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View Annual Report Annual Report 2018 Annual Report publications Annual Report 2018 Sustainability Report 2018 2018 at a glance 7e21fb4d240b4281a8bd0f9d6d700108.indd 1 05.02.2019 10:47:55 9e480d7e4a4f4778b79af9a2358b1921.indd 1 21.01.2019 13:53:59 The Annual Report, Sustainability Report and 2018 at a glance together make up Swisscom’s reporting on 2018. The three publications are available online at: swisscom.ch/report2018 “Inspiring people” concept The networked world offers countless opportunities that we can begin to shape today. Top quality, groundbreaking innovation, deep-rooted commitment – we feel lucky to be able to inspire people and to lead them to embrace the opportunities that a networked future offers. The images used in our reporting show how and where we inspired people in 2018: from high in the Alps to people’s homes, in business and in our Swisscom Shops. A big thank-you to all who took the time to pose for these photographs: Pius and Jeanette Jöhl with their kids at the Oberchäseren alp, a houseshare with friends in Zurich (Seraina Cadonau, Anna Spiess, Linard Baer and Johannes Schutz), Ypsomed AG in Burgdorf, Stefan Mauron, our customer Jeannette Furter, and the entire crew at House of Swisscom in Basel. Table of contents Introduction 1–11 Management Commentary 12–61 Corporate Governance and Remuneration Report 62–101 Financial Statements 102–175 Glossary 176–180 1 2018 in review | 2018 in review Introduction Net revenue EBITDA Net income Capital expenditure 11.7 4.2 1.5 2.4 billion CHF billion CHF billion CHF billion CHF Employees (full- Net debt to Equity ratio Dividend time equivalents) EBITDA ratio per share 19,845 1.8 36.3 22 % CHF Patrouille des Glaciers inOne Prepaid Included in the Watch it live Simple For the first time, Patrouille des package “SimplyMobile” (“Coop Mobile” Glaciers will be broadcast live Expanded inOne offering: de- as of 9 January 2019) is now across Switzerland via S wisscom vices with their own SIM card available in a prepaid version. TV. The patrols will also be plus extra roaming, services Unused data and call minutes tracked in real time through the and speed can be added easily can simply be rolled over to low power network. and at little cost. the next month. Swisscom TV Data packages Internet Exclusive Roaming Guard Swisscom TV is the exclusive Swisscom has consistently Internet Guard, which is free broadcaster of all 2018/2019 reduced roaming charges for of charge, offers Swisscom UEFA Champions League and nearly all data packets abroad customers even better protec- UEFA Europa League matches by between 20% and 50%. tion online. via Teleclub. 2 Awards No. 1 Swisscom took the top spot in several tests and · Overall winner in the CHIP mobile network test. rankings in 2018: · Speed test of Ookla for the fastest mobile · Service test of industry magazine PCtipp, network. for the fifth time running. · Our mobile network was declared the best in · Hotline test of industry magazine connect, Switzerland in the mobile network test carried for the third time running. out by connect. Swisscom share Fastweb House of Swisscom 20 years Italy Future Swisscom was first listed Fastweb acquires 5G spectrum Opening of the House of on the stock exchange on and fixed wireless business of Swisscom in Basel: next- 5 October 1998. The Swisscom Tiscali. generation advice, service and share offers an average annual shopping. return of 5%. Mobile telephony Business customers Network expansion 5G Ultra-fast At the end of 2018, pilot 5G Cloud networks were in operation in The cloud is flying higher as broadband seven Swiss cities. ten new customers join the cloud and new public cloud Half-way point reached in the services are offered. Swiss-wide expansion effort – the 1,111th municipality was added to the ultra-fast Digitisation broadband network. 240 Swisscom is digitising 240 alpine cabins and helping alpine associations finance the necessary power supply solutions. 3 KPIs of Swisscom Group KPIs of Swisscom Group KPIs of Swisscom | Introduction In CHF million, except where indicated 2018 2017 Change Net revenue and results Net revenue 1 11,714 11,662 0.4% Operating income before depreciation and amortisation (EBITDA) 1,2 4,213 4,295 –1.9% EBITDA as % of net revenue % 36.0 36.8 Operating income (EBIT) 3 2,069 2,131 –2.9% Net income 1,521 1,568 –3.0% Earnings per share CHF 29.48 30.31 –2.7% Balance sheet and cash flows Equity at end of year 8,208 7,645 7.4% Equity ratio at end of year % 36.3 34.7 Operating free cash flow 4 1,745 2,159 –19.2% Capital expenditure in property, plant and equipment and intangible assets 2,404 2,378 1.1% Net debt at end of period 5 7,393 7,447 –0.7% Operational data at end of period Fixed telephony access lines in Switzerland in thousand 1,788 2,047 –12.7% Broadband access lines retail in Switzerland in thousand 2,033 2,014 0.9% Swisscom TV access lines in Switzerland in thousand 1,519 1,467 3.5% Mobile access lines in Switzerland in thousand 6,551 6,637 –1.3% Revenue generating units (RGU) Switzerland 6 in thousand 11,891 12,165 –2.3% Unbundled fixed access lines in Switzerland in thousand 87 107 –18.7% Broadband access lines wholesale in Switzerland in thousand 481 435 10.6% Broadband access lines in Italy in thousand 2,547 2,451 3.9% Mobile access lines in Italy in thousand 1,432 1,065 34.5% Swisscom share Number of issued shares in thousand 51,802 51,802 – Market capitalisation at end of year 24,331 26,859 –9.4% Closing price at end of period CHF 469.70 518.50 –9.4% Closing price highest CHF 530.60 527.00 Closing price lowest CHF 427.00 429.80 Dividend per share CHF 22.00 22.00 – Employees Full-time equivalent employees at end of year number 19,845 20,506 –3.2% Average number of full-time equivalent employees number 20,083 20,836 –3.6% 1 Swisscom has applied IFRS 15 “Revenue from Contracts with Customers” since 4 Definition operating free cash flow: operating income before depreciation and 1 January 2018. The prior year’s figures have not been adjusted. If IFRS 15 amortisation (EBITDA), change in operating assets and liabilities had not been applied, net revenue in 2018 would be CHF 5 million lower and (excluding cash and cash equivalents) less net capital expenditure in tangible EBITDA CHF 43 million higher. and intangible assets and dividends paid to non-controlling interests. 2 Definition operating income before depreciation and amortization (EBITDA): 5 Definition net debt: financial liabilities less cash and cash equivalents, current operating income before depreciation and amortization, gain on sale of financial assets as well as non-current fixed interest-bearing certificates subsidiaries, net of deposit and derivative financial instruments for financing received. financial result, result of equity-accounted investees and income tax expense. 6 Definition evenuer generating units (RGU) in Switzerland: fixed telephony 3 Definition operating income (EBIT): operating income before gain on sale of access lines, broadband access lines retail, Swisscom TV access lines and subsidiaries, net financial result, result of equity-accounted investees mobile access lines. and income tax expense. 4 Business overview Swisscom Fastweb Other Operating Switzerland Segments Residential Customers Fastweb is one of the largest With subsidiaries in the areas of The Residential Customers providers of broadband services network construction and division offers mobile and in Italy. Its product portfolio maintenance (cablex), broadcast- fixed-line services. comprises voice, data, broadband ing services (Swisscom Broadcast) These include telephony, and TV services as well as and collection (Billag, until end of broadband, TV and mobile video-on-demand for residential 2018), Swisscom complements offerings as well as ICT solutions and business customers. In its core business in related areas. for SMEs. addition, Fastweb offers mobile The new Digital Business unit is phone services on the basis of an focused on growth areas in the Enterprise Customers MVNO contract (as a virtual fields of Internet services and Whether voice or data, mobile or network operator). It also digital business models and also fixed-line, individual products or provides comprehensive network encompasses business with integrated solutions: Enterprise services and customised solutions online directories and telephone Customers designs, implements for corporate customers. directories (localsearch). and operates entire ICT infra- structures for corporate customers. IT, Network & Infrastructure The division plans, operates and maintains the network and IT infrastructures in Switzerland. Wholesale The Wholesale segment provides other telecommunication service providers with access to the Swisscom fixed and mobile networks. Revenue Revenue Revenue CHF 8.8 bn CHF 2.4 bn CHF 0.9 bn EBITDA EBITDA EBITDA CHF 3.4 bn CHF 0.8 bn CHF 0.2 bn 5 Shareholders’ letter Shareholders’ letter Shareholders’ | Good performance – Introduction solid results Dear Shareholders 20 years of Swisscom – 20 years of pioneering work and investment in reliable infrastructure to support the Swiss business community. In 2018, we celebrated our 20-year anniversary as a public limited and listed company. During this anniversary year, Swisscom continued to hold its ground in an extremely challenging environment and achieved its financial targets. An impressive market performance permitted Swisscom to generate revenue that was practically on a par with the previous year. Fastweb posted another pleasing performance, growing its revenue and expanding its customer base. Visiting the historic cable tunnel on Bollwerk street in Berne, where the latest fibre-optic and copper cables provide parts of the city 6 with Internet. Targets achieved thanks to innovation and capital expenditure An increasingly saturated market, pressure on prices and costs and fierce competition in its core business are all having an impact on Swisscom’s operations and activities.
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