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General conditions

Macroeconomic environment

Swisscom’s financial position, results of operations and cash flows are primarily influenced by macroeconomic factors, notably economic trends, interest rates, exchange rates and the capital markets.

Economy

The performance of the Swiss economy in 2015 was influenced by monetary policy decisions of the Swiss National Bank (SNB) and an economic recovery in the euro area. Economic growth is subdued and is being driven primarily by consumer spending. The unemployment rate has risen slightly, while inflation, as measured by the national consumer price index, is negative.

The bulk of Swisscom’s revenue from telephony and broadband services comes from fixed monthly fees and is subject to low cyclical fluctuations in demand. Project business with corporate customers, on the other hand, is more sensitive to cyclical factors.

Interest rates

The general level of interest rates in Switzerland has historically been lower than in most other industrialised countries. In 2015, the level of and movements in interest rates were determined to a large extent by the monetary policy of the SNB and the European and US central banks. The SNB lifted the cap of CHF 1.20 against the euro on 15 January 2015 and at the same time introduced negative interest rates for sight deposits. As a result, the yields on 10-year Confederation bonds also fell into negative territory. At the end of 2015 they stood at minus 0.05%.

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The level of interest rates has a direct impact on funding costs and also affects the valuation of various items in the balance sheet such as assets, long-term provisions and pension liabilities. Swisscom AGain took advantage of the ongoing period of low interest rates in 2015 for various financing transactions. It issued bonds for CHF 400 million and EUR 500 million with maturities of between 8 and 20 years and also took out a 5-year fixed-rate bank loan of EUR 200 million, all at favourable terms of interest. The proportion of variable interest-bearing financial liabilities stands at 24%. The interest expense on all financial liabilities averaged 2.3% in 2015 (prior year: 2.6%). In addition, Swisscom has in the past concluded interest rate swaps with long terms to maturity which are not classified under hedge accounting. Changes in market interest rates can result in high fluctuations in fair values charged to income.

Exchange rates

On 15 January 2015, the Swiss National Bank (SNB) announced it would no longer defend the minimum CHF/EUR exchange rate of 1.20. As a consequence, the Swiss franc appreciated substantially, particularly against the euro. At the end of 2015, the exchange rate of the euro to the Swiss franc was 9.8% below the level at year-end 2014.

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These exchange rate movements have not had a direct material impact on Swisscom’s business. Only a small share of Swisscom’s revenue in Switzerland is generated in foreign currencies. Handset and technical equipment procurement as well as roaming charges incurred for the use of fixed and mobile networks abroad by Swisscom customers give rise to transaction risks in foreign currencies (notably EUR and USD). These risks are partly hedged by forward foreign exchange transactions.

Swisscom mostly funds itself in Swiss francs, although the proportion of financial liabilities in euros has gradually increased in the last three years, particularly as a result of bond issuance activity. This has led to a better diversification of funding sources. At the end of 2015, financial liabilities amounted to CHF 8.6 bil­lion, of which 66.8% was in CHF, 31.5% in EUR and 1.7% in USD. Currency translations in respect of foreign Group companies, in particular Fastweb in Italy, affect the presentation of the financial position and results of operations in the consolidated financial statements. Cumulative currency translation adjustments in respect of foreign subsidiaries recognised in consolidated equity before deduction of tax effects amounted to CHF 2.2 bil­lion in 2015 (prior year: CHF 2.0 bil­lion). A portion of the liabilities in EUR has been designated as a currency hedge of the net investment in Fastweb.

Capital market

International equity markets had a slightly positive year in 2015, while the Swiss leading index, SMI, fell by 1.8%. Swisscom holds surplus liquidity in the form of cash and cash equivalents and short-term money-market investments. There are only insignificant direct financial investments in equities or other non-current financial assets. comPlan, Swisscom’s legally independent pension fund in Switzerland, has total assets of around CHF 9.3 bil­lion invested in equities, bonds and other investment categories. These assets are thus exposed to capital market risks. This indirectly affects the financial position presented in Swisscom’s consolidated financial statements.

