Activity Report - Swisscom

2002 Annual Report
Swisscom AG

Key figures
CHF in millions, except where indicated
Swisscom Group
Net revenue
Operating income before exceptional items, depreciation and amortization (EBITDA)
As % of net revenue
Operating income (EBIT) before exceptional items
Impairment of goodwill
Gain on sale of real estate
Gain on partial sale of Swisscom Mobile AG
Operating income (EBIT)
Net income
Shareholders’ equity
Equity ratio 1)
Number of full-time equivalent employees (FTEs) at end of period 2)
Average number of FTEs
Revenue per employee
EBITDA per employee
Net cash provided by operating activities
Capital expenditures
Net debt (net funds) 3)
Swisscom Group companies
PSTN channels
ISDN channels
ADSL accesses
National traffic fixed network (Fixnet and Enterprise Solutions)
International traffic fixed network (Fixnet and Enterprise Solutions)
SMS messages (mobile-to-mobile)
Detailed information on Swisscom AG and Swisscom share performance is given in the Financial Review.
1) Shareholders’ equity as % of total assets.
2) Includes 3,544 and 3,299 debitel employees at December 31, 2001 and December 31, 2002 respectively.
3)
Definition of net debt (net funds): total debt less cash and cash equivalents, current financial assets and
financial assets from cross-border tax lease.
%
%
FTE
FTE
CHF in thousands
CHF in thousands
Number
Number
Number
Million minutes
Million minutes
Millions
14 174
4 409
31.1
2 235
(1 130)
568
3 837
5 510
4 964
12 069
49.6
21 328
20 988
675
210
3 389
1 234
(2 899)
3 240 000
2 060 000
33 379
14 317
1 399
1 317
2001 2002
14 526
4 413
30.4
2 408
(702)
–
–
1 706
824
7 299
43.0
20 470
20 910
695
211
3 785
1 222
642
3 163 000
2 172 000
195 220
12 316
1 394
1 650

What’s it all about?
The world around us is highly complex. Companies, investors and customers alike
are increasingly challenged by the constant deluge of information, new technologies,
ever-changing needs and an over-abundance of offerings. While some actively
relish the opportunities and possibilities they present, others are overwhelmed, a
few simply give up.
What is required is a clear overview, and that is exactly what this year’s Annual
Report provides. With our detailed and transparent review of the year 2002 and
preview of the future, we aim to provide our readers with an insightful look into
our business activities, performance, priorities and goals.

Contents
4
6
12
18
30
36
38
42
50
54
56
58
59
61
66
67
Highlights
An overview of 2002
Major holdings
Swisscom Fixnet – the backbone of Switzerland’s fixed network
Swisscom Mobile – stable position despite difficult market
Swisscom Enterprise Solutions – the first address for business customers
debitel – networking without the network
Other important business areas
Swisscom and its employees
Swisscom and its customers
Swisscom and the community
Swisscom and the environment
Swisscom and its shareholders
Organization
Important dates 2003
Publishing details

Highlights 2002
January
Swisscom IT Services AG, which came into being following the merger of Swisscom IT
and AGI IT Services, commences operations on January 1.
Swisscom Fixnet adopts the slogan “Simply in touch”, which encapsulates the company’s
vision of forging links and bringing people together.
February
Swisscom Mobile launches GPRS (General Packet Radio Services), a new standard for
data transmission on the GSM network.
March
Swisscom buys back 9.99 percent of its shares, allowing shareholders to benefit from
the Group’s excellent performance in 2001.
debitel receives two awards: for the fourth consecutive year Swisscom’s German
subsidiary is selected as mobile communications provider and service provider of the
year in Germany.
April
Swisscom Fixnet offers its customers geographical number portability, so that if they
move house within the same network group they can retain their existing phone
number.
A school in Wiggen, canton of Lucerne, becomes the 1,000th school to receive
Internet access under Swisscom’s “Internet for Schools“ initiative.
May
In response to customer demand for a transparent pricing structure, Swisscom
Fixnet introduces a standard national tariff for fixed network traffic.
June
ComCom, the Swiss Federal Communications Commission, awards Swisscom Fixnet
the license for basic service provision for the years 2003 to 2007.
Swisscom Mobile is the first provider in Switzerland to offer a Multimedia Messaging
Service (MMS), allowing mobile phone users to send and receive images, sound
and longer formatted texts.
4

July
Swisscom completes the transition from a parent company structure to a group
structure, creating clear responsibilities and greater transparency as well as facilitating
more targeted development of individual submarkets and customer segments.
August
Fixed-network access online: Swisscom Fixnet customers can access their telephone
bills over the Internet anytime, submit a change-of-address request and choose their
own personal telephone number from a selection of numbers.
September
Swisscom Enterprise Solutions acquires a 49.9 percent stake in Unit.net AG, with an
option to acquire a majority stake at a later date. The move provides Swisscom with
access to the future-oriented market for video/audio communication using streaming
technology.
At the Orbit/COMDEX exhibition in Basle, Swisscom Mobile unveils its mobile office
solution for business customers. “Corporate Office Access“ provides locationindependent
access to corporate network data from a WAP-enabled mobile handset
or Pocket PC.
October
Expo.02 closes its doors. Swisscom participated in Switzerland’s national exhibition
as infrastructure provider, exhibitor and sponsor. Over a million visitors toured
Swisscom’s “Empire of Silence” pavilion.
Swisscom’s German subsidiary debitel expands its already extensive distribution
network with the acquisition of a new partner, Ringfoto, a specialist chain with over
2,900 outlets in prime city center locations.
November
Fixnet Wholesale launches a new ADSL offering geared to business customers with a
need for enhanced performance and larger bandwidths.
December
Swisscom Mobile launches Public Wireless LAN in Switzerland. At around 100
hotspots (busy public locations such as train stations, airports and conference centers),
users with a WLAN-enabled laptop or Pocket PC can enjoy high-speed, wireless
Internet access. The new PWLAN network is the densest in Europe.
5

Clear overview – Summary of 2002
Dear Reader
In this year’s Annual Report our aim is to provide shareholders, customers and
employees with a comprehensible insight into our business activities, and to demonstrate
how Swisscom, in its fifth year of existence, succeeded in maintaining a clear
overview despite an unstable, turbulent and unpredictable marketplace.
Against the background of a sluggish economy, Swisscom performed well in 2002
and remains on track. Our company is one of the few telecoms providers worldwide
with a sound balance sheet and virtually no debts. We succeeded during the year
under review in increasing revenue and stabilizing income at CHF 4.41 billion. At
CHF 824 million, net income is lower year-on-year. Last year’s figure, however, was
strongly influenced by gains on the sale of a 25 percent stake in Swisscom Mobile
AG to Vodafone and the disposal of real estate.
Sweeping changes in the capital markets also left their mark on the Swisscom share.
With a fall of 12.9 percent, it fared reasonably well by national and European standards:
the Swiss Share Index fell 27.8 percent during 2002 and the Dow Jones European
Telecom Index 38.8 percent. Swisscom was the fifth-best performer of all SMI
shares.
Impressive achievements...
Swisscom remains the undisputed market leader in Switzerland. A plethora of new
developments in our core fixed network and mobile communications businesses are
testimony to our continuing innovative capabilities. Our most notable achievements
in 2002 included: the launch of GPRS (General Packet Radio Services), a key driver of
new services in the field of mobile data communications; the rollout of our Multimedia
Messaging Service (MMS), which enables images, sound and longer formatted
texts to be transmitted via mobile phone; the setting up of public wireless LAN in
Switzerland; and a surge in demand for broadband communications. By the end of
2002, Swisscom Fixnet boasted close to 200,000 ADSL customers, including around
110,000 Bluewin customers.
6

7
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
... despite difficult market conditions
All told, the telecoms sector experienced the same difficult year as the economy as
a whole. The fragile upswing at the start of 2002 was short-lived. Even in 2001, huge
amounts of cash continued to flow into the telecoms sector as many investors followed
the “pied pipers” of the “new economy”. What was heralded as the new-age
“
economy” proved to be an illusion. Since early 2002 the market has been consolidating.
Those companies which in the preceding years were able to create sustainable
value and a high level of customer benefit stand a better chance of survival. In
the case of new entrants, those that focus on the domestic market will fare better.
The telecoms sector will remain unstable for the foreseeable future as many companies
continue to pursue uncertain business models or to suffer from weak finances.
Further mergers and the sale of whole companies or parts of companies are envisaged.
Over the medium term, market forces will dictate a further streamlining of
the sector.
We are a Swiss provider with an international flair
Which options must we pursue today in order to strategically strengthen our position
tomorrow? We firmly believe Swisscom will remain successful provided it continues
to focus on core competencies, maintain a clear geographical positioning and
deliver above-average operational and financial performance. Our thinking and operations
are focused above all on increasing the value of the company. In Switzerland
our key competencies are in fixed-network and mobile communications, where
we have a solid basis and are the leading player in all key market segments. Outside
Switzerland we have an investment in debitel and a minority shareholding in Cesky
Telecom and Infonet. Since regulatory requirements provide little room for further
growth in Switzerland, we continue to review our options to see where we can
strengthen our position in Europe. In particular, we are examining cross-border
business models for market segments with an international focus, or activities which
could be implemented without the need for major organizational or technical integration
– for example, network-independent services in mobile communications.
Our strategy is also in line with the strategic goals set by our principal shareholder,
the Swiss government: sustainable preservation and growth of company value,
greater customer orientation, maintenance of our leading market position, and
pursuit of a progressive and socially responsible personnel policy.

Low risk – thanks to restrictive investment policy
Thanks to cautious investment behavior in the past, Swisscom has been able to
maintain a sensible risk profile. In 2002, as in the previous year, we examined well
over 200 potential investments. Most of these had to be rejected.
The biggest investment in 2002 was the acquisition by Swisscom Enterprise Solutions
of a 49.9 percent stake in Unit.net AG, with the option to acquire a majority stake at
a later date. Unit.net operates in major European markets and offers innovative
streaming services for business customers.
In addition to investments in existing profitable companies, Swisscom is actively
seeking opportunities to invest in setting up new business models. In December
2002, for example, Swisscom set about positioning itself in Europe as a leading
provider of public wireless local area networks (PWLAN), which allow wireless
broadband access to the Internet.
Corporate governance: a familiar concept to Swisscom
During the year under review, instances of mismanagement in a number of companies
preoccupied the minds of the media, the public and politicians. The issue at
stake was corporate governance. Where does Swisscom stand in this regard? When
Swisscom AG was founded at the beginning of 1998, we set ourselves the goal of
becoming a role model in corporate governance – not least because of Swisscom’s
firm anchoring in Switzerland and its strong sense of social responsibility. The relationship
between the Swiss government as the majority shareholder, the Board of
Directors as the steering and controlling body, and Swisscom’s senior management,
is governed by clear guidelines. The separation of political and corporate responsibility
has paid dividends, and the pursuit of an open and transparent information
policy has fostered a climate of trust. This approach is also reflected in this year’s
Annual Report. An entire chapter of the Financial Review is dedicated to the subject
of corporate governance.
We also take our social responsibility seriously
Swisscom is committed not only to achieving economic success but also to fulfilling
a social responsibility. As Switzerland’s leading telecoms company, we are also an
important customer in the domestic economy. Every year we invest over a billion
francs in goods and services. We are the eighth biggest employer in Switzerland and
provide training for around 900 apprentices.
8

9
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
Since its inception, Swisscom has been responsible for basic service provision in
Switzerland. This entails offering a cost-effective, high-quality range of basic telecoms
services at the same terms and conditions nationwide. At the beginning of
June 2002 our company was commissioned by the Federal Communications Commission
(ComCom) to deliver basic services for the years 2003 to 2007. Swisscom thus
makes a substantial contribution to public service provision in Switzerland.
With its “Internet for Schools“ project Swisscom is participating in a Swiss-wide
education initiative. Our goal is to provide free Internet access for some 5,000 Swiss
schools over a period of five years. By the end of 2002 Swisscom had completed
negotiations with 24 cantons and equipped around one third of all schools with
broadband Internet access.
A key highlight of the year was our involvement in Expo.02. As exhibitor, infrastructure
provider and official partner, Swisscom contributed in three different ways to
the success of the national exhibition. Some one million people visited our “Empire
of Silence” pavilion in Biel.
Always one step ahead
To remain successful in a fiercely competitive marketplace, companies must continually
explore new avenues and have the ability to translate new ideas into attractive,
user-friendly applications and services. At Swisscom we have an interdisciplinary
team of research specialists whose mission is to develop concrete innovative proposals
that are technically and economically sound, and to support Group companies
with their development projects. Examples of current research work by Swisscom Innovations
include a study and evaluation of Java applications for the next generation
of mobile phones, research into broadband networking of game consoles, and
the combining of voice, Internet and television/video services using DSL technology.
We invest a total of around CHF 120 million each year in innovation activities.

