Shareholders' Letter

Swisscom share performance in 2010
The Swisscom share gained 3.9% over the course of the year, while the Swiss Market Index (SMI),
which lists the 20 leading Swiss companies, dipped 1.7%. Payment of an ordinary dividend of CHF
21 per share (prior year: CHF 20) will be proposed at the Annual General Meeting. This will represent
a total dividend payout of CHF 1,088 million. The Board of Directors is therefore continuing
the dividend policy that it has been pursuing for the last few years.
Three-pillar strategy bears fruit
Swisscom’s corporate strategy is based on the three pillars: “Maximise”, “Extend” and “Expand”.
Maximise
The first pillar “Maximise” is aimed at strengthening and expanding the Group’s core business.
The figures show that we have been particularly successful in that quest this year. We were able
to offset price erosion in excess of CHF 500 million caused by fierce competition and regulation,
thanks to customer growth in mobile and broadband business as well as an increase in data traffic.
Price erosion in mobile communications compared with the previous year was around 13%. Data
services continue to grow at a rapid pace, with the demand for mobile bandwidth doubling every
seven months. Bundled offerings such as Vivo Casa, which combines fixed-line telephony, Internet
and TV, are also doing extremely well. At the same time Swisscom achieved further improvements
in efficiency by cutting costs.
Extend
The second pillar, aimed at expanding our core business along the value chain, is also making good
headway. Swisscom made huge strides in its television business in 2010, virtually doubling the
customer base to 421,000 and gaining over 60,000 new TV customers in the last quarter alone.
Just four years after the market launch, Swisscom is now leader in digital television. The Group’s
subsidiary Swisscom IT Services, with its broad range of IT services, has grown by leaps and bounds
during the past few years. Incoming orders in 2010 amounted to around CHF 464 million.
Swisscom IT Services is now one of the biggest providers in the Swiss outsourcing market. The
company continued its expansion course in 2010, acquiring Panatronic Schweiz AG. In connection
with this a subsidiary was founded under the name Swisscom IT Services Workplace AG. The company
specialises in workplace, printing and repair solutions, a market which offers similar growth
potential to that of business process outsourcing for banks and SAP services.
Expand
The main focus of the third pillar – domestic and international expansion – continues to lie with
Fastweb. 2010 was a difficult year for the company. The investigation against Fastweb commissioned
by the Italian authorities in February 2010 did not affect Fastweb’s good reputation. The
Italian subsidiary reported revenue and customer growth in 2010 and won around 60% of business
customer orders that were put out to tender. The value of Swisscom’s shareholding in Fastweb
was assessed when preparing the annual financial statements. Impairment testing revealed that
the investment book value is covered and no value adjustment is required. In November 2010 Fastweb’s
former Chief Operating Officer, Alberto Calcagno, took over operational management of the
company as General Manager.
Investment in network expansion in Switzerland
The high performance and quality of our networks are crucial to our strategy of maximising and
expanding our core business. In 2010 Swisscom invested around a billion francs in cable and mobile
network expansion, generating and securing several thousand jobs at suppliers. Work is focused
on driving forward expansion of the fibre-optic network in partnership with electrical utilities willing
to invest. The multi-fibre model adopted by the cooperation partners promotes infrastructure
Introduction 6|7
Shareholders’ Letter