Shareholders' Letter

Capital expenditure
Introduction
Swisscom strives to maintain the high quality of its network infrastructure through ongoing targeted
investments, with particular emphasis on fibre-optic network expansion and migration to
an All-IP-based infrastructure. The volume of data transmitted over the fixed and mobile networks
has risen sharply, and this trend is set to continue in the years ahead. Modern communication and
media services, video portals and streaming services as well as new business applications, such
as Voice-over-IP (VoIP), unified communications and videoconferencing will continue to generate
ever higher traffic volumes and drive up demand for ever bigger bandwidths. In the fixed network,
Swisscom is addressing this trend by expanding the fibre-optic network based on a multi-fibre
cooperation approach. As well as promoting infrastructure competition with other platforms
(cable networks), such an approach fosters competition between fibre-optic network providers
and, in so doing, enables maximum innovation in network architecture and services. Fibre-optic
expansion is accompanied by extending the local distribution nodes and deploying leading-edge
DSL technology to enable coverage and bandwidth to be increased over the short to medium term.
To cater to the growing volume of data transmitted over the mobile network, Swisscom is rolling
out the latest mobile standards such as HSPA/HSPA+. Swisscom is also pursuing introduction of
the new LTE (Long Term Evolution) mobile technology which enables higher data speeds and supports
higher data volumes. The introduction will also depend, among other things, on acquiring
the necessary frequencies, which will be auctioned in 2011. All mobile licences will be newly auctioned
with terms running until 2028. The GSM and UMTS licence currently held by Swisscom
expire at the end of 2013 and 2016, respectively. Fastweb operates Italy’s second largest network
and is a leader in multimedia and broadband communication service development. The network
consists of the company’s own backbone network with high-speed connections and fibre-optic or
copper-based broadband access infrastructures.