Sunrise Communications Ag Class A · SIX:SUNN
Sunrise Communications Ag Class A — Q2 2017 Earnings Presentation
28 slides from Sunrise Communications Ag Class A's earnings presentation, Aug 24, 2017
Slide 1: Q2'17 financial results
Sunrise Communications Group AG Q2’17 financial results – 24 August 2017
Slide 2: Agenda
Agenda 1 Summary, guidance and operational update O. Swantee (CEO) 2 Financials A. Krause (CFO) 3 Conclusion O. Swantee (CEO) 4 Q&A 2
Slide 3: Summary: Q2 results confirm improving trends
Summary: Q2 results confirm improving trends • Ongoing subscriber growth momentum in key focus areas • Sunrise ONE with a good start, supporting 26.2% 4P growth YoY (+8.2% in Q2 alone) • Continued strong growth in mobile postpaid (6.8% YoY), internet (11.4% YoY) and TV (27.4%) • Revenue down -1.1% Y
Slide 4: Increased 2017 adj. EBITDA guidance
Increased 2017 adj. EBITDA guidance Adj. EBITDA guidance bridge 2017 (CHFm) 2017 guidance new 3 592-602 CHFm 7-12 577-592 Revenue 1'820 – 1'860 Adj. EBITDA 592 – 602 Normalised1) 225 – 265 Capex Adj. EBITDA Organic Adjustment Adj. EBITDA Reported 255 – 295 operational for tower guidance of guidance
Slide 5: Continued customer momentum in mobile
Continued customer momentum in mobile Postpaid mobile net adds (‘000) Prepaid mobile net adds (‘000) 26 25 26 1 22 20 10 8 12 -6 10 5 Secondary -16 19 Primary -30 15 16 13 12 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 -57 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 • Postpaid driven by primary SIMs (high value), leading • Pre
Slide 6: Broadband and TV continued with double digit net adds
Broadband and TV continued with double digit net adds Internet net adds (‘000) TV net adds (‘000) 14 12 13 11 12 9 8 6 7 5 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 • Steady internet growth continues: Sunrise now has • Double digit TV growth continues: Sunrise now 398k internet sub
Slide 7: ARPU trends continuing - postpaid decline moderated
ARPU trends continuing - postpaid decline moderated Blended mobile ARPU (CHF) Blended mobile ARPU: • Blended mobile ARPU up CHF +0.5 YoY (MTR adj.1)) due to growing Postpaid -1.1 subscribers, which have a higher ARPU than decreasing Prepaid subscribers MTR adjusted: +0.5 • Postpaid down CHF -0.4 YoY
Slide 8: Successful Sunrise ONE launch
Successful Sunrise ONE launch • Sunrise ONE, our converged tariff, was launched successfully on March 6, driving cross selling from Mobile (25% market share) into Internet (11%) and TV (4%) • 26k or 21% of 4P billed customer base already on Sunrise ONE; primarily migrators while share of new custome
Slide 9: B2B transition with first positive proof points
B2B transition with first positive proof points • Management changes announced last year initiated transition phase • Product line-up renewal ongoing and well on-track • Increased focus on SMEs e.g. via cross selling • Use large enterprise customers (e.g. Zurich Airport) to raise awareness and to ma
Slide 10: Agenda
Agenda 1 Summary, guidance and operational update O. Swantee (CEO) 2 Financials A. Krause (CFO) 3 Conclusion O. Swantee (CEO) 4 Q&A 10
Slide 11: Overview: Stable service revenue and higher adj. EBITDA
Overview: Stable service revenue and higher adj. EBITDA Revenue (CHFm) • Revenue down -1.1% (MTR1) adj.) due to low-margin hubbing Total Revenue: Service revenue 2): • Service Revenue 2) stable at +0.2% (MTR adj.) with -19 (-3.9%) -13 (-3.4%) subscriber growth offset by lower ARPUs and less Revenue
Slide 12: Focus on Q2 Revenue
Focus on Q2 Revenue Q2’17 Revenue bridge (CHFm) Q1’17 YoY Q2’16 Revenue 472 Δ hubbing +5.2 -5,6 • Hubbing: international trading business which is volatile by nature -1% • Mobile HW: Revenue depends on handset innovations / launches, which vary Δ mobile HW -4.7 -0,2 across quarters leading to revenu
Slide 13: Gross Profit improvement confirming stabilization trend
Gross Profit improvement confirming stabilization trend Gross Profit (CHFm) Adjusted Opex 1) (CHFm) +3 (+1.0%) 298 -8% 0% 295 157 151 149 145 144 144 145 143 142 81.8% 78.2% Q2’16 Q2’17 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Service Gross Margin 2) • Gross Profit up +1.0% in Q2 from -
Slide 14: eFCF slightly up excluding factoring
eFCF slightly up excluding factoring Cash flow ‘Last Twelve Months (CHFm) Net debt QoQ (CHFm) Q2’17 LTM Q1’17 LTM Reported 602 601 EBITDA Tax (25) (23) • eFCF LTM Q2 excl. factoring slightly up compared to Q1; down Interest (47) (49) incl. factoring as factoring was drawn in -1.633 -71 3 Δ NWC 33 7
Slide 15: Tower transaction successfully closed
Tower transaction successfully closed Closing and deleveraging in August Unchanged normalised annual eFCF impact (CHFm) 2) • Transaction closed on 3 August 2017; deconsolidation of passive infrastructure as of -35 10 1 closing (previously communicated was July 1) 11 • IFRS book gain of around CHF430
Slide 16: Agenda
Agenda 1 Summary, guidance and operational update O. Swantee (CEO) 2 Financials A. Krause (CFO) 3 Conclusion O. Swantee (CEO) 4 Q&A 16
Slide 17: On-track with key priorities
On-track with key priorities Connect score 2016 • Tower sale proceeds partly used for accelerated mobile network Max 1000 upgrade, with all macro sites carrying 4G after completion of this year’s program Network 951 933 • Capex-light landline wholesale strategy; intensified collaboration for quality
Slide 18: Q2 conclusion
Q2 conclusion Q2 recap Outlook • Continued subscriber momentum in focus areas; successful launch of Sunrise ONE • Service Revenue (MTR adj.) development further improved • FY’17 guidance increased on adj. EBITDA • 1.7% adj. EBITDA growth, as a result of driven by YTD trends increasing Gross Profit a
Slide 19: Agenda
Agenda 1 Summary, guidance and operational update O. Swantee (CEO) 2 Financials A. Krause (CFO) 3 Conclusion O. Swantee (CEO) 4 Q&A 19
Slide 20: Appendix
Appendix Sunrise
Slide 21: Income Statement
Income Statement P&L (CHFm) H1 2017 H1 2016 Q2 2017 Q2 2016 Mobile services 582 608 303 311 thereof mobile postpaid 373 375 192 190 thereof mobile prepaid 63 84 32 42 thereof hardware 107 112 60 60 Landline services 186 205 91 108 thereof landline voice 71 77 35 38 thereof hubbing 60 61 30 35 Landli
Slide 22: Cash Flow Statement
Cash Flow Statement Cash Flow (CHFm) H1 2017 H1 2016 Q2 2017 Q2 2016 EBITDA 290 287 149 148 Change in net working capital 18 (21) 32 43 thereof handset receivable factoring impact - 21 - 38 Movement in pension and provisions 1 (6) 0 (2) Interest paid (22) (25) (8) (10) Corporate income and withholdi
Slide 23: Net debt increase due to dividend payment
Net debt increase due to dividend payment June 30, March 31, December 31, June 30, Net debt (CHFm) 2017 2017 2016 2016 Senior Secured Notes issued February 2015 500 500 500 500 Term loan B 1'360 1'360 1'360 1'360 Total cash-pay borrowings 1'860 1'860 1'860 1'860 Financial lease 12 15 17 19 Total deb
Slide 24: MTR change impacts Revenue, but is largely neutral on Gross Profit
MTR change impacts Revenue, but is largely neutral on Gross Profit Total Revenue (CHFm) 2) -3,9% MTR adj: -1.1% • Mobile Termination Rates 1) change as per 472 1 January 2017 negatively impacts Revenue, (14) 453 (5) but is largely neutral on Gross Profit level – as announced on 20 Oct 2016; effect i
Slide 25: Prepaid subscriber base restatement
Prepaid subscriber base restatement Prepaid subscribers Net Adds 3 month rule (‘000) 1) a• Number of spam call centers calls to prepaid customers strongly increased; leading to 28 Old definition reactivation of non-active prepaid customers -13 -17 -7 -34 -27 -37 -20 a -55 -47 b• In order to reflect
Slide 26: Thank you for your interest in Sunrise
Thank you for your interest in Sunrise Thank you for your interest in Sunrise 26
Slide 27: Contact information
Contact information Investor contact Uwe Schiller Stephan Gick uwe.schiller@sunrise.net stephan.gick@sunrise.net investor.relations@sunrise.net +41 58 777 96 86 27
Slide 28: Disclaimer
Disclaimer This document and any materials distributed in connection herewith (including any oral statements) (together, the “Presentation”) do not constitute or form a part of, and should not be construed as, an offer for sale or subscription of or solicitation of any offer to purchase or subscribe
Sunrise Communications Group — Q2 2017 Earnings Presentation on 6ix