Value-oriented business management

Key performance indicators for planning and managing business operations are revenue, operating income before depreciation and amortisation (EBITDA) and capital expenditure. The enterprise value/EBITDA ratio also permits comparisons of Swisscom’s enterprise value derived from the share price on the balance sheet date with that of similar companies (European telecommunications companies) as well as with the prior year. The members of the Board of Directors and Group Executive Board are paid a portion of their remuneration in the form of Swisscom shares, which are blocked for a period of three years. They are also subject to a minimum shareholding requirement. Variable remuneration based on financial and non-financial targets, the partial settlement of remuneration in shares and the minimum shareholding requirement ensure that the financial interests of management are aligned with the interests of shareholders.

In CHF million, except where indicated   31.12.2018   31.12.2017
Enterprise value
Market capitalisation   24,331   26,859
Net debt   7,393   7,447
Defined benefit obligations   1,196   1,048
Equity-accounted investees and other non-current financial assets   (295)   (253)
Non-controlling interests   (15)   (11)
Enterprise value (EV)   32,610   35,090
Operating income before depreciation and amortisation (EBITDA)   4,213   4,295
Ratio enterprise value/EBITDA   7.7   8.2

Swisscom’s enterprise value decreased by 7.1% or CHF 2.5 bil­lion to CHF 32.6 bil­lion in 2018. The reason for this was a decline in market capitalisation of 9.4% or CHF 2,6 bil­lion. The lower enterprise value caused the ratio of enterprise value to EBITDA to drop to 7.7 (prior year: 8.2). Swisscom’s relative market valuation is therefore well above the average for comparable companies in Europe’s telecoms sector. The higher ratio is supported by the solid market position Swisscom has achieved thanks to a high level of investment and an attractive dividend policy, as well as the lower interest rates and lower corporate income tax rates in Switzerland as compared to other European countries.