Swisscom AG (SCMN) Earnings Call Transcript & Summary

Shareholders, [Foreign Language] dear guests and friends of Swisscom, ladies and gentlemen, extraordinary circumstances require extraordinary measures. Currently, the corona pandemic is dominating the world. As you all know, on March 16, 2020, the Federal Council, which is the Swiss government, issued Ordinance 2 on measures to combat the coronavirus. Due to the so-called extraordinary situation, we had to declare that today's Annual General Meeting must be held without the physical presence of our shareholders. We deeply regret this measure. However, it is vital to protect the health of our shareholders. And current circumstances left us no other choice. Instead of the Hallenstadion, we conduct this meeting here at our headquarters, and we are broadcasting today's AGM live on the Internet in German, French and English. This means that you, ladies and gentlemen, still have the opportunity to obtain firsthand information. You were provided with the possibility of casting your votes via the independent proxy. And I would like to thank you for your kind understanding. On behalf of the Board of Directors, the Group Executive Board and on behalf of all employees of Swisscom, I would like to extend a very warm welcome to you. I am happy to welcome you to this year's ordinary shareholders' meeting here at Swisscom's head office in Worblaufen. Welcome to Swisscom's 22nd Ordinary Shareholders' Meeting. I would like to welcome the independent proxy, Reber, attorneys-at-law today, representative by Mrs. Gschwend, and the representative of the auditors, Mr. Kartscher. Furthermore, the following persons are present: Urs Schaeppi, the CEO of Swisscom; and Martin Vögeli, he is Head of Group Strategy and Board Services, and in this function, he also acts as the Secretary of the Board of Directors. Now due to the extraordinary situation, the other members of the Board of Directors and the Group Executive Board are not attending the AGM today. Now ladies and gentlemen, the current situation underlines once again that the network infrastructure is of vital importance. The corona pandemic forces tens of thousands of Swiss citizens to stay and work at home instead of commuting. Furthermore, schoolchildren, students, they're all making much greater use of the Internet at home than before. Swisscom has been driving forward the digitalization of Switzerland for years and is constantly expanding its infrastructure, and these efforts are now paying off. It is precisely the infrastructure that is now able to bear the additional burden. In addition, many companies are realizing only now during the current crisis what kind of advantages digitalization can add to their business. We are currently seeing an increased demand for home office products, particularly among business customers. In this respect, the crisis may also be an opportunity. In 2019, Swisscom has managed to hold its own successfully in a challenging environment. The market remains unchanged. The biggest challenges continue to be market saturation, fierce competition and high price pressure. Nevertheless, we are able to report a solid result for the 2019 financial crisis. Group revenue declined slightly, but profits were higher due to one-off effects. I am pleased with the unabated success of our own products. The inOne combined package continues to grow. We also achieved slight growth in the TV business, although this is basically saturated market. Our subsidiary, Fastweb, in Italy is also growing in the residential and business customer segment. For further details on the respective business developments in 2019, please refer to the annual report. It is also pleasing to note that Swisscom won all the major network tests. In the Connect Test, Swisscom's mobile network was awarded the rating outstanding and the best score ever measured was achieved. The Board of Directors is therefore satisfied with the 2019 results. Swisscom achieved its targets and maintained its strong market position in Switzerland. We want to continue to differentiate ourselves from our competitors with the best infrastructure, progressive products and exceptional service. It is always our goal to provide our customers with the best customer experience. In order to achieve this, we will ensure that we continue to offer our services based on the best network. This is why we are investing heavily in expansion over the next few years and we have committed to new expansion targets. By the end of 2025, fiber coverage in homes and businesses is expected to double compared to 2019. In addition, we intend to deploy our network technologies in a more convergent manner. Mobile communications and broadband networks are to interact intelligently so that all customers get exactly the services they need at any given moment, be it at home or out of home. Ultimately, we also see great opportunities in the new 5G technology, which we want to leverage in the future. This is why we are continuing to invest in the expansion of 5G for our customers. Our Italian subsidiary, Fastweb, plays an important role. However, a great deal depends now on how quickly Italy will recover from the current corona crisis. It is difficult to provide forecasts at the present time. Nevertheless, it is our ambition to achieve further growth in broadband, mobile communications and business customers. Let us now turn to the Swisscom share. Last year, the share price rose by 9.1% to CHF 512.60; while the Swiss Market Index, SMI, rose by 26%. However, compared to other European telecommunications companies, the Swisscom share performed significantly better. 