on
information
received on the whistle-blowing platform operated by

Internal Audit. This reporting procedure, approved by
the Audit Committee, ensures that objections raised
relating to external reporting, financial reporting and
assurance functions can be submitted anonymously and
handled confidentially. At its meetings, which are held
at least quarterly, the Audit Committee is briefed on
audit findings, the reports submitted to the whis-
tle-blowing platform and the status of any corrective
measures implemented. The Head of Internal Audit took
part in all five meetings of the Audit Committee in 2019.
He did not attend the meetings of the full Board of
Directors.

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

Group Executive Board as of 1 January 2020 .

5 Group Executive Board

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 may not be members of the Board of Directors of
Swisscom Ltd at the same time. Temporary exceptions
are only permitted in exceptional cases. 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,
mainly to other members of the Group Executive Board.
The members of the Group Executive Board are
appointed by the Board of Directors.
D See report pages 68-69

An overview of the composition of the Group Executive Board as at 31 December 2019 is given in the table below.

Name

Urs Schaeppi 1

Mario Rossi

Hans C . Werner

Marc Werner 2

Urs Lehner

Christoph Aeschlimann

Dirk Wierzbitzki

Nationality

Switzerland

Switzerland and France

Switzerland

Germany

Year of birth

Function

Appointed to the Group Executive Board as of

1960

1967

1968

1977

1965

CEO Swisscom Ltd

CFO Swisscom Ltd

CPO Swisscom Ltd

Head of Sales & Services

Head of Enterprise Customers 3

March 2006

January 2013

September 2011

January 2014

June 2017

Head of IT, Network & Infrastructure

February 2019

Head of Products & Marketing 4

January 2016

1 Since November 2013 CEO.
2 Resigned from the Group Executive Board as of 31 January 2019.

3 New name of the function from 1 Januar 2020 Head of Business Customers.
4 From 1 Januar 2020 Head of Residential Customers.

Group Executive Board as of 1 January 2020 .

Heinz Herren left the Group Executive Board on 31 Janu-
ary 2019. Christoph Aeschlimann took over as the new
Head of IT, Network & Infrastructure on 1 February 2019.
N See www.swisscom.ch/cgreport2018

Amendments as at 1 January 2020
Marc Werner, Head of Sales & Services, left the Group
Executive Board on 31 December 2019. As of 1 January
2020, the Sales & Services (SAS) and Products & Market-
ing (PMK) divisions were merged into the new Residen-
tial Customers division, which is headed by Dirk Wierzb-
itzki. From 1 January 2020, the Group Executive Board
will thus consist of six members. The Enterprise Custom-
ers division headed by Urs Lehner was renamed “Busi-
ness Customers” as of 1 January 2020.

5.2 Education, professional activities and
affiliations
Key details of the careers and qualifications of the mem-
bers of the Group Executive Board are provided below
along with a summary of the mandates they hold out-
side the Group and other significant activities. Pursuant
to the Articles of Incorporation, the Group Executive
Board members may perform no more than one addi-
tional mandate in listed companies and no more than
two additional mandates in non-listed companies. In
total, they may not perform more than two such addi-
tional 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.

The number of mandates held by order of Swisscom is
limited to ten, while the number of mandates in interest
groups, charitable associations, institutions and founda-
tions, and employee benefit foundations is limited to
seven. Prior to accepting new mandates and other duties
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 defini-
tion of the term “mandate” and information on other
mandates that do not fall under the aforementioned
numerical restrictions for listed and non-listed compa-
nies, are set out in Article 8.3 of the Articles of Incorpora-
tion. None of the members of the Group Executive Board
exceed the set limits for mandates. The members of the
Group Executive Board perform most of their other sig-
nificant activities by order of Swisscom.
N See www.swisscom.ch/basicprinciples

The members of the Group Executive Board are required
to order their personal and business affairs and take
whatever measures necessary to ensure that conflicts of
interest are avoided as far as possible. Should a conflict
of interest nevertheless arise, the member concerned
must inform the CEO immediately. The members of the
Group Executive Board are obliged to abstain from
negotiations in business which conflict with their own
interests or with the interests of natural or legal persons
closely associated to them.

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

Mario Rossi
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 (Switzerland) Ltd, CFO; since
January 2013 Swisscom Ltd, CFO and again member of
the Swisscom Group Executive Board

Mandates by order of Swisscom
President of the Board of Trustees, comPlan, Berne;
member of the Board of Directors, Belgacom Interna-
tional Carrier Services S.A., Brussels

Mandates in interest groups, charitable
associations, institutions and foundations, and
employee benefit foundations
Member of the Foundation Board of the Hasler Founda-
tion, Berne

Other significant activities
Member of the Sanctions Committee of SIX Swiss
Exchange AG, Zurich; member of the Board of Directors
of SwissHoldings, Berne

Urs Schaeppi
Degree in Engineering (Dipl. Ing., Zurich Federal
Institute of Technology (ETH)) and Business
Administration (lic. oec., University of St. Gallen
(HSG))

Career history
1994–1998 plant manager, Biberist paper factory; 1998–
2006 Head of Commercial Business, Swisscom Mobile;
2006–2007 CEO, Swisscom Solutions Ltd; 2007–August
2013 Head of Enterprise Customers, Swisscom (Switzer-
land) Ltd; since January 2013 Head of Swisscom (Switzer-
land) Ltd; 23 July–6 November 2013 acting CEO,
Swisscom Ltd, since 7 November 2013 CEO and since March
2006 member of the Swisscom Group Executive Board

Mandates by order of Swisscom
Member of the Executive Board, Association Suisse des
Télécommunications (asut), Berne; member of the Founda-
tion Board, IMD International Institute for Management
Development, Lausanne; until May 2019, 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 Foundation

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 digitalswitzerland, Zurich (formerly Digital Zurich
2025); member of the Advisory Board on Digital Transfor-
mation for the Federal Department of the Environment,
Transport, Energy and Communications (DETEC) and the
Federal Department of Economic Affairs, Education and
Research (EAER); since January 2019 member of the
international Advisory Committee of the ZHAW School
of Management and Law, Zurich

Hans C. Werner
Graduate in business management, PhD in
business administration (Dr. oec.)

Marc Werner (resigned on 31.12.2019)
Technical apprenticeship with specialised
secondary school diploma, Swiss Certified
Marketing Executive

Career history
1997–1999 Kantonsschule Büelrain, Winterthur, Rector;
1999–2007 Swiss Re: 1999–2000 Head of Technical
Training and Business Training, 2001 Divisional Opera-
tion Officer, Reinsurance & Risk Division, 2002–2003
Head of Human Resources (HR) Corporate 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 of Trustees, comPlan, Berne

Mandate in non-listed company
Since September 2019, member of the Board of Direc-
tors, Kantonsspital Aarau AG

Other significant activities
Member of the Board, Swiss Employer’s Association,
Zurich; President of the Institute Council of the Interna-
tional Institute of Management in Technology (iimt) of
the University of Fribourg

Career history
1997–2000 Minolta (Schweiz) AG, Head of Marketing
and Sales and member of the Executive Management;
2000–2004 Bluewin AG, Head of Marketing & Sales,
member of the Executive Board; 2005–2007 Swisscom
Fixnet Ltd, Head of Marketing & Sales Residential Cus-
tomers; 2008–2013 Swisscom (Switzerland) Ltd: 2008–
2011 Head of Marketing & Sales Residential Customers
and Deputy Head of Residential Customers, 2012–2013
Head of Customer Service Residential Customers and
Deputy Head of Residential Customers; September
2013–December 2015 Swisscom, Head of Residential
Customers division; 2016–2019 Swisscom, Head of Sales
& Services and 2014–2019 member of the Swisscom
Group Executive Board

Mandates by order of Swisscom
Member of the Board of Directors, Digital Festival AG;
member of the Board of Trustees, “Stiftung für Market-
ing in der Unternehmensführung”

Other significant activities
Member of the Communications Council of KS/CS Com-
munication Switzerland (formerly the Verband SW
Schweizer Werbung), Zurich; until September 2019,
member of the Executive Board of the SVC Swiss Ven-
ture Club

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

Urs Lehner
Degree in IT Engineering (UAS, University of
Applied Sciences), Executive MBA in Business
Engineering, University of St. Gallen (HSG)

Christoph Aeschlimann
Degree in computer science (Dipl. Ing.), École
polytechnique fédérale de Lausanne (EPFL); MBA,
McGill University (Canada)

Career history
1997–2013 Trivadis Group, most recently: 2004–2008
Solution Portfolio Manager, member of the 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 Enter-
prise Customers, 2016–June 2017 Head of Sales & Ser-
vices Enterprise Customers; since June 2017 Head of
Enterprise Customers (renamed “Business Customers”
in 2020) and member of the Swisscom Group Executive
Board

Mandates
–

Other significant activities
–

Career history
2001–2004 Odyssey Asset Management Systems, Soft-
ware Development Manager; 2006–2007 Zühlke Group,
Business Unit Manager; 2007–2011 Odyssey Financial
Technologies: 2007–2008 Area Services Manager, 2008–
2011 Senior Account Manager EMEA; 2011–2012 BSB,
Head of Switzerland and General Manager D-A-CH &
CIS; 2012–2018 ERNI Group: 2012–2014 Business Area
Manager, 2014–2017 Managing Director Switzerland,
2017–2018 CEO; since February 2019, Swisscom, Head of
IT, Network & Infrastructure and member of the
Swisscom Group Executive Board

Mandates
–

Other significant activities
–

Dirk Wierzbitzki
Degree in electrical engineering (Dipl. Ing.)

Career history
1994–2001 Mannesmann (now Vodafone Germany):
various management roles in the area of product man-
agement; 2001–2010 Vodafone Group: 2001–2003
Director for Innovation Management, Vodafone Global
Products and Services, 2003–2006 Director of Commer-
cial Terminals, 2006–2008 Director of Consumer Internet
Services and Platforms, 2008–2010 Director of Commu-
nications Services; 2010–2015 Swisscom (Switzerland)
Ltd: member of Management Residential Customers,
2010–2012 Head of Customer Experience Design for
Residential Customers, 2013–2015 Head of Fixed-net-
work Business & TV for Residential Customers; since Jan-
uary 2016, Swisscom: until 2019 Head of Products &
Marketing and since 2020 Head of Residential Custom-
ers; since 2016, member of the Swisscom Group Execu-
tive Board

Mandates by order of Swisscom
Member of the Board of Directors, SoftAtHome, Paris;
member of the Board of Directors, Admeira AG, Berne,
and until March 2019 member of the Board of Directors,
Adtelier AG, Berne

Other significant activities
–

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

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

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.
D See report page 96

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 regis-
tered in its name, exceeds the limit of 5% of all regis-
tered shares entered in the commercial register. For the
shares in excess of the limit, 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. The
calculation of the percentage restriction is subject to the
Group clause in accordance with Article 3.5.1 of the Arti-
cles of Incorporation.
N See www.swisscom.ch/basicprinciples

The 5% voting right restriction does not apply to the
Swiss Confederation, which, under the terms of the Tel-
ecommunications Enterprise Act (TEA), holds the major-
ity of the capital and voting rights in 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 they have acquired the shares
in their own name and for their own account or as bene-
ficial holder. Should an acquirer of shares refuse to make
such a declaration, they will be entered as a shareholder
without voting rights.

Where an entry has been made on the basis of false state-
ments 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 Arti-
cles 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 decides its elec-
tions 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, a two-thirds majority of the voting
shares represented is required in the following cases:
●

introduction of restrictions on voting rights
conversion of registered shares to bearer shares

●

● change in the Articles of Incorporation concerning

special quorums for resolutions

7.3 Convocation of the Annual General
Meeting and agenda items
The Board of Directors convenes 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 con-
vened, stating the agenda item and the proposal or, in
the case of elections, by stating the names of the pro-
posed 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 Incorpo-
ration).
N 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
2020. Partnerships and legal entities may be represented
by authorised signatories, while minors and wards may
be represented by their legal representative, even if the
representative is not a shareholder.

A power of attorney may be granted in writing or elec-
tronically via the shareholders’ platform operated by
Computershare 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 the independent proxy
receives no instructions, he shall abstain. Abstentions
are not deemed to be votes cast (Article 5.7.4 of the Arti-
cles 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 vot-
ing entitlements, which is normally three business days
before the respective Annual General Meeting. Entries in
and deletions 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 5 p.m. on 28 March
2019 were entitled to vote at the Annual General Meet-
ing of 2 April 2019. Shareholders entered in the share
register with voting rights as of 5 p.m. on 1 April 2020
are entitled to vote at the Annual General Meeting of
6 April 2020.

8 Change of control and defensive
measures

Under the terms of the Telecommunications Enterprise
Act (TEA), the Swiss Confederation must hold the major-
ity of the capital and voting rights in Swisscom Ltd. This
requirement is also set out in the Articles of Incorpora-
tion. There is thus no duty to submit a takeover bid as
defined in the Federal Act on Stock Exchanges and Secu-
rities Trading, since this would contradict the TEA.

Details on clauses on change of control are given in the
section “Remuneration Report”.
D See report page 96

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 Audit Committee. A new invi-
tation to 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 Com-
mittee steers the selection process, defines transparent
selection criteria (audit firm, audit team, audit approach,
acceptance of mandate, fees, overall impression). It sub-
mits two proposals for an audit firm accompanied by a
substantiated recommendation to the Board of Direc-
tors. As stipulated by the Swiss Code of Obligations, the
person who leads the audit may only perform the man-
date for a maximum of seven years.

