Swisscom’s financial position, results of operations and cash flows are primarily influenced by macroeconomic factors, notably economic trends, interest rates, exchange rates and the capital markets.
Switzerland enjoyed robust economic growth in 2013, thanks in large measure to strong domestic demand. Gross domestic product (GDP) rose by 2%. Despite modest improvement in the economic situation in Europe and an easing of the financial crisis, there is still the risk of a phase of sluggish growth or even a recession setting in.
The bulk of Swisscom’s revenue stems from telephony, broadband services and television – services based on fixed monthly fees and subject to low cyclical fluctuations in demand. By contrast, project business with business customers and international roaming are affected by cyclical factors.
For many years, the general level of interest rates in Switzerland has been lower than in most other industrialised countries. The main national banks adhered to their low-interest policy and interest rates edged up slightly in 2013. The yield on ten-year government bonds at the end of 2013 was around 1.25%.
Swisscom capitalised again in 2013 on the low-interest phase by entering into two financing transactions: in the third quarter of 2013, Swisscom took out a loan of EUR 300 million with the European Investment Bank (EIB) and a debenture bond of EUR 500 million. Average interest expense on financial liabilities is 2.4%, and average term to maturity four years. Market-based interest rates influence the financial result as well as the measurement of various items in the Swisscom consolidated financial statements, such as goodwill impairment (Fastweb), defined benefit obligations and non-current provisions for dismantlement and restoration costs. Interest levels also have a material impact on returns and thus on the financial situation of the Swisscom pension fund.
There was only a minimal change in the value of the Swiss franc against currencies of key relevance for Swisscom’s operations in 2013. The Swiss National Bank (SNB) adhered to the minimum CHF/EUR exchange rate of 1.20.
Swisscom’s business activities in Switzerland are not materially influenced by currency movements. Only a small share of revenue is generated in foreign currencies. The procurement of handsets and technical equipment as well as the incurring of roaming charges for the use of fixed and mobile networks abroad by Swisscom customers give rise to transaction risks in foreign currencies (notably EUR and USD). These risks are partly hedged by forward foreign exchange transactions.
Swisscom finances itself primarily in Swiss francs. At the end of 2013, financial liabilities amounted to CHF 8.8 billion, of which 89% in CHF and 11% in EUR. Currency translations in respect of foreign Group companies, in particular Fastweb in Italy, affect the presentation of the financial position and results of operations in the consolidated financial statements. Cumulative currency translation differences in respect of foreign subsidiaries recognised in consolidated equity amounted before deduction of tax effects to around CHF 1.9 billion in 2013 (previous year: around CHF 2.0 billion).
International equity markets performed positively in 2013. The SMI rose by around 20%. Swisscom holds surplus liquidity in the form of cash and cash equivalents and short-term money-market investments. There are only insignificant direct financial investments in equities, bonds or other non-current financial assets. Swisscom’s legally independent pension fund comPlan has total assets invested in equities, bonds and other investment categories of around CHF 8.3 billion. These assets are exposed to capital market risks. This indirectly affects the financial position presented in Swisscom’s consolidated financial statements.
Legal and regulatory environment
Swisscom’s legal framework
Swisscom is a public limited company with special status under Swiss law. It is organised in compliance with the Telecommunications Enterprise Act (TEA), company law and the company’s Articles of Incorporation. Its business operations are governed primarily by telecommunications and broadcasting legislation. Swisscom is also subject to rules governing business as a whole, namely competition law. As an stock-exchange-listed company, Swisscom is also required to comply with capital market legislation as well as with the Federal Ordinance of 20 November 2013 against Excessive Compensation in Listed Stock Companies.
