BERN, Switzerland -- Swisscom sold its stake in debitel on 8 June 2004. As a result, debitel is separately disclosed as a discontinued operation in the Swisscom consolidated financial statements.

Swisscom posted a 0.4% increase in revenue (excluding debitel) to CHF 5 billion for the first half of 2004. Operating income before interest, tax, depreciation and amortization (EBITDA) fell by 5.6% year-on-year to CHF 2.25 billion. The 20.5% reduction in net income to CHF 757 million is largely due to the fact that the currency translation loss of CHF 238 million accumulated since the purchase of the debitel holding in 1999 was rebooked to income when the holding was sold. Excluding the debitel Group and in the face of continuing strong competition and unchanged regulatory conditions, Swisscom expects to close 2004 with a consolidated revenue of around CHF 10 billion and operating income before interest, tax, depreciation and amortization of approximately CHF 4.3 billion.

Swisscom posted a 0.4% increase in net revenue (excluding debitel) to CHF 4,999 million at June 30, 2004. While Fixnet and Mobile reported higher revenues (up 0.3% and 5.6% respectively), revenue for Enterprise Solutions was down 8.6%. Swisscom's operating income before interest, tax, depreciation and amortization (excluding debitel) decreased year-on-year by 5.6% to CHF 2,251 million. Operating income increases of CHF 43 million for Fixnet and CHF 38 million for Enterprise Solutions were offset by decreases of CHF 79 million for Mobile and CHF 132 million for the Corporate segment.

Swisscom sold its stake in debitel on 8 June 2004. debitel is separately disclosed as a discontinued operation in the consolidated financial statements. In the first half of 2004 this discontinued operation posted a loss of CHF 241 million (prior-year period minus CHF 77 million), comprising a result of CHF 5 million for the period up to completion of the transaction and a loss of CHF 246 million from the sale. The loss includes a cumulative currency translation loss of CHF 238 million since the stake was purchased in 1999, which was previously recorded under shareholders' equity and not charged to income.

Net income fell by 20.5% or CHF 195 million, mainly due to the rebooking of this currency translation loss. Excluding debitel, net income declined by CHF 31 million.

Equity free cash flow rose year-on-year by CHF 1,257 million to CHF 1,755 million. The fall in net cash provided by operating activities was compensated for by lower net investments, a drop in payments to minority interests, and reduced debt repayments as well as a net cash inflow of CHF 573 million from the sale of debitel.

Swisscom AG