Swisscom AG Annual Report 2020

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FY2020 Annual Report · Swisscom AG

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Annual Report
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312441e71eb6420bb1817f10b34fdf40.indd 1

29.01.2021 15:44:33

The Annual Report, Sustainability Report and “2020 at a glance” together make up Swisscom’s reporting
on 2020. The three publications are available online at: swisscom.ch/report2020

Concept “ready”
With the brand platform “ready”, Swisscom also wants to revitalise its brand internally and externally and
make the networked future accessible to its customers in a simple way.

The pictures in the Annual Report 2020 show Swisscom employees who were also ready in this
extraordinary year in order to enable our customers, for their part, to be “ready for life”.

The cover of the Annual Report and “2020 at a glance” shows Dilan Mert, Shop Manager Shopville at Zurich
Main Station.

The cover page of the Sustainability Report shows Saskia Günther, the new head of the Sustainability
Team.

A big thank you to all who took time to pose for these photographs and film recordings: Lorenz Inglin,
Florian Leibenzeder, Florian Badertscher, Sebnem Kaslack, Stefan Kuch, Reto Jost, Pascal Salina, Carmen
Wäfler, Markus Gisi, Cloé Zähringer-Cela, Dilan Mert, Dany Kammacher, Patrick Weibel, Barbara Pytlik,
Klaus Liechti, Luigi Chiofalo, Saskia Günther and Giulia Langhi.

readyWe areSustainability Report 2020

Table of contents

Introduction

Management Commentary

1 – 11

12 – 67

Corporate Governance and Remuneration Report

68 – 109

Consolidated Financial Statements

Further Information

110 – 179

180 – 188

2020 in review

Net revenue
billion CHF

EBITDA
billion CHF

Capital expenditure
billion CHF

11.1

 3.1%

4.4

 0.6%

2.2

 8.6%

Net income
billion CHF

Net debt to EBITDA
after leases ratio

Equity ratio
%

1.5

 8.4%

1.5

 0.2

39.1

 2.5 PP

Employees
(full-time equivalent)

Dividend per share
CHF

19,062

 1.3%



Total shareholder
return Swisscom share
%

-3.0

 17.3 PP

World champion in
sustainability

Swisscom named world’s most
sustainable telecommunications
company.

Climate-neutral
operations

The world
premiere:

Gbps

The company has itself
saved 80% of emissions
and now offsets the other
20% with myclimate.

Achieved for the first time
by Swisscom in
a real fixed network
environment.

Fastweb is growing!

Fastweb has more
customers, more revenue
and more EBITDA.

CHF 1.6 billion

Invested by Swisscom in
Swiss network expansion and
maintenance.

And everything turned

Test winner

“blue”

blue – the new blue
entertainment experience, combining
film, cinema, TV and news.

No. 1

in all mobile network
tests in Switzerland.

KPIs

In CHF million, except where indicated

Net revenue and results 1

Net revenue

Operating income before depreciation and amortisation (EBITDA)

EBITDA as % of net revenue

EBITDA after lease expense (EBITDA AL)

Operating income (EBIT)

Net income

Earnings per share

Balance sheet and cash flows 1

Equity

Equity ratio

Operating free cash flow proxy

Capital expenditure

Net debt

Operational data

Fixed telephony access lines in Switzerland

Broadband access lines retail in Switzerland

TV access lines 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

Average number of full-time equivalent employees

2020

2019

Change

11,100

11,453

4,382

39.5

4,082

1,947

1,528

29.54

9,491

39.1

1,853

2,229

6,218

1,523

2,043

1,554

6,224

4,358

38.1

4,064

1,910

1,669

32.28

8,875

36.6

1,626

2,438

6,758

1,594

2,058

1,555

6,333

11,344

11,540

555

2,747

1,961

51,802

24,715

477.10

577.80

446.70

22.00

19,062

19,095

515

2,637

1,746

51,802

26,554

512.60

523.40

441.10

22.00

19,317

19,561

CHF

in thousand

CHF

number

–3.1%

0.6%

0.4%

1.9%

–8.4%

–8.5%

6.9%

14.0%

–8.6%

–8.0%

–4.5%

–0.7%

–0.1%

–1.7%

7.8%

4.2%

12.3%

–

–6.9%

–

–1.3%

–2.4%

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

General Meeting.

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Business overview

Other Operating
Segments

With subsidiaries in the area of
network construction and main-
tenance (cablex) and broadcast
services
(Swisscom Broadcast),
Swisscom is supplementing the
core business in related areas. The
Digital Business division is focused
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 provides broadband and
mobile phone services to resi-
dential, business and wholesale
customers in Italy. The offering
includes telephony, broadband
and mobile services. Fastweb
also offers comprehensive ICT
solutions for business customers.

Residential Customers
The Residential Customers division
provides mobile and fixed-line
services in Switzerland, such as
fixed-line telephony, broadband,
TV and mobile communications.

for

Business Customers
Business Customers offers tele-
com services and overall commu-
nications solutions
large
corporations and SME customers
in Switzerland. The offering in the
area of business ICT infrastructure
covers the entire range from
individual products to complete
solutions.

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 pro-
viders to use the Swisscom fixed
and mobile network.

Revenues

CHF 8.3 bn

CHF 2.5 bn

CHF 1.0 bn

EBITDA

CHF 3.5 bn

CHF 0.8 bn

CHF 0.2 bn

Shareholders’ letter
Solid performance –
despite extraordinary year

From left: Urs Schaeppi, CEO Swisscom Ltd and Hansueli Loosli, Chairman of the Board of Directors Swisscom Ltd.

Dear Shareholders

If proof were needed of how important digitisation is for society and the
economy, then an extraordinary 2020 provided it in emphatic style. Home
working, remote learning, online shopping and video calls all helped to alleviate
some of the major disadvantages of the lockdown. It was a similar story
at Swisscom: even though more than 80% of our employees worked from
home, we maintained high productivity and achieved a solid financial result.
We also set our future course through various innovations in our networks
and the bundling of our entertainment offering under the “Swisscom blue”
brand. Moreover, we were especially pleased to see Swisscom named the
world’s most sustainable telecommunications company and to witness our
Italian subsidiary Fastweb grow in all segments.

A solid financial performance...
Swisscom performed well in the year under review despite fierce competition and high price pressure.
Net revenue decreased by 3.1% to CHF 11,100 million, while operating income before depreciation and
amortisation (EBITDA) rose by 0.6%. On a like-for-like basis and at constant exchange rates, revenue
declined by 2.3% while EBITDA remained stable. The decline in revenue was primarily driven by ongoing
price pressure and the impact of Covid-19 – in particular, the lack of roaming revenue. At EBITDA level, the
decline in revenue was offset by efficiency improvements. Net income fell by 8.4% to CHF 1,528 million
due to the absence of one-off effects in income tax expense of the previous year.

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Thanks to outstanding performance and rigorous cost management
Excellent networks, innovative products and services and a committed customer service team form the
basis for a high level of customer satisfaction and thus our success in the market. However, the pace of
digitisation and intense competition are also calling for rigorous cost management. As announced in
2016, Swisscom plans to lower its cost base by CHF 100 million annually. In 2020, we even exceeded this
target with a reduction of CHF 129 million. We are planning further cost reductions of CHF 100 million
per year up to 2022.

And thanks to Fastweb
In 2020, Fastweb continued its successful path in Italy. In the fixed-network business, it increased the
number of broadband customers to 2.75 million (+4.2%) and the number of mobile customers to a total of
1.96 million (+12.3%), despite considerable price pressure. As a result, Fastweb achieved total revenue
of EUR 2,304 million (+3.9%) and operating income before depreciation and amortisation (EBITDA) of
EUR 784 million (+4.5%).

Fastweb is the clear number two in the Italian broadband market thanks to its market share of around 16%
among residential customers, 34% among large companies and 40% among public authorities. Europe’s
fourth-largest market continues to offer exciting growth opportunities. Fastweb signed a co-investment
agreement in August for the nationwide rollout of FTTH in Italy. In the mobile market, Fastweb is working
with Wind Tre to build a 5G mobile network that will provide 30% coverage by 2023 and even 90%
coverage by 2026.

Increased demands on networks due to the Covid-19 pandemic
Demands on network stability and availability rose sharply in the year under review as a result of the Covid-19
pandemic, making the network outages at the beginning of the year all the more painful. These fell far short
of our high standards, but were resolved quickly thanks to efficient and immediate action. Our networks were
fully available again during the lockdown and coped with the massively higher load without any problems.

Swisscom is proactively expanding its network infrastructure. In the year under review, Swisscom
invested CHF 2.2 billion in the expansion of its IT and infrastructure, around CHF 1.6 billion of which was
spent in Switzerland.

Thanks to the over 4.4 million ultra-fast broadband connections installed to date, Swisscom is on course to
meet its expansion target of delivering speeds of at least 80 Mbps to 90% of all businesses and homes in
every Swiss community by 2021. And that is by no means the limit of its ambitions. As set out in its network
strategy for the period to the end of 2025, which was unveiled in 2020, Swisscom intends to double its fibre-
to-the-home (FTTH) coverage and provide up to 60% of homes and businesses with bandwidths of 10 Gbps.

Winner in all Swiss mobile tests, but...
Swisscom provides its customers with an excellent mobile network that came out on top in all of
Switzerland’s mobile tests in the year under review. We were also pleased to be rated the third-best
mobile provider in Europe.

So far, so good, but mobile expansion can no longer keep up with the increasing volume of data traffic.
While data traffic grew by 29% in 2020, we were only able to increase the capacity of our networks by 5%.
5G could ease the situation with the necessary hardware adjustments, but expansion is stalling as a
result of resistance and regional moratoria. The concerns about 5G lack a factual basis: international
expert organisations, such as the World Health Organisation (WHO), confirmed once again in 2020 that
the recommended international limits ensure there are no health risks associated with 5G.

inOne – bundled success
The attractive inOne bundled offering is performing well in a largely saturated and heavily promotion-
driven residential customers market. Swisscom had 2.45 million inOne customers at the end of 2020
(+4.8%). In total, Swisscom has 3.6 million broadband and TV customers (–0.4%) and 6.22 million mobile
customers (–1.7%). There was strong growth in home networking (smart home) solutions for controlling
lighting, music or alarm systems via the Swisscom Home app, with customer numbers rising by 39%.

blue – Swisscom’s new world of entertainment
In September 2020, Swisscom bundled its entertainment services – Bluewin, Swisscom TV, Teleclub and
Kitag – to create the new “Swisscom blue” product family. The blue entertainment package is now also
available via an app on any smartphone and tablet, not only for Swisscom customers but also for those of
our competitors, thus enabling us to extend the reach of the blue offering.

The broadest blue TV package is still only available in combination with the Swisscom Box. This now also
allows access to the streaming services of Amazon and the “MySports” channels with the ice hockey
matches of the Swiss National League.

Tough competition in corporate business
The Covid-19 pandemic has been an additional catalyst driving digitisation in companies. As an integrated
telecommunications and IT company, Swisscom is ideally positioned to meet the growing demand for
cloud, security and unified communication & collaboration solutions (e.g. conferencing services). Revenue
from the solutions business was almost unchanged in 2020, at CHF 1,058 million (+0.9%).

“ We were especially pleased

to see Swisscom named the
world’s most sustainable
telecommunications company
and to witness Fastweb’s

growth in all segments.”

Swisscom offers small businesses “inOne SME”, a standardised yet individual bundled package for Inter-
net and telephony. Larger SMEs or those with more complex needs can use “Smart Business Connect”, an
individualised communication solution with collaboration and networking features.

Ready together – especially in the extraordinary year 2020
Swisscom launched the brand platform “ready” in order to revitalise its brand both internally and exter-
nally. During the lockdown we supported our customers with a “ready together” package of measures:
residential customers without a flat-rate mobile subscription received additional data allowances and
higher Internet speeds of at least 50 Mbps, while customers stranded abroad were given additional
roaming credit. SMEs and schools benefited from home working solutions offering faster Internet speeds.
Swisscom also helped SMEs create online offerings.

Sustainability is an integral element of Swisscom’s DNA
Swisscom’s recognition as the world’s most sustainable telecommunications company is not only confir-
mation of our 20-year journey, but above all an incentive to continue on this path. The key milestones in
2020 were converting to climate-neutral operations, providing a carbon offsetting offer on the purchase
of new smartphones, and becoming the first listed Swiss company to place a green bond, with a volume
of EUR 500 million.

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Network innovations and new growth
Swisscom unveiled two important network innovations in 2020. In the fixed network, Swisscom achieved
a bandwidth of 50 Gbps in the access network under real conditions – a world first that should be ready for the
market in two years. In mobile communications, Swisscom achieved download speeds of over 1.2 Gbps for
the first time in a moving train – important for passengers and safety-critical rail applications.

Swisscom is targeting further growth in its core business and related areas, such as Fastweb in Italy and
digital entertainment services with blue, Smart Life and artificial intelligence and security for companies,
banks and the healthcare sector.

Shareholder return
Swisscom pursues a return policy with a stable dividend. In 2020, Swisscom paid an ordinary dividend of
CHF 22 per share. The Swiss Market Index (SMI) rose by 0.8% compared with the previous year, while the
Swisscom share price fell by 6.9% to CHF 477.10.

“ Swisscom came out on top

in all of Switzerland’s mobile tests
last year. We were also pleased
to be rated the third-best

mobile provider in Europe.”

Outlook
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 (around CHF 1.6 billion of which in Switzerland) for 2021. Subject to
achieving its targets, Swisscom will propose payment of an unchanged, attractive dividend of CHF 22 per
share for the 2021 financial year at the 2022 Annual General Meeting.

Sincerest thanks
The motto of this annual report is “ready”. This year, our employees demonstrated that they are ready to
serve their customers even in extraordinary situations and from their home office. This commitment and
motivation deserve our respect. Many thanks!

You too, dear shareholders, can rely on this Swisscom spirit – in the current crisis, but also as we continue
on our journey to a successful future. We would like to thank you for your loyalty and hope that you
remain ready and willing to place your trust in us.

Kind regards

Hansueli Loosli
Chairman of the Board of Directors
Swisscom Ltd

Urs Schaeppi
CEO Swisscom Ltd

To the interview

Your security
is our job.

Lorenz Inglin and his Cyber Defence Team
protect your data from hackers.

From left: Stefan Kuch, Sebnem Kaslack, Lorenz Inglin, Florian Badertscher, Florian Leibenzeder

Your fibre-optic gateway

to the world.

To the interview

Your security

is our job.

Lorenz Inglin and his Cyber Defence Team

protect your data from hackers.

Your fibre-optic gateway
to the world.

Dany Kammacher, engineer,
brings the fastest network to your living room.

From left: Stefan Kuch, Sebnem Kaslack, Lorenz Inglin, Florian Badertscher, Florian Leibenzeder

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Strategy and environment _______ Corporate strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Objectives and achievement of targets . . . . . . . . . . . . . . 18

General conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Data protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Infrastructure ________________ Infrastructure in Switzerland . . . . . . . . . . . . . . . . . . . . . . . . 26
Infrastructure in Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Employees ___________________ Employees in Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Employees in Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Brands, products and services _____ Swisscom brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Products and services in Switzerland . . . . . . . . . . . . . . . . 37

Products and services in Italy . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Customer satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Innovation and development _____ Innovation as an important driver . . . . . . . . . . . . . . . . . . . 40
Innovation focused on specific topics . . . . . . . . . . . . . . . . 41

Financial review _______________ Alternative performance measures . . . . . . . . . . . . . . . . . . 46
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Segment results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Depreciation and amortisation, non-operating results . 54

Cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Net asset position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Financial outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Value-oriented business management . . . . . . . . . . . . . . . 60

Statement of added value . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Capital market ________________ Swisscom share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Dividend policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Credit ratings and financing . . . . . . . . . . . . . . . . . . . . . . . . . 65

Risks ________________________ Risk situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Risk factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

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Strategy
and environment

Digitisation is having an ever greater impact on all areas 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 Switzerland’s largest telecom provider and
through its subsidiary Fastweb it has an alternative tele-
com service provider in the Italian market.

Swisscom is the market leader in Switzerland for mobile
telecommunications, fixed network and television. It
also occupies a leading market position in a wide range of
IT business segments.

Swisscom operates in a very dynamic environment.
Mega trends such as demographic change, customisation
and altered perceptions regarding health are indelibly
shaping and altering our society and the economy and
therefore have a long-term impact on the activities of
Swisscom. The rollout of the 5G mobile communications
standard, the increasing penetration of cloud and edge
computing, the growing importance of voice recognition
and the advancements made in the field of artificial intel-
ligence are short- to medium-term trends that impact
Swisscom’s business. Finally, the global Covid-19 pan-
demic has left its mark on the year under review. Not only
has it had a direct impact on Swisscom’s business perfor-
mance, it is also affecting some of the trends mentioned
above. The pandemic has shown how important good
network performance is for customers. Expectations
regarding the stability and availability of the networks
will continue to increase. The pandemic will further accel-
erate digitisation as it penetrates more and more into all
spheres of life. This will increase the acceptance and share
of teleworking, accelerate the digitisation of supply chains
and boost automation efforts. The pandemic has also

permanently changed the usage behaviour of customers,
as indicated by, among other things, the increased use of
online channels for shopping and making contact as well
as the rise of contactless payment.

Digitisation is leading to new, rapidly developing business
models. Swisscom’s core business is characterised by
fierce competition with strong price pressure. The over-
all market for connectivity services continues to shrink
in Switzerland and Italy. 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 concert
to provide inspirational experiences. Swisscom is com-
mitted and trustworthy in its actions and consistently
seeks to learn new things and develop itself further,
without ever losing sight of what is important when
pursuing its goals. What matters most to Swisscom is its
customers’ trust in it. That trust is strengthened by
Swisscom’s reliability and sustainability in everything it
undertakes. To realise its vision of being a market leader
in shaping the future and inspiring people in a networked
world, Swisscom has set out three strategic aspirations.
These aspirations define its strategy.

Best products

Efficient operations

Best service

Digital transformation

Best
customer
experience

Operational
excellence

Best infrastructure

Smart investments

Growth

Maximisation of core business

Focused growth
in new areas of business

Growth in IT market

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
develops these on an ongoing basis. Customer require-
ments for networks are constantly growing. As a result,
Swisscom is setting up and operating high-performance
networks that are top in terms of security, availability and
coverage. In the year under review, the Swisscom network
again won numerous tests. More over, as experience with
the Covid-19 lockdown has shown, Swisscom’s network
infrastructure coped very well with the massive increase
in usage intensity. Swisscom has set itself ambitious goals
for the expansion of its fibre-optic network. By the end of
2025, fibre-optic coverage in homes and businesses (FTTH
– Fibre to the Home) is set to double to up to 60% com-
pared with 2019. After launching the first 5G network in
Europe with commercial offerings and end devices in
spring 2019, Swisscom is continuing to push ahead with
the expansion of 5G. Restrictions, such as moratoria in
some cantons, are currently hindering the creation of
urgently needed capacity for 4G and 5G. The Swisscom
Cloud forms the basis for new, scalable offerings pro-
duced in Switzerland. Swisscom complements its own
cloud with global solutions (such as Amazon Web Services
and Microsoft Azure), thereby operating as a service pro-
vider that integrates solutions into hybrid environments.

The relationship with customers is at the heart of
Swisscom’s success. Swisscom’s main guiding principles
are to provide the best service and inspirational experi-
ences across the board. Swisscom provides customers
with expert guidance. They enjoy a local, flexible and
personalised service and an easy online user experience.
Swisscom is reducing complexity and providing rele-
vant, advanced offerings. The flexible, modular inOne
subscription continues to enjoy growing popularity
among retail customers and is thus a key driver of con-
vergence. In the area of entertainment propositions,
Swisscom launched the “Swisscom blue” product fam-
ily: a comprehensive entertainment experience with
new offers and new content that can be accessed from
anywhere. The basis for this new offering is blue TV. This
is available via the Swisscom Box and via an app for
smart TV sets as well as on the set-top boxes of compet-
itors. Bluewin now functions as blue News, and blue+ is
becoming the leading Swiss streaming and pay TV
provider. Kitag cinemas will also become part of the new
world of experience as blue Cinema.

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. Swisscom provides SMEs with complete Smart ICT
solutions for outsourcing IT. For example, Swisscom has
expanded its cloud offering for SMEs with Microsoft Azure.

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Microsoft Azure is distributed through local Swisscom
partners and provides SMEs with the required capacities
flexibly and without prior IT investments. During the
nationwide Covid-19 lockdown, one of the ways in which
Swisscom supported business customers was with free
home office solutions as a quick and pragmatic response to
changing needs. In the business customer segment, cus-
tomer needs are shifting towards standardised products.
Thanks to the new organisation, in place since 1 Janu-
ary 2020, and the establishment of the Business Customers
division, Swisscom is able to offer business customers an
even more consistent product and customer experience.

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 should
allow Swisscom to free up funds for the exploration of
new business opportunities and make the investments
necessary to ensure success. Swisscom’s main approach
in optimising costs is to economise in a more focused
manner and create more efficient operating procedures,
for example by standardising and adjusting the product
portfolio, reducing the number of interfaces, using agile
development methods, phasing out old technologies,
modernising and consolidating the IT platforms, increas-
ing the efficiency of staff deployments, and optimising
processes through the All IP migration. The internal digi-
tal transformation and the higher level of own digitisation
that accompanies it is also crucial for Swisscom. This will
be achieved by expanding process automation, strength-
ening and expanding the online channel for sales and con-
sulting, and the use of artificial intelligence and analytics.
Swisscom is also making its investment activities more
efficient, for example through an intelligent mix of tech-
nologies and value-oriented network expansion.

New growth
The market for telecommunications in Switzerland is
saturated, especially for broadband and TV, but
Swisscom expects further moderate volume growth in
the postpaid segment of mobile communications. Price
pressure will remain high in all markets, and Swisscom
therefore expects revenue to decline slightly in the tele-
communications market as a whole. 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. Due to the
Covid-19 pandemic, any forecast of economic develop-
ment is subject to very considerable unknowns, leading
to uncertainties particularly with regard to the develop-
ment of the market for IT services.

Swisscom is targeting growth in the following three
areas in particular: in its core business, in the IT market
and in new business areas. By developing its core
business further, Swisscom intends to exploit growth
opportunities, e.g. in the Internet of Things (for both
residential and business customers), in the area of
wholesale and in respect of secondary and third-party
brands. In the IT sector, the focus is on security, cloud
and ICT consulting. Growth in new business areas will
come from fintech activities, digital services for SMEs
provided by localsearch (Swisscom Directories Ltd), trust
services and blockchain-based services. Swisscom
actively manages growth areas using clearly defined
success criteria. When selecting growth areas, it is
guided by future customer requirements, focuses on
future-oriented business models offering growth and
makes increased use of partnerships.

Fastweb
The subsidiary Fastweb is an infrastructure-based, alter-
native provider for residential and business customers in
Italy. It offers fixed-line and mobile services. In Italy,
Swisscom expects further market growth in broadband,
especially as broadband penetration in Italy remains
relatively low, whereas the mobile communications
market is highly saturated.

Fastweb is making a significant contribution to growth in
Italy in the areas of broadband and mobile communica-
tions – among both residential and business customers.
It is strengthening its market position through targeted
investments, particularly in mobile communications.
Swisscom maintains Fastweb’s growth course and fur-
ther develop the company profitably. Fastweb is posi-
tioning itself as a convergent 5G provider. The partner-
ship forged with Wind Tre in 2019 has an important role
to play in making the acquired mobile spectrum com-
mercially viable and is accelerating the launch of 5G.
Fastweb’s convergent offerings are characterised by
transparency, fairness and simplicity. High quality of ser-
vice and the use of partnerships are also important. For
business customers, Fastweb is making strategic expan-
sions to its portfolio by employing horizontal solutions
focused on cloud and digital security. Another focus of
Fastweb’s activities is the expansion of its wholesale
offerings – whether in the area of ultra-fast broadband
or with the connection of mobile communications sites
to the fibre-optic network. Fastweb is continuing to
expand its own ultra-fast broadband network. Thanks
to the use of 5G Fixed Wireless Access (FWA) technology,
Fastweb can reach significantly more homes and busi-
nesses with its own network than before.

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 companies,
Swisscom bears a special responsibility in this respect.
Swisscom wants to recognise the opportunities and risks of
digitisation and play as full a role as possible in helping
shape the future of the country. Swisscom has defined three
fields of activity in which it wants to make contributions:
promoting digital competency, contributing to climate pro-
tection and providing a reliable and secure ICT infrastruc-
ture. Swisscom has formulated three strategic priorities
with corresponding objectives to address these fields of
activity: ready for people, ready for the environment and
ready for Switzerland. These objectives also make a contri-
bution towards the 17 Sustainable Development Goals of
the United Nations. Further information can be found in the
separate Sustainability Report.
N See www.swisscom.ch/sustainability

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 – all areas of life come into contact with the
networked world, and people have to keep pace with the
new demands so that they can exploit the opportunities
that arise.

Ready for people
Swisscom wants to enable people in Switzerland to
make use of the opportunities presented by a networked
world. By no later than 2025, Swisscom will help two
million people annually to improve their skills in the dig-
ital world. New educational opportunities for schools,
the adults, SMEs and their employees are bringing it
closer to this goal. Its teams in the call centres and shops
are available to answer
its customers’ questions.
Swisscom ensures safe and fair working conditions in
the supply chain. This action area also includes the com-
mitment to barrier-free access to all of the company’s
services.

Contributing to climate protection
Climate change is affecting the basic resources needed
to sustain life in Switzerland. All countries must contrib-
ute to climate protection. Digitisation brings with it
promising opportunities for this purpose.

Ready for the environment
Swisscom cares about the environment. It is working
with its customers to reduce net CO2 emissions by
500,000 tonnes by 2025. This corresponds to 1% of Swit-
zerland’s greenhouse gas emissions.

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

Ready 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 relia-
ble ultra-fast broadband. By doing this, Swisscom makes
the country more competitive and a better place to live.

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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.

