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   31.12.2019   01.01.2019 1
Enterprise value
Market capitalisation   26,553   24,331
Net debt incl. lease liabilities   8,785   8,631
Defined benefit obligations   1,058   1,196
Income tax assets and liabilities, net   607   873
Equity-accounted investees and other non-current financial assets   (339)   (217)
Non-controlling interests   3   (15)
Enterprise value (EV)   36,667   34,799
Operating income before de­pre­ci­a­tion and amor­ti­sa­tion (EBITDA)   4,358   4,420 2
Ratio enterprise value/EBITDA   8.4   7.9
1 Incl. effect of the initial ap­pli­ca­tion of IFRS 16.
2 Excl. operating lease expense according to IAS 17.

Swisscom’s enterprise value increased by 5.4% or CHF 1.9 bil­lion to CHF 36.7 bil­lion in 2019. The main reason for this was the CHF 2.2 bil­lion increase in market capitalisation. On a comparable basis, EBITDA declined, however. Nevertheless, the ratio of total enterprise value to EBITDA increased slightly to 8.4 (prior year: 7.9). Swisscom’s relative market valuation is therefore well above the average for comparable com­pa­nies in Europe’s telecoms sector. The higher relative valuation is supported by Swisscom’s solid market position and attractive dividend. In addition, the lower interest rates and lower profit tax rates in Switzer­land compared to other European countries have a positive effect.