1 year ago, on April 8, 2019, Swisscom paid an ordinary dividend of CHF 22 per share. Based on the share price as per the end of 2019, this corresponds to a yield of 4.7%. This is still attractive in the current environment with very low or even negative interest rates in some cases. We are proposing an unchanged ordinary dividend of CHF 22 per share. This corresponds to a total dividend payment of CHF 1.14 billion and makes our share a solid dividend title. To this end, we are adhering to our unchanged principle that, if targets are achieved, the dividend shall not be lower than last year's dividend. At the end of December 2019, Marc Werner stepped down as Head of the Sales and Services business sector and left Swisscom. He took up a new challenge as the CEO of Galenica Ltd. We saw his departure as an opportunity to review the group structure. As per the 1st of January 2020, the 2 business sectors, Sales & Services, on the one hand, and Products & Marketing, on the other hand, were merged to form the new Retail Customers business sector and it is headed by Dirk Wierzbitzki. Back in spring 2019, we merged the corporate clients and SME business into the B2B division, which is headed by Urs Lehner. This takes us right into the middle of 2020. The challenges remain -- this year remain market saturation, intense competition and high price pressure. Uncertainty is also created by the fact that no one really knows how the coronavirus will further spread and what the effects will be on our business. We intend to meet these challenges with attractive products and we are relying on the quality of our networks and, of course, on our excellent customer service. We are also continuing to drive forward the transformation of our company and are consistently pursuing our cost targets. In line with the guidance we communicated on February 6, 2020, expect the following for 2020: net revenues of approximately CHF 11.1 billion, EBITDA of CHF 4.3 billion, and we're planning on capital expenditures of around CHF 2.3 billion. If we achieve our goals as planned, we intend to propose an unchanged attractive dividend of CHF 22 per share for the 2020 financial year at the 2021 AGM. Please bear in mind that this forecast may be affected by the effects of the corona pandemic. It is not possible to quantify the repercussions at this stage. A possible financial impact depends on various circumstances, including the duration of the pandemic and, of course, the measures imposed as well as the support measures provided by the Swiss government to Swiss businesses. We are looking back on an intensive 2019 and an extremely challenging start into 2020. However, I am convinced that we not only have the most modern and efficient network, but also integrated smart products and a high-quality, innovative service. Above all, we are proud to have such a large number of dedicated employees who do everything they can every day to ensure that people and companies can enjoy the advantages of the networked world. Particularly, in current -- in the current difficult times, our employees are doing an extraordinary job for all our customers, and they enable them to master the current challenges we are all facing now. I would like to seize this opportunity to thank all our employees, the colleagues of the Board of Directors and of the Group Executive Board and, in particular, our CEO, Urs Schaeppi, for their many years of loyalty and their tireless efforts on behalf of Swisscom. And I would also like to thank you, shareholders, ladies and gentlemen, sincerely. Thank you for the confidence you are placing in Swisscom and for your support. Thank you for your kind attention. I wish you all the best and especially in these days, I wish you the best of health. We shall now proceed to the formal part of this AGM. The annual general meeting has been duly convened and has a quorum. The invitation was published in the Swiss Commercial Gazette on February 28, 2020. The shareholders registered in the share register were invited in writing and, if requested, also electronically. Swisscom informed you about the fact that the AGM would be held without the physical presence of our shareholders on the Internet on March 20. Furthermore, this was also published in the Swiss Commercial Gazette on March 24. No requests for items to be included on the agenda were received. The annual report has been available at the company's headquarters since February 6, 2020. And on request, it was also sent to shareholders by regular mail. The auditors, PricewaterhouseCoopers, who audited the annual and consolidated financial statements as well as the remuneration report, are represented today. I would like to appoint Mr. Martin Vögeli as our minute keeper, and Peter Kartscher is our teller today, the representative of the auditors. Thank you for assuming these tasks, gentlemen. Today's AGM has a quorum, regardless of the number of shareholders present and shares represented. Any resolutions and proposals will be passed today by an absolute majority of the valid votes cast. According to the Articles of Incorporation, abstentions are considered as votes not cast. The items of today's agenda can be seen on the screen behind us, and they can also -- and they were also listed in the written invitation. The number of share votes represented has been determined, and Mr. Vögeli will announce them now.