Financial targets

Net revenue

Operating income before depreciation
and amortisation (EBITDA)

Capital expenditure

Operational Excellence

Other targets

Ultra-fast broadband in Switzerland 2

Objectives

Target achievement 2020

Net revenue for the year 2020
1
of around CHF 11 .0 billion

EBITDA for the year 2020
of around CHF 4 .3 billion

Capital expenditure for the year 2020
of around CHF 2 .3 billion

Reduction of cost base 2020 in Swiss business
by CHF 100 million

Coverage 95% by the end of 2025
with more than 80 Mbps and up to 500 Mbps

Coverage 50–60% by the end of 2025
with up to 10 Gbps

CHF 11,100 million

CHF 4,382 million

CHF 2,229 million

CHF 129 million

82%

32%

1 As communicated during 2020, the 2020 financial targets have been adjusted
as follows, primarily as a result of Covid-19: Net revenue from around CHF 11.1
billion to CHF 11.0 billion.

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

SFSO).

General conditions

Market environment
The three macroeconomic factors of the economy (in Switzerland and in Italy), interest rates and exchange rates (EUR
and USD) can have a significant 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

2016

2017

2018

2019

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

2020

(3 .3) 1

(8 .9) 2

(0 .53)

1 .08

0 .88

2 Forecast Istat

Economy
Economic development in Switzerland and worldwide in
2020 was shaped by the measures taken to contain the
Covid-19 pandemic. After a sharp slump in the first half
of the year, the economy recovered as the year pro-
gressed. Nevertheless, GDP in Switzerland and Italy will
have fallen for the year 2020 as a whole, and for 2021
the economic risks remain high. Economic develop-
ments are having a wide range of impacts on customer
segments in Swisscom’s core business. A high share of
the revenues generated in the Residential Customers
segment can be attributed to products with fixed
monthly charges, meaning the impact of economic fluc-
tuations on revenue remains low in the short term.
However, an economic downturn may reinforce the

trend towards switching to cheaper price plans. Project
business with business customers is more sensitive to
cyclical factors. Pandemic-related travel restrictions in
2020 led to lower revenues and lower costs in the roam-
ing business. Furthermore, the Covid-19 pandemic
resulted in a negative business trend in the cinema and
event business.

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 goodwill
and other items in the financial statements. The yields

on ten-year government bonds remain at a very low
level. Swisscom issued three bonds totalling CHF 719 mil-
lion in 2020. The average interest expense on these
financial liabilities (excl. lease liabilities) was 0.9% at the
end of 2020. 88% of these financial liabilities were
charged a fixed interest rate. The average maturity is
5.8 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 for 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.
The largest currency exposure is 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 35%. The net assets of foreign subsidiaries, especially
Fastweb in Italy, are also subject to a currency transla-
tion risk in the consolidated financial statements. The
carrying amount of Fastweb’s net assets totalled
CHF 3.4 billion (EUR 3.1 billion) at the end of 2020. The
balance sheet items of the foreign subsidiaries were
translated into Swiss francs at the exchange rate on the
balance sheet date, and differences arising in translation
were recognised directly in equity. A portion of the
financial liabilities in EUR has been classified as a cur-
rency hedge of the Fastweb 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 hold-
ing, this would require a change in the corresponding

law, which would be subject to a facultative referen-
dum. Every four years, the Federal Council defines the
goals which the Confederation as principal shareholder
aims to achieve. These goals include strategic, financial
and personnel policy objectives as well as targets relat-
ing to partnerships and investments. The Federal Coun-
cil also expects Swisscom to pursue a corporate strategy
that is, to the extent economically possible, both sus-
tainable and committed to ethical principles. In 2017,
the Federal Council approved the goals for the period
from 2018 to 2021.
N See www.swisscom.ch/ziele_2018-2021 (in German)

Telecommunications Act (TCA)
The TCA and the associated legislation primarily govern
network access, basic service provision and the use of
radio frequencies. In March 2020, the consultation pro-
cess for the ordinances of the revised TCA was con-
cluded. The implementation of the new provisions will
entail numerous system adjustments and, correspond-
ingly, additional operating expenses. The Federal Coun-
cil put the new legal framework in place on 1 Janu-
ary 2021 with various transitional periods.
N See www.admin.ch

Network access
The legislator has confirmed that network access regula-
tion should remain limited to copper-based connections
(no technology-neutral network access). This means that
Swisscom is required to allow other providers physical net-
work access only to copper lines at cost-based prices.
Access to fibre-optic lines continues to be on the basis of
commercial agreements.

Basic service provision
The aim of the basic service is to provide reliable, afforda-
ble basic telecommunications to all sections of the
population in all regions of the country. The scope of
services as well as the related quality and pricing require-
ments are determined periodically by the Federal
Council. The current licence (2018 to 2022) comprises a
multifunctional telephone line, Internet access, and barrier-
free services such as transcription, SMS messaging and
directory services for people with disabilities. Since
1 January 2020, Internet access speed (guaranteed mini-
mum bandwidth) has been 10 Mbps (download) and
1 Mbps (upload).

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 auc-
tion. Swisscom acquired 44% of the auctioned frequen-
cies. The licences run until the end of 2028 and can be

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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 holds a total of 45% of
all the frequencies in operation with mobile communica-
tions 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 authority (Competition Commission,
COMCO) has classified Swisscom as being market-domi-
nant in a wide range of submarkets. There are currently
proceedings open for three issues, within the context of
which COMCO has classified Swisscom as being mar-
ket-dominant and its conduct as being unlawful, and has
thus imposed or may impose direct financial sanctions.
The proceedings relate to the broadcast of live sporting
events on pay TV, the broadband connections of post
office locations and the broadband connections of busi-
ness customers. In other proceedings concerning ADSL
services, the Federal Supreme Court ruled, as the court of
last instance, in 2019. There are still outstanding civil-law
claims in these proceedings. In December 2020, COMCO
opened an investigation into Swisscom’s optical fibre
expansion and ordered precautionary measures. The sta-
tuses of the proceedings and the potential financial
effects are set out in the notes to the consolidated finan-
cial statements (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
payable to the copyright holder for certain types of use
protected by copyright law (collective management of
rights) is determined by reference to collectively negoti-
ated copyright tariffs. These apply to distribution of
television programmes and to the use of time-delayed
television viewing (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 blue TV that Swisscom is affected by the rules
on the transmission and broadcasting of media offer-

ings. The various privileges (known as the “must carry”
provisions) applicable to certain broadcasters are rele-
vant to Swisscom.

Federal Act on Data Protection (FADP)
The Swiss Federal Act on Data Protection regulates the
handling of personal data and had been undergoing
revision since 2016. The revised version was adopted by
the Federal Assembly in the autumn 2020 session. It is
not yet known when it will come into force. Swisscom
believes the new FADP will come into force either on
1 January 2022 or on 1 July 2022. Swisscom has begun
implementing the new FADP.

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. Following a market analysis, in
August 2019 the national regulatory authority, AGCOM,
issued a decision on Telecom Italia’s wholesale access
services (TIM) for the years 2018 to 2021. The decision
also concerned a reduction in prices for virtual unbun-
dled access (VULA) based on FTTS (Fibre to the Street) for
the period from 2019 to 2021. In addition, in July 2020
AGCOM approved TIM’s annual reference offers for fixed
network-based access services for 2019 and 2020.

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, internationally
active companies are entering the Swiss telecommuni-
cations market, offering both free and paid-for Internet-
based services around the world, including telephony,
SMS messaging and streaming services. Overall, this is
generating constant growth in demand for high band-
widths that enable fast, high-quality access to data and
applications. The uninterrupted availability of data and
services, as well as the security involved in ensuring this
availability, play a key role. Modern, highly effective

network infrastructures provide the ideal foundations
for this. Swisscom is therefore building the networks of
the future for both fixed-line and mobile communica-
tions. The dynamics of market consolidation increased
again in 2020. In mid-2020, Liberty Global, the parent
company of UPC Switzerland, submitted a takeover bid
to the shareholders of Sunrise. The acquisition was com-
pleted at the end of 2020 with the approval of the com-
petent Swiss authorities. The merger of the two compet-
itors, UPC Switzerland and Sunrise, is scheduled for
2021. This is intended to create a single convergent pro-
vider with its own gigabit broadband network and its
own mobile network. This will enable the combined
entity to offer convergent bundled packages based on
its own networks. As a result, competitive pressure in
the market will remain high.

The Swiss telecoms market is broken down into the sub-
markets of relevance to Swisscom – mobile communica-
tions and fixed network. The total revenue it generates
is estimated at around CHF 11 billion. Price pressure will
remain high in all markets, and Swisscom therefore
expects revenue to decline slightly in the telecommuni-
cations market as a whole. Market saturation in all mar-
kets is intensifying the existing cut-throat competition.
The individual submarkets are characterised by a high
level of promotional activity on the part of the individ-
ual market participants and corresponding price pres-
sure. At the heart of the portfolio of offerings are conver-
gent offerings which can contain 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

59%

57%

53% 53%

36%

37%

2019

2020

2019

2020

2019

2020

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. Due to the high level of market pen-
etration, the mobile communications market in Switzer-
land 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 Switzerland remains at around 125%. As in the previ-
ous year, the number of postpaid subscriptions taken
out increased, while the number of prepaid customers
fell. The proportion of mobile users with postpaid sub-
scriptions stands at approximately 77% (prior year: 75%).
Swisscom’s market share is 57% (postpaid: 57%; prepaid:
59%). This represents a decrease of 1.5 percentage
points compared to the previous year, which is due to
the continuing competitive pressure.

Fixed-line market
Close to 100% of Switzerland is covered by fixed broad-
band networks. Alongside the fixed-line networks of
tele coms companies, there are also networks provided by
cable network operators. Moreover, market players such
as utilities operating in particular cities and municipali-
ties are building and operating fibre-optic networks on
their own initiative at a regional level. For the most part,
their network infrastructures are available to other mar-
ket participants for product offerings and the provision
of services. Fixed broadband connections are the basis
for a wide-ranging product offering from both national
and global competitors.

Broadband market
The most widespread access technologies for fixed
broadband connections in Switzerland are infrastruc-
tures based on the networks of telecommunications pro-
viders and cable network operators. At the end of 2020,
the number of retail broadband access lines in Switzer-
land totalled 3.9 million, corresponding to around 85% of
homes and offices. Due to market saturation, the num-
ber of broadband connections remained virtually con-
stant, as in the previous year. The competitive pressure in
the market remains high. The growth in broadband con-
nections supplied by telecommunications providers in
the year under review contrasted with a decrease in con-
nections supplied by cable network operators. Swisscom’s
market share remains unchanged at 53%.

TV market
In Switzerland, TV signals are transmitted via cable,
broadband, satellite and mobile. This enables consumers
to watch television programmes on a very wide variety
of devices. The Swiss TV market features a wide range of

offerings from established national market participants.
Offerings from other national and international compa-
nies are also available on the market, including TV and
streaming services that can be used over an existing
broadband connection, regardless of the Internet pro-
vider. The competitive dynamics in the saturated TV
market remains high, driven by the large number of dif-
ferent offerings. In the second half of 2020, Swisscom
brought together all its entertainment offerings com-
prising TV services, pay TV, cinemas and news within the
“Swisscom blue” product family. In order to increase its
own reach, Swisscom also added a new TV service (OTT)
to its existing TV offering. As a result, customers of other
providers can use paid Swisscom subscriptions on differ-
ent devices in addition to TV services, regardless of the
platform. The large majority of TV connections is pro-
vided via cable or broadband networks. Swisscom has
steadily increased its market share in recent years. It is
the market leader, and as at the end of 2020 it had fur-
ther expanded this leading position with a market share
of 37% (prior year: 36%).

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 use of fixed-line telephony
is steadily declining as it is increasingly being substituted
by mobile communications. This trend continued in 2020,
with the number of Swisscom fixed-line connections fall-
ing by around 5% to 1.5 million.

IT services market in Switzerland
In 2020, the IT services market (IT services and software)
generated revenue of around CHF 18 billion. Due to the
Covid-19 pandemic, the trend in 2020 was slightly down-
ward and companies were reluctant to invest in IT. For
the coming years, Swisscom expects the market as a
whole to grow again due to increasing digitisation. How-
ever, a high degree of uncertainty remains, with current
market scenarios predicting slight growth for 2021. The
areas in which Swisscom expects the most growth are
the cloud, security, the Internet of Things (IoT) and busi-

ness applications. This growth is a result of the increas-
ing number of business-driven ICT projects as well as the
rising demand for digital business models and new
working models. Swisscom has noticed a growing will-
ingness on the part of companies to procure more exter-
nal services in order to cope with the elevated complex-
ity and the increasing transformation into a hybrid
cloud. Further growth drivers are also the increasing
threats in the area of IT security and new technological
possibilities in the area of IoT (e.g. through new sensors
and improved connectivity). Customers usually expect
services customised to their individual sector and busi-
ness processes with appropriate advice.

In a difficult market environment, Swisscom maintained
revenue at the previous year’s level. This resulted in a slight
increase in market share compared with 2019. This was
mainly attributable to the positive performance by growth
areas, with market revenues rising for the cloud, data cen-
tres and security services.

Italian market trends in telecoms services
Italian broadband market
Italy’s fixed-line market is Europe’s fourth largest, with
a stable revenue of around EUR 15 billion including
wholesale. Broadband provision for homes and offices
has increased steadily in past years. The broadband mar-
ket comprises more than 16 million access lines for four
major competitors and other smaller providers. Fastweb
is one of the largest fixed-network broadband providers,
with a market share of 16% in the residential customer
segment and 34% in the business customer segment.

Italian mobile communications market
The Italian mobile communications market has a vol-
ume of around 78 million active SIM cards and a total
revenue of around EUR 14 billion. Competition and price
pressure are substantial. Despite the difficult environ-
ment, Fastweb’s customer base in mobile communica-
tions grew by 12% to 2.0 million customers. Fastweb’s
market share is around 3%.

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Data protection

Swisscom attaches great importance to the legally com-
pliant and responsible processing of personal data. For
this reason, in the year under review Swisscom further
expanded the measures for the protection of personal
data and introduced a framework to ensure data ethics.

Data protection within Swisscom is controlled and mon-
itored by a central data governance unit, which works
closely with all the relevant divisions and other staff
units. In order to ensure adequate data governance, the
responsible unit issued several directives and informa-
tion sheets in the year under review. In addition, employ-
ees with a data governance role at Swisscom received
in-depth job-specific training. Appropriate learning con-
tent further developed and sharpened the awareness of
the rest of the workforce with regard to data protection
and confidentiality. What is more, Swisscom signifi-
cantly expanded the testing of systems and applications

for their compliance with legal data protection and con-
fidentiality requirements. It also made further progress
with the development of technical tools to support data
governance.

Swisscom began implementing the new Federal Act on
Data Protection (FADP) in the year under review. The
Federal Act on Data Protection (FADP) regulates the
treatment of personal data. It had been under revision
since 2016, and a revised version was adopted by Parlia-
ment in autumn 2020. It is not yet known when the new
FADP will come into force. Swisscom is assuming that
this will happen in 2022.

To ensure data ethics, a newly created, diversely com-
posed Data Ethics Board has reviewed a variety of cases
to ensure that they comply with Swisscom’s ethical prin-
ciples. The framework for data ethics has proven itself
and will be continued.
N See www.swisscom.ch/dataprotection

To the interview

Your future
is our everyday life.

Your concerns

are important to me.

Patrick Weibel
with his team ensures that you
are always on the best network .

From left: Barbara Pytlik, Klaus Liechti, Patrick Weibel

To the interview

Your concerns
are important to me.

Cloé Zähringer-Cela, Shop Manager,
is personally committed
to providing optimum customer advice .

Infrastructure

Telecommunications networks form the foundations for digital Switzerland . This
was evident in the extraordinary situation that arose in 2020, with economic life
and social life maintained seamlessly . Swisscom continues to invest heavily in infra-
structure to meet the growing broadband needs of the Swiss fixed and mobile
network . By the end of 2021, every Swiss municipality should have access to greater
bandwidths . In addition, Swisscom will expand its fibre-optic coverage to homes
and offices to up to 60% by the end of 2025 . By the end of 2019, Swisscom had
already provided 90% of the Swiss population with basic 5G coverage, commen-
surate 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. It aims to provide Swiss
customers with the best network for both the fixed and
mobile networks. It relies 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. At the beginning of 2020, Swisscom
experienced several network failures. Swisscom sub-
jected these to a thorough analysis and adopted imme-
diate measures to reduce disruptions to a minimum.
Swisscom gave top priority to emergency numbers.
Together with the emergency service organisations,
a dynamic routing system ensures that emergency num-
bers can be reached at all times. At the same time,
Swisscom is continuously improving the stability of its
networks and services. This hast led to a decrease in the
number of residential customers affected by interrup-
tions and downtime in recent years. The trend for cus-
tomer satisfaction is correspondingly positive.

A new age of communication has begun
Swisscom has replaced conventional fixed-line telephony
with the Internet protocol (IP), and thus geared its net-
work towards the future. All Swiss municipalities have
already switched to IP telephony. Private customers
benefit from significantly improved voice quality, auto-
matic name display and the ability to block annoying
advertising calls.

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 Services)
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 2019),
the availability of broadband in rural regions of Switzer-
land is significantly higher than the EU average. At the
end of 2020, Swisscom over 4.4 million or 82% of homes
and businesses were connected with speeds in excess of
80 Mbps. More than 3.1 million or 59% of homes and
offices have connections of more than 200 Mbps, and
32% have coverage of 10 Gbps. Swisscom’s mobile net-
work is one of the best networks in the world, as con-
firmed by independent network tests such as those con-
ducted by connect, Ookla, PC Magazin and CHIP.
It currently supplies around 99% of the Swiss population
with 4G and 3G coverage. Likewise, 99% of the popula-
tion currently has 4G+ with speeds of up to 300 Mbps,
96% 4G+ with speeds of up to 500 Mbps, and 55% 4G+
with speeds of up to 700 Mbps.

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Network expansion
Bandwidth requirements in the Swiss fixed and mobile
telephone network continue to grow. In order to maintain
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 infrastruc-
ture in Switzerland every year.

By the end of 2021, every Swiss municipality should have
access to greater bandwidths in the fixed network: some
90% of all homes and offices in Switzerland will have a
minimum bandwidth of 80 Mbps – with around 85% of
connections even achieving speeds of 100 Mbps or
higher. To achieve this, Swisscom is focusing on a mix of
fibre-optic technologies and convergent approaches that
intelligently combine different network technologies.

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

Compared to 2019, FTTH coverage will also nearly double
by the end of 2025. This means that up 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 90% of homes and offices access to a bandwidth 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.

Customer demand for data in the mobile network con-
tinues to rise: in the year under review, it grew by 29%
year on year. For this reason, and owing to the stringent
legal framework conditions that apply, the mobile

network has to be expanded by the addition of new
mobile telephony sites. Progress continues to be made
on expanding 4G+. The further expansion of the fifth
generation of mobile communications (5G) will be a key
topic for Swisscom in the coming years. By contrast, 2G
technology was only available until the end of 2020 and
is being taken out of service in a matter of weeks.
Swisscom is using the freed-up capacity for the more
efficient technologies.
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 response and much larger capacities than current
standards.

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50 times higher data volume in eight years
in million terabytes

267

170

556

431

353

2012

2013

2014

2015

2016

2017

2018

2019

2020

Change in data volumes in Swisscom networks in million terabytes

Swisscom has been working together with Ericsson since
2015 on the introduction of 5G in Switzerland. In 2019,
Swisscom was the first provider in Europe to put a 5G
network into operation and is constantly expanding it. It
currently provides 96% of the Swiss population with a
basic version of 5G and has already made the 5G+ ver-
sion, which includes all the benefits of 5G, available in
500 locations. The 5G expansion is progressing, with some
restrictions, and is gradually extending the network with
necessary additional capacity.

This expansion is being hindered by concerns and resist-
ance among the population. The arguments for oppos-
ing expansion vary widely, with the underlying specula-
tion and assumptions about 5G often lacking a factual
basis. In the year under review in particular, major expert
organisations such as the World Health Organization
(WHO), the International Commission on Non-Ionizing
Radiation Protection (ICNIRP) and the U.S. Food and
Drug Administration (FDA) once again confirmed that
the internationally applicable limits ensure safe protec-
tion against any harmful effects of mobile radio emis-
sions. This statement also applies to the new 5G stand-
ard. The resistance to further mobile communication
expansion has led to numerous political initiatives at
communal, cantonal and national level and to the issu-
ance of, in some cases unlawful, moratoria calling for a
halt to building permits. Popular initiatives are also
being prepared that would in any event make mobile
communications in Switzerland impossible if they were
accepted. Already today, the controversy surrounding
mobile communications has considerably delayed
numerous network expansion projects, which is also
affecting the expansion of the 4G network.

Moreover, the new 5G technology is currently not
exploiting its full potential, due to the strict legal limits
in Switzerland. If Switzerland is to make full use of the
possibilities offered by 5G, the legal environmental

framework will need to be adjusted. In order to improve
the level of information, Swisscom provides information
on its channels and supports the industry association
asut in its information campaigns, most recently with
the establishment of
information platform
the
CHANCE5G.
N See www.chance5g.ch

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 and introduced the dedicated IoT technologies
Narrowband IoT and LTE-M throughout Switzerland. The
low-power network (LPN) now offers coverage of 97%.
The entry of international cloud providers into the IoT
market has given new impetus to the integration and
scaling of IoT. Thanks to strong partnerships with Ama-
zon and Microsoft, Swisscom is well positioned in this
respect. It is already the leading provider of IoT system
solutions required for cloud and analytics implementa-
tions and their operation. “Data as a Service” rounds off
Swisscom’s portfolio and, thanks to plug-and-play for
IoT applications, makes it even easier for many custom-
ers to enter the IoT.

is continually expanding

Swisscom
its broadband
network, extending the product range and increasing
the number of antenna sites. It coordinates site expan-
sions with other mobile providers wherever feasible,
and now shares nearly a quarter of its approximately
9,000 antenna sites with other providers. At the end of
2020, Swisscom had around 6,100 exterior units and
2,900 mobile communication antennas in buildings.
With around 6,600 hotspots in Switzerland, it is also the
country’s leading provider 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 Communica-
tions Commission (ComCom) allocated the frequencies
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 and 3G 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 frequencies to offer its customers ser-
vices via the 5G, 4G and 3G mobile communication
technologies. It always does this within the legal limits,
which in Switzerland are ten times stricter than those
recommended by the World Health Organization in sen-
sitive areas such as homes, schools, hospitals and per-
manent workplaces.

IT infrastructure and platforms
Swisscom operates six major data centres in Switzer-
land. The IT infrastructure comprises over 140,000 vir-
tual servers and physical servers. The central telecom-
munications functions for the operation of the fixed and
mobile networks converge in four of the six data cen-
tres. In addition, four data centres (two data centres
have a dual function) are used for the operation of IT
applications. These include all business applications in
connection with Swisscom services. Not only are band-
widths 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 portfolio with
the help of internationally renowned partners and
in-house developments.

Swisscom has positioned itself as a reliable IT partner
with a broad range of services. On the basis of an
extended cloud strategy, it is expanding its cloud offer-
ing with hybrid ICT services. These services support
Swisscom customers in setting up hybrid and mul-
ti-cloud environments and operating them efficiently.
Swisscom responds quickly and individually to the
numerous needs of its customers using a flexible service
modular system. As part of its strategy, it is strengthen-
ing its collaboration with the major public cloud provid-
ers (such as Amazon Web Services and Microsoft Azure).
In addition, it is continuously adding new contain-
er-based services to platforms established on the Swiss
market, such as the Enterprise Service Cloud.

The switch to data transmission solely by means of Inter-
net Protocol (IP), together with the expansion of connec-
tivity services, is 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 network 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), managed security and
managed LAN, paying special attention to the combina-
tion of modern and established services. During the
Covid-19 pandemic and in response to changing needs,
Swisscom provided its customers with short-term cloud-
based services to support working from home in the
year under review. Customers made extensive use of
remote access services and cloud connectivity 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. At the same time, the consistent disman-
tling of obsolete fixed-network technology such as TDM
(Time Division Multiplexing) and traditional data centre
infrastructure is reducing complexity and creating space
for new infrastructure.

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 fixed-network ultra-fast broadband
(UBB) connections has increased considerably in Italy.
Fastweb has made a significant contribution to this
development through extensive investments in its own
network infrastructure. Fastweb’s ultra-fast broadband
network with the network technologies FTTH and FTTS
can be used by 8 million homes and businesses, which
corresponds to a share of 30% of the population. Fast-
web offers UBB services to a further 10 million homes
and offices based on upstream services provided by
other network operators. Fastweb will continue to
invest in its own network infrastructure and increase
UBB coverage to 90% by 2026. This is to be achieved
partly with the 5G Fixed Wireless Access (FWA) connec-
tion technology and partly by setting up a 5G mobile
network together with an existing network operator.
Fastweb has set up the following strategic partnerships
to achieve these objectives:

●

In November 2019, Fastweb and Linkem, an estab-
lished player in the field of Fixed Wireless Access
(FWA), signed a long-term cooperation agreement.
This partnership is based on existing resources (5G
spectrum, radio planning capacities, existing and
new sites). It is designed to enable the rapid, cost-ef-
fective market launch of two independent 5G FWA
access networks, reaching 8 million homes and
offices in small and medium-sized cities. The intro-
duction should be completed by June 2023. In
July 2020, the two companies extended their cooper-
ation to include a further 4 million households in

●

rural areas. The market launch should be completed
by June 2024. The agreement provides for the mutual
provision of wholesale services. However, assets,
services and commercial offerings remain separate.
In August 2020, Fastweb, Telecom Italia (TIM) and the
private equity company KKR signed an agreement to
establish FiberCop S.p.A. TIM is contributing its sec-
ondary access network (the network extending from
cable junction boxes to building complexes). The
partners will also integrate Flash Fiber, a company
jointly owned by TIM (80%) and Fastweb (20%), into
the new company. FiberCop will gradually upgrade
the access network with FTTH technology. By 2025,
the partners aim to reach 14 million homes and busi-
nesses using FTTH, which corresponds to 56% of the
population. Flash Fiber was founded in 2016 by TIM
and Fastweb to jointly invest in FTTH coverage in
Italy’s 29 largest cities. In return for contributing its
20% stake in Flash Fiber to the new company, Fastweb
will receive a 4.5% stake in FiberCop. The other shares
will be held by TIM (58%) and KKR (37.5%). The closing
of the transaction is subject to review by the compe-
tition authorities.

IT infrastructure
Fastweb operates four major data centres in Italy. The
IT infrastructure comprises around 6,000 virtual servers
and physical servers for its own needs. One of the data
centres 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 used
mainly for corporate business services, which include
housing-, cloud- and other ICT-managed services.

