26 March 2002
Thanks to improvements in its operating business and a targeted investment policy over the past few years, the Swisscom Group is in an extremely robust financial shape: at the end of 2001 net funds stood at CHF 2.9 billion while cash and cash equivalents and current financial assets amounted to CHF 7.1 billion. The cash position allowed Swisscom to buy back own shares in a value of CHF 4.3 billion, a program which was successfully completed in March 2002. At the Shareholder´s Meeting the Board of Directors of Swisscom will propose that the repurchased shares be cancelled and the Group´s share capital reduced accordingly by 9.99%.
At the Shareholders´ Meeting on 30 April 2002 the Board of Directors of Swisscom Ltd will propose an unchanged dividend of CHF 11 as well as a decrease in share capital via a reduction in par value by CHF 8. Subject to the approval of the Shareholders´ Meeting, CHF 19 per share will therefore be paid out to shareholders. This will amount to a total distribution to shareholders of CHF 1.26 billion. In addition, shareholders benefited from Swisscom´s healthy financial position in March 2002 when they were assigned put options under the share buy-back scheme.
Swisscom posted revenue of CHF 14,174 million in 2001, representing a year-on-year increase of 0.8%. Operating income before interest, tax, and depreciation and before the gain on the sale of real estate (EBITDA) increased by 9.3% to CHF 4,409 million. This increase is primarily attributable to the ongoing success of Swisscom Mobile. Operating income before the sale of real estate and an impairment charge in respect of debitel amounted to CHF 2,235 million, representing a year-on-year increase of 22.1%. The sale of 25% of Swisscom Mobile Ltd to Vodafone generated a gain of CHF 3,837 million, while the sale of real estate resulted in a gain of CHF 568 million.
In the fourth quarter of 2001 Swisscom reviewed the value of its shareholdings. This resulted in impairment charges of CHF 1,130 million and CHF 219 million on the debitel and Infonet holdings respectively. A CHF 199 million writedown was made on the loan to UTA of Austria. At CHF 4,964 million, net income for the Swisscom Group is 57% higher than in 2000.
The positive performance of the Swisscom Group´s operating business is also reflected in the marked increase in traffic volumes, which rose by over 13% in both the fixed and mobile network.
Despite tariff reductions introduced on 1 March 2000, Fixnet ? Retail and Network reported stable revenue from external customers of CHF 3,126 million. Access revenue grew by 4.3% as a result of migration from analog to digital (ISDN). Due to tariff reductions and a decline in traffic, particularly in the local area, revenue from national telephony traffic fell by 6%. Swisscom benefited from an increase in the volume of international telephony traffic and held onto its share of this market. Revenue from value added services rose by 29.1% thanks to the sharp increase in Internet traffic. At CHF 1,691 million, EBITDA in this segment was 1.5% higher than the previous year.
Fixnet ? Wholesale and Carrier Services reported stable revenue from external customers of CHF 1,298 million. National wholesale business posted a 22.8% increase in revenue, as a result of the rise in revenue from interconnection due to gains in market share by rival carriers as well as growth in leased lines. Revenue from international wholesale business rose by 24.7% to CHF 283 million due to higher volumes and increased revenue reported by Swisscom North America. A 35% decline in revenue from incoming international traffic was largely attributable to tariff reductions. Intersegment revenue rose sharply as a result of an increase in Internet traffic and transit traffic to the mobile network. As a result of the overall increase in net revenue, EBITDA for the segment rose to CHF 152 million..
Compared with the previous year, Enterprise Solutions reported a 2.1% drop in revenue from external customers to CHF 1,796 million. Tariff reductions introduced on 1 March 2000 as well as a decline in national traffic volumes led to a reduction in revenue from telephony traffic. Revenue from external customers for managed network services dropped by 10.6% compared with the previous year due to a sustained reduction in prices, which cannot be offset by the growing demand for broadband . However, Corporate Communications Solutions reported strong ongoing demand for IP (Internet Protocol) based products and posted a 22.8% increase in revenue. Swisscom anticipates further growth in this business area. Cost reductions were unable to offset the fall in revenue for this segment. EBITDA for the segment as a whole fell compared with the previous year by 6.4% to CHF 247 million.
As part of the measures already announced in the human resources area, approximately 500 and 120 full-time positions are to be cut at Swisscom Fixnet and Enterprise Solutions respectively up to the end of 2002. Wherever possible this will be achieved through normal staff turnover. Employees affected by these measures are entitled to comprehensive benefits under the Swisscom Group´s well-developed "social plan".