Telecommunications Enterprise Act (TEA) and relationship with the Swiss Confederation
As of 1 January 1998 the former operations of Swiss Telecom PTT were legally transformed into “Swiss Post” and “Swisscom Ltd” (hence the term “public limited company with special status”). Under the terms of the TEA and the company’s Articles of Incorporation, Swisscom is responsible for the provision of domestic and international telecommunications and broadcast services as well as related products and services. The TEA requires the Swiss Confederation to hold a majority of the capital and voting rights in Swisscom. For the Swiss Confederation to give up its majority shareholding, the TEA would need to be amended. Swisscom is also obliged to draw up a collective employment agreement in consultation with the employee associations. Moreover, every four years the Federal Council defines the goals which the Confederation as principal shareholder aims to achieve. These include strategic, financial and personnel policy goals as well as goals relating to partnerships and investments. To guarantee transparency the goals are made public to other investors. The aims of the Confederation are incorporated in the strategic and operating targets set by the Swisscom Board of Directors. For the year under review, the goals for the period 2010 to 2013 are relevant. The Federal Council has renewed its goals for the period 2014 to 2017 and set Swisscom the following financial goals:
- Increase enterprise value over the long term and deliver a total shareholder return (dividend payout and share performance) in line with that of comparable telecoms companies in Europe.
- Pursue a dividend policy that follows the principle of consistency and guarantees an attractive dividend yield commensurate with other stock-exchange-listed companies in Switzerland. This should meet the criteria of a sustainable investment policy, a risk-appropriate equity ratio and easy access at all times to capital markets.
- Aim for a maximum net debt of 2.1 times EBITDA (operating income before depreciation and amortisation); this ratio may be temporarily exceeded.
Telecommunications Act (TCA)
The Telecommunications Act governs the conditions under which market-dominant providers of telecoms services are required to make their network available to other providers. The Act covers a comprehensive catalogue of access types and in the area of the “last mile” is restricted to copper cables. The access services cited in the Act must be offered at regulated conditions and above all at cost-based prices. In addition to network access, the Act governs universal service provision, laying down the framework for the reliable and affordable provision of basic telecommunications to all sections of the population in all regions of the country. The scope of services as well as the related quality and pricing requirements are determined periodically by the Federal Council. The universal service provision licence granted to Swisscom in 2007 by the Federal Communications Commission (ComCom) runs until 2017. The Telecommunications Act also governs conditions for use of the radio frequency spectrum.
Competition law/Federal Cartel Act
The Cartel Act prohibits anti-competitive agreements between companies, provides for sanctions in the event of abuse by companies of their market-dominant position, and prohibits business combinations that result in the elimination of competition. Discrimination of trading partners with respect to prices or other business conditions is considered to be an example of abuse.
Capital market law
The shares of Swisscom Ltd are listed on the SIX Swiss Exchange in Zurich. In addition, Swisscom has issued bonds which are traded on the SIX Swiss Exchange. Swisscom is therefore required to comply with Swiss stock market legislation and regulations. The company is also subject to regulations governing accounting and financial reporting as well as rules relating to ad-hoc publicity and the disclosure of transactions in Swisscom securities by members of the Board of Directors and the Group Executive Board. Shareholdings in Swisscom must also be disclosed if they exceed or fall below a certain limit.
Ordinance Against Excessive Compensation in Listed Stock Companies (OaEC)
The OaEC enters into force on 1 January 2014 and provides for the implementation of transitional provisions. From 1 January 2014, members of the Board of Directors (including the Chairman) as well as members of the Compensation Committee and the independent proxy must be elected on an annual basis by the Annual General Meeting for a one-year term of office. Voting representation by governing bodies and/or custodians is not permitted. It is also prohibited to award severance payments, advance compensation and bonus payments for company acquisitions and disposals. The Board of Directors must undertake to draw up a compensation report, in writing, for financial years starting on or after 1 January 2014. Shareholders must vote on total compensation for the Board of Directors and the Group Executive Board starting from the 2015 Annual General Meeting at the latest. In addition, companies must ensure that powers of attorney and instructions can also be assigned electronically to the independent proxies. The Articles of Incorporation and regulations must be revised in line with the provisions of the Ordinance by no later than the 2015 Annual General Meeting. The Ordinance stipulates certain types of abuse that constitute an offence punishable by law.
Regulatory developments in Switzerland in 2013
Ongoing proceedings relating to telecommunications and competition legislation
In recent years, a number of proceedings relating to telecommunications and competition law have been initiated against Swisscom. Ongoing proceedings in connection with the Telecommunications Act and Cartel Act are described in Notes 28 and 29 to the consolidated financial statements.