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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 . At the end of 2020, Swisscom had
19,062 full-time equivalent employees, of whom 16,048 or 84% were employed in
Switzerland . Swisscom is also training around 900 apprentices in Switzerland .

Employees in Switzerland

The digital transformation is happening everywhere –
it presents many opportunities as well as great chal-
lenges 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 essential for
employees to continuously develop and educate them-
selves. For this reason, Swisscom grants all employees
five training and development days per year. The One
Swisscom Academy offers a wide range of training and
development opportunities. For the most part, the
Academy relies on digitalised learning methods, thanks
to which employees can build their knowledge irrespec-
tive of location and time. These offerings are aimed at
strengthening the employability of employees.

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, 98.1% of the employees in
Switzerland were on open-ended contracts (prior year:
98.7%). Part-time employees made up 21.4% (prior year:
20.1%). The fluctuation rate, representing departing
employees in Switzerland, was 7.8% of the workforce
(prior year: 6.8%). Further information on HR matters can
be found in the Sustainability Report.
N See www.swisscom.ch/sustainability

The Covid-19 pandemic has presented the company and
its employees with a variety of challenges. Swisscom
therefore set up a Covid-19 task force to make rapid
decisions in line with developments, to decide on pro-
tective measures for employees and to provide transpar-
ent information. When the virus emerged, more than
80% of employees were able to work from home tempo-
rarily within a very short space of time. The changeover
worked well, as Swisscom had already played a pioneer-
ing role in working from home throughout Switzerland
even before the Covid-19 pandemic. According to the
results of an internal survey, employees appreciate the
opportunity to work from home. Swisscom will there-
fore continue to promote and expand this working
model in the future. Swisscom employees were also
assisted through the Covid-19 pandemic with up-to-
date information and offerings. These included continu-
ously updated information on the intranet as well as the
internal Care Gate contact and advisory point. Although
the order situation declined in some business areas due
to the Covid-19 pandemic, Swisscom largely refrained
from applying for short-time working, instead aiming to
reallocate resources internally. This was successful, with
the exception of the Kitag cinemas, which remained
completely closed for an extended period.

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. The subsidiaries
cablex Ltd and Swisscom Directories Ltd (localsearch)
negotiate their own CEA with the social partners. Under
the Telecommunications Enterprise Act (TEA), Swisscom

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is obliged to draw up a collective employment agree-
ment in consultation with the employee associations. In
the event of any controversial issues, an arbitration com-
mission must be convened which will support the social
partners by providing suggestions for solutions. At the
end of December 2020, 81% of the workforce in Switzer-
land were covered by the Swisscom CEA (unchanged
from the prior year). The CEA includes progressive
employment conditions and benefits such as five days of
further training per year, 18 weeks of maternity leave,
three weeks of paternity leave and an option to pur-
chase 10 days of additional holiday time. The CEA also
accords the social partners and employee representa-
tions rights of co-determination of varying degrees in
the form of information, participation 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 employ-
ability of employees and provides for retraining meas-
ures in the event of long-term job cuts. Responsibility for
implementing the social plan lies with subsidiary firm
Worklink AG. It provides employees with advice and sup-
port in their search for new employment and arranges
temporary external or internal work placements. The
services it offers include skill assessments, career advice
and coaching. Swisscom also supports progressive work-
ing models such as phased partial retirement. In 2020,
80% of those affected by personnel reduction measures
had found a new job before the social plan programme
ended (prior year: 83%). For employees with manage-
ment contracts, there is also an arrangement in place to
support them in their professional reorientation in the
event of restructuring.

Employee remuneration
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
function, individual performance and the job market.
The variable performance-related salary component
depends on the success of the company. This is measured
by the achievement of overriding objectives such as
financial parameters, customer loyalty and the imple-
mentation of Swisscom’s strategy. Details on remunera-
tion paid to members of the Group Executive Board are
provided in the Remuneration Report.

In 2020, Swisscom and its social partners signed an
agreement on the pay round for the year under review.
With effect from April 2020, salaries for employees sub-
ject to the CEA were increased by 1.0% of the total
payroll, dependent on performance. Employees with sal-
aries in the entry-level or market segment received
a salary increase of at least 0.3%, 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 into
line with the market. The payroll for managers increased
by 0.95% to allow for individual salary adjustments.

Internal staff development and
external job market
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 2020,
every Swisscom employee spent an average of 2.9 days
on learning, training and development. It is also
a declared aim to fill as many Swisscom positions as possi-
ble internally. Where this is not possible, external recruit-
ment is used. Here Swisscom has to compete with national
and international companies for the best talent – espe-
cially in the IT professions. The shortage of skilled work-
ers on the Swiss labour market is currently noticeably
affecting DevOps engineers primarily. These engineers
have a skills profile that is critical to competitiveness in
the ICT market and helps Swisscom to become agile and
respond quickly to changing markets. Although the
Swiss labour market remains a priority, Swisscom
decided to open a DevOps centre in Riga in the year
under review – in addition to the existing centre in Rot-
terdam. The main objective is to maintain access to
international talent in addition to the Swiss labour mar-
ket, if required.

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. The results and
the comments in which employees give their assessments
are available to all employees in real time. They enable
every individual employee and team and the organisation
as a whole to respond quickly to the feedback and start

making improvements. A survey of this type fosters
a culture of feedback and trust, which provides the basis
for Swisscom and its employees to grow and develop
together. The response rate to the Pulse survey is con-
stantly rising: a total of 74% of employees participated in
the 2020 survey (2019: 70%). More than 90% of the
employees participating in the survey said they were
highly likely to recommend Swisscom as an employer.

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 inno-
vative company. To promote diversity, Swisscom focuses
in its activities on the factors of gender, inclusion, genera-
tions and language regions. In relation to gender, for
example, Swisscom also endeavours to make work com-
patible with family life. Flexible working models 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 0.97% to
1.06% versus the previous year. Swisscom tries to earmark
at least 1% of jobs for inclusion employment solutions.
Swisscom also works towards integration where genera-
tion 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 trains around 900 apprentices in Switzerland.
Graduates of technical colleges and universities gain their
first practical experience in our company as part of
a step-in internship or as a trainee. Swisscom is repre-
sented in all of Switzerland’s language regions. It attaches
importance to ensuring that the different languages are
adequately represented in all areas and accordingly offers
apprenticeships, internships and talent programmes for
all language regions.

Employees in Italy

Statutory terms and conditions of employment in Italy
are based on the Contratto Collettivo Nazionale di
Lavoro (CCNL), a state collective employment agree-
ment. The CCNL defines the terms and conditions of
employment between 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.

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. The company’s terms and conditions of employ-
ment enable employees to achieve a healthy balance
between their work demands and personal life. The is
largely due to the following measures, which were set out
in an agreement concluded with the trade unions in 2001:
flexible office working hours, smart working and working
from home, and for mothers the choice of shifts or tempo-
rary part-time jobs.

Fastweb offers competitive salary packages aimed at
attracting and retaining highly qualified specialists and
managers. The company’s salary system comprises
a basic salary, a collective variable profit-sharing bonus
for non-managerial staff and a variable performance-
related component for managerial staff which is 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 model agreed with the unions. Fastweb complies
with the legal minimum salary defined by the CCNL.

To the interview

For exciting
movie nights.

Markus Gisi, Scheduling Director for blue TV,
offers top entertainment whenever you want .

To the interview

For all of our futures.

Saskia Günther, Head of Sustainability Team,
makes sure that Swisscom
remains world leader in sustainability .

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 . The biggest innovation in the year under review was the creation
of the “Swisscom blue” product family, which combines the entertainment offerings
previously available under different brands into a world of experience .

Swisscom brands

The Swisscom brand is managed strategically as an
intangible asset and an important element of the
Group’s reputation management. It supports Swisscom’s
business activities, gives guidance 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
the familiar and the new and standing equally for net-
work infrastructure, best experiences, entertainment,
ICT and digitisation.

In Switzerland, Swisscom offers core business products
and services under the main 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. Outside Switzerland,
Swisscom’s main market is Italy, where it operates under
the Fastweb brand. The strategic management and
development of the entire brand portfolio is an integral
part of corporate communications.

Main brand

New product
family

Secondary brand

Tertiary brand

Other brands
(excerpt)

Swisscom brand portfolio

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Society, technology and the environment are changing
ever more rapidly. A brand must absorb these changes
while offering direction and stability. Vision, values and the
Swisscom promise define the positioning of the Swisscom
brand. To revitalise its brand both internally and externally,
Swisscom has created the brand platform “ready”.
Swisscom expects its employees to demonstrate trust-
worthiness, commitment and curiosity in everything they
do. Based on these foundations, Swisscom presents itself
as a reliable provider, builds on its position as market leader
and opens up new business areas. Swisscom offers its
customers the opportunity to make easier use of the
networked future and prepares them for this.

The year under review was significantly shaped by
a brand-strategic decision: the bundling of the entertain-
ment offering within the “Swisscom blue” product family.
Up to then, Cinetrade, Teleclub, Kitag cinemas and Bluewin
had appeared as separate brands. For customers, the con-
nection to Swisscom was hardly noticeable. Swisscom
therefore dissolved these brands in the year under review
and bundled its entire entertainment offering within the
“Swisscom blue” product family. “Swisscom blue” com-
prises blue TV (formerly Swisscom TV), blue Cinema (for-
merly Kitag cinemas) and blue News (formerly Bluewin).
Teleclub’s services now come under blue+. This bundling
makes the connection between the individual offerings
clear, enables new offerings and makes the Swisscom
brand with even more appealing and dynamic. All this is in
line with Swisscom’s one-brand strategy. The design of
“Swisscom blue” draws heavily on the best-known brand
colour blue and conveys the impression of light, which
plays a central role in the existing corporate design.

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 “Swit-
zerland 50” survey carried out by Brand Finance,
Swisscom ranks in ninth place. This makes it one of the
most valuable brands in Switzerland, worth around
CHF 5 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 match the performance of individual components to
their own 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
separately 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
easily adapted to individuals’ needs.

Swisscom is also continuously expanding the inOne
mobile subscription. Thanks to inOne mobile go, cus-
tomers benefit from unlimited use of their smartphones
in Switzerland. Swisscom is also the first provider in
Switzerland to include use within the EU/Western
Europe in the 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 con-
tract. Customers are increasingly keen to have devices of
this kind with a mobile connection.

Home networking (smart home) for controlling lighting,
music or alarm systems also grew strongly in 2020. At
the end of 2020, some 250,000 customers (+39%) were
using around 340,000 devices via the Swisscom Home
app. This means that almost three times more devices
were connected than a year earlier.

In the area of entertainment, Swisscom launched
“Swisscom blue” in September 2020. “Swisscom blue”
offers a comprehensive entertainment experience with
new offers, new content and the freedom to access it
anywhere. The basis for the new offering is blue TV, the
most popular TV service in Switzerland. It is available, as
before, via the Swisscom Box (or its predecessor mod-
els), but it is also available via an app for every smart-
phone and tablet, via a web player for laptops at blue.ch
and via a smart TV app on devices of the Samsung brand

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and, coming soon, on devices of other manufacturers
such as LG as well. The app is also available with the
complete blue+ offering on the TV boxes of upc TV. blue
TV is thus not only accessible to Swisscom customers,
but also to customers of other cable network operators.

The broadest blue TV package is still only available in
combination with the Swisscom Box. This is because
only the Swisscom Box (or its predecessor model, the
UHD Box) integrates the attractive streaming services of
Netflix, Sky, OCS, Spotify, DAZN, YouTube and many
other providers alongside the traditional medium of
tele vision. In addition, the Swisscom Box now also offers
access to Prime Video, Amazon’s streaming service, as
well as to the MySports channels, which among other
things broadcast the games of Switzerland’s top ice
hockey leagues.

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 customers
straightforward and attractive mobile, Internet and fixed-
line services. Coop Mobile is exclusively a mobile subscrip-
tion. What sets it apart is that the data allowance does not
expire at the end of the month.

Customers can now hand their damaged mobile phones
into Swisscom Repair Centres and have them repaired
without the phone leaving the Swisscom Shop, while
myCloud offers Swisscom customers a Swiss solution for
the secure management and sharing of their personal
data, such as photos, videos and documents. Swisscom
is also continually expanding its service offerings to
cater to changing customer needs.

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 its custom-
ers through the digitisation process. It works together
with customers to develop future-oriented solutions,
supported by one of the most comprehensive ICT port-
folios in Switzerland, which comprises cloud, outsourc-
ing, workplace and IoT solutions, as well as mobile phone
solutions for mobile working and communication, net-
working solutions, location networking, business pro-
cess optimisation, SAP solutions, security and authenti-
cation solutions and a full range of services tailored to

the banking industry. The company makes hospitals
more efficient by providing them with support in the
digitisation of their processes. It also helps health insur-
ance companies by assuming the operation of their core
IT systems. Swisscom is driving digitisation in the health-
care sector by providing its networking solutions for ser-
vice providers and implementing 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 com-
plex needs can use “Smart Business Connect”, an individ-
ualised communication solution with collaboration and
networking features. Both bundled offerings include
integrated services such as Internet failure protection
and can be supplemented with blue TV, blue TV Public or
blue TV Host for hotels and homes. SMEs also depend on
a reliable IT infrastructure for their business operations,
because IT infrastructure is increasingly becoming the
lifeline of companies. SMEs are dependent on IT func-
tioning flawlessly throughout and being able to adapt
easily and flexibly to market and company changes at
any time. Smart ICT thus provides customers with a
complete IT outsourcing package as a modular inte-
grated solution. Together with IT partners in the regions,
Swisscom handles the operation of the customer’s ICT
infrastructure and takes care of data security in a profes-
sional manner. In the year under review, Swisscom
launched the ICT Assessment and My Service Business as
new services for SMEs in the digital world and added
Microsoft Azure to the cloud portfolio to address cus-
tomer needs even more individually. Through the infor-
mation channel as well as the in-house channel, blue TV
Host brings new infotainment offerings to hotels and
homes. The SME portfolio is completed by mobile sub-
scriptions tailored to the needs of business customers
along with software and Internet services.

Swisscom also gives SMEs access to information and
directory services in the form of localsearch, which
makes it easy to find addresses, telephone numbers and
detailed information on companies – on the Internet, via
the mobile app and in the printed telephone directory
(Local Guide). In addition, localsearch operates the direc-
tories local.ch, with a booking platform for 4,500 restau-
rants, and search.ch. Through Swisscom Broadcast Ltd,
Swisscom offers broadcasting services ranging from plat-
form-independent services for media customers to pri-
vate mobile radio and security radio. Through cablex Ltd,
Swisscom also offers telecommunications services
relating to the construction and maintenance of net-
work infrastructure.

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, and supplies its customers
with infrastructure products such as the shared use of
cable ducts and the mobile network. In addition,
Swisscom Wholesale is opening up advanced business
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 by a focus on transparency and
simplicity. The company thus held onto its leading position
in terms of customer satisfaction with fixed-line services
and also achieved a high ranking with mobile customers.

In the business customer segment, Fastweb defended its
leading position, particularly against large companies
(Fastweb market share of 34%) and in the public sector
(Fastweb market share of 40%), where the company won
major national public framework contracts for wireline
and ICT services. In order to expand its offerings in the ICT
and security markets, Fastweb acquired 100% of Cutaway
and 70% of 7Layers in 2020. Thanks to Cutaway, Fastweb
is expanding its offering for end-to-end cloud solutions
and is now less dependent on third-party solutions. The
acquisition of 7Layers increases capacities in terms of
cyber security (high-quality services). Fastweb is thus fur-
ther expanding its customer base and portfolio. In whole-
sale, Fastweb offers UBB services to other telecommuni-
cations companies for their residential and business
customers.

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 represents the emotional aspects of
customer loyalty and reflects 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 Business 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.

Innovation
and development

Global competition, new technologies and changing customer needs are leading to
an ever more rapid pace of change . Swisscom invests constantly in the development
of new products and services for its customers, optimises its processes and thereby
secures its long-term market position .

Innovation as an important driver

Innovation has been steadily gaining in importance for
many 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 people.
To this end, it works closely with partners, universities,
start-ups and established technology companies.

Swisscom Outposts in Silicon Valley and Shanghai conduct
technology scouting and transfers for Swisscom. Swisscom
Ventures networks start-ups with Swisscom’s business
units in order to stimulate innovation. Investments in
over 65 new companies since 2007 have already helped
to create more than 1,000 jobs in Switzerland and to fur-
ther strengthen the Switzerland as a business location.

In the year under review, Swisscom Ventures made
investments in seven new companies and ten follow-up
investments
in existing holdings. Swisscom also
launched the Digital Transformation Fund in 2018.
Swisscom StartUp supports start-ups and entrepreneurs
in Switzerland through consulting, discounts on IT and
cloud services, expert know-how, coaching programmes,
financing and community events. The Swisscom StartUp
Challenge 2020 was dedicated to the topic of 5G. Start-
ups or research teams were able to qualify for a partner-
ship with Swisscom or financing through Swisscom
Ventures and received mentoring from Swisscom,
Venturelab, Ericsson and Qualcomm. Finally, the internal
intrapreneurship programme Kickbox supports the
internal innovation process by providing 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

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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

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 infrastructure. Its
innovative architecture also enables it to renew all compo-
nents from the core network to the connection. Swisscom is
thus laying the foundations to enable the rapid introduction
of new services in the future and to be the first provider to
make new developments available to customers.

Mobile communications
In 2020, Swisscom continued to push ahead strongly with
the introduction of 5G. Among other things, it developed a
5G in-house solution that brings the network of the future
directly into buildings and allows users to benefit directly
from this modern technology. In April 2020, Swisscom put
the first Swiss 5G in-house installations into operation in
the Swisscom Shop in Lucerne railway station and in the
Lucerne station concourse. The 4x4 MIMO (Multiple Input
Multiple Output) technology used increases the speed and
capacity of the network enormously. Swisscom also car-
ried out research on a test track at Lake Walen to find
out how 5G mobile communications coverage in trains
can be improved significantly with the aid of an antenna
corridor along the railway line. It achieved a break-
through, realising download speeds of over 1 Gbps in a
moving train with response times of only 8 milliseconds.

Fixed network
The further development of digital applications will lead
to a similar growth in bandwidth need in the coming years
as in previous years. Demand has increased more than ten-
fold within ten years. This is why Swisscom continually
invests in network expansion and relies on the latest
advanced technologies. In this way it ensures that Switzer-
land’s digital competitiveness remains at a high level.
Swisscom reached the next milestone on this path in the
year under review: it was the first telecommunications
company in the world to achieve a bandwidth of 50 Gbps
download and 25 Gbps upload in the access network in a
real network environment. Swisscom estimates that the
corresponding technology will be ready for the market in
about two years and will then be available for use in every-
day life.

Internet of Things (IoT)
Smart Life
The innovation potential of IoT accelerates lucrative busi-
ness models, automated processes and the creation of
novel customer interactions and intelligent products.
Swisscom supports companies and start-ups through
various formats to successfully enter the IoT and to
develop it further. At the same time, the IoT is becoming
increasingly important to residential customers in their
smart homes or on the move. The Swisscom Home app
already controls over 50 devices from eight manufactur-
ers – including devices from leading international manu-
facturers such as Philips Hue and Sonos as well as Swiss
manufacturers
like myStrom. Swisscom has also
expanded the functionality of the Home app and intro-
duced new types of control. For example, the light

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switches off automatically as soon as the user leaves
home and switches on automatically just before sunset.
The Swisscom Voice Assistant also makes controlling
smart devices even easier and more versatile. Smart
household appliances such as the iRobot vacuum cleaner
robot can now be controlled via the app. The new
Swisscom Smart Switch is an ideal entry-level product for
all users who are interested in smart home applications.

Analytics and artificial intelligence
The use of 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. For
example, customers will in future be able to control the
automated voice dialogue on the Swisscom hotline via
AI-based voice recognition instead of using traditional
numeric input. This will allow customer concerns to be
identified more quickly and customers to be forwarded
directly to the appropriate agent. In the case of a call-
back with an open incident ticket, the call will be routed
directly to a suitable agent. Consequently, customers
will not have to explain their issues again before they are
forwarded. Swisscom is continuously optimising the
AI-supported chatbot used in the written channels in
terms of user experience and automation rate. The chat-
bot now uses a customer-centric recognition model for
concerns.

Security
Expansion of security platform
Security is part of Swisscom’s values and culture. Threats
from the Internet are constantly growing in number and
becoming increasingly intelligent. Many processes and
business models in today’s companies are completely
IT-based and thus become attractive targets for attackers.
By combining professional security services, skills, pro-
cesses and tools, Swisscom offers highly effective security
and thus the best possible protection for its customers,
stakeholders and its own company. For business custom-
ers, Swisscom offers dedicated facilities through Managed
Security Services to monitor and safeguard the infrastruc-
ture. Swisscom further strengthened its Cyber Security
division by acquiring United Security Providers AG in 2019.
The expansion of the security platform planned for 2021
will ensure that Swisscom’s security services are always
based on the latest technology and offer customers
360-degree protection. The new dashboard with extended
self-care services will enable customers to use the security
platform to deal with simple issues quickly and easily, such
as blocking their employees from certain websites or
checking their own line utilisation. This will allow Swisscom
to improve customer service and give it more time to
address complex customer issues.

Entertainment
Launch of “Swisscom blue”
In the year under review, Swisscom combined all its
entertainment offerings under the new “Swisscom
blue” product family. The offerings are now available on
all devices. This means that blue TV can now be received
not only on the Swisscom Box, smartphone and tablet
apps and a web player, but also on a smart TV app for
Samsung devices. Apps for other manufacturers like LG
will follow. Furthermore, blue TV is available on compet-
itors’ devices, e.g. UPC’s TV boxes. In addition to the
streaming packages from Netflix, Sky, OCS, Spotify,
DAZN and YouTube, the Swisscom Box now offers access
to Amazon Prime. “Swisscom blue” is also setting new
standards in the field of gaming & eSports and is gradu-
ally expanding the Swisscom Box into a gaming plat-
form. For the first time, Twitch, the leading streaming
platform for live gaming and eSports, is available on a
Swiss TV platform.

Digital Swisscom
My Swisscom app
In 2020, Swisscom again took further steps to digitise its
network, jobs and processes and to consolidate its role
as the leading service provider among Swiss telecommu-
nications providers. Since April 2020, for example, the
new My Swisscom app has been available for download
from the Google Play Store and the Apple App Store.
With its fresh look, simplified login via fingerprint or
face recognition and personalised content on the home-
page, the app provides extremely easy access to
Swisscom. It offers an overview of running costs, bills
and orders, allows subscriptions and products to be
managed and adjusted, provides information on faults
and maintenance, and enables direct contact with
Swisscom – via chat, message or callback. Other innova-
tions will follow. For example, Swisscom is planning to
integrate a chatbot into the My Swisscom app and to
make communication on the progress of work in the
event of reported faults even more transparent.

Digital business
In the field of digital business innovation, Swisscom sup-
ported developments within and outside its own company
in 2020, by setting up and further developing joint ventures
with strategic partners and promoting intrapreneurship.
The Swisscom Digital Business Unit (DBU) focuses on digi-
tal services for SMEs via localsearch (Swisscom Directories
Ltd), fintech activities and blockchain-based services. It is
also continuously researching other segments that could
become relevant to its activities.

Swisscom Directories Ltd (localsearch)
Today, even small SMEs have to be competitive in the
online world. The Swisscom subsidiary Swisscom Direc-
tories Ltd (localsearch) therefore offers efficient market-
ing products that are geared to the needs of the SME
segment. The focus is on simple, inexpensive and
time-saving solutions for the success of Swiss industry in
the digital world. Thanks to localsearch products, SMEs
can be found online, acquire new customers and retain
existing ones. This is why localsearch brings the five
principles of digital marketing to Swiss SMEs: seen,
found, booked, bought and liked. In addition, localsearch
operates the popular and well-used local.ch and search.ch
directories.

Fintech
The fintech area of the Digital Business Unit focuses on
the areas of digital assets and trust services. In the digi-
tal assets segment, Swisscom is working together with
daura ltd (minority holding) and Custodigit Ltd (subsidi-
ary) on the future of the Swiss financial infrastructure.
Using the digital share platform of daura ltd, the existing
share register can be easily digitised and capital increases
can be processed quickly and inexpensively, practically
at the push of a button. Starting in the year under
review, companies can also hold digital general meet-
ings via daura ltd. Custodigit Ltd offers regulated finan-
cial service providers an easy-to-integrate and secure
platform to store and manage digital assets. Through its
trust services, Swisscom, as a leading provider of trust
services, aims to digitally issue, verify, transmit and store
high-quality documents such as contracts, certificates
and register extracts. With the majority takeover of
Ajila AG in December 2019, Swisscom took a first step

towards fully digitising all processes and conclusions of
new contracts. In this way, Swisscom provides compa-
nies and administrations with significant support with
the complete digitisation of their business processes.
Ajila AG launched the “Digital Deals” platform in 2020.
This platform aims to handle all processes and conclu-
sions of new contracts digitally as a cloud solution. It
eliminates the need to print, sign and rescan documents.

Intelligent automobile networking
autoSense AG, a joint venture of Swisscom with AMAG
and Zurich Insurance, focuses on the development of
advanced automotive services. It has quickly established
itself as one of the main players in this segment.
autoSense offers services related to the intelligent net-
working 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 prob-
lems, an app for cashless refuelling, pay-per-kilometre
insurance and digital assistance for driving instructors
and learners.

Digital identity
Swisscom holds a stake in the SwissSign Group Ltd.
SwissSign is widely supported by state-owned enter-
prises as well as by finance and insurance companies. Its
shareholders intend for SwissID to become a means of
establishing an open and simple system for digital iden-
tification. SwissID can already be used easily and securely
on numerous online portals, including those of Swiss
Post, St. Galler Kantonalbank, Raiffeisen and the cantons
of Aargau, Berne, Graubünden and Zug.

To the interview

Customers know
their own way.

Reto Jost, online designer, motivates his team
to provide the best online customer experience .

To the interview

Customers know

their own way.

Connected anywhere
and at any time.

Luigi Chiofalo, fibre-optic network designer,
connects urban and rural areas .

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 calculation may differ from the
published APMs of other companies. For this reason,
comparability across companies may be limited.

The key alternative performance measures used at Swisscom for 2020 financial reporting are defined as follows:

Key performance measure

Adjustments

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 currency effects (figures for 2020 are translated at the
2019 exchange rate to calculate the currency effect) .

