Cable and telecoms conglomerate Liberty Global plans to spin off and eventually list its Swiss unit Sunrise, a move designed to boost its prospects of challenging incumbent Swisscom.

Nick Wood

February 19, 2024

2 Min Read
Liberty Global

In a statement, Liberty said that 100% of Sunrise will be spun off to Liberty Global shareholders. It will then be listed on the SIX Swiss Exchange in Zurich in the second half of this year.

To enhance its appeal, the listing will be accompanied by a plan to cut Sunrise's debt by 1.5 billion Swiss francs ($1.7 billion). This will be achieved through anticipated free cash flow (FCF) generation, funding from Liberty via non-core asset sales, and unspecified debt optimisation.

The spin-off and listing follows the integration between Sunrise and Liberty's UPC Switzerland unit following their 2020 merger – a merger that led to Sunrise being delisted from SIX in 2021 – and is the next step in Sunrise's long-term strategy, Sunrise said.

"We are excited at the prospect of being listed in Switzerland once again and providing local and international investors with access to our scaled FMC (fixed-mobile convergence) challenger position in the market," said Sunrise CEO André Krause.

Indeed, according to figures from Swiss telco regulator, the Federal Communications Commission (ComCom), Sunrise and UPC had broadband market shares of 13.1% and 15.6% respectively before they merged. By the end of 2021, they had a combined share of 28.5%, which was still some distance behind first-placed Swisscom with 49.5%.

ComCom's most recent numbers show little has changed in this regard, with Sunrise at 28% and Swisscom at 48% at the end of 2022.

It's a similar story in the postpaid mobile market. At the end of 2021, Sunrise had a market share of 25% compared to Swisscom's 57.9%. Fast forward to the end of 2022, and Sunrise had 26%, while Swisscom had 57%.

It underscores how little a dent the combined might of Sunrise and UPC has put in Swisscom's comfortable lead.

Opening Sunrise up to a broader range of investors might give it the financial clout to mount a stronger challenge.

The announcement was made the same day Liberty published Sunrise's fourth quarter financials.

The telco returned to revenue growth, generating sales of €833.8 million, compared to €786.9 million a year earlier. All three of its segments – consumer fixed, consumer mobile and B2B – showed healthy growth.

Adjusted EBITDA grew 6% year-on-year to €267.1 million. However, this was more than offset by higher foreign exchange losses and interest expenses, resulting in a €66.7 million operating loss, which was still narrower than the €102.1 million in lost in Q4 2022.

Sunrise ended Q4 with 2.84 million mobile customers, up from 2.77 million 12 months ago, as postpaid gains offset prepaid losses. However, during the quarter itself, it lost 3,100 mobile customers, compared to a prior-year increase of 14,400.

It was a similar story at the fixed-line division, as the number of customer relationships stayed more or less flat at 1.65 million, and net customer losses weighed in at 13,100 compared to additions of 2,100 in Q4 2022.

Sunrise will be hoping that the spin-off and listing will put it on the financial footing it needs to return to customer growth.

About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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