Shareholders' Letter

In 2009, Swisscom terminated interest rate swaps designated for hedge accounting to hedge interest
rate risks in connection with planned issuance of debenture bonds totalling CHF 500 million.
The effective portion of CHF 24 million was left in the caption other reserves and will be recognised
as interest expense over the remaining duration of the debenture bond issued in 2009.
Furthermore, as of 31 December 2010, a basis interest rate swap with a duration until 2012 with
a negative market value of CHF 1 million (prior year: CHF 2 million) as well as interest rate swaps
aggregating CHF 200 million with a duration until 2040 with a negative market value of CHF 10
million were recorded under derivative financial instruments which were not designated for hedge
accounting.
As of 31 December 2010, derivative financial instruments include forward currency contracts of
EUR 175 million and USD 130 million which serve to hedge future purchases of goods and services
in the respective currencies. These hedges with negative fair values aggregating CHF 15 million
were designated for hedge accounting. CHF 16 million was recorded in the hedging reserve within
consolidated equity for these designated hedging instruments.
In addition, included in derivative financial instruments are foreign currency forward contracts,
currency swaps and currency options for EUR and USD which serve to hedge future transactions
in connection with Swisscom’s operating activities and which were not designated for hedge
accounting purposes.
Management of equity resources
Managed capital is defined as equity including minority interests. Swisscom seeks to maintain a
strong equity basis which enables it to guarantee the continuing existence of the Company and
to offer investors an appropriate return in relation to the risks entered into. Furthermore, Swisscom
maintains funds to enable investments to be made which will bring future benefits to customers
as well as generate further returns for investors. The managed capital is monitored through the
equity ratio which is the ratio of consolidated equity to total assets.
The calculation of the equity ratio is set out in the following table:
31.12.2009
In CHF million 31.12.2010 restated
Share of equity attributable to equity holders of Swisscom Ltd 6,256 6,291
Share of equity attributable to minority interests 28 319
Total capital 6,284 6,610
Total assets 21,067 22,144
Equity ratio in % 29.8% 29.9%
In its strategic targets effective as from 1 January 2008, the Federal Council has ruled that
Swisscom’s net indebtedness shall not exceed 2.1 times the operating result before taxes, interest
and depreciation and amortisation (EBITDA). Swisscom’s internal target for the ratio of net indebtedness
to EBITDA is 2.0. The target value may be temporarily exceeded. Financial leeway exists if
the target is not reached.
Consolidated financial statements 202 | 203
Notes to the consolidated financial statements