Operating income before depreciation and amortisation (EBITDA) Operating income before depreciation, amortisation and impairment losses 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 .

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) minus capital expenditure
in property, plant and equipment, intangible assets and payments for indefeasible rights of
use (IRU) and lease expense . Lease expense includes interest expenses on lease liabilities and
depreciation of rights of use excluding depreciation of indefeasible rights of use (IRU) and
impairment losses on right-of-use assets .

Cash flows from operating and investing activities excl . cash flows from the acquisition and
sale of subsidiaries as well as income and expenses for equity-accounted investments and other
financial assets .

Financial liabilities less cash and cash equivalents, listed debt instruments, certificates of
deposit, derivative financial instruments held for hedging financial liabilities and other current
financial assets .

Net debt incl. lease liabilities

Net debt and lease liabilities .

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Reconciliation of alternative performance measures

in million CHF

Net revenue

Operating income before depreciation and amortisation (EBITDA)

EBITDA

Termination benefits

EBITDA adjusted

Capital expenditure

Capital expenditure in property, plant and equipment
and intangible assets

Payments for indefeasible rights of use (IRU)

Capital expenditure

In CHF million

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)

Impairment losses on right-of-use assets

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

Expense for share-based payments

Revenue from finance leases

Interest received

Interest paid on financial 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

Free cash flow

2020

2019

Change
reported

Change at
constant
currencies

11,100

11,453

–3.1%

–2.3%

4,382

–

4,382

2,188

2,229

4,358

4,414

2,390

2,438

0 .6%

–

–0.7%

–8 .5%

–14 .6%

–8.6%

1 .3%

–

0.0%

–7 .9%

–

–8.0%

2020

2019

Change

4,069

(2,229)

(286)

(178)

(65)

(1)

101

(24)

(15)

309

3,981

(2,438)

(282)

–

(112)

(46)

(48)

(1)

101

(25)

(18)

371

1,853

1,626

4,069

(2,231)

(287)

–

121

(20)

3,981

(2,733)

(276)

394

(52)

1,706

1,345

209

(4)

(6)

(66)

(17)

(3)

–

(62)

227

502

(11)

(355)

(3)

–

108

361

Summary

In CHF million, except where indicated

Net revenue

Operating income before depreciation and amortisation (EBITDA)

EBITDA as % of net revenue

Operating income (EBIT)

Net income

Earnings per share (in CHF)

Operating free cash flow proxy

Capital expenditure

Net debt

Equity ratio

2020

11,100

4,382

39 .5

1,947

1,528

29 .54

1,853

2,229

6,218

39 .1

2019

11,453

4,358

38 .1

1,910

1,669

32 .28

1,626

2,438

6,758

36 .6

Change

–3 .1%

0 .6%

1 .9%

–8 .4%

–8 .5%

14 .0%

–8 .6%

–8 .0%

Full-time equivalent employees

19,062

19,317

–1 .3%

Swisscom’s net revenue decreased by 3.1% or CHF 353
million to CHF 11,100 million, while operating income
before depreciation and amortisation (EBITDA) rose by
0.6% or CHF 24 million to CHF 4,382 million. On a like-
for-like basis and at constant exchange rates, revenue
declined by 2.3% while EBITDA remained stable. The
overall impact of the Covid-19 pandemic on operating
income remained low. The restrictions on travel led to a
substantial decline in both roaming revenue and costs.
Profit before tax increased by 4.4% or CHF 75 million.
However, due to special effects in the previous year’s
income tax expense, net profit fell by 8.4% or CHF 141
million to CHF 1,528 million. Payment of an unchanged
dividend of CHF 22 per share for the 2020 financial year
will be proposed to the Annual General Meeting.

Swisscom Switzerland saw a continued decline in revenue
from telecom services (service revenue). The 3.5% or
CHF 298 million decline in net revenue to CHF 8,275 mil-
lion was primarily driven by continued pricing pressure
and roaming. Roaming accounted for CHF 89 million or
about one-third of the decline in revenue. In contrast,
revenue at Italian subsidiary Fastweb increased in local
currency by EUR 86 million or 3.9% to EUR 2,304 million,
driven by revenue growth in all three customer segments
(Residential Customers, Business Customers and Whole-
sale). The number of customers in the broadband
business rose by 4.2% to 2.75 million, and in mobile
telephony by 12.3% to 1.96 million.

In the Swiss core business, EBITDA increased by 1.2% or
CHF 43 million to CHF 3,527 million; on an adjusted basis
(termination benefits), EBITDA decreased by 0.5%. The
decline in revenue was largely offset by ongoing cost-cut-
ting measures. At Fastweb, EBITDA rose in local currency by
4.5% to EUR 784 million as a result of the growth in revenue.

Swisscom’s capital expenditure decreased by 8.6% or
CHF 209 million to CHF 2,229 million. The previous year’s
figure included expenditure of CHF 196 million for
mobile radio frequencies in Switzerland. Excluding
expenditure for mobile radio frequencies, capital
increased by 1.3% or
expenditure
CHF 22 million to CHF 1,596 million due to the further
expansion of network infrastructure. At Fastweb, capital
expenditure decreased by 2.0% or EUR 12 million to
EUR 587 million and thus remained at a high level.

in Switzerland

The operating free cash flow proxy increased by
CHF 227 million or 14.0% to CHF 1,853 million. The
previous year’s figure was affected by the expenditure
of CHF 196 million for mobile radio frequencies in Swit-
zerland. Net debt decreased by 8.0% to CHF 6,218 mil-
lion, while the net debt/EBITDA ratio after lease expense
fell to 1.5.

The number of employees declined by 1.3% year-on-year
to 19,062 FTEs. In Switzerland, headcount fell by
580 FTEs or 3.5% to 16,048 FTEs as a result of the declin-
ing core business. Over half of the reduction was
achieved through natural fluctuation, retirements and
alternative solutions.

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 for 2021. Subject to achieving its
targets, Swisscom will propose payment of an unchanged,
attractive dividend of CHF 22 per share for the 2021 finan-
cial year at the 2022 Annual General Meeting.

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Segment results

In CHF million, except where indicated

2020

2019

Change

Net revenue

Residential Customers

Business Customers

Wholesale 1

IT, Network & Infrastructure

Intersegment elimination

Swisscom Switzerland

Fastweb

Other Operating Segments

Group Headquarters

Intersegment elimination

4,564

3,100

976

(450)

8,275

2,470

1,020

–

(665)

4,736

3,240

968

(456)

8,573

2,468

1,079

(668)

Revenue from external customers

11,100

11,453

Operating income before depreciation and amortisation (EBITDA)

Residential Customers

Business Customers

Wholesale

IT, Network & Infrastructure

Swisscom Switzerland

Fastweb

Other Operating Segments

Group Headquarters

Reconciliation pension cost 2

Intersegment elimination

2,701

1,344

524

(1,042)

3,527

840

185

(62)

(65)

(43)

2,770

1,394

511

(1,191)

3,484

834

189

(66)

(47)

(36)

Operating income before depreciation and amortisation (EBITDA)

4,382

4,358

–3 .6%

–4 .3%

0 .8%

0 .0%

–1 .3%

–3.5%

0 .1%

–5 .5%

–100 .0%

–0 .4%

–3.1%

–2 .5%

–3 .6%

2 .5%

–12 .5%

1.2%

0 .7%

–2 .1%

–6 .1%

38 .3%

19 .4%

0.6%

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 operating divisions
Swisscom Switzerland and Fastweb. The other business
divisions are grouped together under Other Operating
Segments. Group Headquarters, which includes non-
allocated costs, is reported separately. Swisscom Swit-
zerland comprises the customer segments Residential
Customers, Business Customers and Wholesale, as well
as the IT, Network & Infrastructure division. Fastweb is a
telecommunications provider for residential and business
customers in Italy. Other Operating Segments primarily
comprises the Digital Business division, Swisscom Broad-
cast Ltd (radio transmitters) and cablex Ltd (network
construction and maintenance).

The IT, Network & Infrastructure segment does not
charge any network costs to other segments, nor does
Group Headquarters charge any management fees to
other segments. Any other services between the seg-
ments are charged 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 Residential Customers, Business Customers and
Wholesale segments thus correspond to a contribution
margin before network costs.

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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 and amortisation

Segment result

Operating free cash flow proxy

Segment result before depreciation and amortisation (EBITDA)

Lease expense

EBITDA after lease expense (EBITDA AL)

Capital expenditure

Operating free cash flow proxy

Operational data in thousand and full-time equivalent employees

Fixed telephony access lines

Broadband access lines retail

TV access lines

Mobile access lines

Revenue generating units (RGU)

Broadband access lines wholesale

Headcount

2020

2019

Change

5,667

1,058

759

661

8,193

8,275

(1,747)

(3,001)

(4,748)

3,527

42 .6

(230)

(1,509)

1,788

3,527

(230)

3,297

(1,599)

1,698

1,523

2,043

1,554

6,224

11,344

555

12,591

5,952

1,049

807

643

8,484

8,573

(1,897)

(3,192)

(5,089)

3,484

40 .6

(224)

(1,515)

1,745

3,484

(224)

3,260

(1,761)

1,499

1,594

2,058

1,555

6,333

11,540

515

13,055

–4 .8%

0 .9%

–5 .9%

2 .8%

45 .5%

–3.4%

–7 .9%

–3.5%

–7 .9%

–6 .0%

–6.7%

1.2%

2 .7%

–0 .4%

2.5%

1 .2%

2 .7%

1.1%

–9 .2%

13.3%

–4 .5%

–0 .7%

–0 .1%

–1 .7%

7 .8%

–3 .6%

Net revenue for Swisscom Switzerland fell by CHF 298
million or 3.5% to CHF 8,275 million as a result of contin-
uing competitive and price pressure and lower roaming
revenues. To contain the Covid-19 pandemic, interna-
tional travel was severely restricted. This led to a total
decline in revenue of CHF 89 million in both telecommu-
nications services and Wholesale. Revenue from tele-
communications services decreased by CHF 285 million
or 4.8% to CHF 5,667 million. Of this decline, CHF 164 mil-
lion (–4.0%) was attributable to the Residential Custom-
ers segment and CHF 121 million (–6.6%) to the Business
Customers segment. Revenue from the solutions busi-
ness in Business Customers remained largely stable at
CHF 1,058 million (+0.9%). Revenue was also affected by
the high level of promotions. Sales of merchandise were
unable to match the high volumes seen in 2019, with

revenue falling by 5.9% to CHF 759 million. In Wholesale,
revenue from external customers increased by 2.8%,
with the increase in revenue due to higher demand for
broadband connections and additional mobile network
customers outweighing the decline in inbound roaming.

The number of inOne customers continues to grow. As
at the end of 2020, Swisscom had 2.45 million inOne cus-
tomers in the Residential Customers segment. In this
segment, inOne accounts for 68% of postpaid mobile
subscriptions and 76% of broadband connections. The
market is showing signs of saturation in the area of
mobile communications and fixed-network services,
with the mobile subscriber base falling by 109,000
(–1.7%) to 6.22 million. The number of postpaid lines
grew by 81,000, while the number of prepaid lines fell by

190,000. The number of broadband connections fell by
15,000 (–0.7%) to 2.04 million. There was also a shift to
second and third brands. The number of TV connections
remained stable at 1.55 million. In fixed-line telephony,
the downward trend is slowing as the switch to IP tech-
nology has been completed. The number of fixed teleph-
ony access lines fell by 71,000 or 4.5% to 1.52 million.

Segment expense fell by CHF 341 million or 6.7% to
CHF 4,748 million. Direct costs decreased by CHF 150 mil-
lion or 7.9% to CHF 1,747 million, with costs for acquiring
and retaining customers, roaming and purchasing mer-
chandise all falling. In addition, the cost of broadcasting
sporting events decreased because either such events
were cancelled or will not take place until 2021 due to
Covid-19. Indirect costs were CHF 191 million or 6.0%
lower at CHF 3,001 million. Excluding the expense for
reduced by
headcount
CHF 129 million or 4.1%. This was mainly attributable to
the declining headcount and lower advertising costs,
while fewer customer service deployments as a result of
the stable networks and platforms also reduced costs.
Headcount fell as a result of efficiency measures by
464 FTEs or 3.6% to 12,591. The segment result before

costs were

reductions,

depreciation and amortisation was CHF 43 million or
1.2% higher at CHF 3,527 million. On an adjusted basis,
EBITDA fell by CHF 19 million or 0.5% The decline in
revenue was largely offset by ongoing cost-cutting
measures.

Capital expenditure fell by 9.2% to CHF 1,599 million.
The figure for the previous year included expenditure of
CHF 196 million for mobile radio frequencies. Adjusted
for this, capital expenditure increased by CHF 34 million
or 2.2% due to higher spending on mobile network
expansion and on the expansion of fibre-optic broad-
band in the fixed network. As at the end of 2020, 82% of
all Swiss homes and businesses were connected with
ultra-fast broadband exceeding 80 Mbps. 59% of all
homes and businesses benefit from fast connections
with bandwidths of more than 200 Mbps. Of these,
more than 1.7 million have been upgraded to FTTH.
Swisscom intends to make ultra-fast broadband avail-
able in every Swiss municipality by the end of 2021, even
in remote locations. Swisscom also plans to double FTTH
coverage for homes and businesses to up to 60% by the
end of 2025 compared with 2019 levels.

Fastweb

In EUR million, except where indicated

2020

2019

Change

Net revenue and results

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 and amortisation

Segment result

Operating free cash flow proxy

Segment result before depreciation and amortisation (EBITDA)

Lease expense

EBITDA after lease expense (EBITDA AL)

Capital expenditure

Operating free cash flow proxy

Operational data in thousand and full-time equivalent employees

Broadband access lines

Mobile access lines

Headcount

1,133

907

257

2,297

2,304

(1,520)

784

34 .0

(52)

(577)

155

784

(52)

732

(587)

145

2,747

1,961

2,703

1,104

862

245

2,211

2,218

(1,468)

750

33 .8

(50)

(560)

140

750

(50)

700

(599)

101

2,637

1,746

2,456

2 .6%

5 .2%

4 .9%

3.9%

0 .0%

3.9%

3 .5%

4.5%

4 .0%

3 .0%

10.7%

4 .5%

4 .0%

4.6%

–2 .0%

43.6%

4 .2%

12 .3%

10 .1%

Fastweb’s net revenue rose by EUR 86 million or 3.9%
year-on-year to EUR 2,304 million. Despite challenging
market conditions, Fastweb’s broadband customer base
grew by 110,000 or 4.2% year-on-year to 2.75 million.
Fastweb is also growing in the fiercely competitive
mobile telephony market. The number of mobile access
lines increased by 215,000 or 12.3% year-on-year to
1.96 million despite market saturation and strong com-
petition. The company continues to focus on bundled
offerings, with around 34% of subscribers using a bundled
offering combining fixed network and mobile. Residential
customer revenue rose by EUR 29 million or 2.6% to
EUR 1,133 million as a result of customer growth.
Fastweb maintained its strong position in the business
customer market, Revenue from business customers

was up by EUR 45 million or 5.2% to EUR 907 million as
a result of higher revenue with both private companies and
public administrations. Revenue from wholesale business
increased by EUR 12 million or 4.9% to EUR 257 million.

The segment result before depreciation and amortisation
increased by EUR 34 million or 4.5% to EUR 784 million as
a result of the growth in revenue. Capital expenditure
decreased by EUR 12 million or 2.0% to EUR 587 million.
The volume of capital expenditure remained at a high
level overall, driven by the further expansion of the
ultra-fast broadband networks. Fastweb’s headcount
increased by 247 FTEs or 10.1% year-on-year to 2,703 FTEs
as a result of acquisitions and the hiring of external staff.

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Other Operating Segments

In CHF million, except where indicated

Net revenue and results

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 and amortisation

Segment result

Operating free cash flow proxy

Segment result before depreciation and amortisation (EBITDA)

Lease expense

EBITDA after lease expense (EBITDA AL)

Capital expenditure

Operating free cash flow proxy

Full-time equivalent employees

Headcount

2020

2019

Change

445

575

1,020

(835)

185

18 .1

(12)

(62)

111

185

(12)

173

(44)

129

509

570

1,079

(890)

189

17 .5

(13)

(63)

113

189

(13)

176

(47)

129

–12 .6%

0 .9%

–5.5%

–6 .2%

–2.1%

–7 .7%

–1 .6%

–1.8%

–2 .1%

–7 .7%

–1.7%

–6 .4%

0.0%

3,558

3,605

–1 .3%

The net revenue of Other Operating Segments decreased
by CHF 59 million or 5.5% year-on-year to CHF 1,020 mil-
lion. The decline in revenue from external customers
was attributable to lower revenue at cablex and
Swisscom Broadcast and the loss of Billag’s mandate to
collect national radio and television licence fees. The

segment result before depreciation and amortisation
decreased by CHF 4 million or 2.1% to CHF 185 million,
while the profit margin rose to 18.1% (prior year: 17.5%).
Headcount fell by 47 FTEs or 1.3% to 3,558 FTEs, driven
primarily by lower headcounts at both cablex and
Swisscom Directories Ltd (localsearch).

Group Headquarters and reconciliation

In CHF million, except where indicated

Group Headquarters

Reconciliation pension cost

Elimination

Operating income before depreciation and amortisation (EBITDA)

2020

(62)

(65)

(43)

(170)

2019

(66)

(47)

(36)

(149)

Change

–6 .1%

38 .3%

19 .4%

14.1%

Net costs not allocated to the operating segments,
which comprise Group Headquarters, pension cost rec-
onciliation and inter-segment eliminations, increased by
CHF 21 million year-on-year to CHF 170 million. The rec-
onciliation item for pension cost is the difference
between total employer contributions and the cost

under IFRS. The increase of CHF 18 million in this item
was primarily attributable to changes in assumptions (in
particular regarding the discount rate). Inter-segment
eliminations pertain to interim 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 on 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

Attributable to equity holders of Swisscom Ltd

Attributable to non-controlling interests

Earnings per share (in CHF)

2020

4,382

(2,149)

(286)

1,947

(69)

(45)

(38)

1,799

(271)

1,528

1,530

(2)

29 .54

2019

4,358

(2,166)

(282)

1,910

(62)

(42)

(54)

(28)

1,724

(55)

1,669

1,672

(3)

32 .28

Change

0.6%

–0 .8%

1 .4%

1.9%

11 .3%

7 .1%

–29 .6%

4.4%

392 .7%

–8.4%

–8 .5%

–33 .3%

–8 .5%

Swisscom’s net income fell by CHF 141 million or 8.4% to
CHF 1,528 million, largely due to the higher income tax
expense. Earnings per share decreased accordingly from
CHF 32.28 to CHF 29.54. Profit before income taxes rose
by 4.4%. The depreciation and amortisation of property,
plant and equipment and intangible assets decreased by
CHF 17 million or 0.8% year-on-year to CHF 2,149 million,
mainly reflecting lower depreciation and amortisation at
Swisscom Switzerland and Other Operating Segments.
The higher depreciation at Fastweb in local currency was
offset by the currency effect. Higher interest expense
was offset by an improvement in the other financial

result. The other financial result includes one-off income
of CHF 31 million from valuation differences for financial
assets that were exchanged. The significantly lower tax
expense in the previous year was attributable to positive
tax effects related to the Swiss tax reform. Income tax
expense was CHF 271 million (prior year: CHF 55 million),
corresponding to an effective income tax rate of 15.1%.
This figure included positive tax effects of CHF 29 million
resulting from the revaluation of deferred income tax
items in connection with the Swiss tax reform (prior year:
CHF 269 million). Swisscom anticipates a future effective
consolidated tax rate of 19.0%.

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Cash flows

In CHF million

Operating income before depreciation and amortisation (EBITDA)

Lease expense

EBITDA after lease expense (EBITDA AL)

Capital expenditure

Operating free cash flow proxy

Change in net working capital

Change in defined benefit obligations

Net interest payments on financial assets and liabilities

Income taxes paid

Other operating cash flow

Free cash flow

Dividends paid to equity holders of Swisscom Ltd

Net expenditures for company acquisitions and disposals

Foreign currency translation adjustments

Other changes

Decrease in net debt

2020

4,382

(300)

4,082

(2,229)

1,853

140

(69)

(309)

1,706

(1,140)

(29)

(5)

540

2019

4,358

(294)

4,064

(2,438)

1,626

(63)

(371)

1,345

(1,140)

(53)

107

(8)

251

Change

(6)

209

227

(6)

361

–

(99)

289

increased by
The operating free cash flow proxy
CHF 227 million year-on-year to CHF 1,853 million, mainly
due to lower capital expenditure. Capital expenditure in
the previous year included CHF 196 million for mobile radio
frequencies in Switzerland. Excluding this expenditure, the
operating free cash flow proxy increased by CHF 31 million
or 1.7% as a result of higher operating income before
depreciation and amortisation (EBITDA).

Free cash flow increased by CHF 361 million year-on-year
to CHF 1,706 million. Adjusted for the expenditure for
mobile radio frequencies, free cash flow increased by
CHF 165 million. The increase was attributable in part to
lower income tax payments of CHF 309 million (prior year:
CHF 371 million). Net working capital fell by CHF 140 mil-
lion compared with the end of 2019 (prior year: decrease
of CHF 83 million). In 2020, an unchanged dividend per
share of CHF 22 was paid. This corresponds to a total divi-
dend payment of CHF 1,140 million. Overall, net debt
decreased by CHF 540 million to CHF 6,218 million.

Development of free cash flow
in CHF million

4,382

–2,229

–300

1,853

140

–309

–69

1,706

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

Capital expenditure as % of net revenue

2020

439

519

306

–

259

1,599

629

(43)

2,229

1,596

633

20 .1

Change

–3 .7%

5 .1%

12 .5%

–6 .2%

–1 .1%

–9.2%

–5 .7%

–6 .4%

16 .2%

–8.6%

–9 .8%

–5 .2%

2019

456

494

272

196

262

1,761

667

(37)

2,438

1,770

668

21 .3

Capital expenditure fell by CHF 209 million or 8.6% year-
on-year to CHF 2,229 million, corresponding to 20.1% of
net revenue (prior year: 21.3%). The figure for the previous
year includes expenditure of CHF 196 million for mobile
radio frequencies in Switzerland. Adjusted for this
expenditure, capital expenditure was almost unchanged
compared with the previous year. Switzerland accounted
for CHF 1,596 million or 72% of the investments. Com-
pared with the previous year, they increased by CHF 22
million or 1.4%, excluding mobile radio frequencies.

Capital expenditure incurred by Swisscom Switzerland
increased by CHF 162 million or 9.2% year-on-year to
CHF 1,599 million, corresponding to 19.3% of net revenue

(prior year: 20.5%). The figure for the previous year
includes expenditure of CHF 196 million for mobile radio
frequencies. Capital expenditure on mobile network
expansion and the expansion of fibre-optic broadband
in the fixed network increased.

Fastweb reduced its capital expenditure by CHF 38 mil-
lion or 5.7% to CHF 629 million. In local currency, capital
expenditure decreased by EUR 12 million or 2.0% to
EUR 587 million. The volume of capital expenditure
remained at a high level overall, driven by the further
expansion of the ultra-fast broadband networks. The
ratio of capital expenditure to net revenue fell as a result
to 25.5% (prior year: 27.0%).

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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

31.12.2020

31 .12 .2019

10,725

10,529

Change

196

1,745

5,162

2,138

2,132

(1,525)

(1,216)

(106)

(240)

18,815

(6,218)

(1,988)

(795)

(643)

320

9,491

39 .1

1,842

5,163

2,177

2,183

(1,614)

(1,134)

(122)

(38)

18,986

(6,758)

(2,027)

(1,058)

(607)

339

8,875

36 .6

(97)

(1)

(39)

(51)

(82)

(202)

(171)

540

263

(36)

(19)

616

Operating assets
Net operating assets fell by CHF 0.2 billion to CHF 18.8 bil-
lion. 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
Fastweb’s goodwill is EUR 0.5 billion (CHF 0.5 billion). The
carrying amount of Fastweb’s net assets totals
EUR 3.1 billion (CHF 3.4 billion).

Post-employment benefits
Defined benefit obligations recognised in the consoli-
dated financial statements are measured in accordance
with IFRS provisions. Net defined benefit obligations
were CHF 0.8 billion, which represents a CHF 0.3 billion

decrease year-on-year. This was mainly due to the posi-
tive return on plan assets. Under the Swiss accounting
standards applicable to the pension fund (Swiss GAAP
FER), the funding surplus is CHF 1.2 billion, correspond-
ing to a coverage ratio of 112% on the plan’s assets of
CHF 12.0 billion. The main reasons for the difference of
CHF 2.0 billion compared with the measurement accord-
ing to IFRS are twofold. Firstly, the use of different
assumptions, in particular the interest rate for discount-
ing future pension benefits less the financing share of
employees (risk sharing), has a net effect of CHF 1.4 bil-
lion. 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 0.6 billion. The pension cost recognised in personnel
expenses in accordance with IFRS is significantly higher
than the actual contributions made. The difference
amounts to CHF 65 million in the year under review (pre-
vious year CHF 47 million) and is not included in the seg-
ment results, but shown in the reconciliation to EBITDA
according to the consolidated financial statements.

Net debt
Net debt and the net debt to EBITDA ratio are presented
both with and without classification 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

31.12.2020

31 .12 .2019

Ratio of net debt/EBITDA after lease expense

Debenture bonds

Bank loans

Private placements

Other financial liabilities

Total financial liabilities

Cash and cash equivalents

Listed debt instruments

Certificates of deposit

Derivative financial instruments for financing

Other current financial assets

Net debt

EBITDA after lease expense (EBITDA AL)

Ratio of net debt/EBITDA after lease expense

Ratio of net debt incl. lease liabilities/EBITDA

Net debt

Lease liabilities

Net debt incl. lease liabilities

EBITDA

Ratio of net debt incl. lease liabilities/EBITDA

6,110

484

151

297

7,042

(340)

(271)

–

(79)

(134)

6,218

4,082

1.5

6,218

1,988

8,206

4,382

1.9

5,915

1,080

151

314

7,460

(328)

(139)

(142)

(84)

(9)

6,758

4,064

1.7

6,758

2,027

8,785

4,358

2.0

The ratio of net debt including lease liabilities to EBITDA
was 1.9 at the end of 2020 (prior year: 2.0). Without clas-
sification of the leases as financial liabilities, the ratio of
net debt to EBITDA after lease expense is 1.5 (prior year:
1.7). Both ratios reflect a stable debt situation compared
with the previous year. Swisscom’s goal of maintaining
its single-A credit rating was achieved. The limit on net
debt set by the Federal Council in the financial targets of
2.1x EBITDA after lease expense was also complied with.

