Key risks

Group Risk Management and subject-matter specialists assess key risks. Measures are defined and tracked by business owners, overseen by management.

Risk	Explanation of the risk	Measures
Dynamic market environment and regulation in Switzerland	Infrastructure providers, promotional campaigns by market players, and service providers without their own network reinforce competitive dynamics. Megatrends such as connectivity, individualisation and demographic change have a long-term impact on Swisscom’s activities. Regulations entail uncertainties that may adversely affect its financial performance and financial position. Excessively high political demands could fundamentally call the current system of competition into question.	Swisscom tackles this challenge by means of transformation of the company and constant innovation. Swisscom conducts a comprehensive external environment analysis each year in order to identify disruptions at an early stage. This serves to identify coming trends and developments to determine potential disruptive scenarios. Regular analyses of the economic and regulatory environment and customer analyses help Swisscom to respond to relevant changes at an early stage. Swisscom responds effectively to market-driven change by consistently focusing on customer needs, such as addressing the needs of different customer segments through secondary and third-party brands and adjusting processes and organisation.
Intense competition and regulation in Italy	Competitive dynamics in the Italian telecommunications market are intensifying due to aggressive promotional campaigns by operators and service providers without their own networks, potentially impacting revenue. Additionally, regulatory changes in Italy and Europe pose challenges for companies like Fastweb + Vodafone, which could affect their revenue growth forecasts.	Fastweb + Vodafone responds to these dynamics with continuous adjustments to services, organisation, processes and partnerships. The acquisition of Vodafone Italia at the end of 2024 created a leading convergent provider in the Italian market in the form of Fastweb + Vodafone, which is much more resilient to external risks as a result of the expected synergy effects. In addition, changes in the legal and regulatory environment may have a negative impact on business activities and enterprise value.
Geopolitical development	Geopolitical developments entail risks such as exchange rate fluctuations, inflation, tariffs, shortages of goods, ban of suppliers, delays in deliveries, higher transport costs and general recession.	Swisscom pursues an effective hedging strategy to minimise risk of loss due to fluctuating foreign exchange rates. Swisscom constantly analyses the geopolitical situation and continuously reviews measures in order to respond appropriately to geopolitical changes and implements them in a targeted manner.
Business disruption	Swisscom’s services are heavily dependent on technical infrastructure such as communications networks and IT platforms. Any major business interruption harbours both financial risks and significant reputational risks. Causes include natural disasters, human error, hardware or software failures due to complex IT architecture, cyberattacks, power outages, power shortages and the increasing interdependence of modern technologies.	The threat situation remains tense and is increasing in some areas due to technological and geopolitical developments. Swisscom constantly monitors the threat situation and implements effective measures for permanent risk mitigation. This includes continuously investing in prevention and responsiveness, e.g. reducing the complex IT architecture. Swisscom relies on built-in redundancy, contingency plans, deputising arrangements, alternative locations, careful selection of suppliers and other targeted measures to continuously deliver the expected services.
Expansion of the broadband network	Customer demand for broadband access is growing in parallel with the rising popularity of devices and IP-based services such as smartphones, TV and OTT. To meet current and future customer needs and maintain its market share, Swisscom is in intense competition with cable companies and other network operators.	The network expansion needed requires major capital expenditure. When expanding the network, Swisscom is guided by population density and customer requirements to reduce financial risks and optimise coverage. Swisscom enters into strategic partnerships to support its network expansion. Material risks arise if the network has to be built at a higher price than planned or revenue expected in the long term does not materialise. Swisscom adapts the broadband expansion of the access network to changing conditions and technical opportunities on an ongoing basis to minimise these risks.
Public concern related to electromagnetic radiation	The lack of acceptance of mobile communications and 5G by some impedes network construction, particularly in the case of modernisation work or when searching for new sites for mobile network installations. Swisscom, as a major telecommunications provider in Switzerland, has been at the centre of discussions and actions regarding these concerns. In the year under review, claims were again made that electromagnetic radiation (e.g. from mobile antennas or mobile handsets) is potentially harmful to health.	Switzerland has adopted a comprehensive approach to managing non-ionising radiation through its Ordinance on Protection against Non-Ionising Radiation (ONIR). At locations where people stay for long periods of time (e.g. homes, schools, permanent workplaces and playgrounds) limits that are ten times stricter than those recommended by the World Health Organization (WHO) apply. According to the ONIR monitoring by the government, the median exposure is below 1% of the WHO's limit value. Ongoing measures to raise awareness regarding mobile communications, including information platforms such as Chance5G, remain important.

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