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Cash flows

In CHF million
  1st half-year
  1st half-year
Operating income before depreciation and amortisation (EBITDA)   2,240   2,143   97
Capital expenditure in property, plant and equipment and intangible assets   (1,297)   (1,069)   (228)
Lease expense (IFRS 16)   (137)     (137)
Operating free cash flow proxy   806   1,074   (268)
Change in net working capital   (161)   (358)   197
Change in defined benefit obligations   26   30   (4)
Net interest paid on financial assets and liabilities   (5)   (5)  
Interest paid on finance lease liabilities     (12)   12
Income taxes paid   (293)   (272)   (21)
Other operating cash flow   3   6   (3)
Free cash flow   376   463   (87)
Net expenditures for company acquisitions and disposals   (288)   (37)   (251)
Other cash flows from investing activities, net   17   16   1
Repayment of finance lease liabilities according to IAS 17     (14)   14
Issuance and repayment of financial liabilities, net   922   701   221
Dividends paid to equity holders of Swisscom Ltd   (1,140)   (1,140)  
Other cash flows from financing activities   (6)   (6)  
Net decrease in cash and cash equivalents   (119)   (17)   (102)

Operating free cash flow proxy declined by CHF 268 million to CHF 806 million, owing largely to higher capital expenditure. Capital expenditure increased year-on-year by CHF 228 million or 21.3% to CHF 1,297 million. This was driven by expenses of CHF 196 million for the mobile radio frequencies purchased by Swisscom Switzerland at auction in the first half of 2019.

Free cash flow declined year-on-year by CHF 87 million to CHF 376 million. Excluding Swisscom’s purchase of mobile radio frequencies, free cash flow rose by CHF 109 million or 23.6%. This increase is attributable to the improvement in net working capital. Net working capital grew by CHF 161 million compared to the end of 2018 (prior year: increase of CHF 358 million).

In the first quarter of 2019, Swisscom issued a debenture bond for CHF 200 million. It has a coupon of 0.5% and matures in 2029. In addition, in May 2019 Swisscom increased a debenture bond by CHF 80 million. It has a coupon of 0.75% and matures in 2033. Net expenditure for company acquisitions and disposals includes the purchase price of CHF 240 million paid to Tamedia for the acquisition of the outstanding share of 31% in Swisscom Directories Ltd.