Swisscom group dynamics
In July 2002, Swisscom completed the transition from a parent company structure
to a group structure. The last to join the chain of largely autonomous Group companies
were Swisscom Fixnet, Swisscom Enterprise Solutions and Swisscom Systems; all
three were spun off and set up as public limited companies retroactive to January 1,
2002. The new structure provides clear responsibilities and greater transparency. It
also allows more targeted development of individual customer segments and clears
the way for entering into alliances. In 2002, we were able for the first time to fully
leverage the advantages of the new group structure. The subsidiaries were able to
focus on their submarkets and gain valuable knowledge of their needs. Clear segmentation
and transparency of results enabled the timely identification of market
trends, allowing us to initiate cost-efficiency measures in good time, particularly in
the strongly affected business customer segment.
Smaller workforce
Sustained competitive pressure also necessitated measures that made reductions in
the workforce unavoidable. At the end of 2002 Swisscom had 20,470 full-time
equivalent employees, 858 fewer than in 2001. New positions were also created,
notably at Swisscom Mobile and in broadband services at Swisscom Fixnet. Swisscom
continues to pursue a socially progressive and responsible policy for employees affected
by downsizing, with social plans and measures that serve as a model for
other companies in Switzerland.
Unbundling of the local loop: an unsuitable remedy!
On February 26, 2003 the Swiss government announced its decision to unbundle the
local loop. The corresponding revision in the Federal Ordinance on Telecommunications
Services will come into effect on April 1, 2003. After this date market-dominant
operators will be obliged to open up the last mile and subject their leased line
offerings to the interconnection regime. The Swiss government decided to also incorporate
the unbundling provision in the current revision of the Telecommunications
Act, which calls for comprehensive regulation of access to equipment and services,
including access to mobile networks. We are at pains to understand the endeavors
of the regulator and legislator to extend regulation in this way and believe
the move will fail to promote greater competition. Unbundling will reduce the incentive
of all market players to invest, which in turn will impede evolution of the
information society. The move also represents a serious incursion into the proprietary
rights of Swisscom. A glance over the border shows that unbundling of the last mile
has done little to foster greater competition.
10

11
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
In Switzerland, liberalization of the telecoms market has been extremely successful
to date. It has intensified competition and brought about massive price reductions
in some areas and produced a highly diverse range of market offerings. Swisscom
faces strong competition in broadband communications, in particular from cable
television operators.
A warm thank-you to our employees
Swisscom's success is attributable first and foremost to its employees. Without their
dedication, motivation and enthusiasm, we would not be where we are today. We
would therefore like to express our appreciation for their commitment, team spirit,
flexibility and understanding for the sometimes difficult decisions which we have
been forced to make this past year. We would also like to thank our customers and
shareholders for their continuing trust and loyalty. This encourages us to continue
pursuing our chosen course. Finally, we would like to thank our main shareholder
for its support and the departing members of the management team for their
commitment.
Outlook
In light of the current market situation, we anticipate pressure on revenue and
margins to continue in 2003. Swisscom can only really achieve growth abroad. Given
unchanged market and regulatory conditions, there may be an overall decline in
domestic revenues. Thanks to consistent cost management, however, we expect to
maintain operating income (EBITDA) at the same level as 2002.
We will continue to focus on customer satisfaction and vigorously pursue the
targeted training measures and process optimization steps initiated during the
year under review. Satisfied customers are critical to the success of our company.
We are fully aware of this and intend to make every effort to bring about further
improvements in this area also in 2003.
Markus Rauh Jens Alder
Chairman of the Board of Directors Chief Executive Officer
Swisscom AG Swisscom AG

Major holdings
International Telecom FL AG
debitel AG
TelSource N.V. *
Infonet Services
Corporation
* TelSource has a 27% interest
in Cesky Telecom
At December 31, 2002
12
Swisscom AG
100%
93%
49%
17.7%
Switzerland
Swisscom
Broadcast AG
Swisscom Enterprise
Solutions AG
100%
100%
Swisscom Fixnet AG 100%
Swisscom
Immobilien AG
100%
Swisscom Systems AG 100%
Swisscom Mobile AG 75%
Swisscom
IT Services AG
Swisscom
Directories AG
71.1%
51%
Billag AG 100%
Bluewin AG 100%
cablex AG 100%
Infonet (Schweiz) AG 90%
Unit.net AG 49.9%

What does Swisscom have to say
about broadband technology?

Historical
In 1851 American novelist Nathaniel
Hawthorne attempted to imagine
how electricity would change the
world: “Is it a fact – or have I dreamt
it – that, by means of electricity, the
world of matter has become a great
nerve, vibrating thousands of miles
in a breathless point of time? Rather,
the round globe is a vast head, a
brain, instinct with intelligence!”
Technical
Instead of using conventional broadcast
networks like satellite or cable
television, images, films and music
can now be transmitted over the
“telephone network”. The backbone
for transmitting such huge volumes
of data is a state-of-the-art optical
network to which customers are
directly connected using copper
cables or wireless technology. While
optical fibers in the backbone support
terabit-per-second transmission
(1 Tera = 10 12 ), bandwidths of 1–100
megabits per second are the norm
for data transmission in small
office/home office networks. Today,
copper cables in the “first mile”
provide DSL-equipped customers with
bandwidths of up to 10 megabits per
second. This relatively small bandwidth
is nevertheless sufficient to
deliver dozens of television channels
as well as video-on-demand over the
traditional telephone socket to
homes equipped with the requisite
video technology.

Ether
Optical fiber
Copper

Tomorrow’s world
The foreseeable future will see the
widespread availability of broadband
services. However, content and easeof-use
and billing of content will be
much slower to develop. The Ars Electronica
Center in Linz (www.aec.at)
is conducting research into future
digital services and products. In their
Futurelab, scientists are working on
the development of wireless cyber
spectacles which they hope one day
will replace devices such as television
screens, PC monitors and mobile
handsets. The spectacles show 3D
images but without shutting out the
outside world. In other words, the
wearer can focus on a whole range
of digital information and entertainment
content without losing touch
with the space around him. In a further
development stage, not only will
integrated broadband output devices
deliver the information but there will
also be special input devices capable
of replicating voice, body movements
and body forms, turning one-way
broadband communication into
multi-way communication.

Beat Perny, innovation specialist
at Swisscom Innovations
“In 10 to 15 years’ time a majority of households and a large number of public locations
will have wireless broadband Internet access; such access will be as common as electricity
and running water. An access with a bandwidth of 1 megabit per second will become an
integral part of basic service provision. The Internet will be accessible anytime, anywhere,
using broadband and intelligent technologies, and offering a host of multimedia services.”

Swisscom Fixnet –
the backbone of Switzerland’s fixed network
In 2002 Swisscom Fixnet posted revenue of CHF 6.4 billion in its national and international
fixed network communications business. The year was marked by strong
growth in broadband business, the launch of new service offerings, and measures
aimed at improving customer satisfaction. Swisscom Fixnet, which has been operating
since mid-2002 as a public limited company, has a workforce of 8,010 and is
the biggest business unit with the Swisscom Group.
Net revenue 1)
EBITDA 2)
Swisscom Fixnet 2001 2002
6 588 6 443
1 989 1 903
Employees
8 639 8 010
1) Incl. revenue from other segments, in CHF millions
2) Operating income before interest, tax, depreciation
and amortization in CHF millions
While fixed network telephony continues to cover the bulk of the population’s
communications needs, unrelenting competition, and substitution
by mobile services, is driving down voice traffic and putting increased
pressure on revenue and income. This trend is also affecting
Swisscom Fixnet. The volume of domestic traffic fell year-on-year, with
local traffic down 21 percent and long-distance 0.3 percent. The decline
is partly attributable to the new numbering plan introduced in
2002: since local numbers must be preceded by the area code, traffic
from carrier-preselection customers now goes directly via the preselected
carrier. The volume of international traffic, on the other hand, experienced
a moderate increase of 3.9 percent, partly as a result of a
half-price reduction on international weekend calls during the months
of July and August 2002. As of October 1, 2002, Swisscom Fixnet also
lowered its tariffs for calls to 50 countries by up to 64 percent.
Growth also slackened in the area of analog and digital fixed-line
accesses, with EconomyLINE dropping from 4.2 to 3.4 percent and
MultiLINE from 18.6 to 6.5 percent. Traffic from value-added services
dropped very slightly to 99 percent of the previous year’s level, while
fixed-to-mobile traffic jumped 7.3 percent. Revenue from terminals
on the other hand showed a slight fall.
18

Call volume
Fixed-to-mobile
In millions of minutes
800
700
600
500
00 01 02
ISDN (Integrated Services Digital
Network)
Digital network permitting simultaneous
voice and data communication over the
same line. There are two or more transmission
channels, making it possible to
hold several telephone conversations
simultaneously or to transmit data (fax,
text, images, etc.) at the same time as
holding a telephone conversation. The
transmission rate is 64 kbit/s per channel.
19
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
Nationwide coverage: market leadership and basic provision
Swisscom Fixnet is determined to defend market shares in its core business.
One of its most pressing strategic goals is to improve customer
satisfaction in order to stem migration to the competition. To this
end, it is deploying measures such as market differentiation, product
bundling, simplification of processes, steps to improve quality of service
and a consistent focusing on mass products. Swisscom Fixnet is
looking to grow its broadband services business and aims to expand its
market lead and increase revenue per customer by strengthening its
position, above all in services. Swisscom Fixnet’s services are targeted
at residential customers, small and mid-sized enterprises (SMEs) and
resellers (Wholesale).
Simply in touch – closer to the customer
Customer satisfaction is a top priority at Swisscom. Regular customer
surveys on products and customer service provide valuable feedback on
how Swisscom Fixnet is responding to the needs of its customers. The
results are good: customer satisfaction in the traditional voice business
(telephony) is encouragingly high. This is largely due to various performance
improvement measures and new offerings which also had a
positive impact in 2002.
With the slogan “Simply in touch”, Swisscom Fixnet set out to familiarize
its 3.2 million or so retail customers (250,000 of whom are in the
SME segment) with the simplicity of its offerings. The words were also
followed by actions: on May 1, 2002, Swisscom Fixnet became the first
provider to introduce a national standard tariff. Instead of complex
pricing models there are now only two tariff levels which, together
with the existing evening and weekend calling rates, provide an extremely
attractive offering. Continuing on the “simplicity” theme,
Swisscom Fixnet launched its MultiLINE ISDN starter kit, which allows
users with no prior technical knowledge to install ISDN on their own.
In the fiercely competitive directory enquiries market Swisscom Fixnet
narrowly defended its market share. Overall demand, however,
dropped by around ten percent. In 2003 access to the directory
enquiries service will also become possible from abroad. The Tele-
Conferencing service held its ground well in 2002. Alongside the
well-established audio conferencing service, new Internet-supported
conferencing services are to be introduced in 2003. These will allow
users to manage and operate their conference calls themselves.