See www.swisscom.ch/​investor

Legal and regulatory environment

Swisscom’s legal framework

Swisscom is a public limited company with special status under Swiss law. It is organised in compliance with the Telecommunications Enterprise Act (TEA), company law and the company’s Articles of Incorporation. Its business operations are governed primarily by telecommunications and broadcasting legislation. Swisscom is also subject to rules governing business as a whole, namely competition law. As a stock-exchange-listed company, Swisscom is also required to comply with capital market legislation as well as with the Federal Ordinance against Excessive Compensation in Listed Stock Companies.

Telecommunications Enterprise Act (TEA) and relationship with the Swiss Confederation

As of 1 January 1998, the former operations of Swiss Telecom PTT were legally transformed into “Swiss Post” and “Swisscom Ltd” (hence the term “public limited company with special status”). Under the terms of the TEA and the company’s Articles of Incorporation, Swisscom is responsible for the provision of domestic and international telecommunications and broadcast services as well as related products and services. The TEA requires the Swiss Confederation to hold a majority of the capital and voting rights in Swisscom. For the Swiss Confederation to give up its majority shareholding, the TEA would need to be amended. Swisscom is also obliged to draw up a collective employment agreement in consultation with the employee associations. Every four years the Federal Council defines the goals which the Confederation as principal shareholder aims to achieve. These include strategic, financial and personnel policy goals as well as goals relating to partnerships and investments. To guarantee transparency, the goals are made public to other investors. The aims of the Confederation are incorporated in the strategic and operating targets set by the Swisscom Board of Directors. For the year under review, the goals for the period 2014 to 2017 are relevant. The Federal Council has set the following financial goals for Swisscom:

  • Increase enterprise value over the long term. Deliver a total shareholder return (dividend payout and share performance) on a par with that of comparable telecoms companies in Europe.
  • Pursue a dividend policy that follows the principle of consistency and guarantees an attractive dividend yield commensurate with other stock-exchange-listed companies in Switzerland. It should reflect the requirements of a sustainable investment policy, a risk-appropriate, industry-standard equity ratio and easy access to capital markets at all times.
  • Aim for a maximum net debt of 2.1 times EBITDA (operating income before depreciation and amortisation). This ratio may be temporarily exceeded.

The Federal Council also expects Swisscom to enter into partnerships (participations, alliances, foundation of companies and other forms of cooperation) only if they promote a sustained increase in enterprise value, can be managed well and take sufficient account of potential risks. No interests may be held in foreign telecoms companies with a universal service obligation. Other interests in foreign companies may be acquired if they support the core business in Switzerland or are otherwise a strategic fit.

See www.admin.ch
Telecommunications Act (TCA)

The Telecommunications Act governs the conditions under which market-dominant providers of telecoms services are required to make their network available to other providers. The Act covers a comprehensive catalogue of access types and in the connection area is restricted to copper cables. The access services cited in the Act must be offered at regulated conditions and above all at cost-based prices. In addition to network access, the Act governs universal service provision, laying down the framework for the reliable and affordable provision of basic telecommunications to all sections of the population in all regions of the country. The scope of services as well as the related quality and pricing requirements are determined periodically by the Federal Council. Among other things, universal service provision covers guaranteed nationwide access to a broadband connection with a download speed of at least 2 Mbps. The universal service provision licence granted to Swisscom in 2007 by the Federal Communications Commission (ComCom) runs until 2017. To date, Swisscom has fulfilled the requirements of the universal service provision licence according to the quality criteria laid down by the TCA without complaints and without financial compensation. The Telecommunications Act also governs conditions for use of the radio frequency spectrum.

See www.admin.ch
Competition law/Federal Cartel Act

The Cartel Act prohibits anti-competitive agreements between companies, provides for sanctions in the event of abuse by companies of their market-dominant position, and prohibits business combinations that result in the elimination of competition. Discrimination of trading partners with respect to prices or other business conditions is considered to be an example of abuse.

See www.admin.ch
Capital market law

The shares of Swisscom Ltd are listed on the SIX Swiss Exchange in Zurich. In addition, Swisscom has issued debenture bonds which are traded on the SIX Swiss Exchange. Swisscom is therefore required to comply with Swiss stock market legislation and regulations. It is subject, for example, to the regulations governing accounting and financial reporting as well as the rules relating to ad-hoc publicity and it is required to disclose transactions in Swisscom securities by members of the Board of Directors and the Group Executive Board. Shareholdings in Swisscom must also be disclosed if they exceed, fall below or meet a certain limit.

