The dividend policy adjusted in 2007 envisages that Swisscom pays out up to half of the OpFCF to its shareholders, with however the previous year's dividend as a minimum amount. Neither dividends nor nominal value repayments are paid out on shares acquired by Swisscom as part of its share buybacks.
In each of the years 2004, 2005 and 2006, Swisscom paid out 100% of the Equity Free Cash Flow (EFCF) with the difference between EFCF and dividend in the form of share buybacks. You can find all the information on Swisscom share buybacks here.
The 2006 share buyback is based on the dividend policy communicated in 2003. The key element of this dividend policy is that all the Equity Free Cash Flow (EFCF) is made available to the shareholders and not just a portion of the clear profit. Swisscom defines the EFCF as follows: net earnings from operative business less net investments in fixed assets and remaining intangible assets (CAPEX), acquisitions and disposal of shareholdings, debt redemption (without leasing liabilities) and profit distribution to minority shareholders.
The Equity Free Cash Flow earned in the 2005 financial year was CHF 2.2 billion. The dividend payout of CHF 16 per share, corresponding to a distribution of profits of CHF 907 million, was based on the shareholding on 28 April 2006. The remaining part of the Equity Free Cash Flow of CHF 1.25 billion is paid out to the shareholders through share buybacks in accordance with dividend policy. As announced on 16 February 2006, the share buyback is increased by a special distribution of funds amounting to CHF 1 billion.
The share buyback in 2006, amounting to approximately CHF 2.2 billion, was based on the allocation of free put options. Swisscom acquired 8.0 per cent of the registered shares, thus restoring shareholder liquidity. One put option per share was allocated to the shareholders. Two shares were sold to Swisscom for every 23 put options at the strike price of CHF 450. The options were traded on the Swiss Stock Exchange SWX on ten trading days.
In 2006 the shareholders benefited from dividends amounting to CHF 3.16 billion. Click here for more on the results of the 2006 share buy-back.
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