Now present today are 3 shareholders today. That's the Chairman, the CEO and myself. Also present is independent proxy, Reber Rechtsanwälte, attorneys-at-law with Ms. Julia Gschwend, whom represents all shareholders who have given her a power of attorney with voting instructions. Each share with voting right entered in the share register is entitled to one vote. The shareholders present at the meeting have authorized the independent proxy and do not represent any share votes. In total, the independent proxy represents 39,269,229 votes. This corresponds to around 87% of the shares entitled to vote. Own shares are not represented. Ladies and gentlemen, this brings us to the approval of the management report, the annual financial statements of Swisscom AG and the consolidated financial statements for the 2019 financial year. You'll find the comprehensive reporting of the Board of Directors and the Group Executive Board in the annual report 2019, which we've sent to you on request. And I would like to hand it over to our CEO, Urs Schaeppi. Now he will inform us about the most important events and financial figures of the past financial year and also provide a brief outlook into 2020. Urs, the floor is yours.

Distinguished shareholders, ladies and gentlemen, in all parts of Switzerland and beyond, it's a great pleasure to welcome you here to today's annual general meeting. Hansueli Loosli made the point in his presentation, 2019 was another challenging year for Swisscom. There was pricing pressure, market saturation and a high level of competitiveness. In addition, Swisscom was challenged with regard to increasing its efficiency, launching innovative products, but also with regard to the way it handles the ever-increasing volumes of data. I'm very pleased now to be able to present a sound business results to you here today. Over the next few minutes, I would like to cover 3 points. First of all, I'd like to talk about the year 2019. I then move on to presenting highlights and innovations for 2019, and I'll close by talking about 2020. I'll tell you what the challenges will be in the coming year and where we would like to focus on in 2020. But let's talk about 2019 first, and here are the key performance indicators. You can see that we posted net revenue of CHF 11.45 billion, which is slightly down over the previous year. And there is one reason, which is price erosion in Switzerland. In Italy, we were able to grow. In Switzerland, we posted a slightly negative net revenue. On the other hand, EBITDA amounted to CHF 4.36 billion, which is a stable result, in other words. If you exclude extraordinary items, we are fair to say that we posted stable operating results, which is an excellent result in our environment. Net income amounts to CHF 1.67 billion. That's, again, a very sound net income, up over the previous year, but also due to extraordinary effects. And across the board, we can say that our profitability is stable. It's important to mention investment, CHF 2.44 billion. That's the amount of money Swisscom invested in its infrastructure in 2019. If you compare that with our net revenue, you can see just how capital intensive our industry is. We're looking at roughly 20% of sales invested to upgrade and retrofit the grid, the system, in order to be able to provide pioneering structures that are state of the art. Let me now talk about some highlights in 2019. First of all, the infrastructure. Hansueli Loosli referred to the network tests, and we were able to win the major network tests, all of them. We achieved extraordinary results there, also on the international level. This goes to show just how excellent the quality of Swisscom's network is. We continued investing in 4G. Even though everybody talks about 5G, we continue investing in 4G. That's very important, and we've been able to achieve a coverage ratio of over 99%. This is second to none also on an international level. Furthermore, we invested in -- invest in fixed network and mobile telephony networks and also started investing in 5G technology. In February 2019, the frequencies were auctioned, the frequencies for 5G were auctioned. Swisscom was able to win a fair share of the frequencies. So in future, we will be able to build competitive networks. We were then the first provider in Europe to actually run 5G on a commercial level. To date, we have a 90% coverage in Switzerland already with a basic version of 5G. We're still far away from being finished with 5G. In order to be able to use 5G's full potential, we've got to continue to invest in our network. We've got to establish more antenna locations. We've got to expand our network, which creates major problems for us because, on many locations, we are blocked. Basically, no building permits are given for mobile telephony antennas. I understand that people have concerns with regard to 5G in the general population. This has always been the case. And every time a new technology was introduced, people were concerned. We take those concerns very seriously. But on the other hand, we've got to stick to the facts. Take a look at what the WHO says, the World Health Organization, or specialized publications. They all say 5G is without any problems. Let me move on to innovations now. 2019 was also marked by many interesting innovations that I am very proud of. For example, in TV, we were able to launch a new version of the Swisscom TV products, which is an excellent product also with regard to international competition. And I'll come back to this point later on in my presentation. This is one cornerstone of our fixed net strategy. But our bundled products were also very successful, the inOne product, for example. Here, we combined fixed net services and mobile telephony services. Within a short period of time only, we were able to win 2.75 million customers. We also launched our new mobile telephony subscription or rate, inOne mobile go, which also includes roaming, was an excellent success. There were so many clients signing up for this product that we were overwhelmed. This is the fastest-growing product Swisscom has ever had, has ever launched. [Presentation]