Regulatory developments in Switzerland in 2015
Ongoing proceedings relating to telecommunications and competition legislation

In recent years, a number of proceedings relating to telecommunications and competition law have been initiated against Swisscom. In October 2015 the Federal Administrative Court partly upheld Swisscom’s appeal against the sanction imposed by the Competition Commission for alleged market abuse of broadband services in the period up to the end of 2007 and reduced the fine from CHF 220 million to CHF 186 million. Swisscom does not consider the sanction justified and has lodged an appeal with the Federal Supreme Court. Further information on ongoing proceedings is contained in Notes 28 and 29 to the consolidated financial statements.

See report pages 190–192
“Pro Service Public” initiative

The popular initiative “Pro Service Public”, submitted in June 2013 by a Swiss consumer magazine, calls for the Swiss Confederation to desist from seeking profit, cross-subsidising or pursuing fiscal interests in the public services and to bring the wages of employees in government-associated companies in line with those of federal employees. The Federal Council and Parliament rejected the initiative without a counterproposal. The referendum on the initiative will be held in June 2016.

Revision of the Telecommunications Act (TCA)

The Federal Council opened the consultation on the revision of the TCA on 11 December 2015. It seeks to tackle the legislation in two stages. The first stage will be confined to the most pressing problems. The second stage will focus on a system change in the access regime and fundamental amendments regarding universal service provision. Swisscom welcomes the Federal Council’s decision to exclude the delicate, politically contentious issues of extending price regulation to broadband networks and state-financed broadband expansion from the forthcoming revision of the TCA. Along with mainly formal and technical amendments, the revision of the TCA will focus on intensifying certain market interventions. For example, the system of access regulation is to be adapted to EU mechanisms and the negotiating principle effectively abolished. In addition, regulation of roaming prices and bundled offerings is to be made possible. Swisscom is of the opinion that such legal tightening would negatively affect competition and thus interfere with the positive market results. Legal regulation is also to be extended to justified concerns regarding the protection of consumers and minors and the issues of network expansion and net neutrality. However, as shown in recent years, these issues can be addressed more easily and more effectively through other means, for example, industry solutions (self-regulation) such as the round table for coordinating the expansion of the fibre-optic network, the code of conduct on net neutrality and the asut industry initiative for improved youth media protection.

Revision of the Ordinance on Telecommunications Services (OTS)

The Federal Council opened the consultation on the 2018 revision of the universal service provision on 29 September 2015 and Swisscom made a submission while the consultation was open. Swisscom’s submission is critical of the planned adjustment of price limits, as it sees this as unjustified interference in market mechanisms, and of the increase in the minimum bandwidth for broadband internet access, as an increase in bandwidth by 1 Mbps would lead to considerable costs without bringing customers any significant benefit. However, Swisscom praises the fact that the need for a technological switch to IP technology has been recognised.

Roaming

There were two pending motions in Parliament which aimed to regulate roaming along the same lines as in the EU. These would have required the Federal Council to fix binding maximum tariffs to be adopted by all telecoms providers for incoming and outgoing calls, SMS messages and data transfers via mobile devices when used abroad. The Council of States suspended both motions, which were similarly worded, to give the industry time to respond. On 9 March 2015, a majority in the Council of States supported the view that the telecoms companies had cut excessive prices in the intervening period and there were now sufficient alternatives in the form of WiFi, Skype and other products. The motions were then rejected.

Net neutrality

On 17 June 2014 the National Council approved a motion to force the Federal Council to enshrine net neutrality in law. The Council of States rejected the motion on 16 March 2015. Its Advisory Commission took the view that there was no urgent need for action. In doing so it followed the lead of the Federal Council, which, according to Federal Councillor Leuthard, for the time being is putting its faith in the code of conduct agreed by the sector at the end of 2014. As part of the revision of the Telecommunications Act started at the end of 2015, the Federal Council wants to obligate the telecommunications service providers to inform the public if data is treated differently during transmission.