Telecommunications market evaluation
In 2012, the Federal Council published a follow-up report to its 2010 telecoms market evaluation, in which it concluded among things that, despite an observable investment dynamic, there are indications of local competition issues or the emergence of a monopoly situation. The Federal Council announced that it would commission the Administration to prepare a draft revision of the Telecommunications Act before the end of the current legislative period (2011–2015). The revision should provide for a more flexible regulatory framework than today which would permit intervention by the regulator as needed. One conceivable option is the introduction of technology-neutral regulatory instruments at legislative level which would only be enacted by the Federal Council for the technologies in question, should the need for regulatory intervention arise, for example if competition in the market failed to function properly.
Revision of the Ordinance on Telecommunications Services (OTS)
On 17 April 2013, the Department of the Environment, Transport, Energy and Communications (DETEC) opened a hearing on the revision of the Ordinance on Telecommunications Services (OTS revision). The revision is intended to amend the methods used to calculate cost-based prices for network access services, which are regulated by the Telecommunications Act (TCA).
On 20 September 2011, contrary to the Federal Council’s proposal, the National Council approved the motion calling for “an end to exorbitant mobile charges abroad”. A similar motion was passed in spring 2013. The motion calls for the Federal Council to fix binding maximum tariffs to be adopted by all telecoms providers for inbound and outbound calls, SMS messages and data transfers over mobile devices when used abroad, in line with the requirements imposed by the European Union.Following consultation with the operators, the Council of States decided on 19 March 2013 to suspend the motions until the end of 2014 and to commission the Federal Council to deliver a report to parliament by the end of 2014 on the trend in roaming prices and, in particular, the new technical possibilities such as local breakout (the ability to switch temporarily to a local provider abroad without having to exchange the SIM card and the phone number). On 17 September 2013, the National Council also spoke out in favour of suspending the motions.
A motion put before the National Council on 14 December 2012 called for the legal enforcement of network neutrality. The rationale behind the initiative is that network operators can deploy new technologies at their own discretion and so discriminate against content, thereby posing a threat to freedom of opinion and information.On 13 February 2013, the Federal Council proposed that the motion be rejectedand pointed out that it was intending during the current legislative period to commission a draft consultation paper calling for a partial revision of the Telecommunications Act which includes proposals on the issue of network neutrality. In autumn 2013, the Federal Office of Communications (OFCOM) set up a network neutrality workgroup tasked with drawing up a report by the summer of 2014.
Copyright protection – tariff proceedings
In tariff negotiations with the copyright collecting agencies, Swisscom is represented by Swissstream, the Swiss association of streaming providers. Swisscom is particularly interested in the Joint tariff 12 and the Joint tariff 4 e proceedings due to be dealt with in 2013.
Joint tariff 12 for the recording of TV programmes and replay TV is of vital importance to Swisscom. The Federal Arbitration Board responsible for exploitation of copyrights and related intellectual property rights approved this tariff in a ruling issued on 17 December 2012. The ProsiebenSat1 Group has lodged an appeal against the decision with the Federal Administrative Court.
The copyright collecting agencies have been negotiating with the user associations on Joint tariff 4 e for the storage of copyright-protected works on mobile phones since 2009. Both the user associations and the collecting agencies filed appeals with the Federal Administrative Court against the rulings of the Federal Arbitration Board concerning the disputed tariffs for the tariff periods 2010–2011 and 2012–2013. Further tariff negotiations on the matter have been suspended until such time as the Federal Administrative Court reaches a decision.
Revision of the Federal Law on the Monitoring of Postal and Telecommunications Traffic (BÜPF)
On 27 February 2013, the Federal Council submitted to parliament its message proposing a revision of the BÜPF. The aim of the revision is to ensure that the required monitoring cannot be prevented through the use of modern technologies. The current fee and payment model would be retained. The matter is still being debated in parliament.