Fastweb developed very well. [Presentation]

Right. This was just a quick summary of what kept us busy in 2019. I'd now like to talk about the TV products or TV entertainment, as we prefer to call this segment of products. We have been able to grow with these products. We currently have a market share of roughly 36%. That's 1.56 million TV clients using Swisscom's TV product. So we're very clearly #1 on the Swiss market. Our customers are very enthusiastic about our products because the products are easy to use and provide straightforward access to the content in a very simple way so that we can watch the film we want to watch. There is so much available to our clients, so it's very important to simplify access. Usability is extremely vital, which means that we have equipped our TV box with voice control. You can today talk to your TV box. You can say, "Hey, Swisscom, turn the TV on," switch on the TV, and you don't have to grab your remote control. You don't have to press any button. You can just watch the film you would like to watch without having to touch any technology. We're still in the infancy of this development, but it shows that it has huge potential. Swisscom TV-Box is also developing further. It's not just an entertainment box. It also includes smart home functionalities. You can use this box, for example, to also turn the lights on or off and many other things. Just to show you how big the potential of this technology is, smart home, which provides a huge potential for Swisscom, too. In order for all of these dreams to become a reality, we need a network and this is where we invest heavily. Quality is the name of the game, ladies and gentlemen. And high quality is a top priority at Swisscom. At the beginning of the year, we weren't able to deliver on this promise. We weren't able to live up to the ambition of highly reliable networks. We had some disruptions, service disruptions, which were a major cause of concern for me, and it's not in line with what we promise our clients to deliver. But let me briefly comment on these issues. If we look at the overall reliability of our system and resilience, our performance has become much better over the past few years. Our downtime in fixed net, for example, has been reduced by 30% since 2017. For us and for the Group Executive Board, it is a top priority to provide a reliable system. And 2 terms that often come to mind are redundancy and resilience. Our network is redundant, which means that if one component is faulty, a second one will take over. But if you have a software problem, even in redundant systems, the redundance might not be fully operational. Well, [ you ] can tell us, "You should have a 3x, 4x and 5x redundancy." But usually, this doesn't solve the problem. What we need to do is, and I'm referring to the entire industry, to make our networks not more redundant, but more resilient. Resilience is the technical term we use here. Let me use a different industry to -- as an analogy. In the automobile sector, we have what we call run-flat tires. If you have a puncture, for example, you can still run on a damaged tire. You don't need to have to use the spare wheel. And that's precisely what our telecom and IT industry needs to use as well in order to make sure we can provide 7/24 service everywhere and reliability around the clock. A second challenge that we have with our networks is complexity. Think of the following, think of what's happening in our networks. If you use a smartphone, you can do lots of things with it. You can watch television. You can access the cloud. You can perform banking transactions, et cetera. This requires a very high level of complexity in our network, which is growing by the day. On the other hand, we also have life cycles for products. And this service life of products is going down. About 10 years ago, the life cycle of a product was -- might have been 8 years. Today, it's just 3 years, which means that we are currently rebuilding our system. Let me give you another example. Every week, we perform about 4,000 major maintenance interventions in our network. This is the challenge that Swisscom is confronted with. We need to simplify our network architecture. We also need to automate our networks more in order to ensure a higher level of reliability. But all in all, Swisscom is providing good quality despite the network disruptions at the beginning of the year. A few more comments on Fixnet and its expansion. Here, you have a map. You can see Switzerland to the left in gray and light blue and to the right in dark blue. This goes to show what happens within the next few weeks or this year still and next year when our networks will be able to cover ultra-broadband access for the entire country. We were investing billions of Swiss francs in order to make sure we have faster speed via hybrid fiber optic connections. Our promise by the end of '21 -- for 2020 on is to have modernized the infrastructure in every municipality, 90% of households will be benefit from a speed of more than 80 megabits per second to 10 -- up to 10 gigabits per second. We will then have a very, very powerful network. And just one more figure, 75% of the country will be able to benefit from a transmission speed of more than 200 megabits per second. So even on an international level, we're in a very, very strong position indeed. However, this is not the end of our ambition, ladies and gentlemen, we defined a strategy to take us further and the Board of Directors has approved this strategy. The strategy is to make our network even faster and even more available to everyone, more performance, higher degree of reliability and better coverage. What does it mean in actual facts? Well, we're going to double our fiber optic coverage, Fiber to the Home, fiber to the socket, so to speak, by the year 2025. 