Copyright protection – consultation for a revision of the Copyright Act

In December 2015 the Federal Council opened the consultation for a revision of the Copyright Act. The Copyright Act is to be modernised and piracy better combated. The planned provisions largely follow the recommendations of the Copyright Act working group. Swisscom has an interest in the proper function of copyright law and is of the opinion that the submission largely reflects the concerns of the various interest groups on a balanced basis.

Revision of the Federal Law on the Monitoring of Postal and Telecommunications Traffic (BÜPF)

In February 2013, the Federal Council submitted to Parliament its message proposing a revision of the BÜPF. The aim of the revision is to ensure that the required monitoring cannot be prevented through the use of modern technologies. The current fee and payment model for telecommunications services would be retained. The bill is still under discussion in Parliament.

Regulatory differences between Switzerland and the European Union

In the European Union (EU), the regulatory authorities have extensive powers to analyse markets and impose obligations on market-dominant companies relating to non-discrimination, transparency and forms of access (“ex-ante regulation”). The Swiss government has rejected such all-encompassing regulation, as the market situation in Switzerland is different from most EU member states. The Swiss market is characterised by virtually nationwide competition between Swisscom and the cable network operators. Municipal and regional power utility companies have also now entered the market. The market situation prevailing in Switzerland therefore necessitates a different form of regulation than in countries such as France and Italy, where there is largely a single network provider and no platform competition has evolved.

Legal and regulatory environment in Italy
Fastweb’s legal framework

As a member of the European Union, Italy is required to bring national legislation into line with the European legislative framework. The Italian telecoms regulator, Autorità per le Garanzie nelle Comunicazioni (AGCOM), has the task of imposing regulatory requirements on companies, based on an analysis of the markets defined by the European Commission. Drafts of such requirements and corresponding regulations must be submitted to the European Commission and the regulatory authorities of the other member states, who have the right to comment on or veto the draft. The business operations of Swisscom’s Italian subsidiary Fastweb are therefore heavily influenced by Italian and European telecommunications legislation and its application.

Regulatory developments in Italy in 2015

AGCOM continued its work on the market analysis for wholesale markets in 2015, which will determine the regulatory guidelines for the next three years. It published a new consultation paper in February 2015, and in July 2015 it issued the draft of the final decision which was communicated to the European Commission. AGCOM is proposing to cut the wholesale prices which were last approved in 2013 for the period 2015 to 2017. It is also recommends permitting the outsourcing of activation and maintenance services for wholesale connections to qualified external technicians. AGCOM also supports improvements in the service agreements and incentives and sanctions to increase the penetration with unbundled subscriber lines.

AGCOM issued a decree in April 2015 putting into effect a decision of the Italian Supreme Administrative Court. Under this decree, the increase in wholesale prices for the years 2009 and 2010 to 2012 were annulled; the prices for unbundled subscriber lines were also cut retrospectively for the years 2010 to 2012. A second decision on the revision of prices for WLR (Wholesale Line Rental) and bitstream services is still pending.

AGCOM completed a new market analysis of mobile termination fees in 2015. In it AGCOM proposes that mobile termination fees for all mobile network operators in the period 2015 to 2017 should be based on a wholesale price of 0.98 cents per minute. AGCOM sent the draft of the final decree to the European Commission in July 2015. The final decree is expected to be ratified by the end of 2015. AGCOM also proposes giving mobile network operators the opportunity to determine termination fees for countries outside the EU on the principle of mutuality. Full-service MVNOs will in future also be subject to the regulated termination fees.

AGCOM has commissioned a new market analysis on fixed network termination fees. A public consultation is expected at the beginning of 2016.

Swisscom stakeholder groups

Swisscom engages in dialogue with stakeholder groups depending on how close the relationship is and on the individual stakeholder group’s interests. The size of the stakeholder group is a key factor in determining what kind of dialogue is possible. The Swisscom website provides an overview of our stakeholder groups.

Customers

Swisscom systematically consults residential customers in order to identify their needs and determine their satisfaction. Customer relationship managers, for example, gather information on customer needs in the course of direct contact with customers. Representative customer satisfaction surveys are also regularly conducted, among other things to determine the extent to which customers perceive Swisscom as an environmentally responsible, socially aware company.