Revenue breakdown
Swisscom Fixnet
(excl. Wholesale)
%
46.9 Telephone access charges
27 National telephone traffic
6 International telephone traffic
12 Value added services
5.1 Customer premises equipment
3 Other products
The 9,000 or so public payphones operated by Swisscom Fixnet form
a core element of basic service provision as defined by the regulator. In
response to a clearly identified customer need, more dual card- and
coin-operated payphones are to be installed. Since the spring of 2002
all dual payphones also accept the euro as an additional means of payment.
Web payphones are now in operation in busy public places in
the greater Zurich area. As well as phoning, users can surf the Internet
and send e-mails, e-cards and SMS messages.
In addition to the public payphones referred to above, a further 27,500
or so payphones rented or sold to private operators were in operation
at the end of 2002. Swisscom Fixnet is responsible for the countrywide
maintenance of all these phones.
Popular points of contact
Fast, efficient and direct communication is the key to close customer
relations. Swisscom Fixnet cultivates contact with its customers in the
70-plus Swisscom Shops, in specialist outlets, in electrical retailers and
in its dealings over phone, by post and via e-mail. In October 2002
Swisscom Shops branched out into the field of franchising and opened
the first franchised outlet in Rorschach. Further outlets are planned
for 2003. Swisscom Fixnet also set a new trend with its electronic
billing system which updates billing data three times a day. This way
customers can keep track of their phone costs since the last bill.
The “fixed-network access online” service represents another move
towards increased customer involvement and the streamlining of
processes. Customers can view their access data online and change
their personal details or submit an order for supplementary services.
The Customer Care Service Center is the first point of contact for
Swisscom Fixnet and Bluewin customers wishing to report a fault. The
Service Center either repairs the fault remotely or arranges for a specialist
to repair it on site. With around seven million customer contacts
in 2002, the volume is virtually unchanged year-on-year. Response and
processing times were continuously shortened, the number of repairs
achieved on initial contact rose substantially, and order processing was
further automated.
20

Bluewin: Access customers *
In thousands
900
800
700
600
500
400
300
200
* At December 31
00 01 02
ADSL (Asymmetric Digital Subscriber
Line)
A broadband technology which uses
the existing telephone line to provide
data network access. An ADSL modem
separates voice and data, making it
possible to surf the Internet and use
the telephone at the same time. The
transmission speed varies depending
on the service level. At a speed of 256
kbit/s, even the lowest ADSL level is
some five times faster than a conventional
56k analog modem.
Broadband
The same medium is used for several
transmission channels. In the case of
ADSL, the medium is the copper line.
21
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
Customer segmentation underwent further refinement in 2002. SME
customers were offered the first bundled services tailored to their individual
needs. Since the restructuring in 2002 the Direct Marketing Center
(DMC), which is responsible among other things for winning back
customers, has been operating with MediaLine Interactive Solutions AG
as the outsourcing partner. The move was aimed at improving identification
of customer needs. The results speak for themselves: the number
of customers returning to Swisscom rose sharply compared with
the previous year.
Bluewin expands its leading position
Swisscom is looking to build up its broadband business. On January 1,
2002, with a view to leveraging synergies and enabling more targeted
market development, Bluewin AG was assigned to Swisscom Fixnet and
Swisscom Fixnet’s holding was increased to 100 percent following the
withdrawal of TA Internet Holding AG. Increasing its active access customers
by around 126,000 to 860,000, Bluewin consolidated its position
in 2002 as Switzerland’s leading Internet service provider. Bluewin customers
clocked up some 5.8 billion minutes (+0.3 percent), while the
number of pageviews rose to 1,133 million. The market success of the
“
blue winner” lies in the company’s diverse product range, attractive
new services and first-rate customer service. Since the summer of 2002
the www.bluewin.ch portal has acquired a new, user-friendly layout
and an improved range of shopping services. Bluewin continued to expand
its range of Internet services, the most important additions being
SMS messaging, a homepage tool, and virus and spam filters. A core
element of its existing and future service offerings is ADSL for highspeed
Internet access, and the associated services. From 2003 new services
will be offered that will cover customers’ needs even better: for

12.01
06.02
12.02
Activated ADSL accesses
Swisscom Fixnet
In thousands
40 80 120 160 200 240
example, multimedia communication, information and entertainment
services. Bluewin continues to see itself as an intermediary serving the
needs of consumers on the one hand and companies with their range
of offerings on the other.
Networking by Fixnet Wholesale
With a 3,500-strong workforce, Fixnet Wholesale offers customers attractive
and innovative products and services based on state-of-the-art
network platforms and production infrastructures, and covering the
development, operation and marketing of the wireline network infrastructure.
As the biggest provider of wholesale products on the Swiss
market and operator of the most extensive network in Switzerland,
Fixnet Wholesale serves around 150 national and 180 foreign telecoms
companies. With a European and transatlantic telecommunications
network, Fixnet Wholesale is a leading international carrier service
provider. Product offerings range from regulated interconnection
products in the voice area to a comprehensive portfolio of data and
leased-line services and broadband services.
In 2002 Fixnet Wholesale invested a total of CHF 507 million in infrastructure,
primarily in the broadband area where the total number of
ADSL accesses in Switzerland grew to around 200,000. Massive upgrading
of the respective network components and operating management
systems led to an increase in both capacity and coverage. As a result,
this attractive new broadband technology can now be offered to over
95 percent of the Swiss population. Fixnet Wholesale reckons over the
next few years with a significant rise in demand for broadband accesses.
Business activity will focus among other things on developing
further broadband offerings for residential and business customers.
As part of a systematic cost-reduction program, Fixnet Wholesale implemented
a raft of measures aimed at improving the efficiency and
cost-effectiveness of network platforms, IT systems and associated pro-
22

duction processes. The optimization measures impacted positively on
quality, meeting not only the high expectations of shareholders and
customers but also the demands of the regulator. For the year 2003
Swisscom Fixnet Wholesale lowered the regulated interconnection
prices by up to ten percent.
23
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
cablex: professionals in network construction
Since October 1, 2001 cablex AG, a fully-owned subsidiary of Swisscom
Fixnet, with a workforce of around 700, has been responsible for the
nationwide construction and maintenance of Swisscom’s cable networks.
Network construction is not a Swisscom core business. The company
is currently reviewing a number of options in the direction of a
partnership or sale.
Telecom FL: basic service provider in Liechtenstein
In line with the Group strategy, Telecom FL AG became a wholly-owned
subsidiary of Swisscom Fixnet AG. As basic service provider in the Principality
of Liechtenstein, Telecom FL offers the full portfolio of voice,
mobile, data and Internet services. With 47 employees, the company
generated revenue of CHF 49.2 million in 2002. The role of Telecom FL
AG is currently defined as that of full-service provider. While its position
as market leader in basic service provision is assured, it faces
strong competition in the market for value-added services, above all
in Internet access. The Liechtenstein government intends to strengthen
cooperation with Swisscom. Provided it is permitted by the regulator,
Telecom FL AG will therefore continue to have a strong interest in the
lucrative Liechtenstein market, and aims to exploit potential synergies
with Swisscom to the full.
Swisscom Directories: valuable data source
Swisscom Directories AG, one of the leading producers of telephone
directories in Switzerland, manages six million residential and business
entries in various directories in Switzerland and the Principality of
Liechtenstein: the traditional telephone directory (comprising 25 volumes),
telinfo (CD-ROM), swissinfo (DVD), the electronic telephone directory
(ETV) and the Internet directories www.theyellowpages.ch and
www.whitepages.ch.

Despite a slowdown in the advertising market, revenue from supplementary
entries and ads in the traditional telephone directories grew
eight percent. The traditional directory remains an attractive advertising
medium and still enjoys a high level of acceptance among the population.
The free Internet directories www.theyellowpages.ch and
www.whitepages.ch, financed through advertising, reported an increase
in users to 2.2 million and 3.5 million visitors per month respectively.
In 2002 alone, 40 percent more online customers were registered.
By contrast, the electronic telephone directory (ETV) reported
declining revenue, partly as a result of the trend towards free online
directories financed by advertising.
With a view to achieving sustained cost optimization, Swisscom Directories
decided to reduce the number of sites from eleven to three by
2004. Swisscom Directories is looking to further consolidate its leading
market position with the launch of innovative offerings and expansion
of its online business. For example, a brand new solution is planned for
its Internet directories, and new access options and supplementary services
are to be offered for the pay-as-you-use online directories.
24

What does Swisscom have to say
about mobile communications?

Historical
In 1935, while living in Berlin, the
novelist Erich Kästner described the
city of the future: “A man walking
along the pavement in front of them
suddenly stepped out onto the road,
removed a handset from his coat
pocket, spoke a number into the
mouthpiece and called: ‘Gertrud,
listen, I’ll be an hour later for lunch
as I want to pop into the lab first.
Bye, darling!’ Returning the phone
to his pocket, he stepped back onto
the moving conveyor belt, opened
a book and continued on his way.”
Technical
A mobile communications network is
made up of base stations (antennas),
which form the actual network, and
mobile devices (handsets, laptops, personal
digital assistants). The mobile
devices and the antennas communicate
wirelessly via electromagnetic waves.
Wireless contact takes place solely
between the mobile device and the
responsible base station. Each base
station forms the hub of a honeycombed
radio cell measuring a few
hundred meters in diameter in urban
areas and up to several kilometers in
rural areas. Depending on whether
the network is used for transmitting
conventional telephony traffic or data
traffic, a variety of complementary
networks are available (GSM, WLAN
and, soon, UMTS).

SMS and MMS
E-mail and intranet access
Telephony

Tomorrow’s world
While studying for their masters at
the Royal College of Art in London,
James Auger and Jimmy Loizeau
designed a wireless receiver for
implantation in a tooth. The system
converts radio signals received by
the implant into vibrations which are
then transferred to the inner ear by
bone resonance. Auger and Loizeau
believe the device can be implanted
in a tooth during routine dental
surgery. The wireless receiver in the
tooth can receive signals from outside
transmitters such as mobile
phones or computers. As the sounds
are transmitted to the inner ear in
the form of vibrations, only the person
wearing the implant receives the
message. A microphone can also be
attached to the system. While the
system is battery powered at present,
it is envisaged that a microphone
generator will take over this task
later.

Elke Keleher, innovation specialist
at Swisscom Mobile
“The secret formula: ‘Click and use’. The tedious task of having to configure handheld
devices before they can be used will soon be a thing of the past. A single click will suffice
to gain access to a plethora of services – giving users always-on, ready-to-use access to a
host of complementary networks.”