50% to 60% of the country will be able to benefit from a product which we call Fiber to the Home. That's a fantastic value, fantastic score for coverage. But we continue to invest in 4G and 5G to make sure we can also provide the best networks in mobile telephony. So we're investing billions of Swiss francs in our infrastructure over the next few years to come. Let me now move on to 5G and spend some time here. I already mentioned the point that -- this fact before. We have a 90% coverage with 5G basic already now. We have the first smartphones on the market that are actually able to use 5G. It's all still early days, ladies and gentlemen. But 5G will certainly become more widespread as an issue towards the end of 2021 and -- 2020 and into 2021. There is a big controversy over 5G. But it is absolutely clear that 5G will be the new technology in mobile telephony. It's more efficient. It's more sustainable. It requires much less energy to transmit data packages compared to other technologies. And it also reduces the radiation at the same level of utilization. This is the technology which will also be a springboard for more innovation. Our industry will always be shaped by platforms. And I remember very well, when we launched 3G UMTS, that's what we called it at the time, many people said, "Well, we don't need it. We've got plenty of capacity. We've got 2G. That's good enough." Well, if you take your smartphone, try to use the smartphone with the services you're used to if you just have 2G on your display. It won't work. The 3G network has triggered an innovation boost. And this is precisely what we need today in order to run our businesses from our home office. What we need is a very powerful, high-capacity infrastructure, which is precisely why we need to invest in 5G. Currently, we're locked down. We're blocked. If you look towards Western Switzerland, we haven't been able to build anything at all since the beginning of the year, which is a reason for concern, not just for 5G, we can't build any location or any antenna for 4G either. But data consumption is going up and it's just a matter of time until we have a bottleneck. So Switzerland needs to review this policy approach and break the deadlock so that we can continue building antenna locations. Otherwise, networks will slow down and will create traffic jams on the mobile telephony networks. Let me move on to Fastnet (sic) [ Fastweb ] now. Our Italian subsidiary posted a very positive year. We were able to grow in all segments, which is an excellent result. You can see the figures here for broadband Internet access, we grew by 4%. In mobile, a market we just tapped, posted an increase of 26%, which caused net revenues to go up 5% -- by 5%. We're looking at CHF 2.2 billion in turnover in Italy. And we're looking at operating profit before interest, taxes, depreciation, amortization to the tune of CHF 750 million. That's a plus of 8% over 2018, so a gratifying development in Italy. Let me now talk about the challenges that we will be confronted with. I'm just going to be brief on this. The market and that's clearly one of the challenges, is characterized not just by competition on the domestic market but also on an international level. Who's our competitor, in TV, is it a national player or possibly an Internet-based company? Well, this business is moving towards the Internet to an ever-increasing degree. And I'm very confident that we will position ourselves in the right way. Our market will also be characterized by investment. And on a political level, we have a challenging environment with regard to the construction and the issuing of construction permits for mobile telephony antennae. And obviously, what is keeping us very concerned is the corona crisis. Who would have thought 2 months ago that we would find ourselves in the current situation? It is absolutely unbelievable. But let me make a basic statement, and I'm quite proud of the fact that Swisscom developed very positively. We were able, within a very short period of time, to run 85% of Swisscom from home -- from home office. And this just goes to show the big potential of digitalization. If you walk through our offices here, it's all empty. There's no one here. Every -- the whole business is run from home. It's difficult to say how our business is going to develop based on this current situation. We are looking at this development very intensively. We have set up a task force. The key factor, of course, will be the duration of the crisis and the efficacy of the measures taken by the Swiss government, the Federal Council and by the economy. In closing, I'd like to tell you how we're going to tackle these challenges. Well, it's going to be about innovation with regard to customer service and networks. In retail clients, we will continue to launch innovative products, particularly as far as entertainment. Our largest concern -- as far as business clients are concerned, we will continue to invest in IT solutions, cloud and security solutions. That's clearly an area of growth. And with Fastweb, another important step is coming, we will invest in a partnership with Wind Tre in Italy to invest in 5G networks and in order to make sure we can gain an even stronger foothold on the Italian market, particularly with regard to strengthening the Internet, our core business. So we have clear plans, clear measures, apart from having to invest in our network strategy 2025 for 5G. So there's a lot going on, ladies and gentlemen. On the other hand, we also need to look at our cost side. We've got to develop our cost management proactively. We have an ambition here. We want to reduce costs by CHF 100 million in 2020. Ladies and gentlemen, thank you very much for your trust in Swisscom. That's the end of my presentation. I would like to give it back to Hansueli Loosli.

