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Press release

1999 Annual Report: Swisscom posts higher net income

22 March 2000

The Swisscom Group raised revenues by 6.7% to CHF 11.16 billion in 1998 follo-wing consolidation of debitel with effect from October 1, 1999. Net income rose by around 54% to CHF 2.39 billion. This result is due to extraordinary gains from affiliated companies and the elimination of losses from discontinued operations. Swisscom"s Executive Board will propose an increase in dividend from CHF 11 to CHF 15 at the Shareholders" Meeting on May 30, 2000. Swisscom expects increased revenues, lower operating income and higher net income for the year 2000.

Losses in market share and a slide in charges for fixed-line telephony have left their mark on the financial statements of the Swisscom Group. Annual revenues would have come out 2.1% lower if debitel were excluded. The strong decline in voice communication was not balanced by growth in mobile telephony.

The increase in operating expenses from CHF 6.1 billion to CHF 6.8 billion is mainly due to the consolidation of debitel. Excluding extraordinary effects, operating expenses went up by CHF 103 million. This increase is primarily as a result of increases in IT, advertising and promotion. On a comparative basis, staff numbers were reduced by around 11%. At the close of 1999 the number of full-time equivalent posts including debitel was 21,777. The Perspective Project was agreed with unions in May 1999. The measures under this scheme and other restructuring activities incurred expenses of CHF 249 million.

Affiliated companies generated a gain of CHF 301 million. This gain in large part reflects the successful disposal of holdings within Unisource. The long-term involvement in Unisource has thus proved positive. The stake in Malaysian mobile network operator DiGi Swisscom Berhad was sold. The sale realized a gain of CHF 183 million from discontinued operations.

Consolidated net income amounted to CHF 2.39 billion. Owing to the extraordinary gains from affiliated companies and the elimination of losses from discontinued operations it increased by around 54% over 1998.

Swisscom hives off Blue Window and prepares for flotation

Swisscom has decided to hive off Internet service provider Blue Window as a stock corporation on May 1, 2000. The aim is to increase the flexibility for strategic partnerships and promote growth. A task force is being set up to make preparations for the likely stock-market debut of Blue Window in the second half of 2000. A definitive decision on the timing and structure of the flotation will be made later in the year.


Outlook 2000: Higher net income expected despite falling operating income

In the year 2000, debitel will be included for the first time in the consolidated financial statements for a complete fiscal year. This will entail a substantial increase in revenues. The Swiss market will experience falling revenues in an environment of ongoing fierce competition and sustained downward pressure on prices. Swisscom anticipates a downturn in operating income by comparison with 1999. The disposal of its stake in Cablecom Holding AG will contribute around CHF 1.35 billion to the Group´s extraordinary gain for the year 2000. Swisscom is also planning to dispose of part of its property portfolio. Appropriate market conditions and a successful conclusion to this project should result in a book gain for Swisscom from this sale. Swisscom expects these extraordinary transactions to increase net income for fiscal 2000.


Swisscom 1999 Annual Report:

(CHF in millions)



Deviation. 99/98

Net revenues




Operating expenditure




Operating income before restructuring costs and depreciation (EBITDA) 1)




as a % of net revenues



Depreciation (capital)




Depreciation (goodwill)



Operating income before restructuring costs




as a % of net revenues




Restructuring costs



Operating income after restructuring costs




Equity in net income (loss) of associated companies




Net income (loss) on usual business




Net income (loss) on discontinued activities




Net income




Net income per share




Gross dividend (CHF)


15 (2)


(1): Operating income before restructuring costs and depreciation
(2): Proposal of the Board of Directors to the Shareholders´ meeting

Swisscom will present the comprehensive report on 13 April 2000 at a press conference in Zurich.

Berne, 22 March 2000


Swisscom AG
Media Relations
3050 Bern