Share­holders’ letter

Trustworthy – sustainable

Dear Share­holders

We are pleased to inform you of Swisscom’s positive per­for­mance in what was a challenging year. 2023 was marred by uncertainties, such as the volatile macroeconomic en­vi­ron­ment with rising interest rates and inflation, as well as mounting geopolitical risks. This makes our annual figures all the more encouraging. Swisscom achieved a stable set of financial results in a challenging market. It won over its cus­tomers with an attractive offering, first-rate service and excellent network in­fra­struc­ture. World Finance magazine has rated Swisscom the world’s most sustainable telecom­mu­ni­ca­tions service provider for the third time in a row.

The foundation for this success is our committed employees, who give their very best day in, day out. We are on track to achieve our Group targets for 2025: market leader in Switzer­land, leading challenger in Italy, solid financial results, forward-looking services provided in secure networks, and all of this combined with a strong focus on sustainability.

Number 1 in Switzer­land

In Switzer­land, Swisscom seeks to inspire its cus­tomers with the best networks, first-rate service and the most state-of-the-art products and services. This is something we have managed to achieve. Our employees once again delivered convincing per­for­mance in Swisscom shops and on our mobile hotline in independent tests. What’s more, the My Swisscom App received the best rating of all service apps offered by Swiss telecom­mu­ni­ca­tions providers for the third time running. Swisscom is also once again on the top tier of the podium in recog­nised network tests – for both mobile and fixed networks.

Swisscom also provides security. Despite ongoing inflation, and unlike our peers, we are not implementing any general price increases and will maintain stable prices for mobile com­mu­ni­ca­tions, internet, TV and fixed network sub­scrip­tions until the end of 2024 at the earliest. Our new TV-Box 5 is impressive. It offers attractive new features and is only half the size of, and more energy-efficient than, its predecessor models. Swisscom is also the first provider in Switzer­land to offer its cus­tomers a sub­scrip­tion package including several streaming providers at a special price. Independent market researchers also name Swisscom as a leading cybersecurity solutions provider. With its new IT security services, Swisscom is offering small and medium-sized enterprises even greater security and reliable protection against cyber risks. The acquisition of Axept Business Software Ltd allowed it to expand its expertise in the area of business software. Swisscom is the first provider in Switzer­land to combine the mobile network and Microsoft Teams in a single app in the form of Teams Tele­phony Mobile. Swisscom has a strong position among its business cus­tomers as a full-service provider, and customer satisfaction is high as a result. Consequently, demand for cloud, security, IoT and SAP solutions, and business ap­pli­ca­tions, con­tin­ued to grow.

The best networks – the expansion work continues

Switzer­land receives top marks in­ter­na­tionally for its mobile com­mu­ni­ca­tions and fibre-optic networks. By way of example, it yet again won the renowned fixed and mobile network test organised by the industry magazine connect. In the mobile phone test, Swisscom actually achieved the highest score ever awarded by connect. As our cus­tomers are making increasingly intensive use of our networks, Swisscom is constantly investing in their per­for­mance. Expanding the mobile network remains a challenge. The search for new locations is no mean feat, and around 3,000 building ap­pli­ca­tions for mobile com­mu­ni­ca­tions systems are pending nationwide. In the autumn of 2023, the national government sent out a crucial signal to improve the overall conditions for a rapid 5G network expansion.

Swisscom is working on the expansion of its optical fibre-based in­fra­struc­ture and is slightly raising its targets: it is aiming to achieve fibre-optic coverage of 57% through­out Switzer­land by the end of 2025, and of 75% to 80% by the end of 2030. After 2030, Swisscom plans to complete the fibre-optic network in every municipality. In parallel with the ongoing optical fibre expansion, it is now decommissioning the copper access network wherever high-speed internet is already available.

Fastweb is growing

Fastweb has been building its position as a high-quality provider in Italy for years now. It is now the leading challenger in Europe’s fourth-largest broad­band market. Fastweb reported growth in cus­tomers, revenue and operating income (EBITDA) in 2023. Its revenue came to EUR 2,633 million (+6.1%), with EBITDA up by 2.1% on a like-for-like basis.

Healthy finances create confidence

We handle the funds entrusted to us with respect and care. Healthy finances are the result of prudent management and are essential for our con­tin­ued success going forward.

Swisscom recorded another solid set of financial results in 2023. With slightly higher revenue of CHF 11,072 million (+0.2%) and higher operating income before de­pre­ci­a­tion and amor­ti­sa­tion (EBITDA) of CHF 4,622 million (+4.9%), it generated net income of CHF 1,711 million (+6.7%). Revenue (+0.9%) and EBITDA (+2.3%) were both up on a like-for-like basis and at constant exchange rates.

In order to secure our long-term profitability, we are promoting col­lab­o­ra­tion within our company, developing new business activities and con­tin­u­ously working on our efficiency. For example, we once again reduced our cost base in Swiss telecom­mu­ni­ca­tions in 2023 – by around CHF 60 million.

Responsibility for the en­vi­ron­ment and society

Swisscom has set itself ambitious goals for the en­vi­ron­ment and society. We promote media skills, both for young people within schools and for the population at large. As a pioneer, we also make a key contribution to climate protection, with an emphasis on reducing our CO₂ emissions. We also invest in carefully selected climate protection projects. World Finance magazine, for example, once again rated Swisscom the world’s most sustainable telecom­mu­ni­ca­tions company in the reporting year. The topic of sustainability has been included in the ‘Report on non-financial matters’ chapter for the very first time, and both Swisscom (for Switzer­land) and Fastweb publish a sustainability report.

Most trusted tech innovator

In the reporting year, we firmly es­tab­lished our vision for 2030 within the company: we are aiming to be the most trusted tech innovator in Switzer­land and create unique customer experiences. To safeguard our long-term success, we work closely with the pacesetters of the digital trans­for­ma­tion, be they universities, start-ups or es­tab­lished tech­nol­ogy com­pa­nies. In 2023, Swisscom supported what are known as deeptech start-ups through its StartUp Challenge programme: young com­pa­nies that are developing solutions based on highly developed tech­nolo­gies such as robotics, cleantech or fintech. The winners also get the chance to partner with Swisscom. Swisscom has also launched the Swisscom Sign service, which allows contracts to be signed digitally in a legally effective manner. The service is free of charge for private users and is con­ve­niently integrated into the My Swisscom App.

Share­holder return and outlook

Swisscom’s share price remained virtually stable during the year under review at CHF 506 (–0.1%). The total shareholder return (TSR) based on the increase in the share price and distributions over the last five years was positive at 33%.

Looking ahead to 2024, Swisscom expects revenue of around CHF 11.0 bil­lion, EBITDA of between CHF 4.5 and 4.6 bil­lion and capital ex­pen­di­ture of around CHF 2.3 bil­lion (around CHF 1.7 bil­lion of which will be in Switzer­land). Subject to achieving its targets, Swisscom plans to propose payment of an unchanged dividend of CHF 22 per share for the 2024 financial year at the 2025 Annual General Meeting.

Many thanks

We would like to thank our employees for the passion they show in doing their best for our cus­tomers every day. We would also like to thank you, our valued shareholders, for the trust you have placed in us.

We have set ourselves new, ambitious goals and look forward to embarking on a successful new year with you. There is one thing we can assure you of: exactly 25 years after its IPO, Swisscom is in an excellent market position and can face the future with confidence.

Kind regards

Michael Rechsteiner

Chairman of the Board of Directors

Swisscom Ltd

Christoph Aeschlimann

CEO of Swisscom Ltd