Regulatory differences between Switzerland and the European Union
In the European Union (EU), the regulatory authorities have extensive powers to analyse markets and impose on market-dominant companies obligations relating to non-discrimination, transparency and forms of access (“ex-ante regulation”). The Swiss regulator has rejected this type of practice, opting instead for ex-post regulation (primacy of negotiation and appeal principle) on the grounds that market conditions in Switzerland differ from those in most EU member states. The Swiss market is characterised by virtually nationwide competition between Swisscom and the cable network operators. Moreover, municipal and regional power utility companies have also entered the market. The market situation prevailing in Switzerland therefore necessitates a different set of regulations from those in place in countries such as France and Italy, where no platform competition has evolved due largely to the existence of a single network provider.
Legal and regulatory environment in Italy
Fastweb’s legal framework
As a member of the European Union, Italy is required to bring national legislation into line with the European legislative framework. The Italian regulatory authority Autorità per le Garanzie nelle Comunicazioni (AGCOM) has the task, based on an analysis of the markets defined by the European Commission, of imposing regulatory obligations on companies. Drafts of such regulations must be submitted to the European Commission and the regulatory authorities of the other member states, who have the right to comment on or veto the draft. The business operations of Swisscom’s Italian subsidiary Fastweb are therefore heavily influenced by Italian and European telecommunication legislation and its application.
Regulatory developments in Italy in 2013
In December 2013, AGCOM agreed to a reduction in prices for unbundled fixed access lines and bit-rate services from EUR 9.28 to EUR 8.68 and from EUR 19.50 to EUR 15.14 respectively.
In 2011, the Italian regulatory authority AGCOM issued a ruling to the effect that fixed-line termination rates between Telecom Italia and third-party fixed-network providers were to be billed symmetrically from 1 January 2012. The Administrative Court reversed the decision on the grounds that in 2012 no symmetry existed as yet in the IP-based network architectures. As a consequence, AGCOM decreed an increase of 33% in fixed-line termination rates for third-party networks to EUR/cent 0.361 per minute for 2012, thereafter falling in stages from July 2013 based on the model of an efficient IP architecture. AGCOM is aiming for a price of EUR/cent 0.043 per minute as from 1 July 2015.
Swisscom fosters dialogue with its most important stakeholder groups via electronic media, over the phone, through surveys, information events, business meetings, road shows and conferences, as well as in customers’ homes and in the Swisscom Shops. In 2013 – as in previous years –Swisscom took note of the concerns of the various stakeholder groups, prioritising them and among other things incorporating them into its corporate responsibility strategy.
Stakeholder management at Swisscom is decentralised in order to ensure proximity and ongoing contact with the individual stakeholder groups.
Swisscom systematically consults residential customers in order to identify their needs. Customer relationship managers, for example, gather information on customer needs directly at customer touch points. The Corporate Business division conducts quarterly surveys that include questions on sustainability. Swisscom also maintains regular contact with consumer organisations in all linguistic regions of Switzerland and runs blogs as well as online discussion platforms.The overall findings show that customers expect attractive pricing, market transparency, responsible marketing, comprehensive network coverage, network stability, low-radiation communication technologies and sustainable products and services.
Shareholders and external investors
Besides the Annual General Meeting, Swisscom fosters dialogue with shareholders at analysts’ presentations, road shows and in regular teleconferences. Over the years, it has also built up contacts with numerous external investors and rating agencies. Shareholders and external investors expect above all growth, profitability and innovation from Swisscom.
Swisscom maintains regular, close contact with various public authorities. A key issue in its dealings with this stakeholder group concerns mobile network expansion. Mobile data applications are becoming increasingly popular with customers. But while mobile communications are clearly appreciated and widely used, acceptance of the required infrastructure is sometimes lacking. Network expansion gives rise to tension because of the different interests at stake. For many years, Swisscom has been engaged in dialogue with residents and municipalities on network planning, which in the case of construction projects gives the parties affected an opportunity to suggest suitable alternative locations. Swisscom also liaises regularly with public authorities in other areas and on other occasions: for example, it invites ICT heads of the cantonal education authorities to an annual two-day seminar on the subject of “Internet for Schools”. As a stakeholder group, public authorities expect Swisscom to act decisively in the way it recognises its responsibility towards the public at large and towards young people in particular.