In recent years, Swisscom has taken advantage of
favourable capital market conditions with a view to
optimising the interest and maturity structure of the
Group’s financial liabilities. The share of the Group’s var-
iable interest-bearing financial liabilities is 12%. At the
2020, the average interest expense on all financial liabil-
ities was 0.9%, and the average residual term to matu-
rity was 5.8 years. Financial liabilities with a term of one
year or less stood at CHF 0.8 billion at 31 December 2020.

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Equity
Swisscom had equity of CHF 9.5 billion (prior year:
CHF 8.9 billion) and an equity ratio of 39.1% (prior year:
36.6%). The increase of CHF 0.6 billion reported in equity
resulted primarily from the fact that the net income of
CHF 1.5 billion was higher than the dividend payment of
CHF 1.1 billion. The foreign currency differences arising
from the translation of foreign subsidiaries are recog-
nised in equity. On 31 December 2020, the cumulative
currency translation losses amounted to CHF 1.8 billion
(after tax) and were unchanged on the previous year.
Distributable reserves are not determined on the basis
of the equity as reported in the consolidated financial

statements, but rather on the basis of equity as reported
in the separate financial statements of Swisscom Ltd.
The equity in the 2020 separate financial statements of
Swisscom Ltd was CHF 5.7 billion. The difference of
CHF 3.8 billion versus the equity disclosed in the consol-
idated balance sheet is largely due to earnings retained
by subsidiaries and different accounting methods. Under
accounting and measurement rules in Swiss company
law, share capital and that part of the general reserves
representing 20% of the share capital may not be distrib-
uted. On 31 December 2020, Swisscom Ltd held distrib-
utable reserves of CHF 5.6 billion.

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

2020 Change Swisscom
reported without Fastweb

Change
Fastweb

2021
outlook

11,100

< 0

> 0

4,382

< 0

> 0

2,229

> 0

~ CHF 11.1 bn
~ CHF 8 .5 bn
~ EUR 2 .4 bn

~ CHF 4.3 bn
~ CHF 3 .4 bn
~ EUR 0 .8 bn

~ CHF 2.3 bn
> CHF 1 .6 bn

~ EUR 0 .6 bn

1 Exchange rate CHF/EUR 1.07 (2020: CHF/EUR 1.07).

2 2021 outlook for EBITDA after lease expense ~ CHF 4.0 billion

For 2021, 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, Swisscom
expects revenue to be
lower excluding Fastweb.
Fastweb’s revenue is expected to increase slightly from
2020. For Swisscom excluding Fastweb, it will not be
possible to fully make up for the decline in revenue

through cost savings. In contrast, an increase in EBITDA
is anticipated for Fastweb. Capital expenditure in Swit-
zerland will be slightly higher than in 2020. In the case of
Fastweb, the capital expenditure is expected to be at the
level of 2020. Subject to achieving its targets, Swisscom
will propose payment of an unchanged, attractive divi-
dend of CHF 22 per share for the 2021 financial year at
the 2022 Annual General Meeting.

Value-oriented business management

Key performance indicators for planning and managing
business operations are revenue, operating income
before depreciation and amortisation (EBITDA) and
capital expenditure. The enterprise value/EBITDA ratio
also permits comparisons of Swisscom’s enterprise value
derived from the share price on the balance sheet date
with that of similar companies (European 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

31.12.2020

31 .12 .2019

24,715

8,206

795

643

(320)

34,040

4,382

7.8

26,554

8,785

1,058

607

(339)

36,668

4,358

8.4

Swisscom’s enterprise value fell by 7.3% or CHF 2.7 bil-
lion to CHF 34.0 billion in 2020. The main reason for this
was the decline of CHF 2.4 billion in the company’s mar-
ket capitalisation to CHF 24.7 billion. With EBITDA
remaining stable, the ratio of enterprise value to EBITDA
fell to 7.8 (prior year: 8.4). Swisscom’s relative market
valuation is therefore well above the average for compa-

rable companies in Europe’s telecoms sector. The higher
relative valuation is supported by Swisscom’s solid
market position and attractive dividend. In addition, the
lower interest rates and lower income tax rates in Swit-
zerland compared with other European countries have a
positive effect.

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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.

In CHF million

Added value

Net revenue

Capitalised self-constructed assets and other income

Direct costs

Other operating expense 1

Lease expense

Switzer-
land

Other
countries

2020

Total

Switzer-
land

Other
countries

2019

Total

8,614

2,486

11,100

8,969

2,484

11,453

362

(1,784)

(1,147)

(244)

104

(885)

(641)

(56)

466

378

(2,669)

(1,925)

(1,788)

(1,314)

(300)

(238)

131

(890)

(662)

(56)

509

(2,815)

(1,976)

(294)

Depreciation and amortisation 2

(1,531)

(618)

(2,149)

(1,542)

(624)

(2,166)

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

(4,344)

(2,096)

(6,440)

(4,641)

(2,101)

(6,742)

4,270

390

4,660

4,328

383

4,711

2,428

317

224

(110)

4,550

2,652

2,522

317

331

1,141

357

4,550

231

(154)

4,557

2,753

328

1,141

273

4,557

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 bil-
lion, 92% or CHF 4.3 billion was generated in Switzer-
land, which was 1.3% less than in the previous year. In
2020, the value added per full-time equivalent amounted
to 263,000 (prior year: 257,000). In addition to direct
added value, purchases from suppliers provide signifi-

cant indirect added value for Switzerland’s economy.
Taking into account capital expenditure instead of
depreciation and amortisation, the purchasing volume
in the Swiss business was around CHF 4.4 billion in 2020,
with added value contributed by suppliers in Switzer-
land of approximately 60% or CHF 2.6 billion.

To the interview

Use opportunities
to shape
your own future.

Giulia Langhi went from trainee
to head of the photo and graphics team
in just one year .

To the interview

Use opportunities

to shape

your own future.

Sustainability
is feasible.

Carmen Wäfler, financial specialist, and
Pascal Salina, environmental manager,
make sustainability appealing to investors .

Capital market

By consistently implementing its strategy, Swisscom has achieved its financial
ambitions for 2020, 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 2020
amounted to CHF 24.7 billion (previous year: CHF 26.6
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 2020
in CHF

590

510

430

350

477

0
2
1
0
1
0

0
2
2
0
9
2

0
2
3
0
1
3

0
2
4
0
0
3

0
2
5
0
1
3

0
2
6
0
0
3

0
2
7
0
1
3

0
2
8
0
1
3

0
2
9
0
0
3

0
2
0
1
1
3

0
2
1
1
0
3

0
2
2
1
1
3

Swisscom

SMI (indexed)

Stoxx Europe 600 Telcos (in CHF, indexed)

The Swiss Market Index (SMI) rose by 0.8% compared
with the previous year. The Swisscom share price fell by
6.9% to CHF 477.10, outperforming the Stoxx Europe
600 Telecommunications Index (–16.0% in EUR). The

average daily trading volume increased by 21.4% year on
year to 180,751 shares. The total trading volume of
Swisscom shares in 2020 was CHF 23.0 billion.
N See www.swisscom.ch/shareprice

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Shareholder return
On 14 April 2020, Swisscom paid out an ordinary divi-
dend of CHF 22 per share. Based on the closing price at
the end of 2019, this equates to a return of +4.3%. Taking
into account the decline in the share price, the Swisscom
share achieved a total shareholder return (TSR) of –3.0%
in 2020. The TSR for the SMI was +4.3% and for the Stoxx
Europe 600 Telecommunications Index –12.0% in EUR.

Ownership structure

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).

Confederation

Natural persons

Institutions

Total

Number of
shareholders

Number of
shares

26,394,000

69,308

4,817,812

2,833

20,590,131

31.12.2020

Share
in %

51 .0%

9 .3%

39 .7%

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%

72,142

51,801,943

100.0%

70,742

51,801,943

100.0%

The majority shareholder as at 31 December 2020 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 2020, some 19% 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 valuable
indicators for investors. Twenty-three analysts regularly
publish studies on Swisscom. At the end of 2020, 16% of
the analysts issued a buy rating for the Swisscom share,
48% a hold rating and 36% a sell rating. The average
price target at 31 December 2020, according to the
analysts’ estimates, was CHF 490 per share.

Dividend policy

Swisscom pursues a return policy with a stable dividend.
At the forthcoming Annual General Meeting on 31 March
2021, the Board of Directors will propose an unchanged
ordinary dividend of CHF 22 per share for the 2020
financial year. This is equivalent to a total dividend
payout of CHF 1,140 million.

Since going public in 1998, Swisscom has distributed a
total of CHF 34 billion to its shareholders: CHF 22 billion
in dividend payments and CHF 12 billion in capital reduc-
tions and share buybacks. Swisscom has paid out a total
of CHF 433 per share since the initial public offering.
Together with the overall increase in share price of
CHF 137 per share, this amounts to an average annual
total return of 5.0%.

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
single-A credit rating. To avoid structural downgrading,
Swisscom endeavours to raise financing at the level of
Swisscom Ltd. Swisscom aims to have a broadly diversified
debt portfolio. This involves paying particular attention to
balancing maturities and diversification of financing
instruments, markets and currencies. Swisscom’s solid
financial standing gave it unrestricted access to money
and capital markets again in 2020.

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Risks

Changes in competition, customer behaviour, technologies and the regulatory
framework are drivers of risk . Swisscom uses opportunities and minimises risks by
adapting its business model, innovating and undergoing transformation . Its risk
management system is responsible for protecting the value of the company based
on measures introduced at an early stage .

Risk situation

Sales in the core business are under pressure from
intense competition. New offerings in the areas of digiti-
sation and IT services, such as cloud services, IT security
and IoT solutions, are intended to compensate for sag-
ging revenue from the core business. Market develop-
ments result in changes to the business model and
demand profound transformation. The key risk factors
are addressed below. The main risk factors arising in the
supply chain are described in the Sustainability Report.
N See www.swisscom.ch/sustainability

Risk factors

Competitive dynamics in the
telecommunications market
Competitive dynamics are currently being driven by
infrastructure providers and service providers without
their own network infrastructure. Swisscom is counter-
ing this pressure and the decline in revenue from the tra-
ditional telecommunications business by transforming
the company and through constant innovation. Mega-
trends such as increasing connectivity, customisation
and demographic change are indelibly shaping and alter-
ing our society and the economy and have a long-term
impact on Swisscom’s activities. Swisscom conducts a
comprehensive external environment analysis at least
once a year in order to identify potential disruptions at an
early stage, harness the opportunities these create and
counter the risks in good time. It evaluates the future
trends and developments identified by the analysis: for
example, to categorise new, potentially disruptive devel-
opments and to model possible scenarios in a timely
manner. Swisscom also produces regular analyses of the
economic and regulatory environment. It also examines
the activities of global Internet corporations in greater
depth to identify relevant changes and respond with
appropriate measures. To respond to changes in the mar-
ket, Swisscom consistently focuses on customer needs

when transforming its own company and optimises or
adapts its processes and organisation.

Policy, regulation and compliance
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 opera-
tions. Sanctions by the Competition Commission could
also reduce Swisscom’s operating results and cause repu-
tational damage to the company. Finally, excessively high
political demands (e.g. those imposed on universal ser-
vice provision) threaten to fundamentally undermine the
current competitive system. Swisscom’s wide range of
business activities, coupled with the complexity of the
applicable regulations, calls for an effective compliance
management system (CMS). Swisscom’s central CMS cov-
ers the entire Group. It monitors group-wide adherence to
laws relating to anti-corruption, money laundering, bank-
ing, data protection and confidentiality, antitrust and
competition, telecommunications, stock exchange and
product safety.

Increasing bandwidth in the access network
Customer demand for broadband access is growing rap-
idly, as is the growing popularity of mobile devices and
IP-based (Internet Protocol-based) services (smart-
phones, IPTV, OTTs, etc.). Swisscom faces tough compe-
tition from cable companies and other network opera-
tors 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 optimum network
coverage, network expansion is geared towards popula-
tion density and customer demand. Substantial risks
would arise if Swisscom were forced to spend more on
network expansion than planned or if projected long-
term earnings were to fall. Swisscom minimises the risks
by adapting the broadband expansion of the access net-
work to changing conditions and technical opportunities
on an ongoing basis.

Competitive dynamics and regulation in Italy
The competitive dynamics in Italy carry risks that could
have a detrimental impact on Fastweb’s strategy and
jeopardise projected revenue growth. In particular, risks
may arise in connection with the entry of new competi-
tors in the market. Fastweb is countering this pressure
by constantly adapting its services, organisation, pro-
cesses and partnerships. Changes in the legal and regu-
latory environment can have a negative impact on busi-
ness activities and thus also on the value of the company.

Business interruption
Usage of Swisscom Switzerland’s and Fastweb’s services
is heavily dependent on technical infrastructure such as
communications networks and IT platforms. Any major
disruption to business operations poses a financial risk as
well as a substantial reputational risk. Force majeure,
natural disasters, human error, hardware or software
failure, criminal acts by third parties (e.g. computer
viruses, hacking activities) and the ever-growing com-
plexity and interdependence of modern technologies
can cause damage or interruption to operations. Built-in
redundancy, contingency plans, deputising arrange-
ments, alternative locations, careful selection of suppli-
ers 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’s complex IT architecture entails risks during
both the implementation and operating phases. These
risks have the potential to delay the rollout of new ser-
vices, increase costs and impact competitiveness. The
transformation is being closely monitored by the Group
Executive Board. The area of Internet security has devel-
oped and changed with immense speed with respect to
technology, economics and society and their interde-
pendencies. Constant innovations and the capacity they
create 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 recog-
nised at an early stage, systematically understood and
quickly averted.

Pandemic
The current pandemic has created uncertainties regard-
ing future customer behaviour, reduced revenues for
residential and business customers (including from
lower roaming revenues, business development in
entertainment and the events business, and bankrupt-
cies of business customers). Furthermore, a very sharp
increase in the number of cases could lead to disruptions
in Swisscom’s supply chains and service provision.
Swisscom has taken appropriate measures to prevent
potential negative effects.

Health and the environment
In the year under review, claims were again made that
electromagnetic radiation (e.g. from mobile antennas or
mobile handsets) is potentially harmful to health. Under
the terms of the Ordinance on Non-Ionising Radiation
(ONIR), Switzerland has adopted the precautionary prin-
ciple. It has introduced limits for base stations that are
ten times stricter than those prescribed by the EU, and
they apply to all mobile frequencies (including 5G). The
public’s wary attitude towards 5G, in particular when it
comes to mobile communication antenna, is impeding
Swisscom’s network expansion. Even without stricter
legislation, public concerns about the effects of electro-
magnetic radiation on the environment and health
could further hamper the construction of wireless net-
works in the future and drive up costs.

Climate change poses risks for Swisscom. These risks are
driven by changes in climatic parameters (e.g. increased
average or extreme temperatures, more intense precipi-
tation, melting permafrost), changes in the legal frame-
work and other economic or reputational factors. The
resulting developments could impact the operability of
Swisscom’s telecoms infrastructure, particularly in view
of the potential risk to base stations, transmitter sta-
tions and local exchanges. The analysis of the risks posed
by climate change reflects the various emissions scenar-
ios and is largely based on the official reports of the Fed-
eral Office for the Environment (FOEN) on climate change
(CH2018 Climate Scenarios). Swisscom also publishes its
annual climate report and takes into account the recom-
mendations of the Task Force on Climate-related Finan-
cial Disclosures (TCFD) in the areas of governance and
strategy. Full implementation of the recommendations
of the TCFD is planned for the 2021 financial year.
N See www.swisscom.ch/climatereport2020

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Corporate Governance _______ 1 Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
2 Group structure and shareholders . . . . . . . . . . . . . . . . . . . 70

3 Capital structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

4 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

5 Group Executive Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

6 Remuneration, shareholdings and loans . . . . . . . . . . . . . 93

7 Shareholders’ participation rights . . . . . . . . . . . . . . . . . . . . 93

8 Change of control and defensive measures . . . . . . . . . . 95

9 Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

10 Information policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

11 Financial calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Remuneration Report ________ 1 Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
2 Remuneration of the Board of Directors . . . . . . . . . . . . . 99

3 Remuneration of the Group Executive Board . . . . . . . 102

4 Other remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Statutory Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

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 .

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 and is responsible for
the overall management of the Swisscom Group. It com-
prises five Group divisions: Group Business Steering,
Group Human Resources, Group Strategy & Board
Services, Group Communications & Responsibility and
Group Security, which have staff functions. The Board of
Directors delegates day-to-day business management to
the CEO of Swisscom Ltd. The Group Executive Board is
comprised of the CEO of Swisscom Ltd and the heads of
the Group divisions Group Business Steering (CFO) and
Group Human Resources (CPO), plus the heads of the
business divisions Residential Customers, Business
Customers, and IT, Network & Infrastructure. The Group
also includes the Digital Business division and Group
companies such as the Italian subsidiary Fastweb S.p.A.

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
consideration for people, society and the environment,
comply with applicable rules, demonstrate integrity and
report any violations of the Code of Conduct.

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The operational Group structure is shown in the organisational chart below.

Our Customers

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 organisational chart

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 Directors of
Swisscom Ltd. The Group companies are divided into
three categories: strategic,
important and other.
Swisscom Ltd, Swisscom (Switzerland) Ltd and Fastweb
S.p.A. are classified as strategic companies. The members
of the Board of Directors and the managing directors of
the strategic companies are appointed by the Board of
Directors of Swisscom Ltd and elected via the competent
statutory bodies. The Board of Directors of Swisscom
(Switzerland) Ltd comprises the CEO of Swisscom Ltd as
Chairman, the CFO of Swisscom Ltd and the Head of Busi-
ness Customers. The CEO of Swisscom Ltd is responsible
for the executive management of Swisscom (Switzerland)
Ltd. Seats on the Board of Directors of Fastweb S.p.A. are
held by the CEO of Swisscom Ltd, who acts as Chairman,
together with the CFO of Swisscom Ltd and other repre-
sentatives of Swisscom, plus an independent external
member. The Board of Directors of Fastweb S.p.A. has
empowered the Delegate of the Board of Directors with
the executive management of the company. Fastweb
controls three subsidiaries. All other Group companies are

assigned to a Group division or business division for man-
agement purposes. The members of the Board of Direc-
tors of the other Group companies and their managing
directors are appointed by the CEO of Swisscom Ltd. In
some cases, external parties also serve as members of the
Board of Directors. A list of Group companies, including
company name, registered office, percentage of shares
held and share capital, is provided in Note 5.4 to the con-
solidated financial statements.
D See report pages 165–166

For financial reporting purposes, Swisscom’s business divi-
sions and Group companies are allocated to individual seg-
ments. Further 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).

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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 Depositary
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 2020, the stock market capitalisation
of Swisscom Ltd was CHF 24,715 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 (Financial Market Infrastruc-
tures Act; FMIA), there is a duty to disclose a sharehold-
ing to Swisscom Ltd and SIX Swiss Exchange whenever a
person or group subject to the disclosure obligation
reaches, exceeds or falls below 3, 5, 10, 15, 20, 25, 331/3,
50 or 662/3 per cent of the voting rights of Swisscom Ltd,
irrespective of whether or not the voting rights can be
exercised. The detailed disclosure requirements and the
method for calculating these limits are specified in the
FINMA Financial Market
Infrastructure Ordinance
(FMIO-FINMA). Under the FMIO-FINMA, nominee com-
panies 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 reach, exceed or fall below one of the lim-
its indicated above, the current percentage of shares
actually held by significant shareholders may at any
time 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 2020 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 4.67% of the voting rights in Swisscom Ltd
on 31 December 2020.

The Swiss federal government (Swiss Confederation), as
majority shareholder, held 50.95% of the issued share
capital of Swisscom Ltd on 31 December 2020, which
was unchanged from the previous year. The Telecommu-
nications Enterprise Act (TEA) provides that the Swiss

Confederation shall hold the majority of the share capital
and voting rights of Swisscom Ltd. The Federal Council
defines the goals which the Confederation as principal
shareholder of the company aims to achieve in the next
four years. As a rule, stakeholder talks with the Chair-
man of the Board and the CEO are conducted three times
a year by the responsible federal government depart-
ments – the Federal Department of the Environment,
Transport, Energy and Communications (DETEC) and the
Federal Department of Finance (FEF) – led by the Head of
DETEC. During these talks, the participants examine the
status of target achievement. After the close of the busi-
ness year, target achievement is assessed by the Federal
Council.
N See www.swisscom.ch/ziele_2018-2021 (in German)

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

3 Capital structure

3.1 Capital
The share capital of Swisscom Ltd 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 dividends).

The Bank of New York Mellon Corporation, which acts as
the ADR depositary, 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 93
D See report page 64

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 93

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 neces-
sary assurance that they are acting for the account of
one or more unrelated parties. They must also be able to
provide evidence of the names, addresses and holdings
of the beneficial owners of the shares. This provision
of the Articles of Incorporation may be changed by
resolution of the Annual General Meeting, for which an
absolute majority of valid votes cast is required. In
accordance with this provision, the Board of Directors
has issued regulations governing the entry of trustees
and nominees in the Swisscom Ltd share register.
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 pages 129–131

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

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4 Board of Directors

4.1 Members of the Board of Directors
There were no personnel changes on the Board of Directors in the year under review. As of 31 December 2020, 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

Switzerland

Anna Mossberg

Michael Rechsteiner

Renzo Simoni 2

Sweden

Switzerland

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

2009

2016

2014

2012

2019

2018

2019

2017

1 Since 1 September 2011 Chairman.

2 Designated by the Swiss Confederation.

4.2 Education, professional activities and affiliations
Key details of the career and qualifications of each
member of the Board of Directors are provided in the
summary below, along with the mandates held outside
the Group and other significant activities. Pursuant to
the Articles of Incorporation, Board members may
perform no more than three additional mandates in
listed companies and no more than ten additional
mandates in non-listed companies. In total, they may
not perform more than ten such additional mandates.
These restrictions on the number of mandates do not
apply to mandates performed by a Board member by
order of Swisscom or to mandates in interest groups,

charitable associations, institutions and foundations, or
employee retirement-benefit foundations. 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 foundations,
and employee retirement-benefit foundations is limited
to seven. The Board members 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 professional lives. The issue of affilia-
tions 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 particular the definition of the
term “mandate” and information on other mandates
that do not fall under the aforementioned numerical
restrictions for listed and non-listed companies, are set
out in Article 8.3 of the Articles of Incorporation. No
member of the Board of Directors exceeds the limits set
for mandates.
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 with 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 Genos-
senschaft, 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 mandates: member of the Advisory
Board, Deichmann SE, Essen; since April 2020 Managing
Director of Haselba und Partner GmbH, Baden; since
August 2020 member of the Board of Directors of Pilatus
Flugzeugwerke AG, Stans

Other significant activities
–

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Roland Abt
Doctorate in Business Administration (Dr. oec.)
University of St. Gallen (HSG)

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
Since September 2020 President of the association
Opération Boule à Zéro, Belfaux

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; Chairman of the Board of
Directors 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 Zurich; 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
Until March 2020 Member of the Board of Directors of
interXion Holding N.V., Amsterdam; since February 2020
Member and since April 2020 Chairman of the Board of
Directors of SES S.A., Luxembourg

Other significant activities
–

Career history
1998–2016 ABB Group in various managerial positions,
including 2008–2010 ABB s.r.o., Prague, Country Man-
ager; 2010–2013 ABB S.p.A., Sesto San Giovanni (Italy),
Country Manager and Regional Manager Mediterra-
nean; 2013–2015 Drives and Control Unit, Managing
Director; 2016 Head of Strategic Portfolio Reviews for
the Power Grids division; since December 2016 Schnei-
der Electric, Paris: Chair of the Executive Committee of
Schneider Electric GmbH, Germany, in which capacity
she was also Zone President Germany until June 2017;
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: Chair of the Board
of Directors of Schneider Nordic Baltic A/S; since May
2020 member of the Board of Directors of Schneider
Electric Industries SAS, Rueil-Malmaison

Other significant activities
–

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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

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

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

Career history
1996–2010 Telia: in various roles, including Vice Presi-
dent 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, Swedbank AB, Stock-
holm; member of the Board of Directors, Schibsted ASA,
Oslo; since March 2020 member of the Board of Direc-
tors, Orkla ASA, Oslo

Other significant activities
–

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,
Chur; Chairman of the Board of the Psychiatric Hospital
of the University of Zurich; since November 2020 Chair-
man of Verkehrsbetriebe Luzern AG, Lucerne

Other significant activities
–

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
Asia, Kuala Lumpur, Malaysia; 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 President Power Service; 2015–2017 General
Electric (GE) Officer and Vice President of Global Product
Lines at GE Power Services; since April 2017 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; until
January 2021 member of the Supervisory Board, GE
Power sp. z o.o., Warsaw

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

Other significant activities
Member of the Board of Swissmem

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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 2020

Telecommunications, IT,
Media and/or entertain-
ment

Innovation, technology
and/or digitisation

Residential Customers
(B2C)

Business Customers
(B2B)

International
business experience

33%
(3)

56%
(5)

33%
(3)

78%
(7)

67%
(6)

Finance, Risk Management
and/or M&A

89%
(8)

Strategy and/or Transfor-
mation

Human Resources

Legal

Sustainability

Leadership position in
top management

Member of the Board
of Directors in stock ex-
change listed companies

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 2020

44%
(4)

33%
(3)

22%
(2)

under
4 years

between
4 and 8 years

between
8 and 12 years

Board of Directors by gender
In % and (number of members) as of 31 December 2020

67%
(6)

33%
(3)

Male
Female

The Board of Directors of Swisscom Ltd thus already
complies with the requirements of Swiss company law
regarding gender representation on the boards of direc-
tors of listed companies, which have been in force since
1 January 2021.

