Shareholders' Letter

Key management compensation
In CHF million 2010 2009
Current compensation 1.4 1.4
Share-based payments 0.7 0.7
Social security contributions 0.2 0.2
Total compensation to members of the Board of Directors 2.3 2.3
Current compensation 8.3 8.8
Share-based payments 1.3 1.1
Benefits paid following retirement
from Group Executive Board 0.7 0.6
Pension contributions 1.1 1.2
Social security contributions 1.1 1.1
Total compensation to members of the Group Executive Board
Total compensation to members of the Board of Directors
12.5 12.8
and of the Group Executive Board 14.8 15.1
Individuals in key positions of Swisscom are the members of the Board of Directors and the Group
Executive Board of Swisscom Ltd. Current compensation comprises fixed and variable remuneration
and functional allowances and non-cash benefits, as well as meeting allowances for the members
of the Board of Directors. A third of the entire compensation paid to the Board of Directors
(excluding meeting allowances) is paid in the form of shares. 25% of the variable performancerelated
share of profits of the members of the Group Executive Board is paid out in shares. See
Note 11. Remuneration and shareholdings are disclosed in the Notes to annual financial statements
of Swisscom Ltd pursuant to Swiss company law (Art. 663b bis and 663c para. 3 of the Swiss
Federal Code of Obligations).
38 Service concession agreements
On 21 June 2007 and in accordance with the Swiss Federal Telecommunications Act (FMG), ComCo
granted Swisscom a basic-service license for 2008 to 2017. As licensee, Swisscom (Switzerland)
Ltd is required to offer the entire range of the basic service to all sections of the Swiss population
throughout the whole territory of Switzerland during the ten-year duration of the license. The
license covers the whole territory of Switzerland. The basic service is to guarantee access to a minimum
offering of telecommunication services. Within the framework of the basic service, everyone
has the right to a connection which allows national and international telephone calls in real time,
the transmission and reception of fax messages and access to the Internet. The basic service also
provides for the maintenance of a prescribed number of public telephones per municipality (Publifon).
The Federal Council periodically sets price ceilings for basic services. From 2008 onwards, in
addition to the provision of a basic service to the population of Switzerland enabling access to the
telephone network, the basic-service provision of broadband Internet access services providing
comprehensive territorial coverage constitutes the centrepiece of the license. In addition,
Swisscom, as a market-dominant provider of telecommunication services, must price its interconnection
services to other service providers in a transparent and cost-based manner without discrimination.
Since these new requirements are formulated in a technologically neutral manner
and exceptions are permitted for technical or economic reasons, the total investment needed to
fulfil the new access obligations is on a manageable scale. Consequently, Swisscom has waived
claims for financial compensation in the first five years of the license. However, as price pressure
increases, be it through competition or regulation, the more difficult it will become to provide the
same basic service with comprehensive territorial coverage on the same conditions. Swisscom has
therefore reserved the right to claim compensation in the second half of the license period in order
to limit the entrepreneurial risks associated with the long license period.
Consolidated financial statements 206 | 207
Notes to the consolidated financial statements