Thank you, Urs, for your remarks. Please note that the auditors recommend that the annual financial statements of Swisscom AG and the consolidated financial statements be approved. The corresponding reports to the AGM do not contain any reservations and they've been published in the annual report. Please also note that PricewaterhouseCoopers audited the accounts for the first time this year. And I would like to thank the lead auditor, Peter Kartscher, and his colleagues for their excellent and solution-oriented cooperation. Let us now proceed to the vote as shown on the screen. I kindly ask the independent proxy to cast the vote now. [Voting]

I herewith note that the AGM has approved the proposal with yes vote of 99.9%. Thank you very much. We shall proceed with the consultative vote on the remuneration report. Even though the result of the vote on the remuneration report is not legally binding, it still gives us an indication of whether you agree with our compensation system and the compensation paid in 2019. The compensation policy, the compensation system and the compensation paid to the members of the Board of Directors and the Group Executive Board in 2019 are disclosed in detail and transparently in the remuneration report. The compensation of the Board of Directors and the CEO as well as the total amount of compensation for the Group Executive Board were determined by the Board of Directors, taking into account the recommendations of the Compensation Committee, which is headed by Barbara Frei. The compensation of the other members of the group management was determined by the Compensation Committee. The remuneration of the Board of Directors in the 2019 financial year, including social security contributions, amounted to CHF 2.212 million and therefore is 3.4% lower than in the previous year. The lower total compensation in 2019 is mainly due to the fact that 1 member of the Board of Directors resigned as per December 31, 2018, and a lower number of meetings in total. The maximum total amount of CHF 2.5 million approved by the AGM for 2019 was thus complied with. The remuneration system for the Swisscom Group Executive Board consists of a fixed base salary, a performance-related variable component as well as fringe benefits. For the year 2019, remuneration totaling CHF 7.516 million was paid. Compared to the previous year, the total remuneration of the Group Executive Board decreased by CHF 500,000 or 6.2%. The total compensation of the CEO decreased by CHF 70,000 or 3.8%. The decrease in the total compensation and the compensation of the CEO is mainly due to the lower variable remuneration compared to the previous year as well as due to the change in the composition of the Group Executive Board. The total compensation for 2019 is, therefore, lower than the total amount of CHF 9.7 million that you approved for 2019. I herewith note that Swisscom is creating transparency with its remuneration report and is demonstrating that it pays appropriate salaries and pursues a policy of sound judgment. The auditors have examined the remuneration report and they confirmed to the AGM that the remuneration report for the 2019 financial year complies with the law and with Articles 14 to 16 of the ordinance against excessive remuneration in listed companies. Let us proceed to the vote. The proposal can be seen on the screen. And I kindly ask the independent proxy to cast the votes. [Voting]

I herewith note that the proposal was approved with 97.35% yes votes. Thank you very much for taking favorably note of the remuneration report. Let us proceed to item 2, appropriation of retained earnings 2019 and declaration of the dividend. The retained earnings of CHF 6.685 billion consists of the following: retained earnings brought forward from last year of CHF 5.284 billion and net income for 2019 of CHF 1.401 billion. Of the available earnings, CHF 1.140 billion will be distributed as a dividend and CHF 5.545 billion will be carried forward to the new account. No dividend will be paid on treasury shares held by Swisscom AG. As in the previous year, the Board of Directors, therefore, proposes a dividend of CHF 22 per share or CHF 14.30 after deduction of the withholding tax.

Let us now proceed to the vote. The proposal can be seen on the screen. And I kindly ask the independent proxy to cast the vote. [Voting]

I herewith note that you have approved of the proposal by 99.92% of yes votes. The dividend of CHF 14.30 net per share will be paid out on April 14, 2020. The last trading day entitling shareholders to receive the dividend is April 7. As of April 8, shares will be traded without dividend entitlement. We shall now proceed to item 3, discharge of the members of the Board of Directors and the Group Executive Board for their activities in the financial year 2019.