In 2018, the Board of Directors issued a new call for ten-
ders for the audit mandate for Swisscom Ltd and its
Group companies – with the exception of Fastweb S.p.A.
At the Annual General Meeting on 2 April 2019, Pricewa-
terhouseCoopers AG (PwC), Zurich, was elected as the
new statutory auditors for the 2019 financial year. The
Auditor-in-charge is Peter Kartscher. The statutory audi-
tors mandate was previously performed by KPMG, Muri
bei Bern, from 2004 to 2018.

9.2 Audit fees
The fees paid to PricewaterhouseCoopers (PwC) as audi-
tors for the 2019 financial year amount to CHF 3,209
thousand.

e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C
|

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

9.3 Supplementary fees
The fees charged by PricewaterhouseCoopers (PwC) in
2019 for additional audit-related services amounted to CHF
718 thousand, and for other services CHF 229 thousand.

Audit-related services include audit services in connec-
tion with customer orders for IT outsourcing, IT audits,
due diligence support in an M&A project, and audit ser-
vices in the area of revenue assurance. Other services
include consulting services for a performance manage-
ment system and services in the area of the European
General Data Protection Regulation (GDPR).

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 state-su-
pervised auditing firm on behalf of the Board of Direc-
tors. It also assesses the performance and remuneration
of the auditors. Assessment criteria are the competence
and availability of the audit team, the audit process, and
reporting and communication. It is also responsible for
observing the statutory rotation principle for the Audi-
tor-in-charge and for reviewing and issuing the new invi-
tations to tender for the audit mandate. The Audit Com-
mittee approves the integrated strategic audit plan,
which includes the annual audit plan of both the inter-
nal and external auditors, and the annual fee for the
auditing services provided to the Group and Group com-
panies. To help ensure independence, the Audit Commit-
tee has laid down principles for awarding additional ser-
vices to the auditors, including a list of prohibited
services. In order to ensure the independence of the
auditors, additional service mandates must be approved
by the Audit Committee where the fee exceeds CHF 300
thousand. The Audit Committee requires that the CFO
reports to it quarterly and the auditors annually on cur-
rent mandates being performed by the auditors, broken
down according to audit services, audit-related services
and non-audit services, and on their independence.

The statutory auditors, represented by the Auditor-in-
charge and his deputy, usually attend all Audit Commit-
tee meetings. They inform the Committee in detail on
the performance and results of their work, in particular
regarding the annual financial statement audit. They
further submit a written report annually 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. Finally, the Chairman of
the Audit Committee liaises closely with the Auditor-in-
charge beyond the meetings of the Committee and reg-
ularly reports to the Board of Directors. KPMG, the previ-
ous statutory auditors, attended the meeting held by

the Audit Committee in February 2019 regarding the
annual financial statements for 2018. The statutory
auditors, PwC, took part in all five meetings of the Audit
Committee in 2019. The Head of Internal Audit also
attended all five meetings of the Audit Committee in
2019. Neither the auditor nor Internal Audit participated
in the meetings of the full Board of Directors.

10 Information policy

Swisscom pursues an open, active information policy
vis-à-vis shareholders, the general public and the capital
markets. Shareholders are provided with notifications
and announcements in accordance with Article 12 of the
Articles of Incorporation, which are published in the
Swiss Commercial Gazette. Swisscom publishes compre-
hensive, consistent and transparent financial informa-
tion on a quarterly basis. Furthermore, it publishes an
annual sustainability report in accordance with the
Global Reporting Initiative (GRI) and an annual report
including a management commentary, corporate gov-
ernance report, remuneration report, consolidated
financial statement and the financial statements of
Swisscom Ltd. The interim reports and annual report are
available on the Swisscom website under “Investors” or
may be ordered directly from Swisscom. The Sustainabil-
ity Report is available on the Swisscom website under
“Company”.
N See www.swisscom.ch/financialreports
N See www.swisscom.ch/cr-report2019

Swisscom meets investors regularly throughout the
year, presents its financial results at analysts’ meetings
and road shows, attends selected conferences for finan-
cial analysts and investors, and keeps its shareholders
and other interested parties continuously informed
about its business through press releases.

Related presentations and the ad-hoc press releases pub-
lished by Swisscom are available on the Swisscom web-
site under “Investors”. It is possible to subscribe online to
the ad-hoc press releases published by Swisscom.
N See www.swisscom.ch/adhoc

The comprehensive minutes of the Annual General
Meeting of 2 April 2019 and minutes from past meet-
ings are available on the Swisscom website.
N See www.swisscom.ch/generalmeeting

Those responsible for investor relations can be con-
tacted 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 publishing details.
D See report page 191

11 Financial calendar

● Annual General Meeting for the 2019 financial year:

6 April 2020, in Zürich Oerlikon

● 1st Quarter Interim Report: 30 April 2020
● Half-year Interim Report: 13 August 2020
● 3rd Quarter Interim Report: 29 October 2020
● Annual Report 2020: February 2021

The detailed financial calendar is published on the
Swisscom website under “Investors” and is updated on a
regular basis.
N See www.swisscom.ch/financialcalendar

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 the 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 recom-
mendations of the Swiss Code of Best Practice for Corpo-
rate 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 Regula-
tions of the Compensation Committee. The latest ver-
sions of these documents as well as their earlier, una-
mended and superseded versions can be viewed online
on the Swisscom website under “Basic principles”.
N See www.swisscom.ch/basicprinciples

As in previous years, the Remuneration Report will be
put to a consultative vote at the Annual General Meet-
ing on 6 April 2020.

1.2 Division of responsibilities 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 person-
nel 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 remu-
neration of the Board of Directors and decides on the
remuneration of the CEO as well as the total remunera-
tion for the Group Executive Board. In doing so, it takes
into account the maximum total 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 remunera-
tion, 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 decision-making powers are governed by the Arti-
cles of Incorporation, the Organisational Rules of the
Board of Directors and the Regulations of the Compen-
sation Committee.
N See www.swisscom.ch/basicprinciples

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

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
for the Board of Directors and the Group Executive Board

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
Committee

Board
of Directors

Annual
General Meeting

–

Remuneration of the members of the Group Executive Board (excl . CEO)

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.

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 Commit-
tee, which constitutes itself. If the Annual General Meet-
ing elects the Chairman of the Board of Directors to the
Compensation Committee, he has no voting rights. The
Chairman of the Board of Directors recuses himself
when discussions take place or decisions are made with
regard to changes in 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. In the case of agenda items that
concern the Board of Directors exclusively or concern
changes in the remuneration of the CEO and CPO, the
CEO and CPO may not be 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 Feb-
ruary, June and December. Further meetings can be con-
vened as and when required. The Chairman of the Com-
pensation Committee reports verbally on the activities
of the Committee at the next meeting of the Board of
Directors. The Compensation Committee did not call on
any external consultants during the reporting year.

The details are governed by Article 6.5 of the Articles of
Incorporation, the Organisational Rules of the Board of
Directors and the Regulations of the Compensation
Committee.
N See www.swisscom.ch/basicprinciples

The members of the Compensation Committee neither
work nor have worked for Swisscom in an executive
capacity, nor do they maintain any significant commer-
cial 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.
D See report page 170

The following table gives an overview of the composition of the Committee, the Committee meetings, conference calls
and circular resolutions in 2019.

Total

Average duration (in hours)

Participation:

Barbara Frei, Chairwoman

Roland Abt

Frank Esser

Renzo Simoni 1

Hansueli Loosli 2

Meetings

Conference calls Circular resolutions

01:20

–

1 Representative of the Confederation.

2 Participation without voting rights.

2 Remuneration of the Board of
Directors

2.1 Principles
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 mem-
bers of the Board of Directors with those of the share-
holders. The remuneration is commensurate with the
activities and level of responsibility of each member. 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.
N See www.swisscom.ch/basicprinciples

The remuneration is made up of a Director’s fee that var-
ies in relation to the member’s function, plus meeting
attendance fees, social insurance contributions and any
applicable 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 financially in the performance
of Swisscom’s shares. The remuneration is normally
reviewed every December for the following year for
ongoing appropriateness. In December 2018, the Board
of Directors assessed the appropriateness of the remu-
neration as part of a discretionary decision. The Board of
Directors compared Swisscom’s remuneration with that
of other listed companies domiciled in Switzerland,
which, like Swisscom, must fulfil Swiss and foreign legal
requirements, including full personal liability. The Board
of Directors took as a reference the remuneration paid by
peers Cie Financière Richemont, Geberit, Givaudan,
Lonza, SGS, Sika and Swatch Group. The Board of Direc-
tors opted not to adjust remuneration for the 2019 finan-
cial year. No external consultants were called on with
regard to the structuring of remuneration.

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

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 following net amounts are paid per year:

in CHF/net

Base salary per member

Functional allowances 1

Presidium

Vice presidium

Representative of the Confederation

Finance Committee

Audit Committee

Remuneration Committee

1 No functional allowance 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 add-
ing a 50% top-up to the amount to be invested in shares.
Thus, the Director’s fee (excluding meeting attendance
fees, social insurance contributions 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
obligation can vary in the case of members who join,
leave or assume or give up a function during the year.
Shares are allocated on the basis of their value accepted
for tax purposes, rounded up to the next whole number
of shares, and are subject to a blocking period of three
years. This restriction on disposal also applies if mem-
bers leave the company during the blocking period. The
shares, which are allocated in April of the reporting year
for the reporting year, are recorded at market value on
the date of allocation. The share-based remuneration is
augmented by a factor of 1.19 in order to take account
of the difference between the tax value and the market
value. In April 2019, a total of 1,409 shares were allo-
cated to the members of the Board of Directors (prior
year: 1,486 shares) with a tax value of CHF 411 per share
(prior year: CHF 390). Their market value was CHF 489.50
(prior year: CHF 464) per share.

110,000

255,000

20,000

40,000

Chairmanship

Member

20,000

50,000

20,000

10,000

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.

Social insurance contributions and fringe benefits
Swisscom pays the employee contributions to social
insurance, particularly 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
share of social insurance contributions payable by the
employee. The share of contributions payable by
Swisscom in its role as employer is disclosed separately
and is also included in the total remuneration.

The disclosure of service-related and non-cash benefits
and expenses relies on a tax-based point of view.
Swisscom does not offer any significant service-related
or non-cash benefits. Expenses are reimbursed on the
basis of actual costs incurred. Accordingly, neither ser-
vice-related and non-cash benefits nor out-of-pocket
expenses are included in the reported remuneration.

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

100

2.3 Total remuneration
The total remuneration paid to the individual members
of the Board of Directors for the 2019 and 2018 financial
years is presented in the tables below, broken down into
individual components. The lower amount of total

remuneration for 2019 is attributable to the early resig-
nation of one member of the Board of Directors as of
31 December 2018 and the fact that fewer meetings
were held overall in 2019.

2019, in CHF thousand

Hansueli Loosli

Roland Abt

Alain Carrupt

Frank Esser 1

Barbara Frei

Sandra Lathion-Zweifel 2

Anna Mossberg 3

Catherine Mühlemann 4

Michael Rechsteiner 2

Renzo Simoni

Base salary and functional allowances

Cash
remuneration

Share-based
payment

Meeting
attendance fees

Employer
contributions
to social security

Total 2019

314

144

128

112

136

186

–

128

560

266

181

224

207

144

194

143

252

2,212

Total remuneration to members of the Board of Directors 1,179

719

186

1 Frank Esser is liable to social insurance contributions in Germany. Neither

3 Anna Mossberg is liable to social insurance contributions in Sweden.

employer nor employee contributions were included.

2 Elected to the Board of Directors as of 2 April 2019.

No employee contributions were included.

4 Resigned from the Board of Directors as of 2 April 2019.

2018, in CHF thousand

Hansueli Loosli

Roland Abt

Valérie Berset Bircher 1

Alain Carrupt

Frank Esser

Barbara Frei

Anna Mossberg 2,3

Catherine Mühlemann

Theophil Schlatter 4

Renzo Simoni

Base salary and functional allowances

Cash
remuneration

Share-based
payment

Meeting
attendance fees

Employer
contributions
to social security

Total 2018

314

127

102

130

112

136

186

563

252

194

182

245

207

149

182

252

Total remuneration to members of the Board of Directors 1,225

724

203

139

2,291

1 The cash remuneration (including meeting attendence fees) for the mandate
as member of the Board of Directors of Worklink AG of CHF 6,500 is included.

2 Elected to the Board of Directors as of 4 April 2018.

3 Anna Mossberg is liable to social insurance contributions in Sweden.

No employee contributions were included.

4 Resigned from the Board of Directors as of 4 April 2018.

The total remuneration paid to the members of the
Board of Directors for the 2019 financial year is within
the maximum total amount of CHF 2.5 million approved
by the 2018 Annual General Meeting (AGM) for 2019.

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
allowances). They have four years to acquire the share-
holding, in the form of the blocked shares paid as part of
remuneration and, if necessary, through share purchases

on the open market, observing internal trading restric-
tions. Compliance with the shareholding requirement is
reviewed annually by the Compensation Committee. If a
member’s shareholding falls below the minimum require-
ment 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 obli-
gations, the Chairman of the Board of Directors can
approve individual exceptions at his discretion.