Swisscom is required to deal with political and regulatory issues, advocating the company’s interests vis-à-vis political parties, public authorities and associations. Legislators expect compliance from Swisscom.
Swisscom’s procurement organisations regularly deal with suppliers and supplier relationships, analysing the results of evaluations, formulating targets and reviewing performance. Once a year, they invite their main suppliers to the Key Supplier Day. The focus of the event is on risk mitigation and responsibility in the supply chain.
Swisscom maintains close contact with the media – seven days a week. Its relationship with the media is informed by professional journalistic principles.
Employees and employee representation
In order to meet its mandate and live up to its customer promise, Swisscom relies on fully-committed employees who think and act proactively. It is our employees who transform Swisscom into a tangible experience for customers. Engaging in dialogue with customers and ensuring that the information gathered at the customer interfaces flows back to the company and into the decision-making processes allow Swisscom to continually improve its products and services. Using a wide range of communications platforms and activities, Swisscom promotes a corporate culture that encourages dialogue and cross-collaboration within the company. Every two years, Swisscom conducts an employee survey, the results of which provide ideas for new projects and measures. Helping to shape Swisscom’s future is one of the most important tasks of the Employee Representation Committee. Twice a year, Swisscom organises a round-table meeting with the employee representatives to discuss the main issues of social partnership, training and development, diversity, health and safety at work.
Partners and NGOs
Swisscom believes in the importance of sharing insights and information with partners within the framework of projects: for example, with the WWF Climate Group, myclimate, the Swiss Child Protection Foundation and organisations that address the special needs of disadvantaged groups. Active partnerships and social and ecological commitment are especially relevant for this stakeholder group.
The materiality matrix covers the key issues that are important to stakeholders and Swisscom, and illustrates where they fall within the company’s four strategic priorities in the area of corporate responsibility. The matrix also denotes other issues that have an impact on Swisscom’s business strategy.
Swisscom carefully monitors each issue in the matrix and handles them according to priority. Those with the highest priority and of major relevance to both stakeholders and Swisscom are positioned in the top right-hand box. Other topics such as noise, water protection, wildlife conservation, violence and population growth are important from an ecological and social point of view, but are not pivotal to Swisscom’s activities.
The issues can be identified based on their relevance to Swisscom’s business strategy and the concerns of stakeholders. They are examined and dealt with internally according to level of importance and scope either by specialist departments or by those bodies that act as contact partners for the respective stakeholders. The issues are also discussed by other bodies such as division management, the Management Board of Swisscom Switzerland and the Group Executive Board. If necessary, these bodies initiate the appropriate measures. The matrix topics and priorities were validated by representative target groups in a survey conducted in October 2013. Government authorities, partners and NGOs such as the WWF and myclimate commented on ecological aspects, while the Swiss association for audiovisual learning (SSAB) and the Federal Social Insurance Office (FSIO), which are jointly responsible for the National Programme for the Promotion of Media Skills, commented on social aspects. The survey concluded that Swisscom should promote climate-friendly products and services even more strongly, since they are able to make a substantial contribution to combating climate change. These findings are also confirmed by the most recent study of the International Global e-Sustainability Initiative (GeSI smarter 2020) as well as Swisscom’s latest evaluation. The topic of climate-friendly products and services is therefore classified as highly relevant within the matrix.
Issues highlighted by the FSIO and SSAB surveys, such as the shortage of specialist staff and generation management, have also been incorporated in Swisscom’s materiality matrix under diversity and personnel training and development. There is consensus as regards the rating accorded to the other issues. The issues are arranged alphabetically within the boxes of the materiality matrix.
