Sunrise reports revenue, profit growth but cancels UPC takeover

14 Nov 2019

Swiss full-service provider Sunrise has booked total turnover of CHF474 million (USD478.5 million) for the three months ended 30 September 2019, an increase of 1.0% year-on-year, as growth in service revenue from the mobile (1.3% y-o-y) and fixed broadband (6.8) segments offset the impact of the continuing decline in landline telephony revenues (-5.7%). Sunrise notes that the expansion was driven primarily by subscriber growth, supported by an increase in secondary subscriptions (such as additional SIMs for data) and increasing popularity of converged multi-service bundles. Sunrise counted a total of 1.854 million post-paid mobile subscribers, along with 591,000 pre-paid users – compared to 1.686 million and 677,000 respectively in Q3 2018 – whilst fixed broadband and TV subscriptions reached 490,000 (9.1%) and 269,000 (14.4%) respectively. EBITDA for the period was CHF175 million, compared to CHF154 million in Q3 2018, and representing an increase of 13.0% y-o-y, although this was only 5.5% when changes to accounting standards were included. Net profit for the period, meanwhile, grew to CHF48 million from CHF32 million a year earlier, which the operator attributed to the EBITDA improvement and a deferred tax liability deduction.

Sunrise also confirmed that it has cancelled its planned acquisition of local rival UPC Switzerland, following a protracted fallout amongst Sunrise’s shareholders and management. The provider noted that the cancellation has triggered a CHF50 million penalty payment to UPC parent Liberty Global, but it expects to incur further additional costs of CHF70 million to CHF75 million related to the acquisition. These include underwriting fees (CHF19 million), advisory and legal fees, and already incurred integration costs (CHF24 million). CHF27 million of the total expected costs have already been accounted for as ‘other operating expenses’ in the first nine months of 2019, however. For its part, Liberty Global remained hopeful of a future deal with Sunrise with CEO Mike Fries saying in a statement: ‘we look forward to continuing our conversations with either the board or [Sunrise shareholder] freenet about a potential transaction that creates significant value for both sets of shareholders and Swiss consumers.’