Shareholders' Letter

Development of capital expenditure in CHF million
2,400
2,000
1,600
800
0
2,050
188
691
1,171
2008
Capital expenditure in the 2010 financial year
In CHF million, except where indicated 31.12.2008 31.12.2009 31.12.2010 Change
Recurring capital expenditure 1 515 487 507 4.1%
Next generation networks 2 308 387 448 15.8%
Projects 352 345 249 –27.8%
Swisscom Switzerland 1,171 1,219 1,204 –1.2%
Fastweb 691 657 585 –11.0%
Other operating segments 191 121 130 7.4%
Group Headquarters and elimination (3) (10) (16) 60.0%
Total capital expenditure 2,050 1,987 1,903 –4.2%
Total capital expenditure as % of net revenue 16.8 16.6 15.9
1 Capital expenditure in enlargement of capacity, universal service and unbundling.
2 Capital expenditure in optical fibre, VDSL, All-IP and mobile broadband
1,987
111
657
1,219
2009
1,903
114
585
1,204
2010
Others
Fastweb
Swisscom
Switzerland
Swisscom’s capital expenditure declined by 4.2% to CHF 1,903 million and amounted to 15.9%
(prior year: 16.6%) of net revenue. The decrease in capital expenditure was mainly due to currency
effects. Adjusted for currency effects, capital expenditure fell by 1.2%. Of which Swisscom Switzerland
accounted for 63%, Fastweb 31% and other operating segments 6%.
Swisscom Switzerland
Capital expenditure at Swisscom Switzerland fell year-on-year by CHF 15 million, or 1.2% to
CHF 1,204 million. As a share of revenue, capital expenditure at Swisscom Switzerland amounted
to 14.1%. The year-on-year decrease in capital expenditure by CHF 96 million or 27.8% was due to
high project investments in the prior year. Among other things, a new customer relationship management
system was completed at the end of 2009. Investments in next-generation networks, on
the other hand, increased year-on-year by CHF 61 million, or 15.8%. 2010 saw the signing of the
first cooperation agreements for fibre-optic expansion in Switzerland. Capital expenditure in operational
business, which accounted for 42% of total capital expenditure, increased by CHF 20 million
or 4.1% to CHF 507 million. The auctioning of all mobile licences in 2011 is expected to increase
capital expenditure for the following year.
Fastweb
Fastweb’s capital expenditure fell year-on-year by CHF 72 million or 11.0% to CHF 585 million. In
local currency terms, the fall amounts to EUR 7 million, or 1.6%, and is attributable to lower spending
on network infrastructure. Customer-related capital expenditure in 2010 accounted for 41%
(prior year: 42%) of total capital expenditure.
Other operating segments
At CHF 130 million, capital expenditure for the other operating segments was CHF 9 million, or
7.4% higher year-on-year. This was largely due to higher capital expenditure incurred by Swisscom
Real Estate Ltd. Capital expenditure for Swisscom IT Services amounted to CHF 47 million in 2010
and was invested primarily in servers, storage systems, and workstation equipment.
Management Commentary 66 | 67
Group financial position