Periodic surveys are conducted among business customers in which sustainability is among the issues addressed. Swisscom also maintains regular contact with consumer organisations in all language regions of Switzerland and runs blogs as well as online discussion platforms. The overall findings show that customers expect attractive pricing, good service, market transparency, responsible marketing, comprehensive network coverage, network stability, low-radiation communication technologies and sustainable products and services.

Shareholders and external investors

Besides the Annual General Meeting, Swisscom fosters dialogue with shareholders at analysts’ presentations and road shows and in regular teleconferences. As the principal shareholder, the Confederation holds a position on Swisscom’s Board of Directors and stipulates goals for Swisscom on a four-year horizon. Swisscom is also in regular contact with numerous external investors and rating agencies. Shareholders and external investors expect above all growth, profitability and innovation from Swisscom.

Authorities/residents

Swisscom maintains regular, close contact with various public authorities. A key issue in its dealings with this stakeholder group concerns mobile network expansion. Mobile data applications are becoming increasingly popular with customers. But while mobile communications are clearly appreciated and widely used, the expansion of the infrastructure required to provide these services does not always meet with the same level of support.

Network expansion gives rise to tension because of the different interests at stake. Swisscom has been engaged in dialogue with residents and municipalities on network planning for many years. In the case of construction projects, it gives the parties affected an opportunity to suggest suitable alternative locations. Swisscom also liaises regularly with public authorities in other areas and on other occasions: for example, it invites the ICT heads of the cantonal education authorities to an annual two-day seminar on the subject of “Internet for Schools”. As a stakeholder group, public authorities expect Swisscom to act decisively in the way it honours its responsibility towards the public at large and towards young people in particular.

Legislators

Swisscom is required to deal with political and regulatory issues. It represents the company’s interests vis-à-vis political parties, public authorities and associations. Legislators expect compliance, comprehensive network coverage and technology leadership from Swisscom.

Suppliers

Swisscom’s procurement organisations regularly deal with suppliers and supplier relationships, analysing the results of evaluations, formulating target agreements and reviewing performance. Once a year, they invite their main suppliers to a Key Supplier Day. The focus of the event is on risk mitigation and responsibility in the supply chain. In the interests of maintaining dialogue with global suppliers, Swisscom also relies on international cooperation within the relevant sectors.

Media

Swisscom maintains close contact with the media, seven days a week. Its relationship with the media is informed by professional journalistic principles. In addition to the Media Office, representatives of management maintain a regular dialogue with journalists and make themselves available for interviews and more in-depth background discussions.

Employees and employee representation

In order to meet its mandate and live up to its customer promise, Swisscom relies on fully committed, responsibly minded employees who think and act proactively. It is our employees who transform Swisscom into a tangible experience for customers. Swisscom gains valuable information from the dialogue with customers. The information gathered at the customer interfaces flows back to the company and permits Swisscom to continually improve its products and services. Using a wide range of communication platforms and activities, Swisscom promotes a corporate culture that encourages dialogue and cross-collaboration within the company. Every two years, Swisscom conducts an employee survey, the results of which provide ideas for new projects and measures. Helping to shape Swisscom’s future is one of the most important tasks of the Employee Representation Committee. Twice a year, Swisscom organises a round-table meeting with the employee representatives. Employee concerns mainly relate to social partnership, training and development, diversity, and health and safety at work. Swisscom engages in dialogue with teams from all organisational units on sustainability issues, under the motto “Hello Future”. Through this dialogue, Swisscom keeps its employees up to date on its work in the area of sustainability and encourages them to implement sustainability measures in their daily work and life.

Partners and NGOs

Swisscom believes in the importance of sharing insights and information with partners within the framework of projects; for example, with WWF Climate Savers, myclimate, the Swiss Child Protection Foundation and organisations that address the specific needs of affected groups. Active partnerships and Swisscom’s social and ecological commitment are especially relevant for the partners and NGOs stakeholder group.