4.4 Independence
To establish the independence of its members, the Board
of Directors applies the criteria set out in the Swiss Code
of Best Practice for Corporate Governance published by
economiesuisse. Independent members are thus under-
stood to mean non-executive members of the Board of
Directors who were never a member of the executive
management or who have not been a member of the
executive management for at least three years and who
have no or only comparatively minor business relations
with the company. The term of office of a member of the
Board of Directors is not a criterion that can be used to
assess independence. No members of the Board of
Directors hold an executive role within the Swisscom
Group or have held such a role in any of the three
business years prior to the reporting year. The Board
members have no significant commercial links with

Swisscom Ltd or the Swisscom Group. The Swiss Confed-
eration, represented on the Board by Renzo Simoni,
holds the majority of the capital and voting rights in
Swisscom in accordance with the Telecommunications
Enterprise Act (TEA). Customer and supplier relationships
exist between the Swiss Confederation and Swisscom.
Details of these are provided in Note 6.2 to the consoli-
dated financial statements.
D See report page 170

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 TEA, employees must
be granted appropriate representation on the Board of
Directors of Swisscom Ltd. The Articles of Incorporation
also stipulate that the Board of Directors is to include
two employee representatives and that employees are
entitled to make proposals for their employee repre-
sentatives. Alain Carrupt was nominated as employee
representative by the syndicom trade union and Sandra
Lathion-Zweifel was nominated as employee represent-
ative by the transfair staff association. The employee
representatives are elected by the shareholders at the
Annual General Meeting upon a motion proposed by the
Board of Directors, as are the other members of the
Board of Directors with the exception of the representa-
tive 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, skills and experience that are desired.
On the basis of this, the Nomination Committee evalu-
ates potential candidates and makes recommendations
to the Board of Directors for the election of new Board
members by the Annual General Meeting. The Board of
Directors submits a motion to the Annual General Meet-
ing 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 generally assess their
own performance and efficiency once a year in Decem-
ber or 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-evaluation covers
the composition, organisation and work processes of the
body, responsibilities 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 following/current year. The Chairman also
conducts a one-on-one annual discussion with each
member in which possibilities for further individual
development may be addressed.

Once a year, a one-day mandatory training course is held
such as those in January 2020 and 2021. At least four
times per year, the members of the Board of Directors
also have the opportunity to explore the upcoming chal-
lenges facing the Group and business divisions in-depth
as part of “company experience days”. The majority of
the Board members 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, the business and the

current operational challenges. In addition, they are
introduced to topics 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. He will reach the maximum term of
office – usually twelve years – at the Annual General
Meeting of 31 March 2021 and will therefore step down
from the Board of Directors. The Board of Directors will
propose that the Annual General Meeting elects Michael
Rechsteiner as his successor. The tasks and responsibili-
ties of the Chairman are defined in the Organisational
Rules. In the event that the Chairman of the Board of
Directors is unavailable 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.

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 meeting, the Chairman of the Board,
the CEO and the Chief Personnel Officer report on par-
ticular events, on the general course of business and
major business transactions, as well as on any measures
that have been implemented. To further ensure appro-
priate 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 audi-
tors and other internal and external experts, as neces-
sary, to all its meetings as dictated by the specific issues
being addressed. In the year under review, the Board of
Directors called on an external consultant to review the
Group’s incentive system, while the CEO also commis-
sioned two external audits on network faults in consul-
tation with the Board of Directors. The auditors pre-
sented their findings to the Board of Directors.

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 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

The following table gives an overview of the Board of
Directors’ meetings, conference calls and circular resolu-
tions in 2020. Due to the measures implemented by the
authorities as a result of the Covid-19 pandemic, the
Board of Directors held some meetings exclusively via
video conference or connected individual members to
meetings via Skype.

Meeting days

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

Anna Mossberg

Michael Rechsteiner

Renzo Simoni

07:13

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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 2020:

Board of Directors

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

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

Compensation Committee
Barbara Frei 1
Roland Abt
Frank Esser
Renzo Simoni
Hansueli Loosli 2

1 Chairman/chairwoman of the Board of Director’s committee
2 No voting rights

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. In accordance
with the rules governing the committees, they usually
each 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 latest committee
meetings at the next meeting of the Board of Directors.
All members of the Board of Directors also receive copies
of all Finance and Audit Committee meeting minutes.
The minutes of the Compensation Committee and the
Nomination Committee are provided to the other mem-
bers of the Board of Directors upon request.

Finance Committee
The Finance Committee prepares information for the
Board of Directors on corporate transactions, for exam-
ple, in connection with setting up or dissolving significant
Group companies, acquiring or disposing of significant

shareholdings, and entering into or terminating strate-
gic alliances. The Committee also acts in an advisory
capacity on matters relating to major investments and
divestments and examines specific current issues in
depth. The Finance Committee has the ultimate deci-
sion-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 within the
framework of a half-day meeting. The CEO, the CFO and
the Head of Group Strategy & Board Services always
attend the meetings of the Finance Committee. In 2020,
all the meetings were also attended by other members
of the Group Executive Board, members of the Manage-
ment Boards of strategic Group companies or project
managers, depending on the agenda items. The Finance
Committee did not call on any external consultants dur-
ing the reporting year.

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The following table gives an overview of the Finance Committee’s composition, meetings, conference calls and circular
resolutions in 2020. Due to the measures implemented by the authorities as a result of the Covid-19 pandemic, the
committee held one meeting exclusively via video conference and connected some individual members to meetings
via Skype.

Total

Average duration (in hours)

Participation:

Frank Esser, Chairman

Alain Carrupt

Anna Mossberg

Michael Rechsteiner

Hansueli Loosli

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 external audit. It also handles matters dealt with by
the Board of Directors that call for specific financial
expertise (dividend policy, for example). The Committee
is the Board of Directors’ most important controlling
instrument and is responsible for monitoring the Group-
wide assurance functions. It formulates positions on
business matters which lie within the decision-making
authority of the Board of Directors and has the final say
on those business matters for which it has the 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

Total

Average duration (in hours)

Participation:

Roland Abt, Chairman 1

Sandra Lathion-Zweifel

Renzo Simoni

Hansueli Loosli 1

1 Financial expert.

Meetings

Conference calls

Circular resolutions

04:50

–

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 2020, 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 accoun-
tants and tax experts as required. The Audit Committee
invited external consultants to one of its meetings dur-
ing the reporting year.

The Chairman of the Committee also liaises closely with
the Heads of Internal Audit and Accounting and the rep-
resentatives of Swisscom’s external auditors outside of
the meetings. He and individual members of the Audit
Committee also meet with Fastweb’s internal and exter-
nal auditors once a year to discuss the current challenges
facing Fastweb.

The following table gives an overview of the Audit Com-
mittee’s composition, meetings, conference calls and cir-
cular resolutions in 2020. The Committee held one meet-
ing via videoconference due to the measures implemented
by the authorities as a result of the Covid-19 pandemic.

Meetings

Conference calls

Circular resolutions

04:32

–

Compensation Committee
For information on the Compensation Committee, refer
to the section “Remuneration Report”.
D See report page 97

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 of the Board of Directors and its
composition is determined on a case-by-case basis. The
Committee carries out its work based on a specific require-
ments profile defined by the Board of Directors outlining
the qualifications and experience sought. It then presents
suitable candidates to the Board of Directors, but has no
further decision-making authority. The Board of Directors
appoints the members of the Group Executive Board and
decides upon the motion to be proposed to the Annual
General Meeting for the election and approval of mem-
bers of the Board of Directors. The Nomination Commit-
tee is convened by the Chairman or at the request of a
Committee member as often as business requires. In
December 2019, the Board of Directors appointed a Nom-
ination Committee composed of the following members
to identify succession candidates for the Board of Direc-
tors: Hansueli Loosli (Chairman), Frank Esser, Anna Moss-
berg and Michael Rechsteiner. The Nomination Commit-
tee met twice in the 2020 financial year. The meetings
lasted for an average of 1 hour and 50 minutes, with all
members present. In February, the Board of Directors
appointed a further Nomination Committee composed of
the following members to identify candidates to succeed
the CFO: Hansueli Loosli (Chairman), Frank Esser, Roland
Abt and Sandra Lathion-Zweifel. The Committee held one
meeting lasting 2 hours and 50 minutes, with all members
present. The succession of the CPO was dealt with directly
in the plenary session of the Board of Directors.

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 Federal Coun-
cil formulates these goals for a four-year period in
accordance with the provisions of the TEA.
N See www.swisscom.ch/ziele_2018-2021 (in German)

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 the law, the Board of Direc-
tors decides on business transactions of major impor-
tance to the Group, including, for example, the acquisi-
tion or disposal of companies with a financial exposure
in excess of CHF 20 million and capital investments or
divestments 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 discuss fundamental
issues concerning Swisscom Ltd and its Group compa-
nies at least once a month. The Chairman also meets in
person with each member of the Group Executive Board
as well as the heads of other Group and business divi-
sions 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. The Board of Directors is informed in writ-
ing about other current or material issues on an ongoing
and timely basis. Every member of the Board of Direc-
tors 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 immedi-
ately of any events of an exceptional nature.

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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
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 with a
report on risks every quarter, as well as in-depth infor-
mation 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.
The risk factors are described in the Risks section of the
Management Commentary.
D See report page 66

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 reports to the CFO, manages
and monitors the ICS. Internal Audit periodically reviews
the functioning and effectiveness of the ICS. Significant

shortcomings in the ICS identified during these monitor-
ing and review activities are reported together with the
corrective measures in a status report to the Audit Com-
mittee twice a year and to the Board of Directors on an
annual basis. Should the ICS risk assessment change sig-
nificantly, the Chairman of the Audit Committee is
informed without delay. Corrective measures to remedy
the shortcomings are monitored by the Accounting unit.
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 safe-
guarding the Swisscom Group and its executive bodies
and employees from legal sanctions, financial losses and
reputational damage by ensuring Group-wide compli-
ance. A corporate culture that promotes willingness to
behave in a way that complies with the relevant regula-
tions is intended to help achieve this objective. The
applicable principles are laid down in the Code of Con-
duct approved by the Board of Directors. Swisscom has
therefore implemented a Group-wide, central compli-
ance system. Within the framework of this system, every
year Group Compliance applies a risk-based approach to
identify areas of legal compliance that require monitor-
ing by the central system. Within these areas of legal
compliance, the business activities of the Group compa-
nies are reviewed periodically in a proactive manner in
order to identify risks in good time and determine the
required corrective measures. The employees affected
are informed of the measures and their implementation
is monitored. The decentralised Compliance functions
independently monitor legal compliance in the areas for
which they are responsible and report their findings to
Group Compliance. Once every year, Group Compliance
reviews the appropriateness and effectiveness of the
system. In certain areas, an annual audit of the imple-
mented measures is also performed by external audi-
tors (financial intermediation in accordance with the
Money Laundering Act). Group Compliance reports to
the Audit Committee and the Board of Directors once per
annum on its activities and its risk assessments. Should
there be significant changes in the risk assessment or if
serious breaches are identified, the Chairman of the
Audit Committee is informed 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 2020.
He reported on audit findings at two meetings of the full
Board of Directors.

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Group Executive Board, 1 March 2021 .

5 Group Executive Board

5.1 Members of the Group Executive Board
In accordance with the Articles of Incorporation, the
Executive Board comprises one or more members, who
must not be members of the Board of Directors of
Swisscom Ltd at the same time. Temporary exceptions
are only permitted in exceptional cases. 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 page 70

An overview of the composition of the Group Executive Board as at 31 December 2020 is given in the table below.

Name

Urs Schaeppi 1

Mario Rossi

Hans C . Werner

Urs Lehner

Nationality

Switzerland

Christoph Aeschlimann

Switzerland

Dirk Wierzbitzki

Germany

1 Since November 2013 CEO.

Year of birth

Function

1960

1968

1977

1965

CEO Swisscom Ltd

CFO Swisscom Ltd

CPO Swisscom Ltd

Head of Business Customers

Head of IT, Network & Infrastructure

Head of Residential Customers

Appointed to the Group
Executive Board as of

March 2006

January 2013

September 2011

June 2017

February 2019

January 2016

Amendments as at 1 February and 1 March 2021
The Board of Directors has appointed Klementina Pejic
(1974, German citizen) as Head of Human Resources
(CPO) and member of the Group Executive Board with
effect from 1 February 2021. She takes over from Hans
Werner, who stepped down with effect from 31 January
2021. The Board of Directors has also appointed Eugen
Stermetz (1972, Austrian citizen) as Chief Financial
Officer, Head of Group Business Steering and member of

the Group Executive Board with effect from 1 March 2021.
The current CFO, Mario Rossi, will relinquish his position
on 28 February 2021.

As of 1 February 2021, the Group Executive Board thus
complies with the requirements of Swiss company law
regarding gender representation on the management
boards of listed companies, which have been in force since
1 January 2021.

Group Executive Board, 1 March 2021 .

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 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
retirement-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 Chair-
man of the Board of Directors. Details on the regulation
of external mandates, in particular the definition of the
term “mandate” and information on other mandates
that do not fall under the aforementioned numerical
restrictions for listed and non-listed companies, are set
out in Article 8.3 of the Articles of Incorporation. None of
the members of the Group Executive Board exceeds the
set limits for mandates. The members of the Group
Executive Board perform most of their other significant
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 are necessary to ensure that con-
flicts of interest are avoided as far as possible. Should a
conflict of interest nevertheless arise, the member con-
cerned must inform the CEO and/or Chairman immedi-
ately. 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 with them.

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
(Switzerland) Ltd; since January 2013 Head of Swisscom
(Switzerland) 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
Foundation Board, IMD International Institute for Man-
agement Development, Lausanne; until January 2020
member of the Board of Directors, Admeira AG, Berne;
member of the Board of Trustees of the Swiss Entre-
preneurs 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 international Advisory Committee of the
ZHAW School of Management and Law, Zurich

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Mario Rossi (stepping down
with effect from 28 February 2021)
Commercial apprenticeship;
Swiss Certified Public Accountant

Hans C. Werner (stepped down
with effect from 31 January 2021)
Graduate in business management,
PhD in business administration (Dr. oec.)

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 retirement-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

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
Until January 2021 member of the Board of Trustees,
comPlan, Berne

Mandate in non-listed company
Member of the Board of Directors, Kantonsspital Aarau AG

Mandates in interest groups, charitable
associations, institutions and foundations,
and employee retirement-benefit foundations
Since April 2020 member of the Foundation Board of the
Careum Foundation, Zurich

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

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
Business Customers (known as “Enterprise Customers”
until 2019) and member of the Swisscom Group Execu-
tive Board

Mandates
–

Other significant activities
Since July 2020 member of the Advisory Board of BKW
Innovation GmbH, Berlin

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
Since January 2020 member of the CIO Advisory Board,
Dell

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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 Customers;
since 2016 member of the Swisscom Group Executive
Board

Mandates by order of Swisscom
Member of the Board of Directors, SoftAtHome, Paris;
until January 2020 member of the Board of Directors,
Admeira AG, Berne

Other significant activities
–

Klementina Pejic (from 1 February 2021)
Dortmund University of Applied Sciences;
École de Commerce ESSEC Cergy-Pontoise
International Business M. A.

Career history
2001–2002 Watson Wyatt AG, Zurich, Consultant;
2003–2020 Clariant International AG: 2003–2004 Divi-
sional HR Manager, 2005–2007 Global HR Business Part-
ner, 2008–2009 Head of Management Development
Europe, 2009-2011 Head of Global Talent Management,
2012–2013 Head of Senior Management Development,
2014–2017 Head of SMD & People Excellence, 2018–
January 2021 Head of Human Resources; since 1 Febru-
ary 2021 Swisscom Ltd, CPO and member of the Group
Executive Board

Mandates by order of Swisscom
Since February 2021 member of the Board of Trustees,
comPlan, Berne

Other significant activities
–

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 Tele-
communications Enterprise Act (TEA), holds the majority
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 shareholders or beneficial holders with voting rights
any persons acquiring shares who fail to expressly
declare upon request that they have acquired the shares
in their own name and for their own account or as bene-
ficial holders. Should acquirers of shares refuse to make
such a declaration, they will be entered as shareholders
without voting rights.

Where an entry has been made on the basis of false
statements by the acquirer, the Board of Directors may,
after consulting the party concerned, delete the share
register entry as a shareholder with voting rights and
enter the acquirer as a shareholder without voting
rights. The acquirer must be notified of the deletion
immediately.

Eugen Stermetz (from 1 March 2021)
Degree in Business Administration
(lic. oec., University of St. Gallen (HSG)), PhD in
Social and Economic Sciences (Dr. rer. soc. oec.)

Career history
1996–2000 Boston Consulting Group, Munich and
Vienna; 2001–2005 Igeneon AG, Vienna, Chief Financial
Officer; 2006–2008 F-star GmbH, Vienna, CFO and Man-
aging Director; 2009–2011 SVOX AG, Zurich, CFO and
member of the Executive Board; since 2012 Swisscom:
2012–2017 CFO Participations, 2017–2018 CFO Partici-
pations and Head of M&A, 2018–February 2021 Group
Treasurer (Treasury, Insurance and M&A), since 1 March
2021 CFO and member of the Group Executive Board

Mandates by order of Swisscom
–

Other significant activities
Member of the Investment Committee of comPlan,
Berne

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 97

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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 Incorporation).
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 Annual General Meeting in March
2021. Partnerships and legal entities may be repre-
sented 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 shareholder portal operated by Com-
putershare Switzerland Ltd. Shareholders who are repre-
sented 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 Articles of
Incorporation).

In accordance with the measures prescribed by the Fed-
eral Council to combat the coronavirus (Covid-19 Ordi-
nance 2 of 16 March 2020), the Annual General Meeting
of 6 April 2020 took place without the physical participa-
tion of shareholders. Shareholders were able to author-
ise the independent proxy to cast their votes and exe-
cute their instructions on their behalf. The independent
proxy cast the votes in person at the Annual General
Meeting.

In accordance with Ordinance 3 of the Federal Council of
19 June 2020 on measures to combat the coronavirus
(Covid-19) and the decision of Swisscom’s Board of
Directors, the Annual General Meeting of 31 March 2021
will also take place without the physical participation of
shareholders. Shareholders can authorise the independ-
ent proxy to cast their votes and execute their instruc-
tions on their behalf. This can be done either in writing
or electronically via the shareholder portal. The inde-
pendent proxy will cast the votes in person at the Annual
General Meeting.

7.5 Entries in the share register
Shareholders entered in the share register with voting
rights are entitled to vote at the Annual General Meeting.
To ensure due procedure, the Board of Directors defines a
cut-off date at its own discretion for determining voting
entitlements, which is 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 31 March 2020

were entitled to vote at the Annual General Meeting of
6 April 2020. Shareholders entered in the share register
with voting rights as of 5 p.m. on 26 March 2021 are
entitled to vote at the Annual General Meeting of
31 March 2021.

8 Change of control and
defensive measures

Under the terms of the Telecommunications Enterprise Act
(TEA), the Swiss Confederation must hold the majority of
the capital and voting rights in Swisscom Ltd. This
requirement is also set out in the Articles of Incorpora-
tion. There is thus no duty to submit a takeover bid as
defined in the Financial Market Infrastructures Act, since
this would contradict the TEA.

Details on change of control clauses are given in the section
“Remuneration Report”.
D See report page 97

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. As stipulated by
the Swiss Code of Obligations, the auditor-in-charge
may only perform the mandate for a maximum of seven
years. A request for tenders for the audit mandate was
issued in 2018. PricewaterhouseCoopers (PwC), Zurich,
has performed the mandate since the 2019 financial
year. The auditor-in-charge is Peter Kartscher.

9.2 Audit fees
The fees paid to PwC as auditors for the 2020 financial
year amount to CHF 2,989 thousand (prior year: CHF 3,209
thousand).

9.3 Supplementary fees
The fees charged by PwC for additional audit-related
services in the year under review amounted to CHF 802
thousand (prior year: CHF 718 thousand), and the fees
for other services were CHF 34 thousand (prior year:
CHF 229 thousand).

Audit-related services include audit services in connection
with IT outsourcing orders from business customers,
IT projects, bond issuance, risk management, a company
acquisition and the reporting of financial information.
Other services include consulting services in connection
with the implementation of an ERP system, the reclaiming
of foreign VAT and the preparation of financial information.

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-
supervised 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. Representatives
of PwC, the statutory auditors, attended all five meet-
ings of the Audit Committee in 2020. They did not par-
ticipate in the meetings of the full Board of Directors.
The Head of Internal Audit took part in all five meetings
of the Audit Committee in 2020. He reported on audit
findings at two 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 statements and a condensed version of the
financial statements of Swisscom Ltd. The interim
reports, annual report and financial statements of
Swisscom Ltd are available on the Swisscom website
under “Investors” or may be ordered directly from
Swisscom. The Sustainability Report is available on the
Swisscom website under “Company”.
N See www.swisscom.ch/basicprinciples
N See www.swisscom.ch/financialreports
N See www.swisscom.ch/cr-report2020

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 website
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 6 April 2020 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 189

11 Financial calendar

● Annual General Meeting for the 2020 financial year:
31 March 2021, in Volketswil, without the personal
attendance of shareholders

● 1st Quarter Interim Report: 29 April 2021
● Half-Year Interim Report: 5 August 2021
● 3rd Quarter Interim Report: 28 October 2021
● Annual Report 2021: February 2022

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

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Remuneration Report

Remuneration paid to the Board of Directors and the Group Executive Board is tied
to the generation of sustainable returns and therefore creates an incentive to achieve
long-term corporate success as well as added value for shareholders .

1 Governance

1.1 General principles
The Remuneration Report is based on sections 3.5 and 5
of the annex to the Corporate Governance Directive
issued by 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 31 March 2021.

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 follow-
ing 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 remunera-

tion. In addition, the Articles of Incorporation contain
the following provisions relating to the remuneration
policy:

● Remuneration of the Board of Directors (Articles 6.4

and 8.1)

● Compensation Committee (Article 6.5)
● Remuneration of the Group Executive Board (Articles 7.2

and 8.1)

● Contracts of the Board of Directors and the Group

Executive Board (Article 8.2)

● Number of external mandates for the Board of Direc-

tors and Group Executive Board (Article 8.3)

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 participate in meetings at which any change to
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

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

Personnel and remuneration policy

Principles for performance-related and equity-participation schemes
for the Board of Directors and the Group Executive Board

Principles underlying retirement-benefit plans and social security payments

Equity-share and performance-based participation plans of the Group

General terms of employment of the Group Executive Board

Definition of performance targets for the variable performance-related salary component

Concept of remuneration to members of the Board of Directors

Remuneration of the Board of Directors

Remuneration of the CEO Swisscom Ltd

Total remuneration of the Group Executive Board

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

Remuneration report

Remuneration
Committee

Board
of Directors

Annual
General Meeting

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.
7 Advisory vote.

the Compensation Committee reports verbally on the
activities of the Committee at the next meeting of the
Board of Directors. The meetings of the Compensation
Committee are generally held in February, June and
December. Further meetings can be convened as and
when required. In the year under review, the Compensa-
tion Committee called on external consultants for two
meetings as part of the review of the Group’s incentive
system.

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 Chairman of

The members of the Compensation Committee neither
work nor have worked for Swisscom in an executive
capacity, nor do they maintain any significant commercial
links with Swisscom Ltd or the Swisscom Group. Customer
and supplier relationships exist between the Swiss
Confederation and Swisscom. Details of these are pro-
vided in Note 6.2 to the consolidated financial statements.
D See report page 170

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

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The following table gives an overview of the composition of the Committee, the Committee meetings, conference calls
and circular resolutions in 2020.

Total

Average duration (in hours)

Participation:

Barbara Frei, Chairwoman

Roland Abt

Frank Esser

Renzo Simoni 1

Hansueli Loosli 2

Meetings

Conference calls Circular resolutions

02:11

–

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 experi-
enced and motivated individuals for the Board of Direc-
tors’ function. It also seeks to align the interests of the
members of the Board of Directors with those of the
shareholders. The remuneration is commensurate with
the activities and level of responsibility of each member.
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 Incor-
poration.
N See www.swisscom.ch/basicprinciples

2.2 Amendments as at 1 January 2020
The Board of Directors has amended its remuneration
system as of 1 January 2020, with the aim of simplifying
the system without significantly changing the level of the
fees paid to members, including meeting attendance
fees. The remuneration is made up of a Director’s fee that
varies in relation to the member’s function (basic emolu-
ment plus functional allowances), statutory and regula-
tory employer contributions to social security and, as of
now, to the occupational pension, as well as any addi-
tional benefits. Additional remuneration is no longer
given for attendance at meetings. Instead, the attend-
ance fees have been incorporated into the basic emolu-
ment and functional allowances based on past values. In

addition, the basic emolument and functional allow-
ances have been increased by the amount of the statu-
tory employee contributions to social security. The fees
are now therefore gross amounts from which employee
contributions to social security and the occupational
pension are deducted. As before, no variable perfor-
mance-related emoluments are paid. The members of
the Board of Directors are still obligated to draw a por-
tion of their fee in the form of equity shares and to com-
ply 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 2019, the Board of Directors assessed the
appropriateness of the remuneration as part of a discre-
tionary decision. The Board of Directors compared
Swisscom’s remuneration with that of other listed com-
panies domiciled in Switzerland, which, like Swisscom,
must fulfil Swiss and foreign legal requirements, includ-
ing full personal liability. The Board of Directors used as a
comparison the remuneration paid by Compagnie
Financière Richemont, Geberit, Givaudan, Lonza, SGS,
Sika and Swatch Group. The Board of Directors did not
call on any external consultants with regard to the struc-
turing of the remuneration.

2.3 Remuneration components

Director’s fee

The Director’s fee is made up of a basic emolument and functional allowances as compensation for the individual func-
tions. The increased amounts from 2020 are due to the incorporation of meeting attendance fees and the change from
net to gross fees. The following amounts are paid per year:

in CHF

Base salary per member

Functional allowances 1

Presidium

Vice presidium

Representative of the Confederation

Audit Committee, Chair

Audit Committee, Member

Finance Committee, Chair

Finance Committee, Member

Remuneration Committee, Chair

Remuneration Committee, Member

1 No functional allowance is paid for membership of an ad hoc committee

appointed on a case-by-case basis.

Under the Management Incentive Plan, the members of
the Board of Directors are obligated to draw one third of
their Director’s fee in the form of shares. For members
who resign from the Board of Directors at the Annual
General Meeting, the fee is paid fully in cash on a pro
rata basis. The shares are allocated on the basis of their
tax value, rounded up to whole numbers of shares.
Shares are blocked from sale for three years. This restric-
tion on disposal also applies if members leave the com-
pany 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 alloca-
tion. 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
2020, a total of 1,548 shares were allocated to the mem-
bers of the Board of Directors (prior year: 1,409 shares)
with a tax value of CHF 439 per share (prior year:
CHF 411). Their market value was CHF 522.80 (prior year:
CHF 489.50) per share.