2.5 Shareholdings of the members of the
Board of Directors
As at 31 December 2018 and 2019, the members of the
Board of Directors and/or related parties held blocked

and non-blocked shares as shown in the table below.
None of the individuals required to make notification
holds voting shares exceeding 0.1% of the share capital.

number

Hansueli Loosli

Roland Abt

Valérie Berset Bircher 1

Alain Carrupt

Frank Esser

Barbara Frei

Sandra Lathion-Zweifel 2

Anna Mossberg

Catherine Mühlemann 3

Michael Rechsteiner 2

Renzo Simoni

Total shares held by the members of the Board of Directors

1 Resigned from the Board of Directors as of 31 December 2018.
2 Elected to the Board of Directors as of 2 April 2019.

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 appro-
priate relation to the market as well as the internal
salary structure.

● Remuneration is based on performance in line with

the results achieved by Swisscom.

● Through direct financial participation in the perfor-
mance of the Swisscom share, the interests of manage-
ment are aligned with the interests of shareholders.

31.12.2019

31 .12 .2018

3,474

3,113

544

–

439

798

1,047

114

222

–

109

480

7,227

379

329

642

919

–

112

1,559

–

324

7,706

3 Resigned from the Board of Directors as of 2 April 2019.

The remuneration of the Group Executive Board is a
balanced combination of fixed and variable salary
components. The fixed component is made up of a base
salary, fringe benefits (mainly the use of a company car)
and pension fund benefits. The variable remuneration
includes a performance-related component settled
partly in cash and partly in 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 com-
pliance with the minimum shareholding requirement,
Group Executive Board members have the possibility of
drawing up to 50% of the variable performance-related
component of their salary in shares.

The basic principles regarding the performance-related
remuneration and the profit and equity participation
plans of the Group Executive Board are set out in Arti-
cle 8.1 of the Articles of Incorporation.
N See www.swisscom.ch/basicprinciples

101

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

102

Remuneration system
Remuneration components and determining factors

Remuneration

Assets

Instruments

Fixed remuneration

Base salary
Pension benefits
Fringe benefits

Variable
remuneration

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 sustain-
able 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
companies 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. Swisscom did not con-
sult any new comparative studies in the year under
review, but relied on the previous years’ studies by Willis
Towers Watson. 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 13.3 billion and employ 14,552
people. The international sector comparison covers tele-
communications companies from eleven western Euro-
pean countries with median revenue of CHF 8.9 billion
and median workforce of 18,800 employees. The evalu-
ation of the two comparative studies takes into account
the comparability of the extent of responsibility in terms
of revenue, number of employees and international
scope. No external consultants were called on with
regard to the structuring of remuneration.

As a rule, the Compensation Committee reviews the
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 Exec-
utive Board during the course of the reporting year in
order to take the experience and performance 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 indi-
vidual member of the Group Executive Board. It is deter-
mined based on a discretionary decision taking into
account the external market value of the function and
the salary structure for the Group’s executive manage-
ment. 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
in full (performance-related 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 Committee, tak-
ing into account the performance evaluation by the CEO.
If targets are exceeded, up to 130% of the perfor-
mance-related bonus may be paid. The maximum
performance-related salary component is thus limited
to 91% of the base salary. This ensures that the

performance- related salary component does not exceed
the annual base salary, even taking account of the mar-
ket value of the component paid in shares.

Targets for the variable performance-related
salary component
The targets underlying the variable performance-related
salary 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 were left
unchanged from the previous year, in line with the
Group’s continuing corporate strategy. The targets are
based on the Swisscom Group’s budget figures for 2019.

The targets for the members of the Group Executive
Board consist of financial as well as business transforma-
tion targets. The financial targets include net revenue,
operating income before interest, taxes, depreciation
and amortisation as a percentage of net revenue (EBITDA

Determination of overall target achievement
As the decisive basis for the payment of the profit share

margin), and operating free cash flow proxy. The Group
Executive Board members delegated by Swisscom to the
Board of Directors of the Italian subsidiary Fastweb
S.p.A. (Fastweb) are also measured on the basis of the
Fastweb financial targets.

The business transformation targets are summarised
under the Business Transformation Multiplier (BTM).
They include the net promoter score for residential and
business customers, which is a recognised indicator of
customer loyalty, an availability coefficient, growth tar-
gets and net cost savings targets. Further information
on customer satisfaction can be found in the Manage-
ment Commentary.
D See report page 34-35

The achievement of corporate objectives is calculated by
multiplying the achievement of the financial targets
with the achievement of the business transformation
targets.

Financial performance factor

• Net revenue
• EBITDA margin
• Operating free cash flow

proxy
(Fastweb financial targets)

•

Business transformation
multiplier

• Net promoter score
• Availability key figure
• Growth
• Net cost savings

Overall target achievement

(limited to 130%)

The target structure thus takes account of the following
two strategic priorities of Swisscom: strengthening the
core business by offering the best infrastructure, where
the results achieved are rewarded, and focusing on

future success, where realisation of new growth oppor-
tunities and the best customer experiences is rewarded
in particular.

The following table illustrates the target structure for all Group Executive Board members in the year under review and
shows the individual targets and their respective weighting.

Target levels

Objectives

Financial performance factor

Net revenue

EBITDA margin

Operating free cash flow proxy

Financial objectives Fastweb

Total finance target factor

Business transformations targets

Net promoter score

Availability key indicator

Growth

Net cost savings

Total business transformation multiplicator

Weighting of Weighting of targets level
of other members of the
targets level
Group Executive Board
CEO

24%

32%

20%

100%

40%

20%

100%

24–30%

32–40%

0–20%

40%

20%

103

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

104

Achievement of targets
The Compensation Committee determines the level of
target achievement in the subsequent year once the
consolidated financial statements become available. Its

decision is based on an assessment of the extent to which
targets have been met using a scale for the overachieve-
ment and underachievement of each target. The achieve-
ment of an individual target can vary from 0% to 200%.

Determination of achievement of targets
Per financial target

s
t
e
g
r
a
t

f
o
t
n
e
m
e
v
e
i
h
c
A

200%

130%

100%

Upper limit

Overall target achievement
limited to 130%

Target value achieved

There is an upper limit of 200% for each target . An upper limit of 130% applies to the overall target achievement and
thus to the payment of the target success share .

The overall achievement of targets governing the pay-
ment of the performance-related component is calcu-
lated according to the weighting of the individual tar-
gets. These targets consist of financial and business
transformation targets, which are multiplied by one
another as factors. An upper limit applies to the factor
for the financial targets, and a lower and an upper limit
apply to the factor for the business transformation tar-
gets. The overall achievement of targets is limited to a
maximum of 130%. In determining the level of target
achievement, the Compensation Committee can, under
certain circumstances, exercise a degree of discretion in
assessing the effective management performance, tak-
ing into account special factors such as fluctuations in
exchange rates. Based on the overall achievement of tar-
gets, the Compensation Committee submits a proposal
for the approval of 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, some of the targets relevant to
remuneration were not met. The resulting payment of
the performance-related component is 90% of the tar-
get bonus for the CEO and for the other members of the
Group Executive Board.

Payment of the variable performance-related
salary component
The variable performance-related salary component for
a given financial year 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 the share component up to a maximum of 50%
of the total variable performance-related compensation.

The remaining portion of the performance-related com-
ponent 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 compo-
nent for the current year is generally made in cash only.
The decision as to what percentage of the variable per-
formance-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 publication of the third-quarter results. In
the year under review, one member of the Group Execu-
tive Board opted for a higher share component. The
shares are allocated on the basis of their tax value,
rounded up to whole numbers of shares, and are subject
to a three-year blocking period. This restriction on dis-
posal also applies if the employment relationship is ter-
minated during the blocking period. The share-based
remuneration disclosed in the year under review is aug-
mented 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. The allocation of shares for the 2019 report-
ing year will be made in April 2020.

In April 2019, a total of 1,815 shares (prior year: 1,974
shares) with a tax value of CHF 411 (prior year: CHF 390)
per share and a market value of CHF 489.50 (prior year:
CHF 464) per share were allocated for the 2018 financial
year to the members of the Group Executive Board.

Pension fund and fringe benefits
The members of the Group Executive Board, like all eligi-
ble employees in Switzerland, are insured against the
financial consequences of old age, death and disability
through the comPlan pension plan (for pension fund

regulations, see www.pk-complan.ch). The reported
pension benefits (“pension benefits” here meaning
amounts paid that give rise to or increase pension enti-
tlements) cover all savings, guarantee and risk contribu-
tions 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 term life insurance concluded for
Swisscom management staff in Switzerland. Further
information about this is provided in Note 4.3 to the
consolidated financial statements.
D See report pages 156-161

A tax-based point of view is taken in reporting ser-
vice-related and non-cash benefits and expenses. 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 reim-
bursed on an actual cost basis. They are not included in
the reported remuneration.

3.3 Total remuneration
The following table shows the total remuneration paid
to the members of the Group Executive Board for the
2018 and 2019 financial years, broken down into individ-
ual 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 2,393 thousand in total)
was around 66% of the base salary (CHF 3,606 thousand
in total). The total remuneration paid to the high-
est-earning member of the Group Executive Board (CEO,
Urs Schaeppi) decreased by 3.8% compared to the prior
year. The decrease in total remuneration paid to the
Group Executive Board and the CEO is primarily attribut-
able to the lower variable remuneration as compared to
the prior year and due to the change in the composition
of the Group Executive Board.

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

Total remuneration to members of the Group Executive Board

Benefits paid following retirement from Group Executive Board 3

Total remuneration paid to Group Executive Board,
incl. benefits paid following retirement from Board

Total Group
Executive Board
2019

Total Group
Executive Board
2018

Thereof
Urs Schaeppi
2019

Thereof
Urs Schaeppi
2018

3,606

1,636

757

105

539

873

7,516

–

3,694

1,874

886

575

892

8,016

605

882

417

165

132

148

1,759

–

882

459

182

137

147

1,829

–

7,516

8,621

1,759

1,829

1 The shares are reported at market value and are blocked from sale for three

3 Contractual compensation payments made during the notice period to a

years.

2 Employer contributions to social security (AHV, IV, EO and FAK, incl. adminis-

tration costs, and daily sickness benefits and accident insurance) are included
in the total remuneration.

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 2019 financial year is within the
maximum total amount approved by the 2018 Annual
General Meeting (AGM) for 2019 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 equiva-
lent to two years’ base salary and the other Group Exec-
utive Board members are required to maintain a share-
holding 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 remuneration

and, if necessary, through share purchases on the open
market, observing internal trading restrictions. Compli-
ance with the shareholding requirement is reviewed
annually by the Compensation Committee. If a mem-
ber’s shareholding falls below the minimum require-
ment due to a drop in the share price or a salary adjust-
ment, 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.

105

3.5 Shareholdings of the members of the
Group Executive Board
Blocked and non-blocked shares held by members of the
Group Executive Board and/or related parties as at

31 December 2018 and 2019 are shown in the table
below. None of the individuals required to make notifi-
cation holds voting shares exceeding 0.1% of the share
capital.

number

Urs Schaeppi (CEO)

Mario Rossi

Hans C . Werner

Marc Werner

Urs Lehner

Christoph Aeschlimann 1

Heinz Herren 2

Dirk Wierzbitzki

Total shares held by the members of the Group Executive Board

31.12.2019

31 .12 .2018

4,752

1,707

1,440

1,364

509

–

969

10,741

4,380

1,483

1,259

1,158

290

–

1,856

604

11,030

1 Joined the Group Executive Board as of 1 February 2019.

2 Resigned from the Group Executive Board as of 31 January 2019.

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 any
wrongfully awarded remuneration to lapse or may reclaim
any remuneration that is wrongfully paid. The contracts
do not contain either 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 assignments performed by order of Swisscom (Arti-
cle 6.4 of the Articles of Incorporation). No such remu-
neration was paid in the year under review.
N See www.swisscom.ch/basicprinciples

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 in connection
with their earlier activities as a member of a governing
body of the company or which are not at arm’s length.
Similarly, no such remuneration was paid to former mem-
bers of the Group Executive Board. Further, there were no
payments 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 or pension benefits apart from the
retirement benefits paid to the members of the Board of
Directors and Group Executive Board.

In the 2019 financial year, Swisscom did not grant any
collateral, 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 par-
ties. There are therefore no corresponding receivables
outstanding.

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R

t
r
o
p
e
R
n
o
i
t
a
r
e
n
u
m
e
R
d
n
a
e
c
n
a
n
r
e
v
o
G
e
t
a
r
o
p
r
o
C

106

Report of the statutory auditor
to the General Meeting of Swisscom Ltd

Ittigen (Bern)

We have audited the remuneration report of Swisscom Ltd for the year ended 31 December 2019. 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 96 to 106 of the remuneration report.

Board of Directors’ responsibility

The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accord-
ance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordi-
nance). The Board of Directors is also responsible for designing the remuneration system and defining individual remunera-
tion 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 re-
port, 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 of Swisscom Ltd for the year ended 31 December 2019 complies with Swiss law and
articles 14–16 of the Ordinance.

Other Matter

The remuneration report of Swisscom Ltd for the year ended 31 December 2018 was audited by another firm of auditors
whose report, dated 6 February 2019, expressed an unmodified opinion.