Market trends in telecoms and IT services
Swiss telecoms market
Switzerland has three mobile networks and several transport and access networks in the fixed network area. TV signals in Switzerland are transmitted terrestrially via antenna as well as satellite. The Swiss telecoms market is highly developed by international standards. It is characterised by innovation, a wide range of voice and data services, and television signal broadcasting. Total revenue generated by the telecoms market in Switzerland is estimated at around CHF 17 billion. The market is in a state of transition, driven by the growing convergence of telecommunications, information technology, media and entertainment. People nowadays can access the Internet from anywhere and at any time using a whole range of devices. The rapid spread of smartphones is changing the needs of customers. Swisscom spotted this trend and in June 2012 was one of the first telecoms providers in the world to introduce new types of mobile subscription (infinity tariffs) which allow customers to make unlimited phone calls and send unlimited SMS messages to all Swiss mobile networks, as well as unlimited Internet surfing at flat rates. The individual subscriptions mainly differ in terms of mobile data speeds. As smartphone penetration increases, so too does the volume of data and hence the load on networks. Swisscom is investing continuously in the network infrastructure of the future in order to keep pace with this development. In 2012, Swisscom expanded its mobile frequency portfolio after successfully competing in an auction. Swisscom is also tackling the relentless growth in data traffic by continuously expanding fixed broadband access and deploying new technologies in the mobile network such as LTE (Long Term Evolution). Swisscom also offers bundled offerings that combine different technologies such as fixed-line access with telephony, Internet and TV, plus the option of a mobile line. Competition is continuing to drive down prices. The Swiss telecoms market can be broken down into submarkets of relevance to Swisscom: fixed-line, mobile, broadband and TV.
Fixed-line telephony is mainly based on lines running over the telephone network and cable networks. Market shares have changed very little over the last few years. Swisscom leads the market, well ahead of its competitors. The spread of mobile telephony in recent years has led to a rapid decline in the number of phone calls made over the fixed network and a continuing fall in Swisscom fixed lines. This trend continued in 2013, with the number of fixed lines falling by around 4% to 2.9 million, mainly due to the substitution of fixed lines by mobile communications. At the end of 2013, the number of unbundled fixed lines totalled 256,000.
Mobile communications market
Three companies operate their own wide-area mobile networks in Switzerland: Swisscom, Orange Switzerland and Sunrise. While GSM network coverage is close to 100% of the population, the demands on mobile networks continue to grow. So that it can continue to offer customers optimum data access, Swisscom is investing in new mobile technologies such as LTE. At the end of 2013, some 85% of the Swiss population had access to the latest-generation mobile network. Growth in mobile lines (SIM cards) in Switzerland was slower than in 2012 due to the already high market penetration. Together, the three network operators have a combined total of around 10.5 million mobile lines; penetration in Switzerland is around 130%. The technical possibilities offered by mobile communications are increasing due to the rapid spread of smartphones. A growing number of customers access their data, e-mails and Internet while on the move. Swisscom’s infinity tariffs reflect customers’ changing needs. At the end of 2013, around 1.7 million customers were using the new infinity offerings. For occasional mobile network users, Swisscom provides prepaid offerings with no monthly subscription fee, so that they are charged only as and when they access the network. Machine-to-machine (M2M) mobile data is a growth market which in future will support a whole range of applications such as automatic localisation in the event of a vehicle breakdown. Swisscom makes its mobile network available to third-party providers (MVNO, mobile virtual network operators) so that they can offer their customers proprietary products and services over the Swisscom network.
In 2013, Swisscom’s market share remained relatively stable at 60%. The percentage of postpaid customers in Switzerland is around 62%. As in previous years, prices for mobile services continued to be squeezed by competition, driving down average monthly revenue per customer accordingly.
The most widespread access technologies for fixed broadband in Switzerland are the telephone network based on DSL and cable networks. At the end of 2013 the number of retail broadband lines in Switzerland totalled around 3.3 million or around 92% of all households. Switzerland therefore leads the way internationally in terms of market penetration of broadband lines. Swisscom’s DSL offerings reach more than 98% of the Swiss population.