Please note that the members of the Board of Directors and all persons who were involved in the management of the company in the 2019 financial year are not entitled to vote on this item, neither for their own shares nor for shares represented. And this also applies to any representatives of these persons. Let us proceed to the vote. You can see the proposal on the screen. And I kindly ask the independent proxy to cast the vote. [Voting]

I herewith note that you have granted discharge to the Group Executive Board and the Board of Directors with 99.89% of yes votes. I would like to thank you kindly for your confidence and trust you are placing in us. This brings us to item 4, reelections of the Board of Directors. All current members are standing for reelection. The Federal Representative, Mr. Renzo Simoni, is not elected by the AGM, but he's delegated by the Federal Council. The Federal Council has delegated him for a further term of office until the end of the AGM in 2021. Now the respective education, curriculum vitae and all the previous functions of each member of the Board of Directors are comprehensively disclosed in the corporate governance report. A summary of this information is also included in the invitation to the AGM. And I would like to refrain from presenting each person again here. And I would like to refer to the annual report and the invitation instead.

We therefore proceed to the vote on items 4.1 to 4.8. The proposal has been -- it can be seen on the screen. And the members will be elected separately and individually. I kindly ask the independent proxy to cast the vote. [Voting]

And these are the results of the reelections to the Board of Directors. I herewith note that all persons standing for reelection have been duly reelected: Roland Abt 99.44% of yes votes; Alain Carrupt, 99.8% of yes votes; Frank Esser, 99.34%; Barbara Frei, 94.24%; Sandra Lathion-Zweifel with 97.43%; Anna Mossberg with 99.88%; Michael Rechsteiner with 99.6% of yes votes; and my humble self with 99.02% of yes votes. On behalf of my colleagues and, of course, myself, I would like to thank you very much for the confidence and trust you are placing in us. My colleagues have declared that they are accepting their reelections. And therefore, we shall proceed to my reelection as Chairman of the Board of Directors.

Again, the proposal has been mentioned on the screen behind you. And I would like to kindly ask the independent proxy to cast the vote. [Voting]

And I herewith note that you have reelected Hansueli Loosli with 99.37% of yes votes as Chairman of the Board of Directors.

Thank you, shareholders, ladies and gentlemen, for the confidence you have shown to me with this vote. We now move on to the reelections to the Compensation Committee. The Board of Directors intends to reappoint Barbara Frei as Chair of the Compensation Committee if she were to be reelected by the Shareholders' Meeting.

You can see the Board proposal on the screen. Can I ask the independent proxy to cast the votes now? [Voting]

All results on the reelections to the Compensation Committee can be seen on screen. I note that all persons up for reelection were reelected: Roland Abt, 99.67% yes votes; Frank Esser, 99.58% of yes votes; Barbara Frei with 94.66% of yes votes; and yours truly with 99.29% of yes votes; and Renzo Simoni with 98.26% of yes votes. Thank you very much, also on behalf of my colleagues, for the trust. My colleagues have told me in writing that they accept their reelection. This brings us on to item 6. The Board of Directors proposes the maximum total amount for compensation for the Board of Directors and the Group Executive Board for the 2021 business year. The total amount of compensation paid out to the Board and the Group Executive Committee will be reflected in the compensation report for the 2021 business year. We will then also have a consultative vote on this compensation report at the Annual General Meeting in 2022. We move on to the approval of the total remuneration of the Board of Directors. The Board of Directors proposes that the maximum total amount of CHF 2.5 million for the remuneration of the members of the Board of Directors be approved. This proposed amount is based on the remuneration for 9 members of the Board of Directors and remains unchanged in comparison to the total amount approved by the Shareholders' Meeting in 2020. And it's composed as follows, CHF 2.2 million in terms of directors' fees. That's a base salary and functional allowances. And as of 2020, attendance at the meetings will also be compensated with the functional flat -- a function-based flat fee. No additional attendance fees will be paid. 1/3 of the fees will be paid out in shares. Employer contribution to social insurance and occupational pension, CHF 0.3 million, as well as occupational pension. The employer contributions to the occupational pension scheme include the expected statutory and regulatory obligations for the members of the Board of Directors to potentially be insured 2021. The amount of the contributions is dependent on, amongst other things, the employment situation of the members of the Board of Directors, their age structure and the insurance contribution rates. Now on screen, you can see a chart which shows you the compensation paid between the different years, 2018 through 2021. And the amounts paid out to the Board of Directors in 2018 were CHF 2.3 million, CHF 2.2 million in 2019 and the amount already approved for 2020. And again, proposed -- reproposed amount for 2021 is, as just mentioned, CHF 2.5 million.