PricewaterhouseCoopers AG

Peter Kartscher

Audit expert
Auditor in charge

Zurich, 5 February 2020

Petra Schwick

Audit expert

PricewaterhouseCoopers AG, Birchstrasse 160, Postfach, CH-8050 Zürich, Switzerland
Telefon: +41 58 792 44 00, Telefax: +41 58 792 44 10, www.pwc.ch

PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

107

Consolidated Financial
Statements

Consolidated statement of comprehensive income . . . . . . . . . . 110
Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Consolidated statement of cash flows . . . . . . . . . . . . . . . . . . . . . . . 112
Consolidated statement of changes in equity . . . . . . . . . . . . . . . . 113

Notes to the consolidated
financial statements

1
1 .1
1 .2

2
2 .1
2 .2
2 .3
2 .4
2 .5

3
3 .1
3 .2
3 .3
3 .4
3 .5

4
4 .1
4 .2
4 .3

5
5 .1
5 .2
5 .3
5 .4

6
6 .1
6 .2
6 .3

Operating performance
Segment information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

Capital and financial risk management
Capital management and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Financial result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Financial risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

Operating assets and liabilities
Operating net working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Provisions and contingent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152

Employees
Employee headcount and personnel expense . . . . . . . . . . . . . . . . . . 155
Key management compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Post-employment benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156

Scope of consolidation
Group structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Changes in the scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . 162
Equity-accounted investees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Group companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

Other disclosures
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Other accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

Statutory Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

109

Consolidated Financial Statements
Consolidated statement
of comprehensive
income

In CHF million, except for per share amounts

Note

2019

2018

Income statement

Net revenue

Direct costs

Personnel expense

Other operating expense

Capitalised self-constructed assets and other income

Operating income before depreciation and amortisation

Depreciation and amortisation of property, plant and equipment and intangible assets

Depreciation of right-of-use assets

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

Change in fair value of equity instruments

Items that will not be reclassified to income statement

Foreign currency translation adjustments of foreign subsidiaries

Change in cash flow hedges

Other comprehensive income from equity-accounted investees

Items that may be reclassified to income statement

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

1 .1

1 .2

1 .2, 4 .1

1 .2

3 .2, 3 .3

2 .3

2 .4

5 .3

6 .1

2 .1

11,453

11,714

(2,815)

(2,800)

(1,989)

509

4,358

(2,166)

(282)

1,910

(191)

(28)

1,724

(55)

1,669

146

148

(55)

(46)

102

1,669

102

1,771

1,672

(3)

1,669

1,774

(3)

1,771

(2,954)

(2,815)

(2,193)

461

4,213

(2,144)

–

2,069

(186)

1,916

(395)

1,521

(62)

(53)

(40)

(33)

(86)

1,521

(86)

1,435

1,527

(6)

1,521

1,441

(6)

1,435

Basic and diluted earnings per share (in CHF)

2 .1

32.28

29.48

e
m
o
c
n

i
e
v
i
s
n
e
h
e
r
p
m
o
c

f
o
t
n
e
m
e
t
a
t
s
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
i
F
d
e
t
a
d

i
l

o
s
n
o
C

110

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

Intangible assets

Goodwill

Right-of-use assets

Equity-accounted investees

Other financial assets

Deferred tax assets

Total non-current assets

Total assets

Liabilities and equity

Financial liabilities

Lease liabilities

Trade payables

Provisions

Other operating liabilities

Current income tax liabilities

Total current liabilities

Financial liabilities

Lease 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

Hedging reserve

Equity attributable to equity-holders of Swisscom Ltd

Non-controlling interests

Total equity

Total liabilities and equity

Note

31.12.2019

31 .12 .2018

3 .1

6 .1

3 .2

3 .3

3 .4

2 .3

5 .3

6 .1

2 .2

2 .3

3 .1

3 .5

3 .1

6 .1

2 .2

2 .3

4 .3

3 .5

2 .3

6 .1

2 .1

328

2,183

1,156

3,744

10,529

1,842

5,163

2,177

156

484

152

20,503

24,247

1,411

232

1,614

163

1,182

174

4,776

6,049

1,795

1,058

983

122

589

10,596

15,372

136

10,454

(1,781)

8,872

8,875

24,247

474

2,189

1,243

3,990

10,889

1,860

5,167

–

174

339

167

18,596

22,586

1,340

1,658

131

1,127

250

4,527

6,443

363

1,196

901

134

814

9,851

14,378

136

9,759

(1,728)

8,223

(15)

8,208

22,586

111

s
w
o
fl
h
s
a
c

f
o
t
n
e
m
e
t
a
t
s
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
i
F
d
e
t
a
d

i
l

o
s
n
o
C

112

Consolidated statement
of cash flows

In CHF million

Net income

Income tax expense

Result of equity-accounted investees

Financial income

Financial expense

Note

6 .1

5 .3

2 .4

Depreciation and amortisation of property, plant and equipment and intangible assets

3 .2, 3 .3

Depreciation of right-of-use assets

Gain on sale of property, plant and equipment

Loss on disposal of property, plant and equipment

Expense for share-based payments

Revenue from finance lease

Change in deferred gain from the sale and leaseback of real estate

Change in operating assets and liabilities

Change in provisions

Change in defined benefit obligations

Interest received

Dividends received

Interest payments for financial liabilities

Interest payments for lease liabilities

Income taxes paid

Cash flow from operating activities

2 .3

1 .2

2 .3

3 .1

3 .5

4 .3

5 .3

2 .2

2 .3

6 .1

Purchase of property, plant and equipment and intangible assets

3 .2, 3 .3

Sale of property, plant and equipment and intangible assets

Acquisition of subsidiaries, net of cash and cash equivalents acquired

Sale of subsidiaries net of cash and cash equivalents sold

Payments for equity-accounted investees

Proceeds from finance lease receivables

Purchase of other financial assets

Proceeds from other financial assets

Remaining cash flows from investing activities

Cash flow used in investing activities

Issuance of financial liabilities

Repayment of financial liabilities

Repayment of lease 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 decrease 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

2 .2

2 .3

2 .1

2019

1,669

(33)

191

2,166

282

(13)

–

(101)

(12)

100

(88)

(42)

(371)

3,981

(2,390)

(394)

(3)

(15)

(13)

(39)

(2,733)

417

(374)

(276)

(1,140)

(1)

(15)

2018

1,521

395

(5)

(28)

186

2,144

–

(17)

–

(12)

(70)

(57)

(133)

(24)

(294)

3,720

(2,404)

(78)

–

(35)

–

(31)

–

(2,495)

1,451

(1,545)

(26)

(1,140)

(1)

–

(9)

(1,390)

(1,270)

(142)

474

(4)

328

(45)

525

(6)

474

Consolidated statement
of changes in equity

In CHF million

Share
capital

Capital
reserves

Foreign
currency
Retained translation
earnings adjustments

Equity
attributable
Non-
to equity
Hedging holders of controlling
interests
Swisscom
reserve

Balance at 1 January 2018

136

9,455

(1,689)

(2)

Net income

Other comprehensive income

Comprehensive income

Dividends paid

Other changes

Balance at 31 December 2018

Change in accounting policies 1

Balance at 1 January 2019

Net income

Other comprehensive income

Comprehensive income

Dividends paid

Other changes

–

1,527

(53)

1,474

(1,140)

(30)

–

(39)

–

136

9,759

(1,728)

–

136

9,781

(1,728)

–

1,672

148

1,820

(1,140)

(7)

–

(53)

–

8,245

1,672

102

1,774

(1,140)

(7)

Balance at 31 December 2019

136

10,454

(1,781)

8,872

1 See “General information and changes in accounting policies” in the notes to

the consolidated financial statements.

Total
equity

7,941

1,521

(86)

1,435

(1,141)

(27)

7,952

1,527

(86)

1,441

(1,140)

(30)

(11)

(6)

–

(6)

(1)

8,223

(15)

8,208

–

(15)

(3)

–

(3)

(1)

8,230

1,669

102

1,771

(1,141)

8,875

113

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

Notes to the
consolidated financial
statements

The financial report is a translation from the original German version. In case of any inconsistency the German
version shall prevail.

General information and changes in accounting policies

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 December
2019 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 is unchanged from the prior year and aggregates 51,801,943. The shares have a nom-
inal 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 obli-
gated by current law to hold the majority of the capital and voting rights. The Board of Directors of Swisscom has
approved the issuance of these consolidated financial statements on 5 February 2020. As of this date, no material
events after the reporting date have occurred. The consolidated financial statements will be submitted for approval
to the Annual General Meeting of Shareholders of Swisscom Ltd, to be held on 6 April 2020.

Basis of preparation
The consolidated financial statements of Swisscom have been prepared in accordance with International Finan-
cial 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
interpretation prescribes another measurement basis for a particular caption, in which case this is explicitly
stated in the accounting policies. Material accounting policies of relevance for an understanding of the consoli-
dated financial statements are set out in the specific notes to the financial statements.

Significant judgements, estimates and assumptions in applying the accounting policies
The preparation of consolidated financial statements is dependent upon assumptions and estimates being
made in applying the accounting policies, for which management can exercise a certain degree of judgement.
This concerns the following positions in particular:

Description

Leases

Property, plant and equipment

Intangible assets

Goodwill

Provisions for dismantlement and restoration costs

Provision for regulatory and competition law procedures

Defined benefit plans

114

Further information

Note 2 .3

Note 3 .2

Note 3 .3

Note 3 .4

Note 3 .5

Note 4 .3

Amendments to International Financial Reporting Standards and Interpretations which
are to be applied for the first time in the financial year

Standard

IFRS 16

Name

Leases

Amendments to IFRS 9

Prepayment features with negative compensation

Amendments to IFRS 9, IAS 39, IFRS 7

Interest Rate Benchmark Reform

Amendments to IAS 28

Long-term interests in associates and joint ventures

Amendments to IAS 19

Plan amendment, curtailment or settlement

IFRIC 23

Various

Uncertainty over income tax treatments

Amendments IFRS 2015–2017

As from 1 January 2019 onwards, Swisscom adopted various amendments to existing International Financial
Reporting Standards (IFRS) and Interpretations, which, with the exception of the amendments below, have no
material impact on the results or financial position of the Group. Further information regarding the changes to
the IFRS which must be applied in 2020 or later are set out in Note 6.3.

IFRS 16 Leases
IFRS 16 replaces IAS 17, IFRIC 4 and SIC 27, and lays down the principles governing the recognition, measurement
and disclosure of leases. IFRS 16 provides a single lessee accounting model. The differentiation between finance
and operating leases required until now under IAS 17 is thus dropped in future for the lessee. The lessee recog-
nises lease liabilities in its balance sheet for all future lease payments to be made, as well as a right-of-use asset
for the underlying asset. In future, depreciation and interest expense will be recognised in the income statement
instead of rental expense. This will lead to a material increase in operating income before depreciation and
amortisation. In the statement of cash flows, the share of the lease payments representing repayment of the
principal portion of the newly accounted leases will reduce cash flows from financing activities and no longer
cash flows from operating activities, as previously. Interest payments will continue to be presented as cash flows
from operating activities. The lessor will continue to differentiate between finance and operating leases for
financial reporting purposes. In this regard, the accounting model foreseen under IFRS 16 does not materially
differ from the previous provisions under IAS 17.
Swisscom has elected to apply the modified retrospective approach for the initial adoption of IFRS 16. For rea-
sons of simplicity, a reassessment as to whether an existing contract dated 1 January 2019 constitutes or includes
a lease was dispensed with. The payment obligations arising under operating leases disclosed in Note 2.3 of the
2018 Annual Report for the most part comprise lease payments from the rental of operation and office buildings,
as well as of antenna sites. The net present value of the payment obligations arising from previous operating
leases will be accounted for as lease liabilities. The corresponding right-of-use assets will be recognised in the
amount of the lease liabilities. The reconciliation of payment obligations arising from operating leases as at
31 December 2018 for initial recognition as at 1 January 2019 is as follows:

In CHF million

Obligations from operating leases as at 31 December 2018

Discounting

Carrying amount of finance lease liabilities as of 31 December 2018

Lease liabilities as of 1 January 2019

1,298

(60)

384

1,622

115

The lease liabilities were discounted using the incremental borrowing rate applicable as at 1 January 2019. The
weighted average interest rate was 0.6%. The impact of the first-time adoption of IFRS 16 on the balance sheet
as at 1 January 2019 was as follows:

In CHF million

Property, plant and equipment

Intangible assets

Right-of-use assets

Other financial assets

Other assets

Total assets

Financial liabilities

Lease liabilities

Provisions

Miscellaneous liabilities

Total liabilities

Total equity

Total liabilities and equity

31 .12 .2018 Application IFRS 16

01.01.2019

10,889

1,860

–

421

9,416

22,586

7,783

384

1,032

5,179

14,378

8,208

22,586

(464)

(88)

1,786

–

1,312

1,238

(4)

–

1,312

–

1,312

10,425

1,772

1,786

499

9,416

23,898

7,861

1,622

1,028

5,179

15,690

8,208

23,898

Based on the first adoption of IFRS 16 as of 1 January 2019, additional right-of-use assets and lease liabilities
amounting to CHF 1,238 million were recognised. At initial application, the right-of-use assets were adjusted by
provisions for onerous contracts amounting to CHF 4 million. The prior year’s comparative figures were not
restated. The adoption of IFRS 16 has no impact on equity as of 1 January 2019. With regard to the 2018 financial
year, the application of IFRS 16 would have led to an increase in operating income before depreciation and amor-
tisation (EBITDA) of some CHF 0.2 billion and to higher depreciation and amortisation, as well as interest expenses
of a combined aggregate amount of some CHF 0.2 billion. In addition, other financial assets and financial liabili-
ties totalling USD 79 million (CHF 78 million) which were previously not recorded will be recognised as a result of
the discontinuation of SIC 27. The Italian subsidiary, Fastweb, procures various access services from other
fixed-network operators for the use of connection cables to the end customer. A part of these access services is
now classified as leases in accordance with IFRS 16. The value of the individual connection cable fulfils the criteria
as an asset of low value. Swisscom will apply the low value exemption of IFRS 16 for these leases. Accordingly, no
right-of-use assets and lease liabilities will be recognised for these access services, the costs of which will con-
tinue to be reported as operating expense.