Swisscom Mobile –
stable position despite difficult market
Despite an already high level of market penetration, Swisscom Mobile continued
to grow in 2002. The results speak for themselves: the company’s 2,358-strong
workforce increased revenue by 3.2 percent to CHF 4.11 billion. Operating income
before interest, tax and depreciation and amortization (EBITDA) amounted to
CHF 1.97 billion. The NATEL ® network of Swisscom Mobile currently boasts
3.6 million users – approximately half of the Swiss population. Almost two thirds
of all mobile subscribers are Swisscom Mobile customers.
Net revenue 1)
EBITDA 2)
Swisscom Mobile 2001 2002
3 983 4 112
1 876 1 974
Customers
3 373 000 3 604 875
Employees
2 119 2 358
1) Incl. revenue from other segments, in CHF millions
2) Operating income before interest, tax, depreciation
and amortization in CHF millions
GPRS (General Packet Radio Service) is
a data transmission standard for GSM
mobile networks. Data is broken up
into tiny packets, just like the Internet,
and transmitted continuously. Users
are permanently online and can thus
send and receive data at all times.
GPRS connections are therefore based
not on time but on the volume of data
transmitted. Transmission speeds of
30–40 kbit/s are currently possible
with GPRS, making it ideal for WAP,
entertainment services such as games
and chat as well as sending and receiving
e-mails.
Swisscom Mobile’s commitment to innovations, new products and
customer service have become the company’s key strength and hallmark.
2002 was also marked by the launch of pioneering new offerings:
GPRS, MMS, Public Wireless LAN and Corporate Office Access, all
of which are important milestones in expansion of the company’s data
business. Swisscom Mobile customers expect the market leader to
deliver innovative services coupled with outstanding network quality
and excellent customer service. In 2002 Swisscom Mobile greatly enhanced
performance in all three areas. Customer loyalty and growth
are foolproof signs of customer satisfaction.
Further expansion of the customer base
With net growth of 231,875 customers, Swisscom Mobile increased its
customer base by 6.9 percent to 3.6 million. Of these, 2.3 million are
postpaid customers and 1.3 million prepaid. What is striking about
Swisscom Mobile customers is their loyalty. Swisscom Mobile loses far
fewer customers to the competition than other providers. This says
something for the high quality of its service.
Good score in the area of customer satisfaction
In 2002 Swisscom Mobile made targeted investments aimed at improving
customer satisfaction. An independent institute conducts regular
surveys to assess the level of satisfaction. The latest results put Swisscom
Mobile in the lead, also in the area of customer care. The bridge
between customers and Swisscom Mobile is provided among other
things by call centers in Chur, Olten, Lausanne, Bellinzona and at Swisscom
Mobile’s headquarters in Berne. The 800 or so employees responsible
for residential customers handle more than 15,000 queries and orders
a day. Last year waiting times for the Swisscom Mobile hotline fell
sharply. A raft of measures was implemented to ensure that customer
30

Customers
Number
1352060 NATEL ®swiss
1307422 NATEL ®easy
408 702 NATEL ®budget
263 610 NATEL ®international
103 646 NATEL ® CMN global
72 457 NATEL ®business
96 978 Corporate Products
3604 875 Total
GSM (Global System for Mobile Communications)
is the global digital mobile
standard for the frequencies 900,
1800 and 1900 MHz. Swisscom Mobile
customers can use their phones in over
140 countries thanks to the company’s
numerous roaming agreements.
Bandwidth
Also known as the data rate, bandwidth
describes the number of bits
transmitted per second (e.g. 256 kbit/s)
UMTS (Universal Mobile Telecommunications
System) is a further development
of GSM and hence a new mobile
standard. UMTS will provide users with
high-quality, wireless multimedia applications.
An independent network is
being set up for UMTS to complement
GSM and Public Wireless LAN coverage
in urban areas of Switzerland. Data
transmission speeds of up to 384 kbit/s
should be possible, which will make it
suitable for transmitting items such as
short videos.
31
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
calls are answered within 20 seconds. Leading-edge technology allows
calls to be directly routed to various locations, thereby enabling optimum
deployment of resources and faster response times.
Further upgrade of the NATEL ® network
By international standards the quality of the GSM network is extremely
high and is one of the company’s greatest strengths. Extensive upgrading
and optimization work not only enhanced the existing network but also
created the necessary capacities for the launch of GPRS data transmission
technology. Since December 2002 the NATEL ® network has been expanded
to provide, initially, around 100 Public Wireless LAN hotspots which allow
high-speed wireless Internet access using broadband technology. Such
hotspot density is unique in Europe. Swisscom Mobile is thus the only
provider in Switzerland to offer all available data communications
technologies on a nationwide basis.
Continuing in the direction of UMTS
Despite the prophecies of doom, the mobile communications sector
needs UMTS – not least for capacity reasons. Today’s new services require
greater capacities and bandwidths, especially for business customers.
UMTS delivers these. In June 2002 the Federal Communications Commission
ComCom changed the conditions for UMTS licenses. The obligation
for network operators to provide UMTS coverage for 20 percent of the
Swiss population by the end of 2002 ceased to apply. Swisscom Mobile
nevertheless succeeded in meeting this target and continues to forge
ahead with construction of the UMTS network. However, commercial
launch of UMTS will not be considered until good coverage is assured in
built-up areas and reliable handsets are available on the market. Moreover,
customers must be able to gain clear added value without being
blinded by technology.

SMS
Mobile-to-mobile
In millions
1800
1600
1400
1200
1000
800
600
400
00
01 02
Non-ionizing radiation refers to
electromagnetic fields which cannot
trigger ionization processes in molecules
or atoms, i.e. they do not cause
cell mutations. Mobile antennas emit
non-ionizing radiation.
MMS (Multimedia Messaging Service)
is SMS with images and sound.
Whereas SMS messages are limited to
160 text characters, an MMS message
can contain a text of any length as
well as sounds and images (with builtin
camera)
Non-ionizing radiation – greater legal security
Entry into force of the implementing provisions of the Ordinance on
Protection from Non-Ionizing Radiation (ONIR) in July 2002 ended a
long-standing dispute between federal departments, cantons and mobile
operators. After more than two years of uncertainty, Swisscom Mobile
is relieved that clear regulations now exist. The provisions set by the
Federal Council provide working guidelines for mobile operators and
enforcement agencies. As well as assuring greater security in terms of
network expansion, the decision sent out an important political signal.
Exposure limits in Switzerland are ten times lower than those set by the
World Health Organization (WHO).
Initiatives pushing for a moratorium on antennas have been launched
in a number of cities and regions. This could jeopardize expansion of
the UMTS network and put some locations at a serious economic
disadvantage.
MMS as the mobile messaging format of the future
With the launch of GPRS technology in February 2002, Swisscom Mobile
laid a key foundation stone for the future success of its mobile data services.
By spring, a plethora of attractive and reliable GPRS handsets was
available on the market. Market penetration expanded quickly, and by
the end of 2002 five percent of postpaid customers were using GPRS – a
respectable figure by European standards. In June 2002 Swisscom Mobile
was the first Swiss provider to offer a Multimedia Messaging Service
(MMS), which allows transmission of text, images and sound. Additional
functions were added over the course of the year. As the number of MMSenabled
handsets continues to grow, so too does the level of MMS usage.
Last year Swisscom Mobile stepped up its market development activities
in the field of data services.
32

Prepaid/Postpaid
%
36.3 Prepaid
63.7 Postpaid
COMBOX is a mobile phone answering
service. Depending on which version
is used, it can store voice messages and
faxes and can be activated in a variety
of ways, e.g. call diversion to COMBOX if
the phone is switched off or if a mobile
is switched on but not answered.
PWLAN (Public Wireless Local Area
Network) provides fast, wireless Internet
access at busy locations (hotspots) such
as conference centers and airports. All
that is required is a laptop or Pocket PC,
a WLAN card and a Swisscom Mobile access.
Transmission rates of up to 2 Mbit/s
are possible. With a separate, industrystandard
WLAN card, the laptop does not
have to be connected to a mobile
phone.
33
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
Ongoing optimization of existing products
Swisscom Mobile has often optimized existing products based on feedback
from customers. For example, a new platform for prepaid products
launched at the end of June 2002 simplified the use of NATEL ®
easy abroad. Since August NATEL ® customers have been able to pay for
goods purchased from vending machines by mobile phone; the cost is
debited from their credit balance or charged to their mobile phone
bill. In November attractive new functions were added to COMBOX ® ,
and customer’s itemized statements became more detailed and easier
for the customer to understand. As a result of cooperation between
Swisscom Mobile and Postfinance, since December 2002 NATEL ® easy
users have been able to reload their prepaid cards at any post office
machine (Postomat).
Mobile solutions for business customers
The year 2002 saw the rollout of attractive new mobile services for
business customers, with GPRS marking a key milestone. Swisscom
Mobile’s decision to enter the PWLAN business also attracted keen
interest. At Orbit/COMDEX 2002 in Basle, members of the public
were able to try out Public Wireless LAN for the first time; to this end,
Swisscom Mobile equipped the entire exhibition complex with the
necessary infrastructure. Since December the service has been commercially
available at over 100 hotspots, providing business customers
equipped with a WLAN-enabled laptop or Pocket PC with high-speed
wireless access to their corporate network. The number of hotspots is
to be increased to around 300 by the end of 2003.
Applications of particular benefit to business customers are Personal
Information Management (PIM) solutions which allow users to synchronize
e-mails, calendar and contact data via a handheld device.
Since 2000, the “Mobile Solutions” unit has been developing solutions
geared specifically to the needs of business customers.

Data as % of revenue
%
11
10
9
8
7
6
5
4
3
2
1
00 01 02
WAP (Wireless Application Protocol)
makes it possible to display information
from the Internet on a WAP-enabled
mobile phone. The information must
be prepared using the programming
language WML (Wireless Markup
Language).
Swisscom Mobile’s “gomobile” mobile
portal is based on WAP technology.
The results, most of which have been available since September, are
now helping Swisscom Mobile to produce a leading range of offerings
for business customers. “Corporate Office Access” allows users to
access all company data from a WAP-enabled mobile phone or Pocket
PC. For business customers this can significantly boost productivity.
Swisscom Mobile sees mobile data business as an important revenue
driver of the future.
For Swisscom Mobile 2002 was also a year for partnerships: to meet the
highly complex system integration requirements imposed on the network
operator and to present a common front to business customers,
cooperation agreements were signed with strong partners. Swisscom
Mobile’s main partners include Microsoft, HP, SAP, Cisco and Swisscom
IT Services.
Content is key: value-added services from Swisscom Mobile
and third parties
With the launch of the mobile portal “gomobile” in 2002, Swisscom
Mobile added an attractive range of services to its portfolio. These
included the SMS piste report, launched to coincide with the start of
the ski season, and the SMS game “Who wants to be a millionaire”,
based on the successful television show. At Expo.02, Swisscom Mobile
offered customers an array of SMS services that provided all kinds of
information concerning the Swiss national exhibition. August saw the
launch of two new types of location-based services on “gomobile”:
Local Map and Route Planner. And in April “SMS Connect” was
34

Penetration rate *
Swisscom Mobile
%
60
50
40
30
20
10
00 01 02
* In relation to total Swiss population
HSCSD (High Speed Circuit Switched
Data) is a data transmission standard
for GSM mobile networks. It operates
according to a principle similar to
that of ISDN. Several radio channels
are bundled together to form one
high-performance data channel,
enabling transmission speeds of up
to 57.6 kbit/s.
35
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
launched to facilitate access to all SMS information and entertainment
services. The new services proved extremely popular. Revenue from
portal services rose significantly.
Swisscom Mobile also stepped up its business with third-party content
providers, whose numbers surged last year in Switzerland. Such providers
use the infrastructure and network of Swisscom Mobile to offer,
for example, logos and ringtones for mobile phones via SMS. While
content providers operate on the market as independent companies,
they benefit from the billing facilities provided by Swisscom Mobile.
The services of third-party providers are paid for via prepaid card or
the subscriber’s NATEL ® bill; content providers profit from attractive
revenue-sharing models.
Good starting position for 2003
Swisscom Mobile offers the networking technologies GSM, HSCSD, GPRS,
PWLAN and soon UMTS, and is at the leading edge internationally
where network quality and coverage are concerned. The main challenges
facing Swisscom Mobile in 2003 are an increasingly saturated
marketplace and rapidly changing technologies. First and foremost,
Swisscom Mobile must continue to defend its leading market position
over the next few years. Its goal is to remain number one in terms of
network coverage and quality, and gain a clear edge on the competition
in the area of customer care. To this end, Swisscom Mobile intends
to remain innovative and to respond quickly and effectively to changes
in the marketplace. The focus in 2003 is on expanding Corporate Office
Access solutions and providing further offerings in the field of messaging,
user interfaces and multimedia entertainment.

