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Cash flows


In CHF million
  1st half-year
2016
  1st half-year
2015
 
Change
Operating income before depreciation and amortisation (EBITDA)   2,227   2,133   94
Capital expenditure   (1,193)   (1,142) 1   (51)
Proceeds from sale of tangible and other intangible assets   19   13   6
Change in defined benefit obligations   31   33   (2)
Change in net working capital and other cash flow from operating activities   (288)   (285)   (3)
Dividends paid to non-controlling interests   (8)   (7)   (1)
Operating free cash flow   788   745   43
Net interest paid   (18)   (24)   6
Income taxes paid   (257)   (257)  
Free cash flow   513   464   49
Other cash flows from investing activities, net     6   (6)
Issuance and repayment of financial liabilities, net   730   624   106
Dividends paid to equity holders of Swisscom Ltd   (1,140)   (1,140)  
Other cash flows from financing activities   (33)   (37)   4
Net increase (net decrease) in cash and cash equivalents   70   (83)   153
1 Excluding capital expenditure totalling CHF 10 million in real estate projects for which sales contracts were signed.

Free cash flow increased year-on-year by CHF 49 million or 10.6% to CHF 513 million, due to higher operating free cash flow. Operating free cash flow rose by CHF 43 million or 5.8% to CHF 788 million. The increase was mainly due to higher earnings before depreciation and amortisation (EBITDA), which was partly offset by higher capital expenditure. Net working capital increased by CHF 288 million compared to the end of 2015 (prior year: increase of CHF 285 million), mainly as a result of the payment of the Competition Commission penalty as part of the ongoing proceedings regarding broadband services. Swisscom does not consider the sanction justified and lodged an appeal with the Federal Court. Swisscom paid the penalty of CHF 186 million, as no suspensive effect was granted. Net working capital also increased as a result of higher accruals for prepaid expenses for financial year 2016. Capital expenditure increased year-on-year by CHF 51 million or 4.5% to CHF 1,193 million, mainly due to the ongoing expansion of the broadband networks in Switzerland and Italy.

In the first quarter of 2016, Swisscom issued a debenture bond with a nominal amount of CHF 200 million. It has a coupon of 0.375% and matures in 2028. The funds raised were used to repay existing debts. In addition, a private placement for CHF 150 million that fell due in the first quarter was extended by 15 years at a fixed interest rate of 0.56%. In addition, Swisscom took out short-term bank loans of around CHF 500 million in the first half of 2016, which were used to partly finance the dividend payment.