Market trends in telecoms and IT services

Swiss telecoms market

Switzerland has three mobile networks and several fixed-line networks. TV signals in Switzerland are transmitted terrestrially via antenna as well as satellite. The Swiss telecoms market is highly developed by international standards. It is characterised by innovation, a wide range of voice and data services and television signal broadcasting. Total revenue generated by the telecoms market in Switzerland is estimated at around CHF 13 bil­lion. The market is in a phase of transition, driven by the growing convergence of telecommunications, information technology, media and entertainment. The constant advancement of digitisation and connectivity is a further key trend. More and more new global competitors are entering the Swiss telecoms market, offering both free and paying Internet-based services including telephony, SMS messaging and TV. Cloud solutions are also playing an ever more important role, with storage capacity, processing power, software and services all relocating to an increasing degree to the Internet. Customers’ needs are also continuing to change. Increasingly, customers are accessing data and applications from just about anywhere and at any time using a whole range of different Internet-enabled devices. The result is a rapid growth in demand for high bandwidths that enable fast, high-quality access. To address this trend, Swisscom is building the network infrastructure of the future. It is tackling the relentless growth in data traffic by continuously expanding fixed broadband access and further expanding new technologies in the mobile network, such as 4G/LTE (Long Term Evolution). In addition, Swisscom’s bundled offerings combine different technologies such as fixed-line access with telephony, Internet and TV, plus the option of a mobile line. The Swiss telecoms market can thus be broken down into the following submarkets of relevance to Swisscom: mobile, broadband, TV and fixed-line telephony.

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Mobile communications market

Three companies operate their own wide-area mobile networks in Switzerland: Swisscom, Salt and Sunrise. The Swiss mobile communications market is continuing to change rapidly. This is demonstrated, for example, by the sale of Orange and subsequent change of name from Orange to Salt and the initial public offering of Sunrise at the beginning of 2015. Another major market player, upc cablecom, offers its own mobile services via Salt’s network (as an MVNO, mobile virtual network operator). Swisscom also makes its mobile communications network available to third-party providers so that they can offer their customers proprietary products and services over the Swisscom network.

The demands being placed by users on the mobile networks are constantly rising. In order to offer customers optimum data connectivity, Swisscom is constantly investing in the latest technologies for its mobile network. Growth in mobile lines (SIM cards) in Switzerland was once again slow in 2015 due to the already high market penetration. Together, the three network operators have a combined total of more than 11 million mobile lines; penetration in Switzerland is around 135%. The technical possibilities offered by mobile communications are continuing to increase due to the rapid spread of smartphones. The newly launched mobile offerings such as Natel infinity plus reflect customers’ changing needs. These subscriptions allow Swisscom customers to make unlimited phone calls and send unlimited SMS messages to all Swiss networks, as well as unlimited Internet surfing at flat rates. The individual offerings mainly differ in terms of mobile data speeds and the number of days of inclusive usage abroad. Swisscom offers occasional users of the mobile network prepaid services with no monthly subscription fee.

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In 2015, Swisscom’s market share remained stable at 59% (postpaid 64%, prepaid 50%). The percentage of postpaid customers in Switzerland is around 62%. As in previous years, prices for mobile services continued to be squeezed by competition in 2015.

Fixed-line network

Switzerland has almost 100% coverage of fixed broadband networks. Alongside the fixed-line networks of the telecoms companies such as Swisscom and Sunrise there are also the cable networks of upc cablecom and other small and medium-sized cable network operators. Moreover, new market players such as utilities operating in particular cities and municipalities are building and operating fibre-optic networks on their own initiative at a regional level. In order to meet the rising demands on the networks, Swisscom is investing heavily in its existing fixed network to create a high-performance ultra-fast broadband network based on the latest fibre-optic technology. The digital internet protocol (IP) used on this network will replace the traditional communications technology in the medium term. IP technology makes it possible to combine different services quickly and flexibly over the same network and launch them on the market more quickly than in the past. The fixed broadband connection is therefore increasingly developing into the key access point for customers. It is the basis for a wide-ranging product offering from both national and global competitors. Alongside individual products, Swisscom offers various bundled products tailored to customer needs in the fixed-line area with a choice of TV and/or fixed telephony on top of the broadband connection. To better meet the needs of mostly younger, urban, digitally savvy customers, Swisscom launched the independent brand Wingo in 2015. Wingo features a slimmed-down offering for this young target group and is only available in areas where customers have already been supplied with Fibre-to-the-Home (FTTH).