Revenue from Mobile rose year-on-year by 14.5% to CHF 3,127 million. With high market penetration of around 70%, growth in the Swiss mobile market slackened off. Swisscom Mobile played a successful part in the growth of this market and managed to maintain its high market share. The customer base increased to 3.37 million, including a year-end adjustment of 207,000 for inactive prepaid customers. This growth was primarily due to an increase in the number of contract-customers. Voice revenue rose 14.9% year-on-year to CHF 2,092 million on account of the extended customer base. In the data business, revenue rose by 79.6% to CHF 273 million largely as a result of growth in the SMS area. At CHF 83, average revenue per user and month (APRU) was below the previous year´s level of CHF 89. Customer acquisition costs were significantly below the previous year´s level due to the slowdown in customer growth and the targeted reduction of dealer commissions in the prepaid area. EBITDA improved by 26.5% to CHF 1,876 million, with an EBITDA margin of 47.1%.
debitel posted a local-currency fall in revenue of 3% compared with the previous year. In Swiss francs, the fall in revenue is greater due to currency movements. Growth in the German mobile market slowed in 2001. Tariff reductions and lower commissions and hardware sales led to a 9.5% fall in revenue in Swiss franc terms from debitel´s mobile business in Germany. By contrast, revenue from its non-German business advanced by 10.7% in Swiss francs as a result of positive performance in France, the Netherlands and Denmark. In 2001 subscriber numbers increased in all countries, exceeding the 10 million mark for the first time. In November 2001 debitel acquired Talkline Nederland, a Dutch company. EBITDA at debitel rose by 12% to CHF 187 million in 2001. This improvement is attributable to sound performance in non-German business, which posted positive operating income in all countries
Revenue from Other areas fell by 8.4% to CHF 1,019 million. This was largely attributable to the 20.9% decline in net revenue from Swisscom Systems to CHF 477 million. The reduction in earnings from the rental and sale of private branch exchanges was offset by an increase in revenue from service business. Revenue from broadcasting fell by 10.9%, largely due to the amended framework agreements with the Swiss Broadcasting Corporation (SRG) and the sale of the satellite business. Internet service provider Bluewin increased revenue from external customers by 22% to CHF 61 million, primarily as a result of higher volumes. In 2001 the number of subscribers rose by 19.2% to 715,000. EBITDA for the segment decreased by 7.8% to CHF 142 million. While the first-time consolidation of Swisscom Directories contributed to an increase in EBITDA, lower revenue and a smaller margin at Swisscom Systems combined to produce an overall decline.
During the course of 2002 Swisscom will introduce a new, more advanced pension plan. This change resulted in an extraordinary contribution payment of CHF 240 million for 2001. Additionally, Swisscom paid a one-off special contribution of CHF 200 million to its own comPlan scheme for the establishment of a value fluctuation reserve, this amount being charged to existing provisions without affecting net income. comPlan has only been operational since 1999 and in contrast to other Swiss pension schemes has no asset fluctuation reserve because it had only 100% coverage when it became independent of the federal government.
Year-on-year personnel expenses fell by 2% to CHF 2,461 million. This includes costs of CHF 92 million (compared to CHF 122 million in the previous year) for job reduction measures. The average number of employees expressed in FTEs remained stable at 20,988. Excluding debitel, the number of FTE´sincreased by 1.9% to 17,784 as a result of the merger of Swisscom IT with AGI IT Services AG.
Swisscom aims to hold on to its leading position in its core business in the Swiss market and, with debitel, to defend its leading position as a network-independent service provider in the European market. Due to the high penetration rate, mobile communications markets in Switzerland and abroad are expected to grow only slightly. In the fixed network business Swisscom expects continued pressure on margins.
Swisscom expects a slight growth in revenue for 2002 and is aiming to achieve the same EBITDA level as the previous year. Since the non-recurring gains generated by the sale of real estate and the disposal of the 25% shareholding in Swisscom Mobile will be absent this year, net income for 2002 is expected to be significantly lower.
For a copy of the Annual Report, visit:
Berne, 26 March 2002
This communication contains statements that constitute "forward-looking statements". In this communication, such forward-looking statements include, without limitation, statements relating to our financial condition, results of operations and business and certain of our strategic plans and objectives.Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by the statements. Many of these risks and uncertainties relate to factors which are beyond Swisscom´s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the actions of governmental regulators and other risk factors detailed in Swisscom´s past and future filings and reports filed with the U.S. Security and Exchange Commission and posted on our websites. Readers are cautioned not to put undue reliance on forward-looking statements, which speak only of the date of this communication. Swisscom disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.