Swisscom Enterprise Solutions –
the first address for business customers
With 1,410 employees at 17 locations in Switzerland, Swisscom Enterprise Solutions
posted revenue of CHF 1.45 billion in 2002, 8.5 percent down on the previous year.
This decline is attributable to the ongoing economic downturn, which had a particularly
negative impact on the business customer segment. The year under review
was characterized by the reluctance of many companies to invest and continuing
high pressure on prices. Swisscom Enterprise Solutions was able to maintain
its market position, not least thanks to strategic partnerships and acquisitions.
Net revenue 1)
EBITDA2) Enterprise Solutions 2001 2002
1 585 1 450
114
68
Employees
1 557 1 410
1) Incl. revenue from other segments in CHF millions
2)
Operating income before interest, tax, depreciation and
amortization in CHF millions
Swisscom Enterprise Solutions provides business customers with Internet,
voice and data communication services as well as process integration
(call centers, conferencing) and associated Internet protocol (IP)
convergence solutions. The company’s core business is the management
of communications infrastructures and the planning, construction and
operation of communications solutions for business customers headquartered
in Switzerland. Some 60,000 companies are customers of
Swisscom Enterprise Solutions.
Clear market segmentation through tailored
and standardized solutions
Business customers have distinct requirements – for tailored complete
solutions from a single source, for networked locations, for mobility
and for process/cost optimization. They place high demands on the
security of their communications infrastructure. Swisscom Enterprise
Solutions restructured its product range and marketing concept in
2002 to reflect changing market conditions. The company now focuses
on providing standardized solutions for large and mid-sized companies
as well as on developing tailored solutions for major customers.
In 2002, Swisscom Enterprise Solutions clearly expanded its position
as a provider of standardized solutions. At the same time it extended
its range of products for integrated telecommunications requirements.
36

Revenue from external
customers
%
48.2 Integrated Access & Traffic
41.6 Networking
7.4 Inhouse & Processes
2.8 Supporting Business/
Professional Services
In the year under review, Swisscom Enterprise Solutions successfully implemented
a large number of tailored customer solutions. To cite just a
few examples, the company drew up sophisticated security concepts
and solutions for the transmission of corporate information for Credit
Suisse, Fritz Meyer Holding AG and the Palace Hotel Gstaad, presented
location-independent call and contact center solutions for extratel AG
and optimized business communication processes for the Swiss Helicopter
Rescue Service (REGA), Waser Holding AG and the International
Red Cross, thus cutting time-to-market and reducing costs.
The company’s twin focus on standardized and tailored solutions enables
it to fulfil communications requirements regardless of form or
complexity and to make optimum use of resources.
Integration of competent partners
Swisscom Enterprise Solutions also strengthens its market position
through strategic partnerships and acquisitions. In 2002, the company
intensified its cooperation with Cisco Systems Inc. in the area of marketing
and customer solutions. Cisco Systems is the world’s leading
provider of network technology for the Internet and has the largest
product portfolio of any company in the sector.
In August 2002, Swisscom Enterprise Solutions acquired a 49.9 percent
stake in Unit.net AG with the option of acquiring a majority stake
in the company by 2005. Unit.net offers specialized online communication
services for business customers and is a leader in the field of
streaming technology. Unit.net’s offering ideally complements the
Swisscom Enterprise Solutions product range.
Participation in Infonet Schweiz AG offers customers the security that
Swisscom Enterprise Solutions can also meet their global requirements
and leverage synergies with the California-based Infonet Service Corporation
in order to establish complex customer networks.
37
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors

debitel – networking without the network
“
Together we will strengthen our leading position as a network-independent
provider of mobile telephony and multimedia services in Europe. We will be top
performers and will create lasting value.” debitel continued to implement its clear
vision in 2002. Despite an increasingly difficult market environment, the Germanbased
Swisscom Group company, with 3,299 employees, succeeded in increasing
revenue by eight percent to CHF 4.11 billion. The fall in operating income (EBITDA)
from CHF 187 million to 159 million is largely due to the one-off effects of the previous
year and increased expenditure on customer loyalty activities.
Net revenue 1)
EBITDA 2)
debitel 2001 2002
3 808 4 111
187 159
Customers
10 001 000 10 061 000
Employees
3 544 3 299
1) In CHF millions
2) Operating income before interest, tax, depreciation and
amortization in CHF millions
As an independent telecommunications provider, debitel uses the capacity
of the network operators to provide their entire product range
and to develop its own products and services. debitel does not invest
in networks but concentrates on its core competencies – the provision
of mobile and multimedia services. More than ten million customers
have come to appreciate the company’s objective advice and professional
support. 5,000 sales partners in Germany (7,000 in Europe)
receive a product range from a single source.
debitel has decided to further expand the successful Enhanced Service
Provider (ESP) business model it has implemented for the current GSM
mobile communications generation and transfer it to UMTS. This move
will enable the company to guarantee its participation in this future
market without having to bear the considerable financial burden of
license fees and network infrastructure. debitel has concluded agreements
with the major German UMTS network operators Vodafone D2,
T-Mobile and E-Plus, thereby securing long-term access to UMTS.
Highly demanding environment
The German mobile communications market went through a difficult
phase in 2002: customer numbers stagnated until the third quarter and
even fell slightly. Growth was not seen until the end of the year. Overall,
the number of German mobile subscribers rose from 56 million
to 59 million. The reasons for this slowdown were the high penetration
rate of 68 percent that had already been achieved at the start of the
year and the removal of inactive prepaid subscribers from the customer
base. Top-up cards which had not been loaded for a period of fifteen
months were deactivated on the network.
38

Customers *
In millions
12
10
8
6
*
At December 31
00 01 02
39
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors
Moreover, a combination of the generally poor state of the economy
and the launch of the new single European currency led to a marked
reluctance among German consumers to make purchases in the first
few months of the year. The result was a drastic slump in revenues
right across the board, which also affected telecommunications products.
The same development was observed in the Dutch market.
The market situation impacted most strongly on smaller UMTS license
holders, who found it difficult to meet their UMTS auction and network
development obligations. This led to the long-predicted market consolidation,
with the result that the number of German UMTS network
operators fell from the original six to just four.
Sustainability is the core focus of all activities
In the year under review, debitel succeeded in bucking the general
trend. Even in boom times, the company recognized the importance of
customer loyalty. In 2002, the company again invested a considerable
amount in customer loyalty measures, and focused even more strongly
on income. In this way, debitel is making a sustainable investment in
the future. Customer retention successes have now stabilized at a very
high level. In order to safeguard the positive results in spite of the
necessary outlays, debitel has also improved its terms of business with
network operators and implemented wide-ranging internal costcutting
programs.
Access to the entire German market both via mass market channels and
via specialist dealers with extensive advisory skills has always been one
of debitel’s strengths. In September 2002, the company extended its
exclusive sales partnership with the Electronic Partner-Gruppe for a
further five years, thereby securing a key specialist sales partner over
the long term.
The cooperation agreement with the German Ringfoto Group signed
in October 2002 means that debitel has now added another specialist
retail chain with some 2,700 sales outlets nationwide to its sales network.
Innovative new services
Innovative services also make a major contribution to ensuring customer
satisfaction. debitel launched the debitel Jamba! supplementary
service early in 2002. This is the first mobile tariff whose basic charge
includes a subscription for premium mobile Internet services (WAP), for
which additional charges would otherwise be payable. The debitel

Customers
By country
7729000 Germany
1374 000 Netherlands
504 000 France
372 000 Denmark
82 000 Slovenia
Jamba! premium services can now be combined with any debitel
tariff or selected as an additional subscription by all contract-holding
customers (postpaid). debitel Jamba! supplementary services are now
included in around 40 percent of all new contracts. By offering this
type of service, debitel is investing in the use of data services in order
to further increase the average monthly revenue generated per
customer.
In July debitel launched a supplementary card: a new multi-network
product which enables debitel customers to use a second mobile line
in addition to their existing contract without having to pay an access
fee or a basic monthly fee. Unlike with similar competitive products,
debitel customers enjoy the particular advantage of being able to
choose which network to use, thus making it possible to use different
networks for the main and additional line. This is a unique product
which can only be implemented in this form by a network-independent
provider.
Subscriber numbers fell in the first half of the year due to adjustment
of the prepaid customer base and stagnation in the mobile communications
market. This trend was reversed in the second half, notably in
the postpaid sector. Both in its customer loyalty activities and in the
acquisition of new customers, debitel focuses on customer value and
not simply on increasing subscriber numbers. This starts with higher
dealer premiums for the conclusion of frequent-use tariff contracts and
includes thorough checks on the creditworthiness of new customers as
well as value-oriented and segment-specific customer management.
International activities
The difficult market environment was not confined to Germany. Penetration
rates also stagnated or even fell in the other countries in which
debitel is active.
debitel Nederland entered into a comprehensive cooperation arrangement
with the Dutch network operator O2 Netherlands (formerly
Telfort), which is based on a wholesale agreement: the cooperation
gives debitel Nederland the opportunity to develop its own GSM/GPRS
services and market them through O2 Netherlands’ network. The
operational phase of the cooperation began in November 2002. The
integration of Talkline Nederland, a wholly-owned subsidiary of debitel
Nederland, is proceeding according to plan.
40

In February 2002, debitel France took over the listed mobile communications
retail chain Videlec S.A., which has 80 sales outlets.
debitel Danmark acquired Tiscali’s Internet platform in Denmark as
of January 1, 2003, and with it some 20,000 mobile customers and an
Internet-based sales line.
Across the entire group, debitel exploits every opportunity to create
synergies between the companies, for example in product design, purchasing
arrangements or marketing and sales projects. In its negotiations
with network operators and potential sales partners, debitel also
assesses the possibilities of entering new markets.
Outlook
debitel’s decision to pursue and expand on its business model as a
so-called Enhanced Service Provider has proved to be the correct one,
and leaves the company able to face the future in a confident and
positive manner despite the generally weak economy. Furthermore,
debitel will continue to make every effort to acquire and retain customers
by providing a high quality service and innovative products.
Customer retention activities will be extended despite the considerable
financial expense.
Furthermore, debitel will make additional efforts to increase market
share by safeguarding and developing its sales cooperations, with a
view to remaining competitive over the long term.
The ongoing monitoring and optimization of costs, processes and
structures will also remain key priorities for securing the company’s
future.
41
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors

Other important business areas
Revenue by customer group
Swisscom IT Services
%
75 Swisscom Group companies
21 AGI Banks
4 Third parties
EDI (Electronic Data Interchange) refers
to the electronic exchange of business
data between companies.
Swisscom IT Services – strong partner for IT solutions
Swisscom IT Services, a subsidiary of Swisscom AG that has been operating
since January 1, 2002, is now one of the largest manufacturerindependent
complete providers in the domestic IT market. With 2,347
employees, the company specializes in the development, implementation
and operation of complex IT environments. Despite difficult market
conditions, Swisscom IT Services was able last year to position itself
successfully in the Swiss IT market. After a year of mergers, integration
and consolidation, Swisscom IT Services plans to achieve its ambition
of market growth through consistent customer orientation and high
reliability.
Swisscom IT Services generates revenue from three customer groups:
the Group companies of Swisscom AG, the cantonal banks (which have
a minority stake in Swisscom IT Services via AGI Holding AG) and other
companies in Switzerland. In the year under review, revenue amounted
to CHF 831 million. The general economic weakness is also clearly evident
in the IT market, and the current situation is unlikely to improve
in the foreseeable future. Nevertheless, various sub-segments in the IT
sector will continue to post positive growth. High cost pressure and a
focus on core business are leading to increased demand, particularly
with regard to the outsourcing of business processes and infrastructures.
However, there is also an increasing desire for one-stop IT services.
With a comprehensive range of products and services, Swisscom
IT Services is also the right partner for such customers.
The Swisscom subsidiary Conextrade AG was integrated into Swisscom
IT Services at the beginning of 2003, enabling the Swisscom Group
to bundle e-business competence. Conextrade AG specializes in the
provision of IT for electronic trading, both Internet- and EDI-based.
Continuity of service has been assured for customers, as Conextrade
AG’s products and staff have been transferred to Swisscom IT Services.
Swisscom Systems – specialists in communications systems (PBXs)
Swisscom Systems provides companies with traditional and IP-based
telephone systems as well as associated maintenance and support services.
As a service organization, Swisscom Systems serves more than
100,000 customers throughout Switzerland. With seven|24, the service
promise for comprehensive, reliable service seven days a week, 24
hours a day, Swisscom Systems handled around 380,000 customer enquiries
in 2002. The 1,567 employees, supported by some 1,400 special-
42

