Sunrise Communications Group is buying UPC Switzerland from Liberty Global in a deal valued at $6.3 billion.
UPC Switzerland has network coverage reaching 2.3 million homes or 60 percent of total Swiss homes. It serves 1.1 million customers who subscribed to 1.1 million video, 700,000 broadband and 520,000 voice services.
Liberty Global said UPC Switzerland reported Q4 revenue of $325.6 million (–5.8 percent) in Q4 and $1326 million in 2018.
Sunrise posted Q4 revenue of CHF 509 million (–4.6 percent) with EBITDA of CHF 148 million.
UPC Switzerland lost 49,000 subscribers in Q4, compared to a loss of 22,500 in Q4 2017, primarily due to competition. It added 8,500 mobile subscribers in Q4, driven by bundling success.
Zurich-based Sunrise aims to make further investment in fixed network infrastructure for 1Gbps speed via DOCSIS 3.1 upgrades that will enable up to 10 Gbps over time and drive enhanced customer experience. Elmar Grasser is the CTO of Sunrise Communications and he is currently driving 5G investment.
Liberty Global will be receiving $2.6 billion in cash. Closing of the transaction is expected prior to year-end 2019. Liberty Global last year sold its Austrian business to T-Mobile Austria.
Cost and Capex synergies will be CHF190 million by the third full year post completion. Revenue synergies will be CHF45 million by the fourth full year post completion, Olaf Swantee, CEO of Sunrise said.
UPC Switzerland has 17,500 km fibre network. The transaction will strengthen Sunrise’s position as a #2 player in mobile, TV, fixed broadband and fixed voice with 1.8 million mobile post-paid (~24 percent share), 1.2 million broadband (~30 percent share) and 1.4 million TV customers (~31 percent share).
The transaction enhances Sunrise’s fixed network infrastructure by combining its FTTH footprint, covering approx. 30 percent of homes, with the advanced cable network of UPC Switzerland, covering approx. 60 percent of homes.
Sunrise said it aims for fiscal 2019 Capex of CHF 420-460 million including CHF 91 million spectrum payment, CHF 61 million upfront payment for landline access at Swisscom, and a CHF 16 million upfront payment for landline access scope extensions at utilities.
Capex guidance of Sunrise — excluding these effects — will be CHF 252-292 million including investment in 5G roll-outs.
Sunrise earlier said its telecom engineers are building 5G sites targeting 150 cities / places throughout Switzerland. The 5G coverage will be between 80 percent (e.g. Niederlenz) and 98 percent (e.g. Bachenbulach) by the end of March 2019.
Mike Fries, chief executive officer of Liberty Global, said the company has agreed to provide certain transitional services including network and IT-related functions to Sunrise for five years for certain annual charges.
Baburajan K
