Swisscom submitted an all-cash offer today to acquire 100% of Italy's Fastweb for EUR 3.7 billion (about CHF 6 billion or USB 4.8 billion).

Swisscom intends to make a long-term investment and to further strengthen the position of Fastweb based on a new generation network and innovative offerings in Italy.

Italy is one of the most attractive broadband markets in Europe with significant expected growth potential over the next few years. Fastweb is Italy's leading alternative broadband telecommunications provider with more than one million customers, 2006 revenues and EBITDA of respectively EUR 1.26 billion (CHF 2.04 billion) and EUR 424.6 million (CHF 691 million).

Fastweb currently offers broadband telephony, Internet and IPTV (Opzioni TV) services in more than 130 cities.

The acquisition will strengthen Swisscom in three areas:

• In the field of new technologies, which are key to the further development of Swisscom's infrastructure, Fastweb has a lead of three to five years.
• Fastweb also has a competitive edge in terms of expertise in the strategically important field of multimedia applications based on broadband, and has been delivering IPTV to its customers since 2001.
• By acquiring Fastweb, Swisscom will be able to boost its cash flows significantly. Fastweb is a high-growth company with an increasing free cash flow over time. The transaction has the potential to boost Swisscom's revenues and EBITDA by about one fifth, and generate further growth thereafter. Fastweb will therefore make an important contribution to Swisscom's financial results within a short time period.

Swisscom will look to leverage the expertise Fastweb has gained through its IPTV rollouts and expansion. Fastweb is considered as a highly innovative company. In 2001, Fastweb was the first provider in the world to launch fully IP-based broadband, voice and TV services. Swisscom therefore expects the transaction to produce significant synergies. For example, the experience acquired by Fastweb in operating a fully IP-based, latest-generation broadband network, expanding and commercialising optical networks, and developing and marketing broadband-based multimedia services will prove highly valuable to Swisscom. In return, Swisscom will support Fastweb' plans to position itself in Italy as a mobile virtual network operator (MVNO).

As a strategic partner committed to the long term, Swisscom is investing in Fastweb with the clear objective of further exploiting the Fastweb competitive advantages and technological lead as well as expanding its portfolio of offerings. Fastweb' operational business will continue to be separately managed. Swisscom intends to continue working with Fastweb' existing management team and retain the Fastweb brand in Italy. Nothing will change in terms of the way Swisscom and Fastweb present themselves on their respective markets.

Swisscom confirmed that it will continue to focus its activities on the home market of Switzerland. The company maintains that the acquisition will still leave it with financial flexibility to move quickly in its domestic business, which includes securing nation-wide basic service provision and expansion of broadband networks.