2020
Gross

2019
Net

146,000

110,000

308,000

255,000

25,000

48,000

61,000

17,000

25,000

17,000

25,000

15,000

20,000

40,000

50,000

10,000

20,000

10,000

20,000

10,000

Contributions to social security and occupational
pension as well as additional benefits
Swisscom pays the statutory and regulatory employer
contributions to social security and occupational pen-
sion on the fee. The contributions are disclosed sepa-
rately and are included in the total remuneration.

If required by law, the individual members of the Board
of Directors are insured against the economic conse-
quences of old age, death and disability; their basic
emolument is covered through the comPlan pension
plan and their functional allowances are covered as part
of a 1e plan with VZ Sammelstiftung (see www.pk-com-
plan.ch for the regulations). The reported pension bene-
fits cover all savings, guarantee and risk contributions
paid by the employer to the pension plan.

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.

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2.4 Total remuneration
The total remuneration paid to the individual members
of the Board of Directors for the 2019 and 2020 financial
years is presented in the tables below, broken down into
individual components. The higher total compensation
in 2020 is due in particular to the fact that the Board of

Directors was temporarily composed of only eight mem-
bers in 2019. In addition, Swisscom made statutory or
regulatory contributions to the occupational pension
plans of individual members in 2020.

2020, in CHF thousand

Hansueli Loosli

Roland Abt

Alain Carrupt

Frank Esser 1

Barbara Frei

Sandra Lathion-Zweifel

Anna Mossberg 2

Michael Rechsteiner

Renzo Simoni

Base salary and functional allowances

Cash
remuneration

Share-based

Employer
Employer
payment contributions to PF contributions to SS

Total 2020

335

159

109

152

124

109

151

200

–

558

304

189

243

210

206

184

288

124

2,388

Total remuneration to members of the Board of Directors

1,357

810

1 Frank Esser is subject to social security contributions in Germany.

2 Anna Mossberg is subject to social security contributions in Sweden.

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

Total remuneration to members of the Board of Directors

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

1,179

186

719

186

–

128

560

266

181

224

207

144

194

143

252

2,212

1 Frank Esser is subject to social security contributions in Germany. Neither

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

employer nor employee contributions are paid.
2 Elected to the Board of Directors on 2 April 2019.

No employee contributions were included.
4 Left the Board of Directors on 2 April 2019.

The total remuneration paid to the members of the
Board of Directors for the 2020 financial year is within
the maximum total amount of CHF 2.5 million approved
by the 2019 Annual General Meeting (AGM) for 2020.

2.5 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). As a rule, they have four years from the
start of their term of office or assumption of a new func-
tion to acquire the prescribed shareholding in the form

of the blocked shares paid as part of remuneration and,
if necessary, through share purchases on the open mar-
ket, observing internal trading restrictions. Compliance
with the shareholding requirement is reviewed annually
by the Compensation Committee. If a member’s share-
holding falls below the minimum requirement due to a
drop in the share price, the difference must be made up by
no later than the time of the next review. In justified
cases, such as personal hardship or legal obligations, the
Chairman of the Board of Directors can approve individual
exceptions at his discretion.

101

2.6 Shareholdings of the members of the Board of Directors
As at 31 December 2019 and 2020, 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

Alain Carrupt

Frank Esser

Barbara Frei

Sandra Lathion-Zweifel

Anna Mossberg

Michael Rechsteiner

Renzo Simoni

31.12.2020

31 .12 .2019

3,856

3,474

726

563

972

544

439

798

1,189

1,047

238

346

233

652

114

222

109

480

Total shares held by the members of the Board of Directors

8,775

7,227

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.

The remuneration of the Group Executive Board is a
balanced combination of fixed and variable salary com-
ponents. 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

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Remuneration system
Remuneration components and determining factors

Remuneration

Assets

Instruments

Fixed remuneration

Variable remuneration

Base salary
Pension benefits
Fringe benefits

Performance-related
component in cash
and shares

Minimum shareholding
requirement

Requirement to hold
a minimum amount
of Swisscom shares

Influencing factors

Function, experience
and qualifications,
market

Achievement of
annual performance
targets

Long-term growth
of enterprise value

Purpose

Employee recruitment,
employee retention
and protection

Focus on annual targets
and 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. In the year under
review, Swisscom consulted a current national and inter-
national comparative study by Willis Towers Watson.
The comparison with the Swiss market covers twelve
major companies domiciled in Switzerland from various
sectors, with the exception of the financial and pharma-
ceutical sectors. On average, these companies generate
revenue of CHF 14.63 billion and employ 16,403 people.
The international sector comparison covers telecommu-
nications companies from eight western European
countries with median revenue of CHF 7.5 billion and a
median workforce of 19,500 employees. The evaluation
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 indi-
vidual remuneration paid to members of the Group Exec-
utive Board every three years of employment. Taking into
account the benchmarks and transfer of tasks due to the
reduction of the Group Executive Board, the Board of
Directors adjusted the salaries of three members of the
Group Executive Board during the course of the reporting
year. The aim of this was to take account of their expanded
roles and their experience and performance, while ensur-
ing that remuneration was in line with the market.

3.2 Remuneration components

Base salary
The base salary is the remuneration paid according to the
function, qualifications and performance of the individual
member of the Group Executive Board. It is determined
based on a discretionary decision taking into account
the external market value of the function and the salary
structure for the Group’s executive management. The
base salary is paid in cash.

Variable performance-related salary component
The members of the Group Executive Board are entitled
to a variable performance-related salary component
which represents 70% of the base salary if objectives are
achieved
in full (performance-related bonus). The
amount of the performance-related component paid

103

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 performance-
related bonus may be paid. The maximum perfor-
mance-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 market value of
the component paid in shares.

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

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 2020.

The targets relating to the business transformation
include the net promoter score (NPS) 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 39

Overall target achievement is determined based on the
achievement of financial targets and the achievement of
targets within the scope of the business transformation.

Determination of overall target achievement
As the decisive basis for the payment of the performance-related component

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.

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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 financial target factor

Business transformations targets

Net promoter score

Availability key indicator

Growth

Net cost savings

Total Business Transformation Multiplier

Weighting of
targets level
CEO

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

24%

32%

20%

100%

20%

30%

100%

24–30%

32–40%

0–20%

20%

30%

Achievement of targets
The Compensation Committee determines the level of tar-
get achievement in the subsequent year once the consoli-
dated 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 overachievement
and underachievement of each target. The achievement
of an individual target can vary from 0% to 200%.

Determination of achievement of targets
Per financial target

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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 deter-
mined based on financial targets as well as targets relat-
ing to the business transformation. The weighted
financial targets form the basis for calculating the
achievement of financial targets, with an upper limit.
Similarly, the weighted targets within the scope of the
business transformation form the basis for calculating
the achievement of business transformation targets,
with a lower and upper limit. The two target achieve-
ments are multiplied by each other as factors and result
in the overall target achievement. In determining the
level of target achievement, the Compensation Commit-
tee can, under certain circumstances, exercise a degree
of discretion in assessing the effective management per-

formance, taking into account special factors such as
fluctuations in exchange rates. The overall achievement
of targets is limited to a maximum of 130%.

Based on the overall achievement of targets, the Com-
pensation 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, the targets relevant to remu-
neration were fully met. The resulting payment of the
performance-related component is 103% of the target
bonus for the CEO and for the other members of the
Group Executive Board.

105

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 compensa-
tion. The remaining portion of the performance-related
component is settled in cash. In the event of a departure
from the Group Executive Board during the course of the
year, the payment of the performance-related 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. Shares are
blocked from sale for three years. 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 2020 report-
ing year will be made in March 2021.

In April 2020, a total of 1,452 shares (prior year: 1,815 shares)
with a tax value of CHF 439 (prior year: CHF 411) per
share and a market value of CHF 522.80 (prior year:
CHF 489.50) per share were allocated for the 2019 finan-
cial 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 cover all savings, guarantee and risk
contributions paid by the employer to the pension plan.
They also include the pro-rata costs of the AHV bridging
pension paid by comPlan in the event of early retirement
and the premium for the 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.

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3.3 Total remuneration
The following table shows the total remuneration paid to
the members of the Group Executive Board for the 2019
and 2020 financial years, broken down into individual
components and including the highest amount paid to
one member. In the year under review, the variable per-
formance-related salary component for members of the
Group Executive Board (CHF 2,439 thousand in total)
was around 76% of the base salary (CHF 3,221 thousand

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

in total). The total remuneration paid to the high-
est-earning member of the Group Executive Board (CEO,
Urs Schaeppi) increased by 5.3% compared to the prior
year. The decrease in total remuneration paid to the
Group Executive Board is primarily attributable to the
lower number of Group Executive Board members com-
pared to the previous year.

Total Group
Executive Board
2020

Total Group
Executive Board
2019

Thereof
Urs Schaeppi
2020

Thereof
Urs Schaeppi
2019

3,221

1,708

731

109

510

796

7,075

190

3,606

1,636

757

105

539

873

7,516

–

882

477

189

139

148

1,853

–

882

417

165

132

148

1,759

–

7,265

7,516

1,853

1,759

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 2020 financial year is within the
maximum total amount approved by the 2019 Annual
General Meeting (AGM) for 2020 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 min-
imum shareholding to be held by the CEO is equivalent to
two years’ base salary and the other Group Executive
Board members are required to maintain a shareholding
equivalent to one year’s base salary. The members of the
Group Executive Board build up the prescribed share-

holding over four allocation periods in the form of the
blocked shares paid as part of remuneration and, if nec-
essary, through share purchases on the open market,
observing internal trading restrictions. Compliance with
the shareholding requirement is reviewed annually by
the Compensation Committee. If a member’s sharehold-
ing falls below the minimum requirement due to a drop
in the share price or a salary adjustment, the difference
must be made up by no later than the time of the next
review. In justified cases, such as personal hardship or
legal obligations, the Chairman of the Board of Directors
can approve individual exceptions at his discretion.

107

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 Decem-
ber 2019 and 2020 are shown in the table below. None of the individuals required to make notification holds voting
shares exceeding 0.1% of the share capital.

Number

Urs Schaeppi (CEO)

Mario Rossi

Hans C . Werner

Marc Werner 1

Urs Lehner

Christoph Aeschlimann

Dirk Wierzbitzki

Total shares held by the members of the Group Executive Board

1 Left the Group Executive Board on 31 December 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 enti-
tled to separate remuneration for any directorships they
hold either within or outside the Swisscom Group.

31.12.2020

31 .12 .2019

5,069

1,897

1,588

–

821

145

1,122

10,642

4,752

1,707

1,440

1,364

509

–

969

10,741

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 2020 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.

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

Ittigen

We have audited the remuneration report of Swisscom Ltd for the year ended 31 December 2020. 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 2.4, 2.6, 3.3, 3.5 and 4.1 to 4.3 on pages 97 to 108 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 2020 complies with Swiss law and
articles 14–16 of the Ordinance.

PricewaterhouseCoopers AG

Peter Kartscher

Audit expert
Auditor in charge

Zürich, 3 February 2021

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.

109

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Consolidated
Financial Statements ________

Notes to the consolidated
financial statements _________

Consolidated statement of comprehensive income . . . . . . . 112

Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

Consolidated statement of cash flows . . . . . . . . . . . . . . . . . . . . 114

Consolidated statement of changes in equity . . . . . . . . . . . . . 115

1 Operating performance

1 .1 Segment information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

1 .2 Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

2 Capital and financial risk management

2 .1 Capital management and equity . . . . . . . . . . . . . . . . . . . 126

2 .2 Financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

2 .3 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

2 .4 Financial result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

2 .5 Financial risk management . . . . . . . . . . . . . . . . . . . . . . . . . 135

3 Operating assets and liabilities

3 .1 Operating net working capital . . . . . . . . . . . . . . . . . . . . . . 143

3 .2 Property, plant and equipment . . . . . . . . . . . . . . . . . . . .

146

3 .3 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

148

3 .4 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

3 .5 Provisions and contingent liabilities . . . . . . . . . . . . . . . . . 152

4 Employees

4 .1 Employee headcount and personnel expense . . . . . . . 155

4 .2 Key management compensation . . . . . . . . . . . . . . . . . . . 156

4 .3 Post-employment benefits . . . . . . . . . . . . . . . . . . . . . . . . . 156

5 Scope of consolidation

5 .1 Group structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162

5 .2 Changes in the scope of consolidation . . . . . . . . . . . . . . 162

5 .3 Equity-accounted investees . . . . . . . . . . . . . . . . . . . . . . . . 163

5 .4 Group companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165

6 Other disclosures

6 .1 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

6 .2 Related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170

6 .3 Other accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . 171

Report of the statutory auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

111

Consolidated Financial Statements
Consolidated statement
of comprehensive income

In CHF million, except for per share amounts

Note

2020

2019

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

11,100

11,453

(2,669)

(2,717)

(1,798)

466

4,382

(2,149)

(286)

1,947

(193)

1,799

(271)

1,528

261

(9)

252

(5)

(3)

(5)

(13)

239

1,528

239

1,767

1,530

(2)

1,528

1,769

(2)

1,767

(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

Basic and diluted earnings per share (in CHF)

2 .1

29.54

32.28

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Consolidated balance
sheet

In CHF million

Assets

Cash and cash equivalents

Trade receivables

Other operating assets

Other financial assets

Current income tax assets

Total current assets

Property, plant and equipment

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

Other operating liabilities

Provisions

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 reserves

Equity attributable to equity-holders of Swisscom Ltd

Non-controlling interests

Total equity

Total liabilities and equity

Note

31.12.2020

31 .12 .2019

3 .1

6 .1

3 .2

3 .3

3 .4

2 .3

5 .3

6 .1

2 .2

2 .3

3 .1

3 .5

6 .1

2 .2

2 .3

4 .3

3 .5

2 .3

6 .1

2 .1

340

2,132

1,029

170

3,675

10,725

1,745

5,162

2,138

155

479

183

20,587

24,262

792

226

1,525

1,269

144

186

4,142

6,250

1,762

795

1,072

106

644

10,629

14,771

136

11,085

(1,791)

9,490

9,491

24,262

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

1,194

163

174

4,788

6,049

1,795

1,058

971

122

589

10,584

15,372

136

10,454

(1,781)

8,872

8,875

24,247

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Consolidated statement
of cash flows

In CHF million

Net income

Income tax expense

Result of equity-accounted investees

Financial income

Financial expense

Note

6 .1

5 .3

2 .4

2020

1,528

271

(4)

(41)

193

2019

1,669

(33)

191

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

3 .2, 3 .3

2,149

2,166

Depreciation of right-of-use assets

Gain on sale 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 on financial liabilities

Interest payments on 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 increase (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

286

(10)

(101)

(16)

178

(22)

(93)

(45)

(309)

4,069

(2,188)

(39)

–

(15)

100

(121)

(4)

(2,231)

732

(1,110)

(287)

(1,140)

(1)

(17)

282

(13)

(101)

(12)

112

(88)

(42)

(371)

3,981

(2,390)

(394)

(3)

(15)

(13)

(39)

(2,733)

417

(374)

(276)

(1,140)

(1)

(15)

(1,824)

(1,390)

328

(2)

340

(142)

474

(4)

328

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
reserves

Balance at 1 January 2019

136

9,781

(1,728)

Net income

Other comprehensive income

Comprehensive income

Dividends paid

Other changes

–

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

Net income

Other comprehensive income

Comprehensive income

Dividends paid

Other changes

–

1,530

252

1,782

(1,140)

(11)

–

(10)

–

Balance at 31 December 2020

136

11,085

(1,791)

–

(3)

–

1,530

239

1,769

(1,140)

(11)

9,490

(15)

(3)

–

(3)

(1)

(2)

–

(2)

(1)

Total
equity

8,230

1,669

102

1,771

(1,141)

8,875

1,528

239

1,767

(1,141)

(10)

9,491

115

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 for the year ended 31 December 2020
comprise Swisscom Ltd, as the parent company, and its subsidiaries. Swisscom Ltd is a public limited company
with special status under Swiss law 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 totals 51,801,943. The shares have a nominal value of CHF 1 and are
fully paid-up. Each share entitles the holder to one vote. The majority shareholder of Swisscom Ltd remains, as in
the prior year, the Swiss Confederation (“Confederation”). The Confederation is obligated by current law to hold
the majority of the capital and voting rights. The Board of Directors of Swisscom approved the issuance of these
consolidated financial statements on 3 February 2021. As of this date, no material events after the reporting date
have occurred. The consolidated financial statements are subject to approval by the shareholders of Swisscom
Ltd in its Annual General Meeting to be held on 31 March 2021.

Basis of preparation
The consolidated financial statements of Swisscom have been prepared in accordance with International Financial
Reporting Standards (IFRS), and in compliance with the provisions of Swiss law. The reporting period covers twelve
months. The consolidated financial statements are presented in Swiss francs (CHF), which corresponds to the
functional currency of Swisscom Ltd. Unless otherwise noted, all amounts are stated in millions of Swiss francs.
The consolidated financial statements are drawn up on the historical cost basis, unless a standard or interpretation
prescribes another measurement basis for a particular line item, in which case this is explicitly stated in the
accounting policies. Material accounting policies of relevance for an understanding of the consolidated 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. In
particular, this concerns the following positions:

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

Further information

Note 2 .3

Note 3 .2

Note 3 .3

Note 3 .4

Note 3 .5

Note 4 .3

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Impact of the Covid-19 pandemic
In March 2020, government measures against the spread of Covid-19 restricted economic activities in the key
regions for Swisscom, Switzerland and Italy. With the exception of international roaming, the impact on
Swisscom’s telecommunications business is minimal. The international roaming business recorded a sharp
decline as a result of reduced travel activity. Furthermore, Covid-19 resulted in a negative business trend in the
cinema and event business. Covid-19 does not have a significant impact on the key estimation uncertainties and
assumptions. It is not possible to definitively quantify the potential financial impact of Covid-19 as there is a high
degree of uncertainty as regards relevant various factors (especially the extent and duration of the pandemic,
government support measures to benefit the economy, customer behaviour in Switzerland and Italy, etc.).

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

Standard

Name

Amendments to IFRS 3

Definition of a business

Amendments to IFRS 16

Rent concessions in connection with Covid-19

Amendments to IAS 1 and IAS 8

Definition of material

–

Amendments to the references to the framework
in the IFRS standards

As of 1 January 2020 onwards, Swisscom adopted various amendments to existing International Financial
Reporting Standards (IFRS) and Interpretations, which have no material impact on the results or financial position
of the Group. Further information regarding the changes to the IFRS which must be applied in 2021 or later are set
out in Note 6.3.

117

1 Operating performance

This chapter sets out 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

Changes in segment reporting
As of 1 January 2020, Swisscom amended its organisational structure in Switzerland and the segment formerly
known as Enterprise Customers was renamed Business Customers. In order to provide all business customers with
a customer experience tailored to their needs, Swisscom has merged the SME and Corporate Customer segments.
As a result, segment reporting now includes the telecommunications and solutions business with small and
medium- sized enterprises in the Business Customers segment (previously reported under Residential Customers). In
addition, Swisscom has bundled Customer Field Services in Switzerland, some of which were previously reported
in the Residential Customers segment, at its subsidiary cablex Ltd (Other Operating Segments). Finally, Swisscom
has transferred various areas between Swisscom Switzerland and Group Headquarters as of 1 January 2020. The
prior-year amounts have been restated as follows:

In CHF million

Net revenue

2019 financial year

Residential Customers

Business Customers (previously Enterprise Customers)

Wholesale

IT, Network & Infrastructure

Elimination

Swisscom Switzerland

Fastweb

Other Operating Segments

Group Headquarters

Elimination

Total net revenue

Segment result

2019 financial year

Residential Customers

Business Customers (previously Enterprise Customers)

Wholesale

IT, Network & Infrastructure

Swisscom Switzerland

Fastweb

Other Operating Segments

Group Headquarters

Elimination

Total segment result

Reported

Adjustment

Restated

5,691

2,312

968

(493)

8,563

2,468

929

(508)

11,453

3,264

603

525

(2,642)

1,750

155

114

(74)

(77)

1,868

(955)

928

–

150

–

(160)

–

(631)

673

(14)

(33)

(5)

–

(1)

–

4,736

3,240

968

(456)

8,573

2,468

1,079

(668)

11,453

2,633

1,276

511

(2,675)

1,745

155

113

(68)

(77)

1,868

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General information

Swisscom Group

Swisscom Switzerland

Residential
Customers

Business
Customers

Wholesale

IT, Network
& Infrastructure

Fastweb

Other Operating
segments

Segment

Activity

Residential Customers

Business Customers

Wholesale

IT, Network & Infrastructure

Fastweb

Other Operating Segments

The Residential Customers segment provides mobile and fixed-network services in Switzerland, such as telephony,
broadband, TV and mobile offerings . The segment also includes the sale of terminal equipment .

The Business Customers segment focuses on telecom services and overall communications solutions for large
corporations and customers from small and medium-sized enterprises in Switzerland . Its offering in the area of
business ICT infrastructure covers the entire range from individual products to complete solutions .

This segment incorporates the use of the Swisscom fixed-line 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 access
services to the access network .

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 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 provides broadband and mobile services to residential, business and wholesale customers in Italy . The
offering includes telephony, broadband and mobile offerings . For business customers, Fastweb offers comprehensive
ICT 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
telecommunications . Swisscom Broadcast Ltd is the leading provider in Switzerland of broadcast services, of
cross-platform retail media services, and of security communications .

Reporting is divided into the segments Residential Customers, Business Customers, Wholesale, and IT, Network &
Infrastructure, which are grouped under Swisscom Switzerland, as well as Fastweb and Other Operating Segments.
Group Headquarters, which includes non-allocated costs, is reported separately.

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. Any other
services between the segments are charged at market prices. The results of the Residential Customers, Business
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 and 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 2020, the Eliminations segment result of CHF –99 million
(prior year: CHF –77 million) includes an expense of CHF 65 million (prior year: CHF 47 million) as a pension cost
reconciliation item in accordance with IAS 19.

Leases between the segments are not recognised in the balance sheet in accordance with IFRS 16. The reported
lease expense of the segments comprises depreciation and interest on right-of-use assets excl. depreciation of pre-
paid indefeasible rights of use (IRU) of CHF 24 million (prior year: CHF 30 million), impairments on right-of-use
asserts of CHF 7 million (prior year: none) and the accounting for the rental of buildings between segments. The
lease expense of assets of low value is presented as direct costs.

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, IRU are paid in full at the beginning of the usage period. If

119

the criteria of IFRS 16 are met, they are classified as a lease. From an economic point of view, pre-paid IRU will be
considered as capital expenditure in the segment information. IRU payments in 2020 amounted to CHF 41 mil-
lion (prior year: CHF 48 million).

Swisscom Switzerland sometimes sells mobile handsets at a subsidised rate as part of a bundled offering with a
mobile 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 business
being recognised. In the segment reporting of Swisscom Switzerland, the recognition and dissolution of these
contract assets is reported as other revenue. The amounts invoiced are reported under revenue from tele-
communications services or merchandise.

Segment information 2020

2020, 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

Swisscom
Switzerland

4,484

3,048

661

8,193

8,275

(1,747)

(3,001)

Segment result before depreciation and amortisation

3,527

(230)

(1,509)

1,788

Lease expense

Depreciation and amortisation

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

Fastweb

1,214

973

275

2,462

–

445

–

445

575

2,470

1,020

(887)

(743)

840

(56)

(618)

166

(70)

(765)

185

(12)

(62)

111

Elimi-
nation

–

(665)

522

(108)

–

(99)

–

(62)

(2)

–

(64)

Segment result before depreciation and amortisation

3,527

Capital expenditure

Lease expense

Operating free cash flow proxy

(1,599)

(230)

1,698

840

(629)

(56)

155

185

(44)

(12)

129

(62)

–

(2)

(64)

(108)

–

(65)

Total

5,698

4,466

936

11,100

–

11,100

(2,669)

(4,049)

4,382

(300)

(2,180)

1,902

1,947

(152)

1,799

(271)

1,528

4,382

(2,229)

(300)

1,853

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Segment information Swisscom Switzerland 2020

Residential
Customers

Business
Customers

Whole-
sale

IT,
Network &
Infrastructure

Elimi-
nation

Total
Swisscom
Switzerland

–

661

–

661

315

976

(433)

(19)

524

(1)

–

523

–

(12)

(1,115)

(1,042)

(153)

(1,361)

(2,556)

(43)

(72)

(33)

(76)

2,586

1,235

(27)

(40)

–

(1,532)

Swisscom
Switzerland

4,662

3,179

643

8,484

8,573

(1,897)

(3,192)

Other
Operating
Segments

Group
Head-
quarters

Fastweb

1,228

958

274

2,460

–

509

–

509

570

2,468

1,079

(888)

(746)

834

(56)

(623)

155

(62)

(828)

189

(12)

(64)

113

–

(67)

(66)

(2)

–

(68)

–

(450)

604

(154)

–

Elimi-
nation

–

(668)

553

(83)

–

(77)

2020, in CHF million

Fixed-line

Mobile

Telecom services

Solution business

Merchandise

Wholesale

Revenue other

2,012

1,934

3,946

–

524

–

960

761

1,721

1,058

235

–

Net revenue from external customers

4,484

3,026

Net revenue from other segments

Net revenue

Direct costs

Indirect costs

4,564

(1,088)

(775)

3,100

(818)

(938)

Segment result before depreciation and amortisation

2,701

1,344

Lease expense

Depreciation and amortisation

Segment result

Capital expenditure

Segment information 2019

2019, in CHF million, adjusted

Residential customers

Corporate customers

Wholesale customers

Net revenue from external customers

Net revenue from other segments

Net revenue

Direct costs

Indirect costs

Segment result before depreciation and amortisation

3,484

(224)

(1,515)

1,745

Lease expense

Depreciation and amortisation

Segment result

Interest 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

Segment result before depreciation and amortisation

3,484

Capital expenditure

Lease expense

Operating free cash flow proxy

(1,761)

(224)

1,499

834

(667)

(56)

111

189

(47)

(12)

130

(66)

–

(2)

(68)

(83)

–

(46)

2,972

2,695

5,667

1,058

759

661

8,193

8,275

(1,747)

(3,001)

3,527

(230)

(1,509)

1,788

(1,599)

Total

5,890

4,646

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

121

Segment information Swisscom Switzerland 2019

2019, in CHF million, adjusted

Fixed-line

Mobile

Telecom services

Solution business

Merchandise

Wholesale

Revenue other

2,049

2,061

4,110

–

547

–

998

844

1,842

1,049

260

–

Net revenue from external customers

4,662

3,156

Net revenue from other segments

Net revenue

Direct costs

Indirect costs

4,736

(1,172)

(794)

3,240

(876)

(970)

Segment result before depreciation and amortisation

2,770

1,394

Residential
Customers

Business
Customers

Whole-
sale

IT,
Network &
Infrastructure

Elimi-
nation

Total
Swisscom
Switzerland

–

643

–

643

325

968

(426)

(31)

511

–

(11)

(1,265)

(1,191)

(146)

(1,338)

(2,675)

–

(456)

588

(132)

–

3,047

2,905

5,952

1,049

807

643

8,484

8,573

(1,897)

(3,192)

3,484

(224)

(1,515)

1,745

(1,761)

(49)

(88)

(29)

(89)

2,633

1,276

511

(32)

(43)

–

(1,686)

Lease expense

Depreciation and amortisation

Segment result

Capital expenditure

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

2020

Non-current
assets

15,814

4,044

662

2019

Non-current
assets

15,759

4,041

636

Net revenue

8,969

2,460

–

Net revenue

8,614

2,462

–

11,100

20,587

11,453

20,503

2020

7,770

1,058

828

936

508

2019

8,012

1,021

899

916

605

11,100

11,453

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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
cellular traffic due to Swisscom customers within Switzerland and abroad. Swisscom offers subscriptions 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 contract, it is considered as a multi-component contract. Multi-component transactions are
grouped into portfolios for revenue accounting. The transaction price for multi-component contracts is allocated
to each identified benefit 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
benefit 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 benefit obligation are considered as part of the total transaction price and allocated to
the separate benefit 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 connections,
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 implementation,
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 outsourcing
contract are not recorded as separate benefit 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 benefit obligations. Revenue is deferred and recog-
nised 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.

