Shareholders' Letter

Swisscom TV customer base increased by over 80% to 421,000 customers.
> Mobile subscriber base grew by another 4.0%.
> 172,000 customers in 2010 signed up for the bundled product Vivo Casa.
> Revenue from mobile data services rose by 33.2% to CHF 435 million.
Swisscom Switzerland increased its revenue from external customers by CHF 122 million or 1.5%
to CHF 8,500 million, A growth in customer numbers and volume of CHF 546 million more than
compensated for the price erosion in the Swiss core business of CHF 526 million. In addition, the
economic recovery and the increased number of multifunctional mobile devices (smartphones)
sold also boosted net revenue, with around 1.38 million mobile devices sold in 2010, of which
around half were smartphones. The trend towards bundled offerings and new pricing models (flatrate
tariffs) continued unabated, with the number of Swisscom customers subscribing to bundled
products more than doubling year-on-year. By the end of 2010, Swisscom had signed up 327,000
customers for its bundled product Vivo Casa ( Swisscom TV, Internet and fixed-line telephony). The
year also saw a sharp rise in the number of flat-rate customers, with the customer base more than
doubling year-on-year from 83,000 to 145,000. The number of PSTN/ISDN access lines declined by
178,000 or 5.2% to just over 3.2 million. Besides loss of market share to cable network operators,
the decline was mainly attributable to the increase in unbundled access lines by 102,000 to
255,000. This increase was driven primarily by migration of wholesale customers from broadband
access lines to unbundled access lines, as a result of which wholesale broadband access lines
declined by 105,000 to 226,000, while retail broadband access lines rose by 106,000 or 7.2% to just
under 1.6 million. The number of Swisscom TV customers grew year-on-year by 81.5% to 421,000,
while the number of mobile subscribers increased by 226,000 or 4.0% to 5.8 million. Thanks to
sustained customer growth and higher smartphone sales, revenue from data services rose by
33.2% to CHF 435 million. Average monthly revenue per mobile user (ARPU) fell by 2.0% to CHF 49
due to price reductions and new tariff models. At CHF 3,804 million, the segment result before
depreciation and amortisation was CHF 129 million, or 3.5% higher year-on-year due to a combination
of revenue growth and cost savings, which increased the profit margin from 43.5% to 44.4%.
Management Commentary 50 | 51
Operating segment results