IFRIC 23 “Uncertainty over Income Tax Treatments”
IFRIC 23 governs the recognition and measurement of deferred and current income taxes where there is uncer-
tainty over their income tax treatment. Uncertainty in the context of income tax treatment exists when it is not
clear whether the Group’s income tax treatment will be accepted by the tax authorities. If it is probable that the
Group’s income tax treatment will not be accepted by the tax authorities, this uncertainty must be recorded at
either the expected value or the most probable value. Swisscom has reviewed its tax position and, as at 1 Janu-
ary 2019, reduced its current income tax liabilities by CHF 22 million. The effect of applying IFRIC 23 for the first
time was recorded directly to retained earnings.

Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”
The amendments to IFRS 9, IAS 39 and IFRS 7 aim to mitigate the effects of the reform of reference interest rates
(known as the IBOR reform) on financial reporting. The amendments should ensure that hedge accounting con-
tinues to exist or can be designated despite the uncertainties associated with the expected replacement of var-
ious reference interest rates. The amendments are mandatory for financial years beginning on or after 1 January
2020. Swisscom is exercising the option of early adoption and applying the amendments from 1 January 2019.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

116

1 Operating performance

This chapter sets outs information on the operating performance of Swisscom
in the current financial 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 information

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
mobile-phone subscriptions as well as national and international telephone and data traffic for residential cus-
tomers and customers from small and medium-sized 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 incorporates the use of the Swisscom landline and mobile network by other telecommunications
service providers and the use of external networks by Swisscom . In addition, Wholesale includes roaming by foreign
operators whose customers use the Swisscom mobile network, as well as broadband services and regulated prod-
ucts related to the unbundling of the local loop for other telecommunication 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, broad-
band 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 comprises Digital Business and Participations . Digital Business mainly comprises
Swisscom Directories Ltd (localsearch), which operates in the field of online directories and telephone directories .
Participations mainly comprises the subsidiaries cablex Ltd and Swisscom Broadcast Ltd . The operations of cablex
Ltd are in the building and maintenance of wired and wireless networks in Switzerland, primarily in the field of tele-
communications . Swisscom Broadcast Ltd is the leading provider in Switzerland of broadcast services, of cross-plat-
form retail media services, and of security communications .

Reporting is divided into 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 sepa-
rately in segment reporting. Various areas were transferred between the segments of Swisscom Switzerland as
at 1 January 2019. The prior year’s comparatives were restated accordingly.

117

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. The results of the Residential Custom-
ers, Enterprise Customers and Wholesale segments thus correspond to a contribution margin before network
costs.

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. Pension cost 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 2019, an expense of CHF 47 million is disclosed under
“Eliminations” as a pension cost reconciliation item in accordance with IAS 19 (prior year: CHF 60 million).

Leases between the segments are not recognised in the balance sheet in accordance with IFRS 16. The reported
lease expense of the segments in 2019 comprises depreciation and interest on leases excl. depreciation of inde-
feasible rights of use (IRU) of CHF 30 million and the accounting for the rental of buildings between segments.
The lease expense of assets of low value is presented as direct costs. The lease expense of the segments in 2018
comprises the expense for operating and finance leases in accordance with IAS 17 and the accounting for the
rental of buildings between segments. The reconciliation of the indirect costs of the segments to the consoli-
dated values is reported in the column “Eliminations”. In 2018, an expense of CHF 207 million is disclosed under
“Eliminations” as an indirect cost reconciliation item.

Capital expenditure consists of the purchase of property, plant and equipment and intangible assets and pay-
ments for indefeasible rights of use (IRU). In general, IRUs are paid in full at the beginning of the use and are
classified as leases under IFRS 16. From an economic point of view, IRU payments will be considered as capital
expenditure in the segment information. In 2019, capital expenditure includes IRU payments of CHF 48 million
(prior year: none).

Swisscom Switzerland sells some mobile handsets on a subsidised basis in a bundled offering with a mobile
communications contract. As a result of the reallocation of revenue over the pre-delivered components (mobile
handset), revenue is recognised earlier than the date of invoicing. This results in contract assets deriving from
this contract being recognised. In the segment reporting of Swisscom Switzerland, the recognition and dissolu-
tion of these contract assets is reported as other revenue. The amounts invoiced are reported under revenue
from telecommunications services or merchandise.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

118

Segment information 2019

2019, 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

Swisscom
Switzerland

5,609

2,232

643

8,484

8,563

(1,897)

(3,175)

Segment result before depreciation and amortisation

3,491

(226)

(1,515)

1,750

Lease expense

Depreciation

Segment result

Interest expense on lease liabilities

Operating income

Financial income and financial expense, net

Result of equity-accounted investees

Income before income taxes

Income tax expense

Net income

Other
Operating
Segments

Group
Head-
quarters

–

509

–

509

420

929

(63)

(678)

188

(11)

(63)

114

–

(73)

(72)

(2)

–

(74)

Fastweb

1,228

958

274

2,460

2,468

(888)

(746)

834

(56)

(623)

155

Elimi-
nation

–

(508)

392

(83)

(77)

Segment result before depreciation and amortisation

3,491

Capital expenditure

Lease expense

Operating free cash flow proxy

(1,761)

(226)

1,504

834

(667)

(56)

111

188

(47)

(11)

130

(72)

–

(2)

(74)

(83)

(45)

1 Including capitalised costs of self-constructed assets and other income.

Segment information Swisscom Switzerland 2019

Total

6,837

3,699

917

11,453

–

11,453

(2,815)

(4,280)

4,358

(294)

(2,196)

1,868

1,910

(158)

(28)

1,724

(55)

1,669

4,358

(2,438)

(294)

1,626

2019, in CHF million

Fixed-line

Mobile

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

3,415

Lease expense

Depreciation

Segment result

Capital expenditure

(51)

(99)

3,265

(29)

1 Including capitalised costs of self-constructed assets and other income.

Residential
Customers

Enterprise
Customers

Whole-
sale

IT,
Network &
Infrastructure

Elimi-
nation

Total
Swisscom
Switzerland

2,527

2,486

5,013

–

560

–

5,609

5,691

(1,293)

(983)

520

399

919

1,021

248

–

2,209

103

2,312

(786)

(821)

705

(28)

(74)

603

(37)

–

643

–

643

325

968

(427)

(16)

525

(1)

–

524

–

(11)

(1,228)

(1,154)

(146)

(1,342)

(2,642)

–

(1,695)

–

(493)

620

(127)

–

3,047

2,885

5,932

1,021

808

643

8,484

8,563

(1,897)

(3,175)

3,491

(226)

(1,515)

1,750

(1,761)

119

Segment information 2018

2018, 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

Swisscom
Switzerland

5,843

2,326

566

8,735

8,806

(1,971)

(3,259)

Segment result before depreciation and amortisation

3,576

(221)

(1,471)

1,884

Lease expense

Depreciation

Segment result

Financial income and financial expense, net

Result of equity-accounted investees

Income before income taxes

Income tax expense

Net income

Fastweb

1,210

900

308

2,418

2,426

(935)

(688)

803

(26)

(587)

190

Segment result before depreciation and amortisation

3,576

Capital expenditure

Lease expense

Operating free cash flow proxy

(1,620)

(221)

1,735

803

(757)

(26)

197

(46)

(13)

138

1 Including capitalised costs of self-constructed assets and other income.

Segment information Swisscom Switzerland 2018

Other
Operating
Segments

Group
Head-
quarters

–

560

–

560

349

909

(59)

(653)

197

(13)

(59)

125

Elimi-
nation

–

(429)

131

(287)

262

(27)

(52)

(287)

262

(6)

Total

7,053

3,787

874

11,714

–

11,714

(2,954)

(4,547)

4,213

–

(2,144)

2,069

(158)

1,916

(395)

1,521

4,213

(2,404)

–

1,809

–

(78)

(76)

(2)

–

(78)

(76)

–

(2)

(78)

2018, in CHF million, restated

Fixed-line

Mobile

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

3,463

Lease expense

Depreciation

Segment result

Capital expenditure

(51)

(138)

3,274

(43)

1 Including capitalised costs of self-constructed assets and other income.

Residential
Customers

Enterprise
Customers

Whole-
sale

IT,
Network &
Infrastructure

Elimi-
nation

Total
Swisscom
Switzerland

2,573

2,618

5,191

–

494

–

158

5,843

5,924

(1,411)

(1,050)

580

451

1,031

1,027

224

–

2,306

102

2,408

(757)

(847)

804

(34)

(69)

701

(40)

–

566

–

566

328

894

(430)

(17)

447

(1)

–

446

–

(11)

(1,206)

(1,138)

(136)

(1,263)

(2,537)

–

(1,537)

–

(499)

638

(139)

–

(1)

–

3,153

3,069

6,222

1,027

718

566

202

8,735

8,806

(1,971)

(3,259)

3,576

(221)

(1,471)

1,884

(1,620)

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

120

Disclosure by geographical regions

In CHF million

Switzerland

Italy

Other countries

Not allocated

Total

Disclosure by products and services

In CHF million

Telecom services

Solution business

Merchandise

Wholesale

Revenue other

Total net revenue

2019

Non-current
assets

15,759

4,041

636

2018

Non-current
assets

14,440

3,581

506

Net revenue

9,274

2,418

–

Net revenue

8,969

2,460

–

11,453

20,503

11,714

18,596

2019

8,012

1,021

899

916

605

2018

8,227

1,027

790

873

797

11,453

11,714

121

Accounting policies

Telecommunication services
Telecommunication services encompass mobile and fixed-network services both in Switzerland and abroad.
Mobile-phone services comprise the basic charges; in addition, they include the domestic and international cel-
lular traffic relating to calls made by Swisscom customers within Switzerland and abroad. Swisscom offers sub-
scriptions with a monthly flat-rate fee, the revenue for which is recognised on a straight-line basis over the
minimum term of the contract. Depending on the type of subscription, revenue is recognised on the basis of the
minutes used. The minimum contract term is generally 12 or 24 months. If a mobile handset is sold as part of a
bundled offering with a mobile-phone contract, it is considered as a multi-element contract. Multi-element
transactions are grouped into portfolios for revenue accounting. The transaction price for multi-element con-
tracts is allocated to each identified performance obligation on the basis of relative stand-alone selling prices. In
this process, the stand-alone selling price of each component is considered in relation to the sum of the stand-
alone selling prices of all performance obligations under the contract. The stand-alone selling prices of mobile
handsets and subscriptions correspond to Swisscom’s list price and the minimum contract term. Non-refundable
connection fees which do not constitute a separate performance obligation are considered as part of the total
transaction price and allocated to the separate performance obligations arising under the customer contract on
a pro rata basis. In the event that there is no minimum contract term, the revenue is recognised at the time of
connection.
Fixed-network services principally comprise the basic charges for fixed telephony, broadband and TV connec-
tions, as well as the domestic and international telephony traffic of individuals and corporate customers. In
addition, Swisscom makes bundled offerings comprising broadband and TV connections with an optional fixed-
line telephony connection. These subscription fees are flat rate. The minimum contract term is twelve months.
Revenues are recognised on a straight-line basis over the term of the contract. Revenue for telephone calls is
recognised at the time when the calls are made.

Solutions
The service area of communications and IT solutions principally comprise advisory services and the implementa-
tion, maintenance and operation of communication infrastructures. Furthermore, the area includes applications
and services, as well as the integration, operation and maintenance of data networks and outsourcing services.
Revenue from customer-specific orders is recognised using a measure of progress method, which is measured on
the basis of the relationship of the costs incurred to total anticipated costs. Revenue arising on long-term out-
sourcing contracts is recognised as a function of performance to date provided to the customer. The duration of
these contracts is generally between three and seven years. Transition projects in connection with an outsourc-
ing contract are not recorded as separate performance obligations. Maintenance revenues are recognised on a
straight-line basis over the term of the maintenance contracts.

Sales of merchandise
Mobile handsets, fixed-line devices and miscellaneous supplies are recognised as revenue at the time of delivery
or provision of the service. Swisscom sells routers and TV boxes to be used for services provided by Swisscom. As
these are only compatible with the Swisscom network and cannot be used for networks of other telecommuni-
cation service providers, they are not recorded as separate performance obligations. Revenue is deferred and
recognised over the minimum contract term of the related broadband or TV subscription.

Wholesale
The services principally comprise leased lines and the use of the Swisscom fixed network by other telecommuni-
cation service providers (roaming). Leased-line charges are recognised as revenue on a straight-line basis over the
terms of the contract. Roaming services are recognised as revenue on the basis of the call minutes or at contrac-
tually agreed charges as of the time of providing the service. Roaming fees charged to other telecommunication
service providers are reported on a gross basis.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

122

1.2 Operating expenses

Direct costs

In CHF million

Customer premises equipment and merchandise

Services purchased

Costs to obtain a contract

Costs to fulfill a contract

Network access costs of swiss subsidiaries

Network access costs of foreign subsidiaries

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 and contract assets

Miscellaneous operating expenses

Total other operating expense

Capitalised self-constructed tangible and intangible assets

Own work for capitalized contract costs

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.