Transmitters
Swisscom Broadcast
Number
1 535 Television
908 Radio (VHF and MW)
16 Digital audio broadcast (DAB)
ist dealers, generated revenue of CHF 456 million. However, technological
changes and the state of the economy had a negative impact on
customers’ capital spending, resulting in a 15.8 percent fall in revenue.
The effect of the Millennium, when many new systems were installed
for the 1999/2000 year change, coupled with uncertainty on the part of
customers over whether to switch to voice-over-IP technology, also left
their mark. These trends together with their impact have forced
Swisscom Systems to implement restructuring measures. By adjusting
the cost base to reflect market developments and initiating sustainable
efficiency improvements, Swisscom Systems intends to continue securing
its position as Switzerland’s market leader in the field of communications
systems.
Swisscom Broadcast – 360-degree transmission
With some 240 employees, over 500 transmitter locations and more
than 2,400 transmitters, Swisscom Broadcast AG ensures nationwide
broadcast of radio and television signals. In the year under review, the
leading infrastructure operator posted revenues of CHF 176 million
thanks to the attractiveness of its locations and also by sharing its facilities
with third parties. Swisscom Broadcast provides customers with a
contractual guarantee of up to 99.9 percent availability for broadcast
signals. The main customers include SRG SSR idée suisse, the three mobile
communications providers, various emergency services and local
radio stations. Swisscom Broadcast’s services also include signal supply
for cable network providers, who then redistribute the signals in their
cable networks. Revenue from the broadcast of analog television signals
was down on the previous year, as SRG SSR idée suisse has switched
off the second and third transmitter networks. On the other hand, terrestrial
digital television (DVB-T) is opening up new opportunities and
challenges for Swisscom Broadcast. The implementation of this new
technology is scheduled to begin in mid-2003, and digital audio broadcast
(DAB) will also be expanded further in the medium term.
The revision of the Broadcasting Act also presents new challenges for
Swisscom Broadcast. One consequence of the regulations proposed by
the Swiss Federal Council would be that licensed broadcasters would
be subsidized by the telecoms providers. For example, Swisscom Broadcast
would have to provide wireless terrestrial broadcasting for SRG SSR
idée suisse and other licensed broadcasters at cost-oriented prices.
Swisscom does not consider any such subsidization of the broadcasting
sector by the telecoms sector to be in accordance with the “user pays”
principle.
43
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors

Billag – complete provider of billing services
Billag AG is Switzerland’s leader in third-party billing, and its offering
comprises billing, payment collection, reminders, debt recovery and
customer care services. These services release Billag’s customers from
the at times highly complex billing process, leaving them free to concentrate
on their core business. With around 150 employees, Billag
posted revenue of CHF 52 million in 2002 and collected payments
worth CHF 1,200 million on behalf of its customers. It also sent some
twelve million bills to three million households. On average, the Billag
Call Center dealt with 2,500 telephone enquiries and 3,000 letters
(changes of address, customer responses, etc.) each day. The company’s
main customer is the Swiss Confederation through the collection of
radio and TV license fees for SRG SSR idée suisse. However, Billag also
provides its know-how to other organizations and private companies,
in particular in the energy and insurance sectors.
Foreign holdings – time for consolidation
In the year under review, Swisscom disposed of its holding in the
Austrian company UTA. In the Czech Republic, Swisscom is supporting
the National Property Fund in its efforts to privatize Cesky Telecom.
To this end, Swisscom is committed within the context of existing
mandates to maximizing the shareholder value of its indirect holding
in the national provider until such time as it can be sold.
Despite the difficult environment, Infonet Services Corporation, in
which Swisscom has a 17.7 percent holding, consistently expanded its
international data network and extended its activities into new business
areas, in particular through a number of partnerships in the field
of wireless access. As a leading provider of global value-added services,
Infonet Services Corporation assures fast and secure data transfer between
computer centers for more than 3,000 multinational business
customers from 180 countries. Infonet Services Corporation was named
best carrier in Europe at the “World Communication Awards 2002”.
44

What does Swisscom have to say
about the human being as a yardstick?

Historical
In Vienna in 1769 Baron Wolfgang
von Kempelen devised a machine
that could play chess and, according
to him, defeat every grand master.
Seated next to the chessboard was a
wooden figure clad in Turkish national
dress and whose movements were
controlled from inside a box. While
observers suspected the machine contained
a human chess player sitting
inside the box and concealed by a
mirror, the idea of a machine that
could think provided fascinating
food for thought. The first person to
purchase the chess genius was King
Frederick the Great of Prussia. Charles
Babbage, who later constructed the
first computer-controlled calculator,
drew inspiration from the automated
chess player. This led him to start
thinking about the notion of machine
intelligence. He concluded that it
would require more than mechanical
components alone to emulate human
thought processes.
Technical
As we go about our daily lives we are
confronted by all kinds of stimuli. We
still manage, however, to focus our
vision on selected events and objects.
The Department for Neuro-Physiological
Rehabilitation at the Inselspital,
Berne’s University Hospital, has
succeeded in localizing the brain cells
that are involved in differentiating
between important and unimportant
information. Objects falling within
the receptive field of such a cell only
activate the cell if they are important,
i.e. an electrical activity can be
measured. Uninteresting objects,
on the other hand, fail to trigger any
activity and so no information is
passed on. It is not clear, however,
which mechanisms are responsible
for deciding what is important and
what is not.

Receptiveness
Input

Tomorrow’s world
Nicholas Negroponte, Professor at
the Massachusetts Institute of Technology
(MIT), is conducting research
into future forms of communication.
In the computer journal “Wired” he
draws a direct correlation between
the discovery of new technologies
and children playing: “The wild, the
absurd, the seemingly crazy: this kind
of thinking is where new ideas come
from. In corporate parlance it’s called
‘thinking out of the box’. At the MIT
Media Lab, it’s business as usual. The
people capable of such playful
thought carry forward their childish
qualities and childhood dreams, applying
them in areas where most of us
get stuck, victims of our adult seriousness.
Staying a child isn’t easy.
But a continuous stream of new toys
helps.”

Kurt Stadelmann, Cultural Specialist
at the Museum of Communication in Berne
“Whether sending an image via MMS says more than a thousand words spoken over the telephone
remains to be seen. An outstanding piece of technology alone has never been
sufficient to bring about a technological breakthrough. History has shown that technological
wonders are only as good as the purpose they serve in people’s everyday lives. In the
final analysis, the key deciding factor has always been the interaction between man and
technology. This takes time: time to develop, time to mature, time to become established.”

A progressive employer
With attractive entry opportunities, progressive employment conditions, modern
participation programs for employees and management and some 900 apprenticeships
on offer throughout Switzerland, Swisscom is very well positioned in the
employment market. The company is handling the headcount reductions made
necessary by the economic climate and ongoing cost pressures with creative and
socially responsible measures that are serving as the model for other companies
in Switzerland.
Innovative approaches to professional training...
Swisscom is an attractive and professional provider of apprenticeships
in the Swiss employment market, offering a total of six different career
paths. The IT technician and commercial apprenticeships are particularly
popular, as is the mediamatics path. In contrast to the overall decline
in staff numbers at Swisscom, the number of apprenticeships actually
increased slightly. With the imminent reform of basic commercial training
which will incorporate the opportunities afforded by the new law
on professional training (nBBG), Swisscom’s professional training program
has defined important parameters for the future, which take full
account of the change to an information and knowledge society. In
2003, Swisscom will be launching a prototype incorporating new forms
of learning, at the centre of which is the promotion of project-based
working methods for apprentices.
...
and to the development of talent
Swisscom is highly committed to identifying and developing potential
management talent. We offer talented young people a range of entry
opportunities such as direct entry, the trainee program, work placements
or part-time positions. We regularly advertise in universities,
take part in all the major career fairs held in Switzerland and invite
students to job forums in order to establish contact with them directly.
Swisscom is a sponsor of some 700 students at the University of
St. Gallen.
50

Apprentices
Six types of apprenticeship
403 IT technician
151 Commercial assistant
111 Mediamatics technician
87 Retail assistant
87 Electronics technician
33 Telematics technician
...
and to employee participation programs
In 2002, Swisscom for the first time gave all employees the opportunity
to purchase shares at attractive conditions. The “TopShare” program
offers them a simple and flexible way to participate as co-owners in
the jointly achieved success of the company. The high uptake showed
that the employees are committed to their company and that a program
of this kind meets a far-reaching need. “TopShare” complements
the existing share option plans for members of management.
En route to a new collective employment agreement
A new collective employment agreement has been in force at Swisscom
since the beginning of 2001 and will continue to apply until the end of
2003. Over the last two years, the agreement has fully met its objectives.
Swisscom has been able to position itself well in the employment
market thanks to its progressive and socially acceptable employment
conditions. The future development of the collective employment
agreement will take account of Swisscom’s group structure. Swisscom
plans to convert its attractive employment conditions into a model that
gives the Group companies greater flexibility in the formulation of
their employment contracts. Initial discussions with the unions have
shown that in some respects at least, there is a huge gulf in perceptions.
However, the aim is still to continue the proven, constructive social
partnership with the unions, employee associations and also the
company committees, who began their work at the beginning of 2002.
858 fewer jobs
Swisscom had 20,470 full-time equivalent employees at the end of
2002, 858 fewer than the previous year. Excluding debitel, the headcount
was 17,171 FTEs. These figures do not include 872 apprentices.
The job cuts are a consequence of the difficult economic climate and
the ongoing price and cost pressure, particularly evident in the decline
in the business customer segment. By contrast, a total of 238 new jobs
were created in the year under review in the boom area of broadband
communications and at Swisscom Mobile.
Swisscom offers jobs in all parts of the country, and Swisscom employees
pay taxes in every single canton. The eighth-largest employer
in the Swiss employment market, Swisscom is significant not only in
quantitative terms but also because it offers a guarantee of challenging
work opportunities in the shape of forward-looking careers and
training programs.
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An overview of 2002
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Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
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Customers
The community
The environment
Investors