We now proceed to the vote. You can see the proposal on screen. Could I ask the independent proxy to cast the votes now? [Voting]

I declare that the maximum total amount for the compensation of the Board of Directors in 2021 was approved with 99.12% yes votes. We now proceed to 6.2, approval of the total remuneration of the members of the Group Executive Board. The proposed maximum total amount of CHF 8.7 million is based on the remuneration of 6 members of the Group Executive Board. In comparison with the total amount approved for 2020 by the Shareholders' Meeting, this amount has been reduced by CHF 1 million because we were down by 1 person on the Group Executive Board. And this is composed as follows: CHF 3.5 million in terms of basic remuneration; CHF 3.5 million in terms of variable performance-related remuneration; and CHF 1.7 million in terms of pension contributions, fringe benefits and employer contributions to social insurance. The base -- basic remuneration includes a potential basic remuneration increase of 5% in comparison with 2020. As a rule, the individual remuneration in place for members of the Group Executive Board is reviewed once every 3 years of employment. The Board of Directors will decide whether to implement the envisaged basic remuneration increase for each member of the Group Executive Board individually based predominantly on the evaluation of the market value of the function in question, drawing on market comparisons and taking into account individual performance. The Board of Directors will determine the basic remuneration for 2021 at the end of 2020. The proposed total amount includes maximum variable compensation. So you're actually going to vote on the amount that would have to be paid if all corporate objectives and all objectives of every single individual member of the Group Executive Board were to be exceeded by far. The Board of Directors will define the objectives for the 2021 business year at the end of 2020. Once the financial result for 2021 is available in February 2022, the Board of Directors will also determine to what degree objectives have been met, somewhere between 0 and 130%. The Board of Directors considers it to be realistic that objectives will be reached by 100%. If objectives are reached by 100% in 2021, total remuneration would amount to CHF 7.4 million. As you can see on screen, over the previous years, targets have never been outperformed to such an extent that the maximum possible remuneration was paid out in full. In 2019 and '18, the amounts were clearly below the maximum amount approved. And the Board also expects this to be the case for 2020 and 2021.

We now proceed to the vote. You can see the proposal projected on screen. Could I ask the independent proxy to cast the votes now? [Voting]

I declare that the maximum total amount of CHF 8.7 million for compensation of the members of the Group Executive Board for 2021 was approved with 98.9% of yes votes. This brings us on to item 7, the reelection of the independent proxy. The Board of Director proposes that the law firm Reber Rechtsanwälte KIG, Zurich be reelected as independent proxy for the period of time until the conclusion of next Ordinary Shareholders' Meeting. Reber Rechtsanwälte has confirmed that their firm meets the independence requirements for performing this mandate.

You can see the proposal on screen, ladies and gentlemen. Could I ask the independent proxy to cast the votes now? [Voting]

I note that Reber Rechtsanwälte was reelected as independent proxy with more than 99.10% until the completion of the next Annual General Meeting. I'd like to congratulate Reber Rechtsanwälte on their reelection and like to express my gratitude for them taking over this mandate. We now move on to item 8, reelection of the statutory auditors. The Board of Directors proposes that PricewaterhouseCoopers AG, Zurich be reelected as statutory auditors for the 2020 financial year. PwC is a state-supervised audit company registered with the Federal Audit Supervisory Authority and has confirmed to Swisscom that it fulfills the legal requirements concerning independence.

We now proceed to the vote. You can see the proposal on screen. Could I ask the independent proxy to cast the votes now? [Voting]

I note that PricewaterhouseCoopers has been reelected with 99.97% yes votes as the statutory auditors for the 2020 business year. I'd like to congratulate PwC on their reelection. Thank you very much for taking over this mandate. I also have a written declaration that PwC accepts its reelection. With that, ladies and gentlemen, we are reaching the end of today's Annual General Meeting of Shareholders. Ladies and gentlemen, I'd like to thank you for the trust you have put in this -- in our company, Swisscom, and the trust you have expressed by accepting all Board -- all of the Board's proposals. I'd like to thank you all for your understanding that you weren't able to come here. I truly miss the discussions we usually have at the Annual General Meetings. I'd also like to thank Martin Vögeli and everyone working behind the scenes to make this extraordinary procedure possible in the first place. I'm already looking forward to welcoming you again in person a year from now at the Annual General Meeting of Swisscom in 2021. It will take place on the 31st of March 2021 in the Hallenstadion in Zurich. Ladies and gentlemen, don't forget this. Swisscom is here for you and for Switzerland, particularly in troublesome times. Together, we can survive. Now I would like to wish you all the best, stay healthy. I hereby close the 2020 Annual General Meeting. [Statements in English on this transcript were spoken by an interpreter present on the live call.]