2019

1,095

642

327

366

369

2018

1,175

607

345

368

428

2,815

2,954

2019

2,679

121

2,800

262

314

–

116

223

149

101

742

2018

2,752

2,815

284

334

207

118

230

176

100

670

1,989

2,193

(344)

(66)

(13)

(86)

(509)

(331)

(49)

(17)

(64)

(461)

4,280

4,547

Capitalised self-constructed tangible and intangible assets include personnel costs for the manufacturing of tech-
nical installations, the construction of network infrastructure and the development of software for internal use.

123

Accounting policies

Costs to obtain a contract
Swisscom pays commissions to dealers for the acquisition and retention of mobile-phone customers. The com-
mission payable is dependent on the type of subscription. Costs to obtain a contract are deferred and amortised
over the related revenue-recognition period. In addition, the handset subsidies granted to the customer at the
same time as a Swisscom mobile-phone subscription is entered into are reimbursed to the dealer. These costs are
deferred and amortised on a straight-line basis over the contract term as the costs of obtaining a contract. The
amortisation period corresponds to the related revenue-recognition period. See Note 1.1.

Costs to fulfil a contract
In connection with a broadband or TV subscription, the customer must purchase a router or TV box in order that
the customer can use the services of Swisscom. Routers and TV boxes may be used exclusively for services pro-
vided by Swisscom. The cost of routers and TV boxes are reported as costs to fulfil a contract and amortised over
the minimum term of the contract. The set-up costs incurred to transfer and integrate outsourcing transactions
with corporate customers are deferred and amortised against income on a straight-line basis over the duration
of the operating contract. The amortisation period corresponds to the related revenue-recognition period. See
Note 1.1.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

124

2 Capital and financial risk management

Set out below are the procedures and guidelines governing the active
management of equity and the financial risks to which Swisscom is exposed .
Swisscom strives to achieve a robust equity basis, which enables it to guarantee
its ability to continue as a going concern and to offer investors an appropriate
return based on the risks assumed .

2.1 Capital management and equity

Net debt ratio incl. lease liabilities/EBITDA
Swisscom has a single A credit rating with rating agencies Standard & Poor’s and Moody’s. Swisscom aims to
maintain this single A credit rating. An important quantitative criterion for the credit rating and the assessment
and control of the financial situation by the management is the ratio of net debt including lease liabilities to
EBITDA (operating result before depreciation and amortisation). In accordance with Swisscom’s definition, net
debt is composed of financial liabilities less cash and cash equivalents, current financial assets, derivative finan-
cial instruments held to hedge financial liabilities and other non-current financial assets directly related to
non-current financial liabilities (certificates of deposit and U.S. treasury bond strips). The ratio of net debt includ-
ing lease liabilities to EBTDA is as follows:

In CHF million

Net debt

Lease liabilities

Net debt incl. lease liabilities

Operating income before depreciation and amortisation (EBITDA)

Ratio of net debt incl. lease liabilities/EBITDA

31.12.2019

01 .01 .2019

6,758

2,027

8,785

4,358

2.0

7,009

1,622

8,631

4,420

2.0

1 Incl. effect of the initial application of IFRS 16.

2 Excl. operating lease expense of CHF 207 million in accordance with IAS 17.

Equity ratio
Swisscom strives to achieve an equity ratio of a minimum of 30%. The equity ratio is computed as follows:

In CHF million

Equity

Total assets

Equity ratio in %

1 Incl. effect of the initial application of IFRS 16.

31.12.2019

01 .01 .2019

8,875

24,247

36.6

8,230

23,898

34.4

Dividend policy
Swisscom pursues a dividend policy with a stable dividend, taking into account its financial situation and cash
flow generation. Distributable reserves are not determined on the basis of the equity as reported in the consoli-
dated financial statements but rather on the basis of equity as reported in the statutory financial statements of
the parent company, Swisscom Ltd. As at 31 December 2019, Swisscom Ltd’s distributable reserves amounted to
CHF 6,697 million. The dividend is proposed by the Board of Directors and must be approved by the Annual Gen-
eral Meeting of Shareholders. Treasury shares are not entitled to a dividend. Swisscom Ltd paid the following
dividends in 2018 and 2019:

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

2019

51 .802

22 .00

1,140

2018

51 .801

22 .00

1,140

125

The Board of Directors will propose to the Annual General Meeting of Shareholders of Swisscom Ltd on 6 April
2020 the payment of an unchanged dividend of CHF 22 per share for the 2019 financial year. This equates to an
aggregate dividend distribution of CHF 1,140 million. The expected dividend payment date is 14 April 2020.

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)

2019

1,672

2018

1,527

51,801,540

51,801,182

32.28

29.48

Supplementary information on equity
Development of retained earnings and other reserves as well as comprehensive income 2019

In CHF million

Balance at 31 December 2018

Change in accounting policies 1

Balance at 1 January 2019, adjusted

Net income

Actuarial gains and losses from defined
benefit pension plans

Change in fair value of equity instruments

Income tax expense

Items that will not be reclassified
to income statement

Foreign currency translation adjustments
of foreign subsidiaries

Fair value losses of cash flow hedges transferred
to income statement

Equity-accounted investees

Income tax expense

Items that may be reclassified
to income statement

Other comprehensive income

Comprehensive income

Dividends paid

Other changes

Foreign
currency
Retained
translation
earnings adjustments

9,759

(1,728)

9,781

1,672

193

(47)

148

–

148

1,820

(1,140)

(7)

–

(1,728)

–

(59)

–

(53)

–

Hedging
reserve

Equity
holders of
Swisscom

Non-
controlling
interests

–

(1)

–

8,035

8,057

1,672

193

(47)

148

(59)

(46)

102

1,774

(1,140)

(7)

Total

8,020

8,042

1,669

193

(47)

148

(59)

(46)

102

1,771

(1,141)

8,687

(15)

–

(15)

(3)

–

(3)

(1)

Balance at 31 December 2019

10,454

(1,781)

8,684

1 See “General information and changes in accounting policies” in the notes to

the consolidated financial statements.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

126

Development of retained earnings and other reserves as well as comprehensive income 2018

In CHF million

Balance at 1 January 2018

Net income

Actuarial gains and losses from defined benefit pension plans

Change in fair value of equity instruments

Income tax expense

Items that will not be reclassified to income statement

Foreign currency translation adjustments of foreign subsidiaries

Fair value losses of cash flow hedges transferred to income statement

Equity-accounted investees

Income tax expense

Items that may be reclassified
to income statement

Other comprehensive income

Comprehensive income

Dividends paid

Other changes

Foreign
currency
Retained
translation
earnings adjustments

Hedging
reserve

Equity
holders of
Swisscom

Non-
controlling
interests

(1,689)

(2)

7,764

1,527

(11)

(6)

9,455

1,527

(78)

(53)

–

(53)

1,474

(1,140)

(30)

–

(41)

–

(39)

–

(78)

(53)

(41)

(33)

(86)

1,441

(1,140)

(30)

8,035

Total

7,753

1,521

(78)

(53)

(41)

(33)

(86)

1,435

(1,141)

(27)

–

(6)

(1)

Balance at 31 December 2018

9,759

(1,728)

(15)

8,020

127

2.2 Financial liabilities

In CHF million

Balance at 1 January

Change in accounting policies 1

Balance at 1 January, adjusted

Issuance of bank loans

Issuance of debenture bonds

Issuance of other financial liabilities

Issuance of financial liabilities

Repayment of bank loans

Repayment of debenture bonds

Repayment of private placements

Repayment of other financial liabilities

Repayment of financial liabilities

Interest expense

Interest payments

Foreign currency translation adjustments

Change in fair value

Accrual of deferred purchase price margins from business combinations

Expenses for deferred consideration arising on business combinations 2

Other changes

Balance at 31 December

Bank loans

Debenture bonds

Private placements

Derivative financial instruments 3

Other financial liabilities

Total financial liabilities

Thereof current financial liabilities

Thereof non-current financial liabilities

2019

7,783

7,861

405

417

(95)

–

(278)

(1)

(374)

(88)

(146)

(369)

7,460

1,080

5,915

151

230

7,460

1,411

6,049

2018

7,824

–

7,824

564

885

1,451

(69)

(1,385)

(72)

(19)

(1,545)

114

(133)

(117)

(7)

158

(18)

7,783

1,233

5,554

426

516

7,783

1,340

6,443

1 See “General information and changes in accounting policies” in the notes to

2 Reported in the cash flow statement as cash flow used in investing activities.

the consolidated financial statements.

See Note 5.2.
3 See Note 2.5.

Credit lines
Swisscom has two confirmed lines of credit from banks each amounting to CHF 1,000 million, maturing in 2022
and 2024 respectively. As of 31 December 2019, none of these lines of credit had been drawn down, as in the
prior year.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

128

Bank loans

In CHF million

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

Total bank loans

Maturity years

2018–2019

2019–2020

2013–2020

2015–2020

2017–2024

2009–2028

Par value
in currency

Nominal
interest rate

Effective
interest rate

31.12.2019

31 .12 .2018

Carrying amount

500

460

200

150

0 .01%

0 .00%

Euribor
+0 .386%

0 .76%

0 .67%

8 .30%

7 .65%

–0 .66%

–0 .35%

0 .00%

–0 .58%

0 .67%

4 .62%

4 .63%

–

499

219

163

563

–

135

229

169

1,080

1,233

1 Variable interest-bearing.
2 Fixed interest-bearing.
3 Designated for hedge accounting of net investments in foreign operations.

4 After hedging with currency swap.
5 After hedging with currency swap and taking hedge accounting into consider-

ation.

On 31 December 2019, Swisscom took on short-term bank loans on a weekly and monthly basis for EUR 460 mil-
lion (CHF 499 million) (prior year EUR 500 million, CHF 563 million). The funds received were used to repay exist-
ing debts. Bank loans to the value of EUR 510 million (CHF 553 million) may become due for immediate repay-
ment if the shareholding of the Confederation in the capital of Swisscom falls below one third, or if another
shareholder can exercise control over Swisscom.

129

Debenture bonds

In CHF million

Maturity years

Par value
in currency

Nominal
interest rate

Effective
interest rate

31.12.2019

31 .12 .2018

Carrying amount

Debenture bond in EUR
(ISIN: XS0972165848) 1

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 EUR
(ISIN: XS1803247557)

Debenture bond in CHF
(ISIN: CH0344583783)

Debenture bond in CHF
(ISIN: CH0362748359)

Debenture bond in CHF
(ISIN: CH0317921663)

Debenture bond in CHF
(ISIN: CH0437180935)

Debenture bond in CHF
(ISIN: CH0254147504)

Debenture bond in CHF
(ISIN: CH0419040982)

Debenture bond in CHF
(ISIN: CH0336352775)

Debenture bond in CHF
(ISIN: CH0373476164)

Debenture bond in CHF
(ISIN: CH0268988182) 2

Debenture bond in CHF
(ISIN: CH0494734335)

Total debenture bonds

2013–2020

2014–2021

2010–2022

2015–2023

2012–2024

2015–2025

2014–2026

2018–2026

2016–2027

2017–2027

2016–2028

2018–2028

2014–2029

2019–2029

2016–2032

2017/
2019–2033

2015/
2018–2035

2019–2044

500

250

500

200

500

200

350

200

150

160

200

300

230

300

125

2 .00%

2 .22%

1 .88%

2 .06%

2 .63%

2 .81%

0 .25%

–0 .43%

1 .75%

1 .77%

1 .75%

–0 .21%

1 .50%

1 .47%

1 .13%

1 .25%

0 .38%

–0 .39%

0 .38%

0 .39%

0 .38%

0 .30%

0 .75%

0 .72%

1 .50%

1 .47%

0 .50%

0 .43%

0 .13%

0 .14%

0 .75%

0 .66%

1 .00%

0 .22%

0 .00%

544

502

256

504

575

202

539

206

351

202

151

161

202

299

233

319

564

501

255

504

584

202

560

199

351

202

151

161

–

299

151

306

125

5,915

–

5,554

1 Designated for hedge accounting of net investments in foreign operations.
2 Thereof CHF 150 million designated for fair value hedge accounting.
3 After hedging with interest rate swap.

4 After hedging with currency swap and taking hedge accounting into consider-

ation.

In the first quarter of 2019, Swisscom issued a debenture bond for CHF 200 million. It has a coupon of 0.5% and
matures in 2029. In the second quarter of 2019, a debenture bond taken out in 2017 to the value of CHF 80 mil-
lion was topped up. It has a coupon of 0.75% and matures in 2033. In addition, in August 2019 Swisscom issued
a debenture bond for CHF 125 million. It has a coupon of 0% and matures in 2044. The funds received were used
to repay existing loans.

In 2018, Swisscom issued three debenture bonds of an aggregate nominal amount of CHF 885 million. The funds
received were used to repay existing debt. In the third quarter of 2018, Swisscom repaid a debenture bond of a
nominal amount of CHF 1.4 billion upon maturity.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

130

Private placements

In CHF million

Maturity years

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

31.12.2019

31 .12 .2018

Carrying amount

278

150

Variable

0 .56%

1 .25%

0 .56%

–

151

276

150

426

In the fourth quarter of 2019, Swisscom repaid a private placement of CHF 278 million upon maturity. The out-
standing private placements may become due for immediate repayment if the shareholding of the Confedera-
tion in the capital of Swisscom falls below 35% or if another shareholder can exercise control over Swisscom.

Other financial liabilities
As of December 31, 2019, the carrying amount of other financial liabilities was CHF 230 million (prior year
CHF 516 million), consisting primarily of deferred purchase price payments from business combinations and
U.S. treasury bond strips. Repayment of other financial liabilities in 2019 includes the purchase price of
CHF 240 million paid to Tamedia for the acquisition of the outstanding share of 31% in Swisscom Directories Ltd.
See Note 5.2.

