Provisions
In CHF million |
Termination benefits |
Dismantlement and restoration costs |
Regulatory proceedings |
Other |
Total |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 31 December 2011 | 10 | 549 | 131 | 213 | 903 | |||||
| Additions to provisions | 74 | 4 | 22 | 33 | 133 | |||||
| Present-value adjustments | – | 9 | 3 | 3 | 15 | |||||
| Release of unused provisions | (8) | (49) | (3) | (27) | (87) | |||||
| Use of provisions | (10) | (1) | (49) | (63) | (123) | |||||
| Foreign currency translation adjustments | – | – | – | (1) | (1) | |||||
| Balance at 31 December 2012 | 66 | 512 | 104 | 158 | 840 | |||||
| Additions to provisions | 31 | 57 | 13 | 46 | 147 | |||||
| Present-value adjustments | – | 13 | 2 | – | 15 | |||||
| Release of unused provisions | (31) | (100) | – | (17) | (148) | |||||
| Use of provisions | (21) | (1) | (1) | (32) | (55) | |||||
| Balance at 31 December 2013 | 45 | 481 | 118 | 155 | 799 | |||||
| Thereof current provisions | 40 | – | 22 | 70 | 132 | |||||
| Thereof non-current provisions | 5 | 481 | 96 | 85 | 667 |
Provisions for termination benefits
In 2013, Swisscom recognised provisions of CHF 31 million for personnel reduction costs. This is primarily the result of the new organisation announced in November 2013 of the segments Enterprise Customers and Swisscom IT Services, which, as from 1 January 2014, were merged into a new business segment Enterprise Customers. On 31 October 2012, Swisscom announced a personnel reduction plan involving some 400 positions as part of an efficiency programme with the objective of securing the Group’s competitiveness. The costs for this personnel reduction plan were estimated at CHF 50 million which was recognised in the fourth quarter of 2012. For further information see Note 9.
Provisions for dismantling and restoration costs
The provisions for dismantling and restoration costs relate to the dismantling of telecommunication installations and transmitter stations and the restoration to its original state of the land owned by third parties on which they are located. In 2013, as a result of new location and expansion strategies, the costs of dismantling and restoration were subjected to review as a result of which the provisions for dismantling and restoring telecommunication installations following reassessment were increased by CHF 57 million. As regards transmitter stations, the reassessment resulted in a decrease of provisions by CHF 79 million. The provisions are computed by reference to estimates of future dismantling costs and are discounted using an average interest rate of 2.79% (prior year: 1.63%). The effect of using different interest rates amounted to CHF 21 million (prior year: CHF 18 million). In 2013, adjustments in the total amount of CHF 19 million (prior year: CHF 42 million) were recorded under the dismantling costs capitalised as part of property, plant and equipment and CHF 23 million (prior year: CHF 4 million) was recognised in the income statement. The non-current portion of the provisions is expected to be settled after 2020.
Provisions for regulatory proceedings
In accordance with the revised Telecommunications Act, Swisscom provides interconnection services and other access services to other telecommunication service providers in Switzerland. In previous years, several telecommunication service providers demanded from the Federal Communications Commission (ComCom) a reduction in the prices charged to them by Swisscom. As a result of legal assessments, Swisscom raised provisions in prior years. The provisions recognised in 2012 consolidated financial statements have not changed materially during the current financial year. As of 31 December 2013, the provisions relating to the proceedings for interconnection and other access services of Swisscom (Switzerland) Ltd amounted to CHF 118 million. Settlements made in 2013 amounted to CHF 1 million. Settlements of the remaining claims are dependent upon the date on which legally binding rulings and decisions are issued.
Other provisions
Other provisions include provisions for environmental, contractual and tax risks, as well as provisions for insurance claims. The non-current portion of the provisions will most likely be settled between 2015 and 2017.