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   31.12.2020   31.12.2019
Enterprise value
Market capitalisation   24,715   26,554
Net debt incl. lease liabilities   8,206   8,785
Defined benefit obligations   795   1,058
Income tax assets and liabilities, net   643   607
Equity-accounted investees and other non-current financial assets   (320)   (339)
Non-controlling interests   1   3
Enterprise value (EV)   34,040   36,668
Operating income before de­pre­ci­a­tion and amor­ti­sa­tion (EBITDA)   4,382   4,358
Ratio enterprise value/EBITDA   7.8   8.4

Swisscom’s enterprise value fell by 7.3% or CHF 2.7 bil­lion to CHF 34.0 bil­lion in 2020. The main reason for this was the decline of CHF 2.4 bil­lion in the company’s market capitalisation to CHF 24.7 bil­lion. With EBITDA remaining stable, the ratio of enterprise value to EBITDA fell to 7.8 (prior year: 8.4). 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 income tax rates in Switzer­land compared with other European countries have a positive effect.