Broadband market

The most widespread access technologies for broadband in Switzerland are infrastructures based on the networks of telecoms providers and cable network operators. At the end of 2015, the number of retail broadband lines in Switzerland totalled 3.6 million or 84% of all Swiss households and businesses. Switzerland therefore leads the way internationally in terms of broadband access market penetration.

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The number of broadband lines increased by around 4% in 2015, the same rate of growth as in the previous year. As in 2014, growth in broadband access lines provided by cable network operators outpaced that of the broadband access lines of telecom service providers. Telecom service providers accounted for more than a third of new broadband access lines in 2015, corresponding to a market share of all broadband lines of 66% (prior year 67%). Of these, 54% (prior year: 54%) were for Swisscom end customers and 12% (prior year: 13%) for Swisscom wholesale offerings and fully unbundled lines.

TV market

In Switzerland, TV signals are transmitted via cable, broadband, satellite, antenna (terrestrial) and mobile. The importance of high-definition digital TV and its market penetration are constantly increasing. Upc cablecom ceased transmitting analogue TV signals in 2015. Other national and international companies have also entered the Swiss TV market, offering TV as well as video-on-­demand services which can be accessed over an existing broadband connection regardless of the Internet provider.

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More than 85% of all TV connections are provided over the cable or broadband network, with cable TV and Swisscom TV commanding the largest market shares. Swisscom has been steadily growing its market share over the last few years thanks to its own digital TV offering, Swisscom TV, which had a market share of 29% at the end of 2015 (prior year: 26%).

Fixed-line telephony market

Fixed-line telephony is mainly based on lines running over the fixed networks of the telecom service providers and the cable networks. The number of Swisscom fixed lines is steadily declining. This trend continued in 2015, with the number of Swisscom fixed lines falling by around 5% to 2.6 million. The main reason for the decline was the substitution of mobile phones for fixed-line telephones together with a small fall in market share.

IT services market in Switzerland

In 2015, the IT services market generated a revenue volume of CHF 8.7 bil­lion. Market volume is expected to total CHF 9.4 bil­lion by 2019. Swisscom expects the strongest growth in business process outsourcing (BPO) and in application-based and infrastructure project-based services. This growth is a result of the increasing number of business-driven ICT projects. Customers usually expect services customised to their individual sector and business processes with related consultancy. However, the prospects for growth must be assessed taking into consideration the effects of the strong franc and increasing global competition resulting from digitalisation. Consequently, Swiss companies as well as their competitors are under cost pressure. While ICT providers are looking for new roles and some are building up their own cloud offering, customers are increasingly postponing ICT investments.

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The shifts in the market and IT innovations are creating new opportunities for Swisscom. As one of the few providers of integrated digitalisation solutions, Swisscom helps companies to simplify and automate processes and integrate existing solutions. Swisscom also co-creates new IT services with its customers. As a result, Swisscom is seen as a driver of digitalisation in the Swiss economy. With a market share of around 9%, it remains one of the leading providers of IT services on the Swiss market.

Italian broadband market

Italy’s fixed broadband market is Europe’s fourth largest, with a revenue volume of around EUR 13 bil­lion. In contrast to most other European countries, in Italy there are no cable network operators who offer broadband services. Only slightly over half of the households and businesses in Italy have access to the broadband network; the penetration of broadband is thus well below the European average. The Italian market continues to be dominated by bundled products which combine voice and broadband services. Due to the intensely competitive environment, the market is under considerable pricing pressure. Ultra-fast broadband services have become more popular. The market leaders for fibre-optic/VDSL offerings are Telecom Italia and Fastweb.

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Thanks to its market share of 49% (prior-year 50%), Telecom Italia has a leading position on the Italian broadband market. Fastweb raised its market share from 15% to 16% compared with the previous year and caught up to Wind, in second place behind Telecom Italia.

A permanent nationwide presence is becoming increasingly important for service providers given the growing complexity of products and services. With this in mind, Fastweb is further expanding the ultra-fast broadband network and aims to cover around 7.5 million households and businesses, or 30% of the population, by the end of 2016. Fastweb has also decided to expand its own sales network, improve the efficiency of its dealer structure and step up investment in its own sales outlets in major Italian cities.