123

1.2 Operating expenses

Direct costs

In CHF million

Customer premises equipment and merchandise

Services purchased

Costs to obtain a contract

Costs to fulfil 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

Energy costs

Advertising and selling expenses

Consultancy expenses and freelance workforce

Call centre services purchased

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.

2020

980

646

285

344

394

2019

1,095

642

327

366

369

2,669

2,815

2020

2,657

2,717

255

267

116

186

130

136

557

1,798

(359)

(40)

(11)

(56)

(466)

2019

2,679

121

2,800

262

314

116

223

149

134

101

608

1,989

(344)

(66)

(13)

(86)

(509)

4,049

4,280

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.

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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, Swisscom will reimburse the dealer for any handset
subsidies they grant to customers when they take out a Swisscom mobile subscription at the same time. The
associated costs are deferred and amortised on a straight-line basis over the contract term as the costs of obtain-
ing 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 to
use the services of Swisscom. Routers and TV boxes may be used exclusively for services provided 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 cus-
tomers 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.

125

2 Capital and financial risk management

The following chapter sets out the procedures and guidelines governing the
active management of the capital structure 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

Ratio of net debt to EBITDA after lease expense
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 to operating result before
depreciation, amortisation and impairment losses after lease expense (EBITDA AL). Net debt comprises financial
liabilities less cash and cash equivalents, listed debt instruments, certificates of deposit, derivative financial instru-
ments held for hedging financial liabilities and other current financial assets. Lease expense includes depreciation
and interest on right-of-use assets excluding depreciation on prepaid indefeasible rights of use (IRU) and impair-
ment losses. The net debt to EBITDA AL ratio is as follows:

In CHF million

Net debt

EBITDA after lease expense (EBITDA AL)

Ratio net debt/EBITDA AL

31.12.2020

31 .12 .2019

6,218

4,082

1.5

6,758

4,064

1.7

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 %

31.12.2020

31 .12 .2019

9,491

24,262

39.1

8,875

24,247

36.6

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 2020, Swisscom Ltd’s distributable reserves amounted to
CHF 5,644 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 2019 and 2020:

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

2020

51 .802

22 .00

1,140

2019

51 .802

22 .00

1,140

The Board of Directors will propose the payment of an unchanged dividend of CHF 22 per share for the 2020
financial year to the Annual General Meeting of Shareholders of Swisscom Ltd on 31 March 2021. This equates to
an aggregate dividend distribution of CHF 1,140 million. The expected dividend payment date is 8 April 2021.

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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)

2020

1,530

2019

1,672

51,800,587

51,801,540

29.54

32.28

Supplementary information on equity
Development of retained earnings and other reserves as well as comprehensive income 2020

In CHF million

Balance at 1 January 2020

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

Items that may be reclassified
to income statement

Other comprehensive income

Comprehensive income

Dividends paid

Other changes

Foreign
currency
Retained
translation
earnings adjustments

10,454

(1,781)

1,530

330

(10)

(68)

252

–

252

1,782

(1,140)

(11)

–

(5)

–

(5)

(10)

–

Balance at 31 December 2020

11,085

(1,791)

Hedging
reserves

Equity
holders of
Swisscom

Non-
controlling
interests

–

8,684

1,530

–

(3)

–

(3)

–

330

(10)

(68)

252

(5)

(3)

(5)

(13)

239

1,769

(1,140)

(11)

9,302

(2)

–

(2)

(1)

Total

8,687

1,528

330

(10)

(68)

252

(5)

(3)

(5)

(13)

239

1,767

(1,141)

(10)

9,303

127

Development of retained earnings and other reserves as well as comprehensive income 2019

In CHF million

Balance at 1 January 2019

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
reserves

Equity
holders of
Swisscom

Non-
controlling
interests

8,057

1,672

(15)

(3)

9,781

1,672

193

(47)

148

–

148

1,820

(1,140)

(7)

(1,728)

–

(59)

–

(53)

–

(1)

–

193

(47)

148

(59)

(46)

102

1,774

(1,140)

(7)

Total

8,042

1,669

193

(47)

148

(59)

(46)

102

1,771

(1,141)

8,687

–

(3)

(1)

Balance at 31 December 2019

10,454

(1,781)

8,684

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2.2 Financial liabilities

In CHF million

Balance at 1 January

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 1

Other changes

Balance at 31 December

Bank loans

Debenture bonds

Private placements

Derivative financial instruments 2

Other financial liabilities

Total financial liabilities

Thereof current financial liabilities

Thereof non-current financial liabilities

2020

7,460

719

732

(557)

(540)

–

(13)

(1,110)

(93)

(41)

–

(26)

7,042

484

6,110

151

207

7,042

792

6,250

2019

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

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

2 See Note 2.5.

See Note 5.2.

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 2020, none of these lines of credit had been drawn down, as in the prior year.

Bank loans

In CHF million

Bank loans in EUR 1

Bank loans in EUR 1, 3

Bank loans in EUR 2

Bank loans in CHF 1

Bank loans in EUR 2, 3

Bank loans in USD 2

Total bank loans

Maturity years

2019–2020

2013–2020

2015–2020

2020–2021

2017–2024

2009–2028

Par value
in currency

Nominal
interest rate

Effective
interest rate

31.12.2020

31 .12 .2019

Carrying amount

460

200

199

150

0 .00%

Euribor
+0 .386%

0 .76%

0 .00%

0 .67%

8 .30%

7 .65%

–0 .35%

0 .00%

–0 .58%

0 .00%

0 .67%

4 .62%

4 .63%

–

199

163

484

499

219

–

163

1,080

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.

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On 31 December 2020, Swisscom took on short-term bank loans on a weekly and monthly basis for CHF 199 mil-
lion (prior year: EUR 460 million; CHF 499 million). Bank loans to the value of EUR 150 million (CHF 162 million)
may become due for immediate repayment if the shareholding of the Confederation in the capital of Swisscom
falls below one third, or if another shareholder can exercise control over Swisscom.

Debenture bonds

In CHF million

Maturity years

Par value
in currency

Nominal
interest rate

Effective
interest rate

31.12.2020

31 .12 .2019

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) 2

Debenture bond in CHF
(ISIN: CH0188335365)

Debenture bond in EUR
(ISIN: XS1288894691)

Debenture bond in CHF
(ISIN: CH0247776138)

Debenture bond in EUR
(ISIN: XS1803247557) 1

Debenture bond in CHF
(ISIN: CH0344583783) 2

Debenture bond in CHF
(ISIN: CH0362748359)

Debenture bond in CHF
(ISIN: CH0317921663)

Debenture bond in CHF
(ISIN: CH0437180935)

Debenture bond in EUR
(ISIN: XS21692434791) 1

Debenture bond in CHF
(ISIN: CH0254147504)

Debenture bond in CHF
(ISIN: CH0419040982)

Debenture bond in CHF
(ISIN: CH0515152467)

Debenture bond in CHF
(ISIN: CH0336352775)

Debenture bond in CHF
(ISIN: CH0373476164)

Debenture bond in CHF
(ISIN: CH0580291968)

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

2020–2028

2014–2029

2019–2029

2020–2031

2016–2032

2017/
2019–2033

2020–2034

2015/
2018–2035

2019–2044

500

250

500

200

500

200

350

200

150

500

160

200

100

300

230

100

300

125

2 .00%

2 .22%

1 .88%

2 .06%

2 .63%

2 .81%

0 .25%

–0 .44%

1 .75%

1 .77%

1 .75%

–0 .12%

1 .50%

1 .47%

1 .13%

1 .25%

0 .38%

–0 .49%

0 .38%

0 .39%

0 .38%

0 .30%

0 .75%

0 .72%

0 .38%

0 .53%

1 .50%

1 .47%

0 .50%

0 .43%

0 .13%

0 .15%

0 .13%

0 .14%

0 .75%

0 .66%

0 .25%

0 .27%

1 .00%

0 .22%

0 .00%

–

542

503

255

504

578

202

538

208

351

202

151

534

161

201

100

299

233

100

323

544

502

256

504

575

202

539

206

351

202

151

–

161

202

–

299

233

–

319

125

6,110

125

5,915

1 Designated for hedge accounting of net investments in foreign operations.
2 Thereof CHF 575 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.

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In the second quarter of 2020, Swisscom became the first listed company in Switzerland to issue a Green Bond in
EUR. The amount borrowed totalled EUR 500 million (CHF 519 million). The coupon was 0.375% and the bond has a
maturity of 8.5 years. The funds raised will be used within Swisscom’s Green Bond Framework. In the third quarter
of 2020, Swisscom issued a CHF 100 million bond with a maturity of 11 years and a coupon of 0.125%. In the fourth
quarter of 2020, Swisscom issued a CHF 100 million bond with a maturity of 14 years and a coupon of 0.245%. The
funds received were used to repay existing debt. Swisscom repaid a EUR 500 million (CHF 540 million) bond upon
maturity in the third quarter of 2020.

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, Swisscom topped up a debenture bond taken out in 2017 by
CHF 80 million. It has a coupon of 0.75% and matures in 2033. In addition, Swisscom issued a debenture bond for
CHF 125 million in August 2019. It has a coupon of 0% and matures in 2044. The funds received were used to
repay existing debt.

Private placements
In the fourth quarter of 2019, Swisscom repaid a private placement of CHF 278 million upon maturity. The out-
standing private placements of CHF 150 million may become due for immediate repayment if the shareholding
of the Confederation in the capital of Swisscom falls below 35% or if another shareholder can exercise control
over Swisscom.

Other financial liabilities
As at 31 December 2020, the carrying amount of other financial liabilities was CHF 207 million (prior year:
CHF 230 million), consisting primarily of loans. Repayments of other financial liabilities in 2019 includes the pur-
chase 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

Lessee
Swisscom’s leases comprise the rental of operation and office buildings, antenna sites, and network infrastructure
in particular. In addition, indefeasible rights of use (IRU) are classified as leases under IFRS 16. In general, IRU are
paid in full at the beginning of use. The Italian subsidiary Fastweb procures various access services from other
fixed-network operators and uses their connection cables to the end customer. Swisscom applies the low value
exemption 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 2020, the carrying amount of
the deferred gains was CHF 106 million (prior year: CHF 122 million). The deferred gains are released to other
income over the term of the individual leases.

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132

Right-of-use assets

In CHF million

At cost

Balance at 1 January 2019

Additions

Disposals

Foreign currency translation adjustments

Balance at 31 December 2019

Additions

Disposals

Business combinations

Foreign currency translation adjustments

Balance at 31 December 2020

Accumulated depreciation and impairment losses

Balance at 1 January 2019

Depreciation

Disposals

Foreign currency translation adjustments

Balance at 31 December 2019

Depreciation

Impairments

Disposals

Foreign currency translation adjustments

Balance at 31 December 2020

Net carrying amount

Net carrying amount at 31 December 2020

Net carrying amount at 31 December 2019

Net carrying amount at 1 January 2019

Lease liabilities

In CHF million

Balance at 1 January

Additions

Interest expense

Payments

Disposals

Business combinations

Foreign currency translation adjustments

Balance at 31 December

Land and buildings

Technical installations

Other leases

Total lease liabilities 1

Thereof current lease liabilities

Thereof non-current lease liabilities

1 Note 2.5 shows the maturity analysis for lease liabilities.

Land
and buildings

Technical
installations

Other
right-of-use
assets

1,818

262

(72)

(9)

624

430

(17)

(31)

1,999

1,006

202

(29)

(1)

(9)

–

(4)

2,172

1,046

(246)

(219)

–

(393)

(223)

(7)

–

(412)

(62)

(442)

(53)

–

(601)

(485)

1,571

1,606

1,572

561

564

212

–

(1)

–

(1)

–

(1)

(3)

–

(4)

2020

2,027

258

(332)

(8)

(3)

1,988

1,624

356

1,988

226

1,762

Total

2,444

698

(89)

(40)

3,013

258

(39)

(5)

3,228

(658)

(282)

(836)

(279)

(7)

(1,090)

2,138

2,177

1,786

2019

1,622

698

(318)

–

(17)

2,027

1,642

377

2,027

232

1,795

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 and impairment losses

Depreciation of right-of-use assets

Impairment losses on right-of-use assets

Financial expense

Interest expense on lease liabilities

2020

187

2019

184

(134)

(135)

(279)

(7)

(282)

–

(45)

(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 as at 31 December 2019 and 2020 break down as follows:

In CHF million

Within 1 year

Between 1 and 2 years

Between 2 and 3 years

Between 3 and 4 years

Between 4 and 5 years

After 5 years

Total future payments from finance leases

Future interest income

Total receivables from finance leases

31.12.2020

31 .12 .2019

(1)

Future lease payments in respect of operating leases are as follows as at 31 December 2019 and 2020:

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

31.12.2020

31 .12 .2019

Total future payments from operating leases

211

209

133

Significant judgements or estimates
When determining the terms of leases, management considers all facts and circumstances that encompass an
economic 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.

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.

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, 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 for the underly-
ing asset as at the time when the leased asset becomes available to Swisscom. The lease payments are divided
into a repayment 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 essen-
tially 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 standards. Swisscom procures various access services from other network operators and uses their con-
nection cables to the end customer. Under IFRS 16, part of these access services is classified as a lease. The value of
the individual 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 services, 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 termination 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 reasonably certain that all renewal options
will be exercised. Accordingly, no renewal options are taken into account in the initial measurement of lease
contracts of antenna sites. Given Swisscom’s planning horizon is a maximum of five years and technological
developments, it is not possible to estimate the amount of additional undiscounted payments which are cur-
rently not included in the lease liabilities.

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134

2.4 Financial result

In CHF million

Interest income on financial assets

Gain on exchange of financial assets

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 on financial assets and liabilities

1 See Note 2.5.
2 See Note 4.3.

3 See Note 3.5.

2020

2019

(75)

(45)

(2)

(5)

(9)

(39)

(18)

(193)

(152)

(45)

(69)

–

(73)

(42)

(8)

(12)

(23)

(16)

(17)

(191)

(158)

(42)

(62)

In the third quarter of 2020, Swisscom exchanged certificates of deposit for U.S. treasury bond strips (listed debt
instruments). The exchange of financial assets resulted in a valuation difference of CHF 31 million, which was
recognised as financial income.

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 currencies
as of 31 December 2019 and 2020:

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

31.12.2020

31 .12 .2019

EUR

(15)

(2,350)

(37)

(2,342)

(2,340)

–

540

626

(1,714)

USD

315

(221)

(49)

(307)

(234)

307

(34)

–

273

EUR

(3,151)

(34)

(3,080)

(3,039)

–

527

760

1,287

(1,752)

USD

309

(234)

(35)

(358)

(303)

358

(44)

–

314

In addition, as of 31 December 2020, Swisscom had outstanding financial liabilities with a nominal value total-
ling EUR 1,650 million (CHF 1,782 million, prior year EUR 1,710 million, CHF 1,855 million), which is designated for
hedge accounting of net investments in foreign operations. In 2020, income of CHF 9 million (prior year: income
of CHF 72 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 2020, the
cumulative positive amount of foreign currency translation differences in equity totals CHF 243 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. The analysis assumes
that all other variables, in particular the interest rate level, remain constant.

In CHF million

31.12.2020

EUR volatility 5 .14%

USD volatility 6 .39%

31.12.2019

EUR volatility 4 .67%

USD volatility 6 .01%

Income impact on

Hedges for
balance sheet items balance sheet items

Planned

Hedges for
cash flows planned cash flows

120

(5)

144

(3)

(32)

(60)

–

(2)

–

(22)

–

(22)

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

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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

31.12.2020

31 .12 .2019

6,565

274

6,839

(271)

(561)

(832)

6,007

(287)

1,115

828

6,294

(1,115)

5,179

6,007

6,589

646

7,235

(250)

(414)

(664)

6,571

232

1,335

1,567

6,339

(1,335)

5,004

6,571

Interest rate sensitivity analysis
A shift in interest rates by 100 basis points has an impact of CHF 8 million on the income statement (previous
year: CHF 16 million), but no impact on equity as of 31 December 2019 and 2020.

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

31.12.2020

31 .12 .2019

340

478

898

328

390

803

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

31.12.2020

31 .12 .2019

441

218

112

898

421

168

120

803

137

Financial risks from operating activities
Credit risks on trade receivables, contract assets and other receivables arise from the Group’s operating activities.
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. They are also influenced by the default risk of customer groups and industry
sectors. Swisscom has a receivables management system in place to minimise default losses. New customers are
reviewed for their creditworthiness and maximum payment targets are set for customer groups. As regards their
creditworthiness, 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 is the industry segment in which a business customer is
active. The split of trade receivables and contract assets by operating segment is as follows:

In CHF million

Notional amount

Residential Customers

Business Customers

Wholesale

IT, Network & Infrastructure

Swisscom Switzerland

Fastweb

Other Operating Segments

Total notional amount

Allowances for doubtful debts

Residential Customers

Business Customers

Wholesale

IT, Network & Infrastructure

Swisscom Switzerland

Fastweb

Other Operating Segments

Total allowances for doubtful debts

Total notional amount less allowances for doubtful debts

31.12.2020

31 .12 .2019

1,003

1,069

421

141

1,587

643

219

2,449

(59)

(14)

(2)

(77)

(60)

(27)

436

173

1,704

658

187

2,549

(56)

(2)

(1)

(60)

(69)

(15)

(164)

(144)

2,285

2,405

As at 31 December 2020, 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 .65%

6 .82%

42 .31%

27 .88%

67 .68%

6.70%

Par value

1,681

513

104

31.12.2020

Allowance

(11)

(35)

(22)

(29)

(67)

2,449

(164)

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As at 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 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 .64%

4 .79%

26 .15%

42 .67%

58 .95%

5.65%

31 .12 .2019

Par value

Allowance

1,729

585

(11)

(28)

(17)

(32)

(56)

2,549

(144)

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

2020

144

(74)

(3)

–

164

2019

157

(92)

(3)

144

In CHF million

31.12.2020

Bank loans

Debenture bonds

Private placements

Derivative financial instruments

Other financial liabilities

Lease liabilities

Trade payables

Total

In CHF million

31.12.2019

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

484

526

6,110

6,356

151

207

1,988

1,525

159

207

2,653

1,525

10,555

11,509

206

606

271

1,502

2,611

181

556

1,409

132

3,785

155

560

1,589

–

2,195

5,795

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

233

908

246

968

566

1,633

–

2,170

5,561

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

Contract value

Positive fair value

Negative fair value

31.12.2020

31 .12 .2019

31.12.2020

31 .12 .2019

31.12.2020

31 .12 .2019

575

540

575

760

1,115

1,335

200

216

537

147

200

527

211

983

–

(3)

(79)

–

(1)

(7)

(87)

(90)

(11)

(79)

–

(4)

(70)

–

(5)

(80)

(84)

(14)

(70)

Total derivative financial instruments

1,742

2,465

Thereof current derivative financial instruments

Thereof non-current derivative financial instruments

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 contains forward contracts, designated as cash flow hedges, for hedging 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 instruments
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 derivative finan-
cial 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 taking place. In the EUR zone, the EURIBOR was recently reformed and
ESTR is to be replaced by the EONIA. Swisscom is closely monitoring developments related to the conversion of
reference interest rates. It will contact the counterparties in due course to implement the switch in individual
contracts.

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Valuation category and fair value of financial instruments

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
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

31.12.2020

Level

107
–
271
100
478
91
91
1
79
80
649

484
6,110
151
90
207
7,042

107
–
277
100
484

91
91
1
79
80
655

519
6,381
160
90
223
7,373

2
2
1
2

2
2

2
1
2
2
2

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

Financial assets amounting to CHF 277 million (prior year: CHF 281 million) are not freely available, as they serve
as security for liabilities.

141

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.

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.

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3 Operating assets and liabilities

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

3.1 Operating net working capital

Movements in operating assets and liabilities

In CHF million

2020 financial year

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

2019 financial year

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 .2019

Operational
changes

Other
1
changes

31.12.2020

2,183

1,156

(1,614)

(1,194)

531

(54)

(127)

(83)

(178)

–

2,132

1,029

(1,525)

(1,269)

367

01 .01 .2019

Operational
changes

Other
1
changes

31 .12 .2019

2,189

1,243

(1,658)

(1,127)

647

(64)

(81)

(112)

(24)

(23)

(4)

2,183

1,156

(1,614)

(1,194)

531

31.12.2020

31 .12 .2019

2,180

116

(164)

2,132

2,238

(143)

2,183

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

Miscellaneous liabilities

Total other operating liabilities

Contract assets and liabilities

In CHF million

Contract assets

Swisscom Switzerland

Other

Total contract assets

Contract liabilities

Swisscom Switzerland

Fastweb

Other

Total contract liabilities

31.12.2020

31 .12 .2019

153

224

120

349

222

262

125

338

1,029

1,156

737

160

100

215

1,269

690

145

207

1,194

31.12.2020

31 .12 .2019

153

535

122

737

162

222

468

133

690

Contract assets of Swisscom Switzerland primarily include deferrals arising in connection with the sale of bundled
offerings in the mobile-phone area. In part, mobile handsets are sold on a subsidised basis, together with a mobile
contract in a 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 above all cover deferrals from payments for prepaid cards
and prepaid Swisscom Switzerland subscription fees. In 2020, an amount of CHF 228 million was recorded as
revenue which had been recognised as a contract liability as of 31 December 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 sub-
sidised mobile handset and a minimum contract term. These contracts incorporate revenue of CHF 513 million
(2021: CHF 370 million; 2022: CHF 143 million).

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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

Swisscom Switzerland

Fastweb

Other

Total costs to obtain a contract

Costs to fulfil a contract

Router and TV boxes

Initial costs from outsourcing contracts

Total costs to fulfil a contract

Total contract costs

Accounting policies

31.12.2020

31 .12 .2019

108

116

224

137

125

262

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 valu-
ation 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 homogene-
ous credit risk attributes, reviewed collectively for impairment and, whenever required, impairment losses are rec-
ognised. In addition to the contractually foreseen payment conditions, historical default rates and current infor-
mation 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.

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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 1 January 2019

Additions

Disposals

Adjustment to dismantlement and restoration costs

Reclassifications

Sales of subsidiaries

Foreign currency translation adjustments

Balance at 31 December 2019

Additions

Disposals

Adjustment to dismantlement and restoration costs

Reclassifications

Foreign currency translation adjustments

27,313

1,122

(459)

141

(4)

(186)

27,955

1,241

(1,042)

135

(18)

2,147

(479)

–

(3)

1,684

(10)

–

(1)

–

4,448

201

(124)

(3)

–

4,614

209

(110)

–

Balance at 31 December 2020

28,317

1,675

4,801

Accumulated depreciation and impairment losses

Balance at 1 January 2019

Depreciation

Impairment losses

Disposals

Sales of subsidiaries

Reclassifications

Foreign currency translation adjustments

Balance at 31 December 2019

Depreciation

Impairment losses

Disposals

Foreign currency translation adjustments

(18,921)

(1,195)

(1)

459

–

106

(19,548)

(1,198)

(8)

1,038

(1,841)

(3,078)

(18)

(1)

470

–

(1)

(1,390)

(18)

–

(306)

(8)

119

–

(3,270)

(303)

–

103

–

Balance at 31 December 2020

(19,706)

(1,400)

(3,470)

357

362

–

(234)

–

(1)

484

229

–

(205)

–

508

–

Total

34,265

1,687

(1,062)

(3)

(7)

(190)

34,737

1,681

(1,162)

(1)

(18)

35,301

(23,840)

(1,519)

(10)

1,048

–

107

(24,208)

(1,519)

(8)

1,149

(24,576)

10,725

10,529

10,425

Net carrying amount

Net carrying amount at 31 December 2020

Net carrying amount at 31 December 2019

Net carrying amount at 1 January 2019

8,611

8,407

8,392

275

294

306

1,331

1,344

1,370

508

484

357

Commitments for future capital expenditures
Firm contractual commitments for future capital investments in property, plant and equipment as of 31 Decem-
ber 2020 aggregated CHF 800 million (prior year: CHF 809 million).

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 64 million (prior year: CHF 47 million) was recognised in property, plant and
equipment with no impact on the income statement. See Note 3.5.

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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 addition
to historical cost and the costs directly attributable to bringing the asset to the location and condition necessary
for it to be capable of operating in the manner intended by management, purchase or manufacturing cost also
includes the estimated costs for dismantling and 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: