Sunrise Communications Ag Class A · SIX:SUNN
Sunrise Communications Ag Class A — Merger or Acquisition (February 2019)
26 slides from Sunrise Communications Ag Class A's merger presentation, Feb 28, 2019
Slide 1: Acquisition of UPC Switzerland
Acquisition of UPC Switzerland Creating a stronger and more valuable Sunrise 28 February 2019 1
Slide 2: Disclaimer
Disclaimer • The information contained in this investor presentation has not been independently verified and no representation or • The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, in any warranty, express or implied, is made as to, and n
Slide 3: Transaction highlights
Transaction highlights Sunrise to acquire UPC Switzerland for CHF6.3 billion Clear #2 player in mobile, TV, fixed broadband and fixed voice strengthening position as the leading converged challenger and true Swiss champion Secures superior next generation fixed network infrastructure to drive enhanc
Slide 4: Compelling value enhancing in-market combination
Compelling value enhancing in-market combination 1 • Create a fully converged challenger nationwide with scale across all elements of the 4P bundle Reinforces Sunrise's • #2 player in mobile, TV, fixed broadband and fixed voice with the scale to drive innovation, invest in new services and pursue gr
Slide 5: UPC Switzerland — a strong 3P provider
UPC Switzerland — a strong 3P provider Switzerland's #2 fixed broadband and TV provider1) Strong and growing B2B business2) Internet New Sunrise TV New Sunrise CHFm Total: 3.8m 30% Total: 4.3m 31% 19% 26% 169 Switzerland Switzerland 155 12% Switzerland 5% Other 69% Other 69% Note: As of Q3'18 Dec-17
Slide 6: UPC Switzerland — superior next generation network
UPC Switzerland — superior next generation network HFC network Outstanding backbone and transmission network • Network currently based on DOCSIS 3.0, with partial migration to DOCSIS 3.1 planned for 2020 • Clear roadmap to 1Gbps speed speed via DOCSIS 3.1 upgrades that will enable speeds of up to 10
Slide 7: UPC Switzerland — leading entertainment offering
UPC Switzerland — leading entertainment offering New industry leading Video Platform – UPC TV: • Launched in October 2018 • 4K box, cloud based • Fast zapping, full trick play Voice control 4K + cloud Early results show • Voice control remote (incl. Swiss German) excellent NPS achieved • New UPC TV
Slide 8: UPC Switzerland — strategic growth initiatives
UPC Switzerland — strategic growth initiatives Comprehensive measures to improve current trajectory Strategy Key initiatives Outlook • UPC Switzerland standalone Improve TV experience with new • Introduction of New UPC TV with significantly enhanced pre-synergies financial Entertainment platform dri
Slide 9: New Sunrise — the leading converged challenger
New Sunrise — the leading converged challenger New Sunrise (B2B and B2C)1) Ingredients to win Customer experience leveraging our best offer mix of Mobile Broadband TV2) mobile, broadband, entertainment and service - personalized ‘000 SIMs (Post-paid) ‘000 RGUs ‘000 RGUs to the customer based on inte
Slide 10: New Sunrise — securing the broadest and deepest digital infrastructure in Switzerland
New Sunrise — securing the broadest and deepest digital infrastructure in Switzerland Expected future Technology Sunrise access Download speed Swiss household coverage evolution Mbit/s Mobile BB • Own mobile network can be used for Mobile Broadband Up to 900 MBB ~100% (MBB); 5G roll out to push use
Slide 11: New Sunrise — growing in B2B
New Sunrise — growing in B2B Bringing together 2 proven and complementary B2B operators Challenges before acquisition Opportunities from acquisition Customers with more complex Leading integrated telecom provider needs than retail customers for SoHo and SME companies Difficult to target as some Busi
Slide 12: New Sunrise — significant value creation through cost and revenue synergies
New Sunrise — significant value creation through cost and revenue synergies with ~CHF2.8 billion NPV 1) Year 3 synergies estimates2) (CHFm) NPV1) (CHFbn) ~2.4 ~0.4 ~2.8 453) 235 35 10 190 90 55 COGS SG&A Capex Other Cost & Capex Revenue Total • Fixed network • Removing • IT & network • Central alloc
Slide 13: Synergy benchmarking
Synergy benchmarking UPC MVNO plus Sunrise fixed access provide large relative cost saving opportunity Cost & Capex synergies as % of combined cost base (COGS + Opex + Capex) 20% 8% 17% 18% 23% 13% 13% 27% n.a. 20% 25% 22% 32% High relative synergies due to 11.7% significant wholesale / MVNO Signifi
Slide 14: Attractive valuation compared to precedents
Attractive valuation compared to precedents Favourable multiples relative to precedent convergence transactions even more so when considering low Swiss interest and tax rates EV / EBITDA1) EV / OpFCF1) 22% 30% 23% 28%2) 30% 25% 18% 1.7% 1.7% 0.8% 0.8% 0.6% 3.3% (0.3%) 12.7x 12.4x 12.1x 27.4x 3) 11.5
Slide 15: Prudent combined leverage @ ~2.7x post run-rate synergies
Prudent combined leverage @ ~2.7x post run-rate synergies 1) Targeting investment grade leverage in the medium-term Combined net debt Dec-18 (CHFbn) ~2.7x including run- rate synergies1) Leverage2) 2.0x 3.0x 2.7 3.6 0.3 3.8 (4.1) 1.2 Sunrise net debt UPC Switzerland Cash payment Rights issue Other 3
Slide 16: Fully underwritten transaction funding
Fully underwritten transaction funding Combination of debt and equity to maintain prudent capital structure Transaction EV CHFbn Fully Underwritten Rights Issue CHFbn Enterprise Value 6.3 Rights Issue ~4.1 of which UPC Switzerland net debt of which cash payment to LGI ~2.7 contributed1) 3.6 of which
Slide 17: Attractive combined financials
Attractive combined financials 1) Expected enhanced margins and cash flow generation support existing dividend policy and de-leveraging profile, and drive accretion from year 1 Combined revenues1) (CHFm) Combined adj. EBITDA1) 2) (CHFm) Combined adj. OpFCF1) 3) (CHFm) 32% 49% 39% 60% 62% 61% 1,296 3
Slide 18: Expected closing during the second half of 2019
Expected closing during the second half of 2019 27 February 2019: Transaction signing and announcement. Q4 and FY 2018 results release 10 April 2019: AGM Q2/Q3 2019: Regulatory approval and EGM Second half of 2019: Transaction closing 18
Slide 19: Creating a stronger and more valuable Sunrise
Creating a stronger and more valuable Sunrise 1 Creating a stronger converged challenger in the attractive Swiss market with scale to compete and innovate 2 Attractive price paid vs precedent transactions, 10.9x adj. OpFCF1) post run-rate cost & capex synergies and before integration costs 3 In-mark
Slide 20: Appendix
Appendix 20
Slide 21: Implied valuation multiples reconciliation
Implied valuation multiples reconciliation UPC Switzerland financial metrics (2018) CHFm Sunrise reporting Liberty Global reporting EV 6,300 6,300 OCF1) 732 732 EBITDA adjustments2) (1) - Central opex allocations3) (32) (32) Central capex allocations4) (62) - - - Adj. EBITDA (post central allocation
Slide 22: Overview of combined capital structure
Overview of combined capital structure Sunrise Combined CHFm, unless stated otherwise (FY’18A) Adjustments (FY’18A) Maturity Maturity profile (CHFm) Sunrise Term Loan B (“TLB”) Sunrise 1,410 (910) 500 2024 Sunrise CHF notes 200 (200) - UPCB Finance IV Ltd 5.375% ($) - 1,122 1,122 Jan-25 1’353 UPC Sw
Slide 23: Overview of combined financials
Overview of combined financials Dec-18, CHFm Sunrise UPC Switzerland Combined1) Revenue 1,876 1,296 3,173 % growth 1.2% (3.7%) (0.9%) Reported EBITDA (Sunrise) / OCF (UPC Switzerland)2) 602 732 1,335 EBITDA adjustments3) (1) (1) (3) Central opex allocations4) - (32) (32) Central capex allocations5)
Slide 24: Sunrise and UPC Switzerland adj. eFCF
Sunrise and UPC Switzerland adj. eFCF Dec-18, CHFm Sunrise UPC Switzerland Comments • ~CHF155m run-rate2) cost synergy impact; ~CHF45m run-rate3) EBITDA-equivalent EBITDA1) 601 637 impact of revenue synergies Change in NWC (49) n/a Capex (303) (245) • ~CHF35m run-rate2) capex synergy impact Cash tax
Slide 25: UPC Switzerland key financials
UPC Switzerland key financials 2018 1Q 18 2Q 18 3Q 18 4Q 18 FY18 Subscribers/RGUs (000s)1) Data 727 714 701 688 688 Telephony 530 525 519 514 514 Total video 1,159 1,124 1,104 1,073 1,073 o/w basic video 490 464 452 432 432 o/w enhanced video 669 660 651 640 640 Mobile 122 129 138 146 146 Other oper
Slide 26: Contact Information
26 Contact Information Investor Relations Uwe Schiller uwe.schiller@sunrise.net Stephan Gick stephan.gick@sunrise.net Contact www.sunrise.ch/ir investor.relations@sunrise.net +41 58 777 96 86
Sunrise Communications Group — Merger or Acquisition (February 2019) on 6ix