Shareholders' Letter

3.17 Net revenue
General
Net revenue is measured at the fair value of the consideration received less value-added taxes,
price reductions, quantity discounts and other reductions in sales proceeds. Revenues are recognised
when it is probable that a future benefit from the transaction will accrue to Swisscom and
the amount can be reliably estimated. When Swisscom acts as principal, revenues are recorded
gross. However, when, from an economic point of view, Swisscom acts only as a broker or agent,
revenues are reported net of related costs. In multi-component contracts, revenue is determined
and reported separately for each identifiable component part. Total consideration for a multi-component
contract is distributed over the various component parts at fair value on a pro-rata basis.
If the fair value of services still to be provided can be measured reliably but not the fair value of
the services already rendered, the value of the services already rendered is calculated using the
residual-value method.
Services by segments
Residential Customers
The segment “Residential Customers” comprises mainly connection fees for broadband services,
fixed-network and mobile phone subscriptions as well as national and international telephone
and data traffic for residential customers. The segment “Residential Customers” also includes
value-added services, TV offerings, the sale of terminal equipment and the operation of a directories
database.
Small and Medium-Sized Enterprises
The segment “Small and Medium-Sized Enterprises” primarily comprises connection fees for
broadband services, fixed-network and mobile phone subscriptions as well as national and international
telephone and data traffic for small and medium-sized enterprises.
Corporate Business
The “Corporate Business” segment focuses on complete communication solutions for business
customers. The product offerings in the field of business ICT infrastructure cover everything from
individual products through to complete solutions.
Wholesale
“Wholesale” comprises mainly the use of Swisscom fixed and mobile networks by other telecommunication
service providers and the use of third-party networks by Swisscom. It also consists of
roaming with foreign operators whose customers use Swisscom’s mobile networks, as well as
broadband services and regulated products as a result of the unbundling of the local loop for other
telecommunication service providers.
Networks & IT
“Networks & IT” encompasses primarily the planning, operation and maintenance of Swisscom’s
network infrastructure and related IT systems, both for fixed and mobile phone networks. Networks
& IT also includes support functions for Swisscom Switzerland in the fields of finance,
human resources, and strategy.
Fastweb
“Fastweb” is the second-largest provider of broadband services in Italy. Their product portfolio comprises
voice, data, Internet and IP-TV services as well as video-on-demand for residential and corporate
customers. In addition, Fastweb offers mobile phone services on the basis of an MVNO contract
(virtual network operator). It also provides comprehensive network services and customised
solutions.
Other Operating Segments
The “Other Operating Segments” mainly comprise Swisscom IT Services, Swisscom Participations
and Swisscom Hospitality Services. Swisscom IT Services is a provider of IT services. Its core business
encompasses the integration and operation of complex IT infrastructures. Swisscom Participations
comprises mainly Swisscom Broadcast Ltd, Swisscom Real Estate Ltd, cablex Ltd, Billag Ltd, Alphapay
Ltd and Curabill Ltd as well as the Sicap Group. Swisscom Broadcast Ltd is the leading provider