Co-Motion
Startups since launch*
%
29.6 Trade/Industry
24.3 IT/Consulting
15.8 Catering
13.8 Health/Wellness
0.7 Production/Industry
15.8 Other services
* At December 31, 2002 “
Employment Market Center, Co-Motion, WORK_LINK:
innovations in the employment market
Swisscom is doing everything it can to prevent hardship as a result of
the necessary headcount reductions. The Employment Market Center
supports employees who are being released in their search for a new
job, either within or outside the company. The services offered by the
Employment Market Center include personal consultations, assessments,
career advice, help with job applications, specialist training and
job placements. In 2002, the Employment Market Center helped 872 of
the employees affected by the restructuring. The average time spent
by an employee in the Employment Market Centre was around nine
months. 93 percent of all departing employees found another job or
a different, socially acceptable solution. The other participants have
either withdrawn from the employment market or registered for unemployment
benefits.
Co-Motion” is one of the most successful business starter programs in
Switzerland and helps employees set up their own companies, planning
the most important steps with them and also offering financial
assistance in the form of the necessary startup capital or an interestfree
loan. 390 Swisscom employees have taken part in the program
since its launch in 1999, with the result that 150 business plans have
been approved and some 250 new jobs created in other sectors.
A real innovation in the Swiss employment market is WORK_LINK AG,
a joint venture of Swisscom, the unions and Manpower AG. WORK_LINK
places long-serving employees affected by the headcount reductions in
temporary jobs and supports them as they enter the external employment
market. WORK_LINK served an average of 246 people per month
in 2002.
52

comPlan pension fund
In 2002, the members of the comPlan pension fund voted in favor of
a new pension plan. The existing defined benefit plan has now been
supplemented by the dual pension plan (defined contribution plan
for retirement provision, defined benefit plan for risk provision). The
modern pension plan is based on individual, flexible retirement saving
and takes into account present-day requirements. A range of savings
options are available, allowing members to create a retirement pension
that meets their particular requirements.
The comPlan pension fund did not meet its earnings target in 2002 due
to the continuing poor performance of the capital markets. At the end
of the year, the fund was CHF 300 million below full coverage, or six
percent of its obligations. Initial measures have been implemented to
improve comPlan’s difficult financial situation. As of the start of 2003,
the interest rate payable on the retirement savings of withdrawing
employees has been reduced to 3.25 percent. The interest rate for the
remaining members will not be defined until the end of the year. An
examination of the future development of comPlan will be completed
by mid-2003 and will form the basis for any further measures to be
borne by all parties involved.
Work and family: on course for the perfect balance
Swisscom supports the idea of combining work and family, enabling
employees to combine their professional and family responsibilities, as
well as their leisure time, without being overburdened. The company
promotes the concept of work-life balance through specific options
such as teleworking, job sharing or sabbaticals. In 2002, several hundred
employees took advantage of the options available to them and
changed their weekly working hours, took unpaid vacation, set up
long-term accounts or switched to teleworking. Children of employees
at seven locations have access to crèche places. The scheme is to be
extended further in 2003.
53
An overview of 2002
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Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors

Only satisfied customers remain loyal
Swisscom’s long-term success is dependent on the satisfaction of its customers,
because only satisfied customers remain loyal customers. Swisscom measured
its public image at regular intervals throughout 2002. The results showed that
customer perception of the company is good.
Fundamental values as the basis of our profile
Swisscom’s four core values are reliability, strong home base, international
outlook and respect. They are ingrained in the company’s history
and define the worth that Swisscom places in its customers.
Reliability: For Swisscom, this means guaranteeing provision of a modern
and reliable telecommunications infrastructure throughout
Switzerland, thus creating the basis for successful communication in
our country.
Strong home base: Swisscom is a part of Switzerland, and the country’s
inhabitants see it as such. A strong home base represents safety and
security. The interplay of going away and coming home, of Wanderlust
and homesickness is a key issue for many Swiss people.
International outlook: Institutionally, Switzerland’s identity is focused
internally, but on a corporate level the focus is just as clearly external.
International outlook (in the sense of “open to the world”) is the
Swisscom value that describes this relationship. Swisscom tackles globalization
with an international outlook, and at the same time Swisscom
embodies Switzerland’s international outlook.
Respect: Swisscom treats all parties with respect. As a nationally important
company, Swisscom has traditionally enjoyed a respectful relationship
with its employees, with government and society and with
the environment. Swisscom looks after the concerns of individuals and
companies with high quality advice and services and offers a solid and
reliable price/performance ratio.
54

Mirror, mirror on the wall …
Since the beginning of 2002, Swisscom has measured both the perception
of the Swisscom brand as a customer-friendly company and
the degree of recognition of the corporate brand at regular intervals.
On four occasions, Swisscom measured the satisfaction of residential
customers with Swisscom Mobile, Swisscom Fixnet and their main
competitors. Based on a scale from 1 to 10, the scores for the two
Group companies fluctuated between 7.78 and 8.05, clearly exceeding
the level of customer satisfaction enjoyed by their main competitors.
Two measurements were taken among business customers. The customers
of Swisscom Enterprise Solutions, Swisscom Systems, Swisscom
IT Services, Swisscom Mobile and Swisscom Fixnet were surveyed,
together with competitors’ customers. The average for this sector
fell from 7.69 in the first half of the year to 7.32 in the second. The
Swisscom Group companies achieved average scores of 7.92 and 7.47
respectively. Both residential and business customers rated the values
of respect and reliability as most significant in the assessment of their
satisfaction. Reliability was rated highest by Swisscom customers in
their assessment of the company’s core values, followed by strong
home base, international outlook and respect.
These measurements complement the customer surveys which the individual
Group companies carry out in their respective sub-markets.
The comments and criticisms made by customers are translated into
concrete measures such as the creation of additional Swisscom Shops in
the form of franchising solutions, faster response times in call centers
through more intensive training and optimized processes, introduction
of a ticket system in Swisscom Shops, expansion of the mobile network
and the setting up of contact centers as a centralized point of access
for SME customers.
55
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors

Services that build trust
As Switzerland’s market leader in the field of telecommunications and a company
with strong links with the community, Swisscom is aware of its social responsibilities
and provides a large number of services that cannot be measured in francs, euros or
dollars. To this end, Swisscom aims to create a climate of trust. Examples of the company’s
commitment to community issues are basic service provision, the “Internet for
Schools” educational initiative and its contribution to Expo.02.
Public payphones
Number
4 981 Basic provision locations
3 935 Locations operated voluntarily
by Swisscom Fixnet
Basic service provision for all
In mid-2002, the Federal Communications Commission (ComCom)
awarded Swisscom the license for basic service provision for the period
2003–2007. Basic service provision comprises analog and digital telephone
lines, emergency numbers, public payphones and services for
the disabled. With its basic service provision, Swisscom is committed to
a modern “public service”, providing high quality basic telecoms services
to the entire Swiss population at the same price.
Successful Expo.02 involvement
2002 will always be remembered as Expo year. Thanks to its threefold
involvement as exhibition and infrastructure partner as well as “Official
Partner”, Swisscom played a hugely significant role in Switzerland’s
sixth national exhibition, and the results were positive. For example,
around one million people visited the company’s “Empire of Silence”
pavilion at the Biel Arteplage. 600 employee volunteers ensured that
the pavilion functioned smoothly during all 159 exhibition days.
As infrastructure partner, Swisscom was responsible for the construction,
operation and monitoring of the entire telecommunications infrastructure
on all four Arteplages. 2,500 accesses were linked by well
over 2,000 kilometers of fiber-optic and copper cables. Everything
went off without a hitch, and the mobile communications infrastructure
also met the requirements of visitors at all times.
The telecommunications infrastructure and the adventure pavilion
were awarded the “Flying Fish” eco-label by Expo.02, chiefly due to
the environmental management system in accordance with ISO 14001,
the purchase of 600,000 kWh of wind-generated electricity from Mont
Crosin and the recycling in other projects of over 75 percent of the
materials used.
56

12.01
06.02
12.02
Internet for Schools
Number of registered schools
500 1 000 1 500 2 000
5,000 Swiss schools on the Internet
With the “Internet for Schools” initiative launched in the summer of
2001, Swisscom hopes to make a significant contribution to the promotion
of education in Switzerland and enable the Swiss school system
to develop further in this era of the information society. The aim is to
firmly establish new media and the use of the Internet in day-to-day
school activities. In order to achieve this, Swisscom is offering every
Swiss school free broadband Internet access. The offer is open to all
public and private schools, and had already been taken up by one in
three of the 5,000 or so schools in Switzerland by the end of 2002.
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An overview of 2002
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Swisscom Mobile
Enterprise Solutions
debitel
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Customers
The community
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Investors

Environmental management at Swisscom –
efficient and effective
Swisscom has operated an ISO 14001 certified environmental management system
for many years. The company was able to further reduce its environmental impact
in 2002 and extend environmental activities beyond the borders of the company.
In tandem with this, Swisscom continued to develop its environmental management
system with regard to corporate social responsibility. Swisscom also scores highly
in environmental ratings, maintaining its presence in the Dow Jones Sustainability
World Index and the FTSE4Good Index.
Ecological efficiency
Call minutes (millions)/CO2 emission
(tonnes)
1.5
1.4
1.3
1.2
1.1
1.0
0.9
0.8
00 01 02
Swisscom has increased its eco-efficiency continuously in recent years.
It manages more telecom traffic than before per unit of energy used –
expressed in charge minutes – and has reduced its CO2 emissions per
charge minute. Charge minutes (line usage time billed) are an intangible
Swisscom product but still require an energy-intensive network
infrastructure. High network utilization is therefore advantageous not
only in economic terms but also in ecological terms. In line with
Switzerland’s national energy policy, Swisscom plans to increase its ecoefficiency
with regard to energy consumption and CO2 emissions by a
further ten percent by the end of 2005.
Swisscom has extended its environmental efforts beyond operational
ecology. In its capacity as a product buyer, for instance, it hopes to implement
ecological improvements in the large-scale manufacture of
terminals. Working in cooperation with Motorola, the company plans
to launch an ecologically optimized mobile phone suitable for the mass
market. Swisscom is also exploring new avenues in the area of energy.
The Swisscom Fixnet Group company, acutely aware of its relatively
high energy consumption, will from 2003 become the largest consumer
of naturemade star-certified eco-electricity. The electricity savings
achieved in recent years will more than compensate for the increased
electricity costs that this will entail. Finally, Swisscom also pursues a
targeted eco-sponsorship policy and takes both its environmental and
social responsibilities extremely seriously. The company’s nationwide
commitment includes support for the Swiss National Park, the WWF’s
SMARAGD project and the GLOBE environmental education program.
58

CHF 5.5 billion paid back to shareholders
2002 was an extraordinary year for Swisscom and its shareholders. Swisscom
shared the very good results achieved in 2001 with its shareholders, repaying
CHF 5.5 billion to them over the course of the year. This corresponds to around
one fifth of Swisscom’s market value as at the end of 2002. The repayment was
made up of a buy-back of 9.99 percent of the shares, an ordinary dividend of
CHF 11 and a capital reduction of CHF 8 per share.
Swisscom share
December 2001 – December 2002
Share performance
Swisscom registered share
Swiss Market Index (indexed)
DJ EU Stoxx Telecom Index (indexed)
550.00
450.00
350.00
250.00
December
January
February
March
April
May
June
July
August
September
October
November
December
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An overview of 2002
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Enterprise Solutions
debitel
Other business areas
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Customers
The community
The environment
Investors
Swisscom’s balance sheet is still extremely healthy in spite of the share
buy-back. The equity ratio remains high at 43 percent, and EBITDA
generated in six days is sufficient to cover the interest payable for the
entire year. The share price performance was also remarkable. In an
adverse environment (Swiss Market Index SMI –27.84 percent, DJ EU
Telecom Index –38.79 percent), Swisscom achieved the fifth-best performance
among all the SMI shares (–12.93 percent).
Corporate governance as a rating criterion
For Swisscom, however, the performance of the share price is only one
part of the whole value creation process. The company firmly believes
that other values also have to be taken into consideration in order to
create sustainable added value. A key factor in investors’ assessment
of the company is corporate governance, the sum total of all business
principles. How do we run the company? What control mechanisms
do we have in place? Are responsibilities clearly defined? And: Is our
information policy transparent? Swisscom has convincing answers to
these and other questions relating to the quality of its corporate
management.

