Financial liabilities

Bank loans and credit limit

In 2013, Swisscom took up bank loans in EUR. The newly taken up bank loan of EUR 300 million (CHF 368 million) carries variable interest rates and has a seven-year term. The EUR 300 million financing was designated for hedge accounting of net investments in foreign operations. During the financial year, Swisscom repaid maturing bank loans amounting to CHF 150 million. As of 31 December 2013, no transaction costs were recognised in connection with the bank loans, as in the prior year. The effective interest rate of the CHF denominated bank loans is 0.63%. For the bank loans in USD and EUR, the rate is 4.62% and 0.53%, respectively. A portion of the EUR-denominated bank loans totalling EUR 350 million was swapped into variable CHF financing through foreign-currency swaps. The bank loans may become due for immediate repayment if the shareholding of the Swiss Confederation in the capital of Swisscom falls below one third or if another shareholder can exercise control over Swisscom.

Swisscom has a confirmed bank line of credit amounting to CHF 100 million maturing in 2016 and a further confirmed line of credit of CHF 2,000 million from banks maturing in 2018. As of 31 December 2013, these lines of credit had not been drawn down, as in the prior year.

Debenture bonds

In 2013, Swisscom took up a debenture bond in an amount of EUR 500 million (CHF 614 million). The coupon rate was 2.00% with a term of seven years. The debenture bond was issued by Lunar Funding V, an independent Irish multi purpose vehicle. It is secured by a loan note from Lunar V to Swisscom in the same amount. The amount taken up was applied to refinance existing financial loans. The EUR 500 million financing was designated for hedge accounting of net investments in foreign operations. During the current financial year, Swisscom repaid a debenture bond totalling CHF 550 million upon maturity. In the prior year, Swisscom took up a debenture bond totalling CHF 500 million and redeemed a debenture bond totalling CHF 250 million upon maturity. The effective interest rate on the Swiss-franc denominated debenture bonds is 3.22% and 2.15% for those denominated in EUR. The investors are entitled to sell the debentures back to Swisscom and/or Lunar V if a shareholder other than the Swiss Confederation gains a majority share in Swisscom and at the same time, the company’s rating falls below BBB–/Baa3.

Private placements

Swisscom repaid private placements amounting to EUR 108 million (CHF 133 million) in 2013 and in the prior year, a private placement totalling CHF 150 million. The interest rate risk of private placements maturing in 2016 is hedged with interest-rate swaps and was designated as cash flow hedges for hedge accounting purposes. The duration of the hedges is identical to the duration of the hedged private placements. The total EUR-denominated private placement was swapped to variable CHF financing using foreign currency swaps. The swap of fixed interest-bearing EUR financing into variable CHF financing was designated as a fair value hedge. As in the prior year, no transaction costs were recorded as of 31 December 2013 in connection with the private placements. The effective interest rate on the private placements in CHF is 1.67%. For the EUR-denominated private placements, the rate is 0.72%. The CHF private placements of CHF 600 million maturing in 2017 through 2019 may become due for immediate repayment if the shareholding of the Swiss Confederation in the capital of Swisscom falls below 35% or if another shareholder can exercise control over Swisscom. The investors in the remaining private placements are entitled to resell their investments to Swisscom should the Swiss Confederation permanently give up its majority shareholding in Swisscom.

Liabilities arising from finance leases

Swisscom concluded two agreements in 2001 for the sale of real estate. At the same time, Swisscom entered into long-term agreements to lease back part of the real estate sold which, in part, qualify as finance leases. The gain realised on real estate classified as finance leases was deferred. As of 31 December 2013, the deferred gains totalled CHF 183 million (prior year: CHF 187 million). The deferred gains are released to other income over the term of the individual leases. In 2013, CHF 4 million (prior year: CHF 4 million) of the deferred gains was released. The effective interest rate of the finance lease liabilities was 6.5%. The minimum lease payments and financial liabilities relating to these leaseback agreements are set out in the following table:

The future payments of the liabilities arising under finance leases, expressed in terms of their present value, as of 31 December 2012 and 2013 were as follows:

In addition, operating lease arrangements exist for miscellaneous real estate with terms of 1 to 25 years. See note 35. In 2013, conditional rental payments of CHF 4 million were recorded as rental expense (prior year: CHF 4 million).