Shareholders' Letter

IFRS 3 (revised) “Business Combinations” (in effect as of 1 July 2009) contains several significant
changes to the previous reporting and measurement practices as well as disclosure of additional
information relating to business combinations. Swisscom applies the amendments to
IFRS 3 (revised) in its consolidated financial statements for business combinations occurring
subsequent to 1 January 2010.
> IFRS 27 (revised) “Consolidated and Separate Financial Statements” (in effect as of 1 July 2009)
requires changes to the previous reporting and measurement practices in relation to disposals
of shares as well as the purchases of minority interests. Changes to shareholdings which do
not lead to the acquisition or loss of control are now to be recorded exclusively as equity transactions
without income effect. Previously, Swisscom accounted for the acquisition of minority
interests using the purchase method. If the costs of acquisition were greater than the attributable
share of the carrying amount, the difference was recognised as goodwill. If shares were
disposed of without surrendering control, the difference between the proceeds on disposal and
the corresponding carrying amount, including goodwill, was recognised as a gain or loss in the
income statement.
> Amendments of IFRS of 2009: IAS 39 (revised) “Financial Instruments: Recognition and Measurement”
(in effect as from 1 January 2010): The conditions to be fulfilled for the exemption
from the scope of application of IAS 39 of derivatives entered into within the framework of a
business combination were clarified. The new rules provide that now only certain forward contracts
are to be excluded from the scope of application of IAS 39. The revised Standard is to be
applied prospectively as from 1 January 2010 for all outstanding contracts. Options amounting
to CHF 14 million were recognised in the first quarter of 2010 and recorded as financial income.
Accordingly, net income increased by CHF 14 million and earnings and diluted earnings by share
by CHF 0.27.
> Amendments to IFRS of 2009: IAS 17 (revised) “Leases” (in effect as from 1 January 2010): The
Amendment concerns the classification of leases involving land. The specific rule whereby land
typically represents an operating lease as a result of its unlimited economic life was removed.
As of this date, identical conditions apply for the classification of leases involving land as for
leases involving buildings. Thus, under certain circumstances, land is to be classified as a finance
lease. As a result of the amendment, Swisscom must reclassify a part of the share of land which
was sold and leased back in 2001 as a finance lease. The amendment was applied retroactively.
The impact on the balance sheet, income statement and cash flow statement is as follows:
In CHF million Reported Adjustments Restated
Balance sheet at 1 January 2009
Property, plant and equipment 8,033 181 8,214
Deferred tax assets 58 9 67
Financial liabilities (11,792) (211) (12,003)
Other non-financial liabilities (802) (95) (897)
Equity 5,763 (116) 5,647
Share of equity attributable to equity holders of Swisscom Ltd 5,389 (116) 5,273
Share of equity attributable to minority interests 374 – 374
In CHF million, except for per share amounts Reported Adjustments Restated
Income statement full year 2009
Other operating expenses (2,524) 15 (2,509)
Capitalised self-constructed assets and other income 414 3 417
Depreciation (1,988) (7) (1,995)
Financial expense (480) (13) (493)
Net income 1,925 (2) 1,923
Share of net income attributable to equity holders
of Swisscom Ltd 1,928 (2) 1,926
Share of net income attributable to minority interests (3) – (3)
Basic and diluted earnings per share (in CHF) 37.22 (0.04) 37.18