Growth in broadband lines is slowing from year to year. In 2013, the number of lines grew by around 4%, versus around 5% in 2012. As in the previous year, growth in broadband access lines provided by cable network operators outpaced that of telephone-based DSL broadband access lines. DSL broadband accounted for around a third of new lines in 2013, corresponding to a market share of all broadband lines of around 69%. Of these, 54% (prior year: 55%) were Swisscom end customers and 15% (prior year: 16%) wholesale offerings and fully unbundled lines. Broadband is increasingly becoming the basic Internet access for households, through which customers can access additional services or bundled offerings.
The most important modes of transmission for TV signals in Switzerland are cable, broadband, satellite, antenna (terrestrial) and mobile. The importance and market penetration of digital television continues to grow. In May 2013, the Federal Department of the Environment, Transport, Energy and Communication (DETEC) decided to phase out (in two stages) the obligation to broadcast analogue television signals. As of 1 June 2013, the obligation was lifted for selected foreign TV channels; as of 1 January 2015, the obligation will be lifted for certain domestic TV channels. This will mainly affect cable network operators. If a cable network operator offers customers a free converter which converts the digital signal into an analogue signal, thereby allowing them to receive a comparable basic digital package, the operator is immediately freed from its obligation to broadcast analogue channels. This is already the case with upc cablecom, Switzerland’s biggest cable network operator. Cable television, Swisscom TV and satellite reception account for the largest market shares. Sunrise has been offering its own digital television services since 2012.
Swisscom has been steadily growing its market share over the last few years thanks to its own digital TV offering, Swisscom TV. At year-end 2013, it commanded a market share of 23% (prior year: 20%). In 2013, the number of Swisscom TV customers rose by 209,000 to 1.0 million. Swisscom TV offers over 200 television channels, more than 6,100 films (video-on-demand) and over 4,000 exclusive live sports coverage (mainly football and ice hockey). Swisscom TV also offers convenience features such as replay TV (allowing viewers to watch missed programmes for up to 30 hours after transmission), live pause, a recording function, picture-in-picture, TV apps for weather, news, photos and other services, and a TV guide. Thanks to a mobile app, customers can access the services and schedule at any time while on the move. Swisscom TV is available in a range of packages to meet all customer needs.
Italian broadband market
Italy’s broadband market is Europe’s fourth largest, with a revenue volume of around EUR 14 billion. Unlike most other European markets, no competition exists in Italy between DSL-based broadband providers and cable network operators. Broadband penetration is well below the European average, accounting for just over 50% of households. The total number of broadband lines in Italy remained steady in 2013 at around 13.6 million. Fastweb increased the number of broadband lines year-on-year by 9.9% or 175,000 to 1.94 million, outperforming its competitors in terms of new customers in 2013.
Telecom Italia commands the lion’s share of the broadband market, with 51% of all broadband lines (prior year: 52%) compared with Fastweb’s 14% (prior year: 13%). Three integrated players dominate the market: Telecom Italia, Vodafone and Wind. Thanks to economies of scale, they are able to maintain a strong advertising presence and build up a dense sales network. For service providers, a permanent countrywide presence is becoming increasingly important, given the growing complexity of products and services and increasing legal constraints on telephone sales due to data privacy. With this in mind, Fastweb has decided to expand its own sales network, improve the efficiency of its dealer structure and step up investment in its own sales outlets in major Italian cities.
IT services market in Switzerland
In 2013, the IT services market generated a revenue volume of CHF 7.9 billion. Swisscom expects the market volume in 2016 to total CHF 8.6 billion. Growth prospects have improved slightly. Growth is expected in the segment for applications-based services, which are often sector-specific or based on SAP. Business process outsourcing (BPO) and cloud services are also expected to grow, whereas the outlook for classic infrastructure services is rather one of stagnation or even decline.
Swisscom IT Services remains one of the biggest providers of IT services in Switzerland, with a market share of 8%, and has substantially increased its share of the banking BPO market. Having acquired Entris Integrator Ltd and Entris Operations AG in the first half of 2013, Swisscom IT Services now offers an IT back-office management solution (including process handling) to some 50 banks and has paved the way for further growth in business process outsourcing for the banking sector. Swisscom IT Services defended its market position in IT outsourcing and laid the foundations for further growth in cloud computing by setting up new platforms.