Results of operations

Income statement

In CHF million, except where indicated   2013   2012   Change
Swisscom Switzerland   8,389   8,407   –0.2%
Fastweb   2,013   2,040   –1.3%
Other operating segments   1,032   936   10.3%
Group Headquarters     1  
Revenue from external customers   11,434   11,384   0.4%
Swisscom Switzerland   3,547   3,557   –0.3%
Fastweb   620   602   3.0%
Other operating segments   303   274   10.6%
Group Headquarters   (127)   (110)   15.5%
Reconciliation pension cost 1   (17)   179  
Intersegment elimination   (24)   (25)   –4.0%
Operating income before depreciation and amortisation (EBITDA)   4,302   4,477   –3.9%
Net revenue   11,434   11,384   0.4%
Goods and services purchased   (2,338)   (2,399)   –2.5%
Personnel expense   (2,706)   (2,485)   8.9%
Other operating expense   (2,476)   (2,396)   3.3%
Capitalised self-constructed assets and other income   388   373   4.0%
Operating expenses   (7,132)   (6,907)   3.3%
Operating income before depreciation and amortisation (EBITDA)   4,302   4,477   –3.9%
Depreciation, amortisation and impairment losses   (2,044)   (1,950)   4.8%
Operating income (EBIT)   2,258   2,527   –10.6%
Net interest expense   (251)   (249)   0.8%
Other financial result   (8)   (77)   –89.6%
Share of results of associates   30   32   –6.3%
Income before income taxes   2,029   2,233   –9.1%
Income tax expense   (334)   (418)   –20.1%
Net income   1,695   1,815   –6.6%
Share of net income attributable to equity holders of Swisscom Ltd   1,685   1,808   –6.8%
Share of net income attributable to non-controlling interests   10   7  
Average number of shares outstanding (in millions of shares)   51.801   51.801  
Earnings per share (in CHF)   32.53   34.90   –6.8%
1 The operating income of segments consist of pension cost especially employer contributions. The difference to the pension cost by IAS 19 will therefore be recognised as a reconciliation item.
Net revenue

Swisscom’s net revenue rose by CHF 50 million or 0.4% to CHF 11,434 million. On a like-for-like basis, net revenue was 0.8% lower. At Swisscom Switzerland, revenue dropped by CHF 12 million or 0.1% to CHF 8,449 million, resulting in a like-for-like reduction in revenue of 0.7%. Price erosion and price reductions for roaming of around CHF 560 million was largely offset by CHF 480 million in customer and volume growth. Fastweb’s net revenue fell by EUR 58 million or 3.4% to EUR 1,642 million, or by 1.3% in Swiss francs. Excluding wholesale revenue from interconnection services (hubbing), net revenue at Fastweb was down by EUR 16 million or 1.0% to EUR 1,597 million. The EUR 20 million increase in revenue in the residential customer segment was more than offset by the EUR 36 million decline in revenue from business customers and wholesale (excluding hubbing). Primarily as a result of corporate acquisitions, net revenue generated by other operating segments increased by CHF 91 million or 5.3% to CHF 1,819 million.

Goods and services purchased

Goods and services purchased fell year-on-year by CHF 61 million or 2.5% to CHF 2,338 million. Adjusted for corporate acquisitions and at constant exchange rates, the reduction amounts to 5.1%. The lower expenditure at Fastweb is mainly attributable to the planned reduction in hubbing business and lower termination rates, while the reduction at Swisscom Switzerland is the result of lower procurement costs for mobile handsets.

Personnel expense

Personnel expense increased by CHF 221 million or 8.9% year-on-year to CHF 2,706 million. Included in 2012 are a reduction of CHF 157 million from a one-time, non-cash change in a pension plan and restructuring expense of CHF 68 million. Discounting these non-recurring items and adjusting for corporate acquisitions, personnel expense rose by 2.9%, largely due to higher ordinary pension costs which, excluding the effect from the 2012 amendment to the pension plan, rose by CHF 51 million. Headcount rose year-on-year by 594 FTEs or 3.0% to 20,108 FTEs. Adjusted for corporate acquisitions in Switzerland and the outsourcing of positions in Italy, the rise in headcount was 1.8%, which is chiefly attributable to the insourcing of external staff in Switzerland.

Other operating expense

Other operating expense increased by CHF 80 million or 3.3% year-on-year to CHF 2,476 million. Adjusted for company acquisitions and at constant exchange rates, the rise amounted to 1.7%. This increase is primarily attributable to the purchase of outsourcing services due to the outsourcing of positions at Fastweb.

Capitalised self-constructed assets and other income

Capitalised self-constructed assets and other income increased by CHF 15 million or 4.0% year-on-year to CHF 388 million, while capitalised self-constructed assets were CHF 9 million or 3.4% lower year-on-year at CHF 256 million.

Operating income before depreciation and amortisation (EBITDA)

Operating income before depreciation and amortisation (EBITDA) was CHF 175 million or 3.9% lower at CHF 4,302 million. In 2012, the amendment to the pension plan resulted in a one-off reduction of CHF 157 million in pension costs. Restructuring costs totalling CHF 78 million were also recognised in 2012. Ordinary pension costs rose in 2013. Company acquisitions and currency effects had a positive impact on operating income. Adjusted EBITDA decreased by 2.0%, primarily due to the continuing competition and price pressure. Expenses were also higher in Switzerland for grid maintenance and IT, while customer growth in Italy led to higher acquisition costs.

Depreciation and amortisation

Depreciation and amortisation rose by CHF 94 million or 4.8% year-on-year to CHF 2,044 million. This increase is mainly attributable to higher depreciation and amortisation at Swisscom Switzerland due to continuing broadband network expansion and to the mobile frequencies acquired in 2012. Intangible assets resulting from business combinations were capitalised for purchase price allocation purposes. Depreciation and amortisation includes scheduled amortisation related to intangible assets from business combinations (e.g. brands, customer relationships) totalling CHF 156 million (prior year: CHF 151 million).

Net interest income and other financial result

The net financial result in 2013 amounted to CHF 251 million (prior year: CHF 249 million). The average rate of interest on financial liabilities in 2013 is 2.4%. The other financial result improved year-on-year by CHF 69 million, which is primarily attributable to positive effects of CHF 30 million arising from the fair value adjustment of interest rate derivatives.


Associates mainly covers the share of results of investments in Belgacom International Carrier Services, LTV Yellow Pages and Metroweb (Italy). The share of results of associates declined year-on-year by CHF 2 million to CHF 30 million, primarily due to the acquisition of a majority stake in Cinetrade. Dividends received, amounting to CHF 43 million (prior year: CHF 38 million), largely concern dividends paid by LTV Yellow Pages, Cinetrade and Belgacom International Carrier Services.

Income tax expense

Income tax expense amounted to CHF 334 million (prior year: CHF 418 million), corresponding to an effective income tax rate of 16.5% (prior year: 18.7%). The decrease in income tax expense is largely due to the offsetting and recognition of tax loss carry-forwards that had previously not been capitalised. Excluding non-recurring items, Swisscom anticipates an income tax rate of around 21% in the long term. Income taxes paid were CHF 88 million higher than a year earlier at CHF 278 million.

Net income and earnings per share

Net income fell by CHF 120 million or 6.6% year-on-year to CHF 1,695 million, largely reflecting lower EBITDA and higher depreciation and amortisation as a result of the increase in capital expenditure. Earnings per share fell by 6.8% from CHF 34.90 to CHF 32.53.