2.3 Leases
Swisscom applied IFRS 16 “Leases” as at 1 January 2019, and elected to apply the modified retrospective approach
for the first-time application. With this approach, right-of-use assets and lease liabilities were recognised in the
same amount. For further information, see in Note “General information and changes in accounting policies“.

Lessee
The Swisscom leases comprise the rental of operation and office buildings, antenna sites, and network infra-
structure in particular. In addition, indefeasible rights of use (IRU) are classified as leases under IFRS 16. In gen-
eral, IRUs are paid in full at the beginning of use. The Italian subsidiary, Fastweb, procures various access services
from other fixed-network operators for the use of connection cables to the end customer. Swisscom will apply
the low value exemption of IFRS 16 for these leases. Accordingly, no right-of-use assets and lease liabilities will
be recognised for these access services, the costs of which will be reported as direct costs. There are no material
lease commitments arising from leases that began after the balance sheet date.

Swisscom concluded two agreements in 2001 for the sale of real estate. At the same time, it 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 2019, the carrying amount of
the deferred gains was CHF 122 million (prior year: CHF 134 million). The deferred gains are released to other
income over the term of the individual leases.

131

Rights-of-use assets

In CHF million

At cost

Balance at 31 December 2018

Change in accounting policies 1

Reclassifications 1

Balance at 1 January 2019, adjusted

Additions

Disposals

Foreign currency translation adjustments

Balance at 31 December 2019

Accumulated depreciation and impairment losses

Balance at 31 December 2018

Change in accounting policies 1

Reclassifications 1

Balance at 1 January 2019, adjusted

Depreciation

Disposals

Foreign currency translation adjustments

Balance at 31 December 2019

Net carrying amount

Net carrying amount at 31 December 2019

Net carrying amount at 1 January 2019

1 See “General information and changes in accounting policies” in the notes

to the consolidated financial statements.

Land
and buildings

Technical
installations

Other
right-of-use
assets

–

1,236

582

1,818

262

(72)

(9)

–

624

430

(17)

(31)

1,999

1,006

–

(4)

(242)

(246)

(219)

–

(393)

1,606

1,572

–

(412)

(62)

(442)

564

212

–

(1)

–

(1)

Lease liabilities

In CHF million

Balance at 1 January

Change in accounting policies 1

Balance at 1 January, adjusted

Additions

Interest expense

Payments

Foreign currency translation adjustments

Balance at 31 December

Land and buildings

Technical installations

Other leases

Total lease liabilities 2

Thereof current lease liabilities

Thereof non-current lease liabilities

1 See “General information and changes in accounting policies” in the notes to

2 Note 2.5 shows the maturity analysis for lease liabilities.

the consolidated financial statements.

Total

–

1,238

1,206

2,444

698

(89)

(40)

3,013

–

(4)

(654)

(658)

(282)

(836)

2,177

1,786

2019

384

1,238

1,622

698

(318)

(17)

2,027

1,642

377

2,027

232

1,795

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

132

Income and expenses arising from leases

In CHF million

Revenue

Income from leases excluding subleases

Income from subleases

Other income

Deferred gain on sale and leaseback of real estate

Financial income

Interest income on finance lease

Direct costs

Expense from leases of low value assets

Depreciation

Depreciation of right-of-use assets

Financial expense

Interest expense on lease liabilities

2019

184

(135)

(282)

(42)

Lessor
Swisscom supplies other providers of telecommunications services with access lines for use, which classify either
as finance or operating lease. At the same time, Swisscom leases space in operations and offices buildings and at
antenna sites, which is classified as an operating lease. Future lease payments in respect of receivables from
finance leases break down as follows as at 31 December 2019.

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 future payments from finance leases

Future interest revenue

Total receivables from finance leases

Future lease payments in respect of operating leases are as follows as at 31 December 2019:

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 future payments from operating leases

31.12.2019

(1)

31.12.2019

209

Significant judgements or estimates
When determining the terms of leases, management considers all facts and circumstances that provide an eco-
nomic incentive to exercise renewal options or not exercise termination options. Renewal and termination
options are only included in the contract term where there is sufficient certainty that they will be exercised. This
assessment is reviewed in the event of a material occurrence or change in circumstances that may affect the
previous assessment, where this is within the lessee’s control.

133

Accounting policies

Financial liabilities
Financial liabilities are initially recognised at fair value less direct transaction costs. In subsequent accounting
periods, they are re-measured at amortised cost using the effective interest method.

The following paragraphs describe the accounting policies valid as from 1 January 2019. The amendments to the
previous accounting policies are described in the note “Amendments to International Financial Reporting Stand-
ards and Interpretations which are to be applied for the first time in the financial year”.

Leases
A lease is a contract or part of a contract that transfers the right to control the use of an identifiable asset for an
agreed period of time in return for payment. In particular, the Swisscom leases comprise the rental of operation
and office buildings, antenna sites, as well as network infrastructure and indefeasible rights of use (IRU). As a
lessee, for each lease Swisscom recognises a lease liability for future lease payments and a right-of-use asset as
at the time when the leased asset becomes available to Swisscom. The lease payments are divided into a repay-
ment component and an interest component. The interest component is recognised as an interest expense over
the lease term computed on the basis of the effective interest method. The right-of-use asset is depreciated on
a straight-line basis over the shorter of the useful life and the lease term. As a lessor, Swisscom has to distinguish
between finance and operating leases. A lease is recorded as a finance lease whenever essentially all of the risks
and rewards incidental to ownership of the asset are transferred. Unless implicitly specified in the lease, the
interest rate used to measure the rights of use and lease liabilities is the incremental borrowing rate. In the area
of network access services, for selected leases Swisscom applies the exemptions regarding the separation of
lease and non-lease components. The non-lease components are accounted for in accordance with other stand-
ards. Swisscom procures various access services from other network operators for the use of connection cables
to the end customer. Under IFRS 16, part of these access services is classified as a lease. The value of the individ-
ual connection cable fulfils the criteria as an asset of low value. Swisscom applies the low value asset exemption
for these leases. Accordingly, no right-of-use assets and lease liabilities will be recognised for these access ser-
vices, the costs of which will continue to be reported as operating expense. The exemption for short-term leases
is not applied. A number of leases for the rental of operation and office buildings include renewal and termina-
tion options which are taken into account in the initial measurement by category of building. Rental contracts of
antenna sites have an initial lease term of 10 to 15 years. In general, these rental contracts include renewal and
mutual termination options. For these leases, it’s not reasonable certain that all renewal options will be exer-
cised. Accordingly, no renewal options are taken into account in the initial measurement of lease contracts of
antenna sites. It is not possible to estimate the amount of additional undiscounted payments which are cur-
rently not included in the lease liabilities. This due to Swisscom’s planning horizon of a maximum of five years
and technological developments.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

134

2.4 Financial result

In CHF million

Interest income on financial assets

Change in fair value of interest rate swaps 1

Capitalised borrowing costs

Other financial income

Total financial income

Interest expense on financial liabilities

Interest expense on lease liabilities

Interest expense on defined benefit obligations 2

Foreign exchange losses

Change in fair value of interest rate swaps 1

Present-value adjustments on provisions 3

Other financial expense

Total financial expense

Financial income and financial expense, net

Interest expense on lease liabilities

Net interest expense for financial assets and liabilities

1 See Note 2.5.
2 See Note 4.3.

3 See Note 3.5.

2019

–

(73)

(42)

(8)

(12)

(23)

(8)

(25)

(191)

(158)

(42)

(62)

2018

(114)

(24)

(6)

–

(8)

(28)

(186)

(158)

(24)

(104)

2.5 Financial risk management
Swisscom is exposed to various financial risks arising from its operating 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 mitigation

Currency risks

Swisscom is exposed to foreign exchange changes
which can impact the Group’s cash flows,
financial result and equity .

● Reduction in cash flow volatility by use of forward
currency contracts/swaps and currency swaps and
designation for hedge accounting (transaction risk)
● Reduction in translation risk by foreign currency
financing and designation for hedge accounting
● Hedging of curreny risk of foreign currency financing
by use of currency swaps

● Use of interest rate swaps to manage
fixed/variable share of financial debt

● Guideline establishing minimum requirements

for counterparties

● Designated counterparty limits
● Employment of netting agreements foreseen under

ISDA (International Swaps and Derivatives Association)

Interest-rate risks result from changes in interest rates
which can negatively impact cash flows and the financial
situation of Swisscom .

Through its operating business activities and derivative
financial instruments and financial investments,
Swisscom is exposed to the risk of default
of a counterparty .

Interest rate risk

Credit risks
from operating
business activities
and financial
transactions

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 confirmed lines of credit .

● Use of collateral agreements

● Procedures and principles

to ensure adequate liquidity

● Two guaranteed bank credit lines
each of CHF 1,000 million

135

Foreign exchange risks
As regards financial instruments, the following currency risks and hedging contracts existed for foreign curren-
cies as of 31 December 2018 and 2019:

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

31.12.2019

31 .12 .2018

EUR

(3,151)

(34)

(3,080)

(3,039)

–

527

760

1,287

(1,752)

USD

309

(234)

(35)

(358)

(303)

358

(44)

–

314

EUR

(3,443)

(34)

(3,360)

(64)

(3,424)

–

635

789

1,424

(2,000)

USD

227

(144)

(47)

(423)

(371)

430

(62)

–

368

(3)

In addition, as of 31 December 2019, Swisscom had outstanding financial liabilities with a nominal value total-
ling EUR 1,710 million (CHF 1,855 million, prior year EUR 1,770 million, CHF 1,995 million), which is designated for
hedge accounting of net investments in foreign operations. In 2019, income of CHF 72 million (prior year: income
of CHF 85 million) arising from the measurement of financial liabilities was recognised in other comprehensive
income in the position of foreign currency translation of foreign Group companies. As of 31 December 2019, the
cumulative positive amount of foreign currency translation differences in equity totals CHF 234 million.

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

31.12.2019

EUR volatility 4 .67%

USD volatility 6 .01%

31.12.2018

EUR volatility 6 .28%

USD volatility 7 .68%

Income impact on

Hedges for
balance sheet items balance sheet items

Planned

Hedges for
cash flows planned cash flows

144

(3)

211

(4)

(60)

(89)

(2)

–

(22)

–

(33)

The volatility of the balance sheet positions and scheduled cash flows is partially offset by the volatility of the
related hedging contracts.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

136

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

31.12.2019

31 .12 .2018

6,589

646

7,235

(250)

(414)

(664)

6,571

232

1,335

1,567

6,339

(1,335)

5,004

6,571

6,497

1,053

7,550

(139)

(556)

(695)

6,855

497

1,364

1,861

6,358

(1,364)

4,994

6,855

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 2018 and 2019.

Credit risks
Credit risks from financial transactions
The carrying amounts of cash and cash equivalents and other financial assets exposed to credit risk (excluding
trade receivables and contract assets) may be analysed as follows:

In CHF million

Cash and cash equivalents

Financial assets at amortised cost

Derivative financial instruments

Other assets valued at fair value

Total carrying amount of financial assets

31.12.2019

31 .12 .2018

328

390

803

474

259

817

The carrying amounts analysed by the 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

31.12.2019

31 .12 .2018

421

168

120

803

453

212

817

137

Financial risks from operating activities
Credit risks on trade receivables, contract assets and other receivables arise from the Group’s operating activi-
ties. Credit risks from other receivables are insignificant. As an initial step, Swisscom divides the credit risks from
operating activities between Swisscom Switzerland and Fastweb. Default risks are principally impacted by the
individual attributes of the customers. The default risk is further influenced by the default risk of customer
groups and industry sectors. Swisscom possesses a receivables management system as an aid to minimise
default losses. New customers are reviewed for their credit-worthiness, and maximum payment targets are set
for customer groups. As regards their credit-worthiness, customers are divided into groups for the purposes of
monitoring default risk. In the process a differentiation is made between individual and business customers,
among other things. In addition, the ageing structure of the receivables is taken into account, as well as the
industry segment in which a business customer is active.