January
February
March
April
May
June
July
August
September
October
November
December
Trading volume
Swisscom share 2002
Average daily trading volume
in CHF millions
30 40 50 60 70 80 90 100 110
Source: Bloomberg
Risk analyses and competition monitoring
Swisscom operates according to a simple tenet: added value can only
be created if the existing value is at least maintained. Consequently,
Swisscom management devotes 90 percent of its time to existing business.
A permanent risk analysis encompassing business development as
well as the market and technological environment is designed to ensure
that changes are identified in good time and exploited successfully.
Swisscom observes its competitors closely in order to learn from
them and to differentiate itself. Its outward-looking company perspective
also creates added value. Swisscom wants to find out what expectations
its various interest groups – from investors and the financial
markets through society and the regulator to customers and employees
– place on it, so that it can develop its plans and strategies accordingly.
Conversely, it is important that these various groups have access
to the relevant information at all times. Swisscom therefore maintains
an open and transparent information policy.
To sum up: Swisscom firmly believes that sustainability and reliability
are every bit as important as short-term profits.
60

Swisscom Organization
61
CEO
Strategy and Group Steering
Group Operations and
Related Businesses
Group Communications
At February 28, 2003
Swisscom Fixnet AG
Swisscom Mobile AG
Swisscom Enterprise Solutions AG
Swisscom IT Services AG
Swisscom Systems AG
debitel AG
Group Finance and Controlling
Group Human Resources
An overview of 2002
Swisscom Fixnet
Swisscom Mobile
Enterprise Solutions
debitel
Other business areas
Employees
Customers
The community
The environment
Investors

Swisscom Board of Directors
Markus Rauh Franco Ambrosetti Jacqueline Françoise Demierre Ernst Hofmann Rose Gerrit Huy
Markus Rauh
Chairman, born 1939, Swiss citizen
Degree in mechanical engineering
and doctorate (Dr. sc. tech) from
the Swiss Federal Institute of
Technology (ETH) in Zurich
Career: Sperry Univac, Philips,
Wild Leitz, CEO of the Leica Group,
freelance management consultant
Other mandates: Chairman of the
Boards of Directors of Synthes AG
and Rauh Betonschalungen AG;
Vice-Chairman of the Boards of
Directors of Leica Camera AG, Leica
Geosystems AG and Dietiker AG;
Member of the Boards of Directors
of unaxis Holding AG, The Generics
Group AG, Madison Management
AG, St.Galler Kantonalbank AG and
Anova Holding AG; Member of the
Executive Board of Economiesuisse;
President of the Board of Trustees
of the Institute for Technology
Management at the University
of St.Gallen; Chairman of the
Board of Directors of the AO ASIF
Foundation
62
Franco Ambrosetti
Born 1941, Swiss citizen
Degree in business administration
Other mandates: Chairman of the
Board of Directors of Ettore
Ambrosetti&Sons Ltd.; Member
of the Boards of Directors of Exten
S.A., Guardian SA and Brainpower
BV, Amsterdam; Chairman of
the Ticino Chamber of Commerce;
President of the European Wheel
Manufacturers Association
Jacqueline Françoise Demierre
Employee representative
Born 1954, Swiss citizen
Diploma in sales management
Career: Berne Telegraph Office,
General Directorate of the PTT,
various functions at Swisscom, e.g.
Relationship Manager Mobile
Communications and Environment,
since 2002 employee representative
Ernst Hofmann
Employee representative
Born 1937, Swiss citizen
Career: Basel Telecoms Center,
Deputy General Secretary of the
Swiss PTT Vereinigung, Deputy
General Secretary of the Communications
Union
Rose Gerrit Huy
Born 1953, German citizen
Degree in mathematics
and economics
Career: Head of Pre-Development
at Mercedes-Benz, Member
of the Executive Board of Daimler-
Benz Interservices (debis), CEO
of Compaq Deutschland GmbH,
CEO of the Beta Research Kirch
Group, CTO at Kirch Pay, freelance
management consultant

Peter Küpfer André Richoz Felix Rosenberg Helmut Woelki Alfred Bissegger (Secretary)
Peter Küpfer
Born 1944, Swiss citizen
Certified accountant
Career: Revisuisse, Financière CSFB,
CS First Boston, CS Holding, Bank
Leu AG, freelance management
consultant
Other mandates: Chairman of the
Boards of Directors of Valora Holding
AG and Pilatus Flugzeugwerke
AG; Member of the Boards of
Directors of Bank Julius Baer AG,
Karl Steiner Holding AG, Unaxis AG,
Swiss Steel AG and Holcim AG
André Richoz
Vice Chairman
Born 1947, Swiss citizen
Doctor of physics and MBA
Career: National Scientific Fund,
Credit Suisse, Sulzer Group,
Head of the Charmilles Group
owned by Georg Fischer AG, CEO
of the SIKA Group, CEO of the
Rockland Group
Other mandates: Member of the
Boards of Directors of BBL-ING (CH)
and Batigroup AG; Member of
the Swiss Academy of Engineering
Sciences
63
Felix Rosenberg
Representative of the Swiss
Confederation
Born 1941, Swiss citizen
Degree in law
Career: Clerk to the local court in
Baden, Member of the Cantonal
Government of Thurgau, Member
of the PTT Executive Board, CEO
of Telecom PTT and until end of
March 1998 of Swisscom
Other mandates: Chairman of the
Boards of Directors of Voigt AG
and De Martin AG; Member of the
Board of Directors of Huser&Peyer;
President of the Board of Trustees
of the Swiss Pro Patria Foundation
Helmut Woelki
Born 1949, German citizen
Degree in business administration
Career: Fegro Handelsgesellschaft,
SAS Service Partner, CEO of LSG
Lufthansa Service Holding AG,
freelance consultant to international
companies
Other mandates: Consultant to the
Onex Corporation, Toronto, and
Lufthansa; judge at the Commercial
Court in Frankfurt/Main
Secretary
Alfred Bissegger
Born 1942
Career: Head of Corporate
Communications, PTT,
Deputy General Secretary, PTT

Swisscom Group Management
Ueli Dietiker
Jens Alder Adrian Bult René Fischer Esther Häberling Stefan Nünlist
Jens Alder
Chief Executive Officer of
Swisscom AG
Born 1957, Swiss citizen
Degree in electrical engineering
from the Swiss Federal Institute
of Technology (ETH) in Zurich,
MBA INSEAD, Fontainebleau
Career: Standard Telephone& Radio
AG, Alcatel STR AG, Motor
Columbus AG, Alcatel Schweiz AG,
Head of Network Services and
Member of Group Management
at Swisscom AG
Other mandates: Member of the
Management Board of SICTA,
Member of the Management Board
of the Swiss Employers’ Federation
64
Adrian Bult
CEO of Swisscom Fixnet AG
Born 1959, Swiss citizen
Degree in business administration
Career: IBM Schweiz, Telecom PTT,
Head of IT and Member of Group
Management at Swisscom AG
Ueli Dietiker
Chief Financial Officer and
deputy CEO of Swisscom AG
(as of April 1, 2002)
Born 1953, Swiss citizen
Chartered accountant
Career: ATAG Ernst&Young,
Motor Columbus AG,
Cablecom Holding AG
René Fischer
CEO of Swisscom Systems AG
(as of August 22, 2002)
Born 1965, Swiss citizen
Degree in business administration
Career: Bank Leu AG, Telekurs AG,
SIG Schweiz. Industriegesellschaft
AG, Head of Finance and
Controlling at Swisscom Fixnet AG
Esther Häberling
Head of Group Human Resources
(as of April 1, 2002)
Born 1957, Swiss citizen
Degree in business administration
Career: ETH Zurich, Sulzer Roteq,
Holcim Group
Stefan Nünlist
Head of Group Communications
Born 1961, Swiss citizen
Degree in law, attorney
Career: Federal Department of
Foreign Affairs, Federal Department
of Economic Affairs, Atel AG
Other mandates: Member of the
Management Board of the Swiss
Advertisers’ Federation, Member
of the Swiss Tourism Council,
Member of the FDP Party
Leadership in the Canton of
Solothurn, Member of the Olten
Municipal Council

Mauro Santona Urs Stahlberger
Hanspeter Quadri Jürg Rötheli Carsten Schloter Michael Shipton Peter Wagner
Hanspeter Quadri
CEO of Swisscom Enterprise
Solutions AG
Born 1953, Swiss citizen
Degree in mathematics
and information technology
Career: IBM Schweiz, Head of Large
Accounts at Swisscom AG, Head of
Major Accounts at Swisscom AG
Other mandates: Chairman of the
Board of Directors of Unit.net AG,
Member of the Board of Directors
of Infonet Services Corporation,
Los Angeles, USA
Jürg Rötheli
Head of Group Operations &
Related Businesses
Born 1963, Swiss citizen
Doctorate in law, attorney
Career: Stampfli, Keller& Partner,
Interdiscount Holding AG,
Simeco Holding AG, Head of Legal
Services (General Counsel) and
Member of Group Management
at Swisscom AG
Mauro Santona
CIO (Chief Information Officer)
Swisscom AG,
Born 1957, Italian citizen
Degree in engineering
Career: IBM Schweiz, Valora Group
65
Carsten Schloter
CEO of Swisscom Mobile AG
Born 1963, German citizen
Degree in business administration
Career: Mercedes Benz France SA,
debitel France SA, debitel Germany,
Head of Public Com at Swisscom AG,
Head of Mobil Com at Swisscom AG
Other mandate: Chairman of
the “Forum Mobil” Association
Michael Shipton
Chief Strategy Officer
of Swisscom AG
Born 1956, British and Swiss citizen
BSc, PhD
Career: British Telecom plc,
Hasler AG, Ascom AG, Telecom PTT,
Head of Business Steering Network
Services at Swisscom AG
Urs Stahlberger
CEO of Swisscom IT Services AG
Born 1946, Swiss citizen
Commercial diploma,
IT specialist
Career: Credit Suisse,
AGI IT Services AG
Peter Wagner
CEO of debitel AG
Born 1953, German citizen
Degree in mathematics
Career: Standard Elektrik Lorenz
AG, Alcatel SEL AG, Wavetek
Wandel Goltermann Inc.
Other mandates: Member of the
Boards of Directors of Acterna
Corp., Germantown, USA, Deutsche
Messe AG, Hanover, German Association
for Information Technology,
Telecommunications and New
Media e.V., Berlin, Landesverband
der Baden-Württembergischen
Industrie e.V.
The following members have left
the Group Executive Board since
January 1, 2002:
Dave Schnell
(as of March 31, 2002)
Werner Steiner
(as of August 21, 2002)
Mauro Santona
(as of January 31, 2003)

March 26
Important dates 2003
Annual Press Conference, Zurich
March 26 Financial Analysts’ Meeting,
Zurich
May 6 General Shareholders’ Meeting,
Zurich
May 9 Dividend distribution
May 14 2003 First-Quarter Report
August 20 2003 Half-Year Report
November 20 2003 Third-Quarter Report
66

Publishing details
Published and produced by:
Swisscom AG,
Group Communications,
Berne
Design and layout:
Gottschalk+Ash Int‘l
Translation:
CLS Corporate
Language Services AG, Basle
Photographs:
Erhard Hofer
Swisscom ReproMedia Services
Prepress and printing:
Stämpfli AG, Berne
Printed on chlorine-free paper
© Swisscom AG, Berne
67
The 2002 Swisscom Annual
Report is available in English,
German and French.
The Financial Review (enclosed)
is available in English
and German.
Additional copies
of the Annual Report can be
ordered from:
Swisscom AG
Group Communications
CH-3050 Berne
T+41 31 342 36 78
F+41 31 342 27 79
E annual.report@swisscom.com
Financial information:
Swisscom AG
Investor Relations
CH-3050 Berne
T+41 31 342 25 38
F+41 31 342 64 11
E investor.relations@swisscom.com
www.swisscom.com/ir
General information:
Swisscom AG
Head Office
CH-3050 Berne
T+41 31 342 11 11
F+41 31 342 25 49
E swisscom@swisscom.com
Visit our website for the latest
information: www.swisscom.com
An abridged online version
of the Swisscom Annual Report
is available at:
German:
www.swisscom.com/bericht2002
French:
www.swisscom.com/rapport2002
English:
www.swisscom.com/report2002
Italian:
www.swisscom.com/rapporto2002