The split of trade receivables and contract assets by operating segment may be analysed as follows:

In CHF million

Notional amount

Residential Customers

Enterprise Customers

Wholesale

IT, Network & Infrastructure

Swisscom Switzerland

Fastweb

Other Operating Segments

Total notional amount

Allowances for doubtful debts

Residential Customers

Enterprise Customers

Wholesale

IT, Network & Infrastructure

Swisscom Switzerland

Fastweb

Other Operating Segments

Total allowances for doubtful debts

Total notional amount less allowances for doubtful debts

31.12.2019

31 .12 .2018

1,069

1,140

436

173

1,704

658

187

2,549

(56)

(2)

(1)

(60)

(69)

(15)

481

149

1,795

696

176

2,667

(51)

(3)

(1)

(2)

(57)

(87)

(13)

(144)

(157)

2,405

2,510

As of 31 December 2019, the maturities of trade receivables and contract assets as well as any applicable related
valuation allowances may 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

Rate

0 .64%

4 .79%

26 .15%

42 .67%

58 .95%

5.65%

Par value

1,729

585

31.12.2019

Allowance

(11)

(28)

(17)

(32)

(56)

2,549

(144)

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

138

As of 31 December 2018, the maturities of trade receivables and contract assets as well as any applicable related
valuation allowances may be analysed as follows:

In CHF million

Not overdue

Past due up to 3 months

Past due 4 to 6 months

Past due 7 to 12 months

Past due over 1 year

Total

Rate

0 .51%

6 .15%

24 .36%

35 .48%

81 .93%

5.89%

31 .12 .2018

Par value

Allowance

1,974

439

(10)

(27)

(19)

(33)

(68)

2,667

(157)

Movements in valuation allowances for trade receivables and contract assets may be analysed as follows:

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

2019

157

(92)

(3)

144

2018

225

(138)

(7)

(4)

157

In CHF million

31.12.2019

Bank loans

Debenture bonds

Private placements

Derivative financial instruments

Other financial liabilities

Lease liabilities

Trade payables

Total

In CHF million

31.12.2018

Bank loans

Debenture bonds

Private placements

Derivative financial instruments

Other financial liabilities

Lease liabilities

Trade payables

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

1,080

5,915

151

230

2,027

1,614

1,133

6,095

160

230

2,727

1,614

11,101

12,041

790

617

282

1,595

3,342

184

607

1,385

152

3,486

156

566

1,633

–

2,170

5,561

246

968

Carrying Contractual Due within Due within Due within
1 year 1 to 2 years 3 to 5 years
amount

payments

Due after
5 years

1,233

5,554

426

516

384

1,295

5,960

438

516

775

641

278

394

1,658

9,825

10,700

1,610

3,052

302

638

1,470

330

3,777

157

–

593

–

1,094

1,663

4,891

139

Derivative financial instruments

In CHF million

Interest rate swaps in CHF

Currency swaps in EUR

Total fair value hedges

Forward currency contracts 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

Total derivative financial instruments

Thereof current derivative financial instruments

Thereof non-current derivative financial instruments

Contract value

Positive fair value

Negative fair value

31.12.2019

31 .12 .2018

31.12.2019

31 .12 .2018

31.12.2019

31 .12 .2018

575

760

575

789

1,335

1,364

147

200

527

211

983

2,465

202

200

635

221

1,118

2,684

–

(4)

(1)

–

(1)

(2)

(70)

(48)

–

(5)

(80)

(84)

(14)

(70)

–

(1)

(2)

(51)

(54)

(5)

(49)

Swisscom has entered into interest rate and foreign currency swaps, designated as fair value hedges, in order to
hedge interest rate and foreign currency risks of fixed interest-bearing finance denominated in CHF and EUR.
Derivative financial instruments contain currency swaps, designated as cash flow hedges, in order to hedge
future purchases of goods and services in USD. Furthermore, derivative financial instruments include interest
rate swaps which are not designated for hedge accounting purposes. In addition, derivative financial instru-
ments exclusively comprise forward foreign currency transactions and foreign currency swaps in EUR and USD
which serve to hedge future transactions in connection with financing or the operating business activities of
Swisscom, and which were not designated for hedge accounting purposes. Swisscom does not enter into deriv-
ative financial instruments for speculative purposes.

The fair value hedge transactions of CHF 575 million and EUR 500 million designated by Swisscom will be affected
by the Interest Rate Benchmark Reform (known as the IBOR Reform). In Switzerland, the changeover from the
reference interest rate LIBOR to SARON is being pursued. In the EUR zone, the EURIBOR was recently reformed
and EONIA is to be replaced by the ESTR. Swisscom is closely following developments relating to the changeover
of reference interest rates, and will contact the counterparties in due course to ensure that the changeover can
be completed on individual contracts. By adopting the modifications early, Swisscom is guaranteeing that hedge
accounting continues to exist or can be designated despite the uncertainties associated with the expected
replacement of the reference interest rates in CHF and EUR.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

140

Accounting policies

Derivative financial instruments
Derivative financial instruments are initially recognised at fair value and are subsequently measured at fair
value. The method of recording the fluctuations in fair value depends on the underlying transaction and the
objective pursued by purchasing or entering into this underlying transaction. On the date a derivative contract is
concluded, 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 instru-
ments 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 are recognised in the hedging reserve as part of equity. If a hedge of an anticipated 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. Other-
wise, the amounts recorded in equity are recognised in the income statement as income or expense in the same
period as the cash flows of the intended or agreed future transaction occur. Changes in the fair value of deriva-
tive financial instruments that are not designated as hedging instruments are immediately recorded as income.

Valuation category 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 stock exchange quo-
tations 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 forward
foreign exchange rates as of the balance sheet date.

Valuation categories and fair value of financial instruments
The 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 trade payables, as well as miscellaneous receivables
and liabilities whose carrying amount corresponds to a reasonable estimation of their fair value.

141

In CHF million

Other financial assets
Term deposits
Certificates of deposit
Listed debt instruments
Loans
At amortised cost
Equity instruments valued at fair value
Fair value through other comprehensive income
Loans
Derivative financial instruments
Fair value through profit or loss
Total other financial assets

Financial liabilities
Bank loans
Debenture bonds
Private placements
Derivative financial instruments
Other financial liabilities
Total financial liabilities

In CHF million

Other financial assets
Term deposits
Certificates of deposit
Quoted debt instruments
Loans
At amortised cost
Equity instruments valued at fair value
Equity instruments valued at fair value
At fair value through other comprehensive income
Loans
Derivative financial instruments
Fair value through profit or loss
Total other financial assets

Financial liabilities
Bank loans
Debenture bonds
Private placements
Derivative financial instruments
Other financial liabilities
Total financial liabilities

Carrying amount

Fair Value

31.12.2019

Level

7
142
139
102
390
82
82
1
84
85
557

1,080
5,915
151
84
230
7,460

7
160
134
102
403

82
82
1
84
85
570

1,111
6,194
159
84
230
7,778

2
2
1
2

2
2

2
1
2
2
2

Carrying amount

Fair Value

31 .12 .2018

Level

7
145
63
44
259
6
72
78
2
82
84
421

1,233
5,554
426
54
516
7,783

7
157
63
44
271

72
78
2
82
84
433

1,250
5,719
426
54
516
7,965

2
2
1
2

1
3

2
2

2
1
2
2
2

Financial assets amounting to CHF 281 million (prior year: CHF 208 million) are not freely available, as they serve
as security for liabilities.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

142

3 Operating assets and liabilities

The following section discloses information on the movement in net operating
assets and liabilities, as well as in significant non-current tangible and intan-
gible assets . In addition, it provides information about the allocation of goodwill
to the individual cash-generating units and on the results of any applicable
impairment tests . Movements in provisions and contingent liabilities are also
presented in this section .

3.1 Operating net working capital

Movements in operating assets and liabilities

In CHF million

Financial year 2019

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 2018

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.

Trade receivables

In CHF million

Billed revenue

Accrued revenue

Allowances

Total trade receivables 1

1 Credit risks. See Note 2.5.

31 .12 .2018

Operational
changes

Other
1
changes

31.12.2019

2,189

1,243

(1,658)

(1,127)

647

(64)

(69)

(100)

(24)

(23)

(4)

2,183

1,156

(1,614)

(1,182)

543

31 .12 .2017

Operational
changes

Other
1
changes

31 .12 .2018

2,389

729

(1,753)

(1,165)

200

(139)

(61)

430

(37)

377

2,189

1,243

(1,658)

(1,127)

647

31.12.2019

31 .12 .2018

2,238

(143)

2,183

2,231

113

(155)

2,189

143

Other operating assets and liabilities

In CHF million

Other operating assets

Contract assets

Contract costs

Other receivables

Inventories

Prepaid expenses

Advance payments made

Value-added taxes receivable

Other non-financial assets

Total other operating assets

Other operating liabilities

Contract liabilities

Accruals for variable performance-related bonus

Value-added taxes payable

Accruals for annual holiday, overtime

Liabilities from collection activities

Advance payments received

Miscellaneous liabilities

Total other operating liabilities

Contract assets and liabilities

In CHF million

Contract assets

Swisscom Switzerland

Fastweb

Other

Total contract assets

Contract liabilities

Swisscom Switzerland

Fastweb

Other

Total contract liabilities

31.12.2019

31 .12 .2018

222

262

125

338

321

274

154

316

1,156

1,243

672

145

207

1,182

620

163

173

1,127

31.12.2019

31 .12 .2018

162

–

222

456

127

672

258

321

427

113

620

Contract assets of Swisscom Switzerland primarily include deferrals arising in connection with the sale of bun-
dled offerings in the mobile-phone area. In part, mobile handsets are sold, together with a mobile-phone con-
tract, on a subsidised basis in the bundled offering. As a result of the allocation of revenue over the pre-delivered
components (mobile handset), revenues are recognised earlier than the invoicing thereof. This results in contract
assets deriving from this business being recognised. Contractual liabilities largely cover deferrals from payments
for prepaid cards and prepaid Swisscom Switzerland subscription fees. In 2019, an amount of CHF 209 million
was recorded as revenue which had been recognised as a contract liability as of 1 January 2019. Swisscom avails
itself of the rules of IFRS 15.121 regarding the disclosure of the transaction price allocated to the performance
obligation that are unsatisfied. The exemption is not applied in the case of mobile-phone contracts with the sale
of a subsidised mobile handset and a minimum contract term. These contracts incorporate revenue of
CHF 559 million (2020: CHF 482 million; 2021: CHF 77 million). The decrease in the reported transaction price
from CHF 961 million to CHF 559 million is due to the introduction of the SIM-Only tariff in March 2019.

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

144

Contract costs
Contract costs include deferred costs to obtain a contract as well as costs to fulfil a contract, which may be
analysed as follows:

In CHF million

Costs to obtain a contract

Commissions to dealers for customer acquisition and retention

Commissions to dealers for handset subsidies

Swisscom Switzerland

Fastweb

Other

Total costs to obtain a contract

Costs to fulfill a contract

Router and TV boxes

Initial costs from outsourcing contracts

Total costs to fulfill a contract

Total contract costs

Accounting policies

31.12.2019

31 .12 .2018

137

125

262

101

173

101

274

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 heter-
ogeneous credit risk attributes, reviewed collectively for impairment, and whenever required, impairment losses
are recognised. In addition to the contractually foreseen payment conditions, historical default rates and current
information and expectations are taken into consideration in determining the expected future cash flows from
the portfolio. Impairment losses for trade receivables are recognised as other operating expenses.

145

Technical
installations

Land, buildings
and leasehold
improvements

Advances made
and assets
installations under construction

Other

3.2 Property, plant and equipment

In CHF million

Cost of acquisition

Balance at 31 December 2017

Additions

Disposals

Adjustment to dismantlement and restoration costs

Reclassifications

Business combinations

Foreign currency translation adjustments

Balance at 31 December 2018

Reclassifications 1

Balance at 1 January 2019, adjusted

Additions

Disposals

Adjustment to dismantlement and restoration costs

Reclassifications

Sales of subsidiaries

Foreign currency translation adjustments

28,175

1,368

(1,586)

(1)

(192)

27,873

(560)

27,313

1,122

(459)

141

(4)

(186)

2,696

4,273

(99)

–

(3)

–

(4)

2,592

(445)

2,147

(479)

–

(3)

242

(167)

160

–

4,512

(64)

4,448

201

(124)

(3)

–

Balance at 31 December 2019

27,955

1,684

4,614

Accumulated depreciation and impairment losses

Balance at 31 December 2017

Depreciation

Disposals

Reclassifications

Foreign currency translation adjustments

Balance at 31 December 2018

Reclassifications 1

Balance at 1 January 2019, adjusted

Depreciation

Impairment losses

Disposals

Sales of subsidiaries

Reclassifications

Foreign currency translation adjustments

Balance at 31 December 2019

Net carrying amount

Net carrying amount at 31 December 2019

Net carrying amount at 31 December 2018

Net carrying amount at 31 December 2017

(19,880)

(1,165)

1,584

107

(19,298)

377

(18,921)

(1,195)

(1)

459

–

106

(19,548)

8,407

8,575

8,295

1 See “General information and changes in accounting policies” in the notes to

the consolidated financial statements.

(2,040)

(2,891)

(35)

(2,034)

193

(1,841)

(18)

(1)

470

–

(1)

(319)

163

(66)

–

(3,113)

(3,078)

(306)

(8)

119

–

(1,390)

(3,270)

294

558

656

1,344

1,399

1,382

484

357

364

196

–

(202)

–

(1)

357

–

357

362

–

(234)

–

(1)

484

–

Total

35,508

1,808

(1,852)

(197)

35,334

(1,069)

34,265

1,687

(1,062)

(3)

(7)

(190)

34,737

(24,811)

(1,519)

1,778

(1)

108

(24,445)

605

(23,840)

(1,519)

(10)

1,048

–

107

(24,208)

10,529

10,889

10,697

Commitments for future capital expenditures
Firm contractual commitments for future capital investments in property, plant and equipment as of 31 Decem-
ber 2019 aggregated CHF 809 million (prior year: CHF 914 million).

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

s
t
n
e
m
e
t
a
t
S
l

a
i
c
n
a
n
i
F
d
e
t
a
d

i
l

o
s
n
o
C

146

Non-cash investing and financing transactions
As a result of changes in the assumptions made in estimating the provisions for dismantlement and restoration
costs, an increase therein of CHF 47 million (prior year: CHF 3 million) was recognised in property, plant and
equipment with no impact on the income statement. See Note 3.5.

Significant judgements or estimates
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 recognised at historical cost less depreciation and impairment losses. In addi-
tion to historical cost and the costs directly attributable to bringing the asset to the location and condition nec-
essary 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 restoring the site. Borrowing costs are capitalised insofar
as they are directly attributable 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 costs can be measured reliably. The carrying amount of the parts
replaced is de-recognised. Depreciation 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: