Sunrise Communications Ag Class A · SIX:SUNN
Sunrise Communications Ag Class A — Merger or Acquisition (September 2019)
40 slides from Sunrise Communications Ag Class A's merger presentation, Sep 30, 2019
Slide 1: Acquisition of UPC Switzerland
Switzerland Acquisition of UPC Switzerland Creating a stronger and more valuable Sunrise Investor presentation 30 September 2019
Slide 2: Disclaimer
Disclaimer • The information contained in this 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 no relianc
Slide 3: Executive summary and transaction update
Executive summary and transaction update
Slide 4: New Sunrise – creating the leading fully-integrated Swiss telecommunications challenger
New Sunrise – creating the leading fully-integrated Swiss telecommunications challenger 1 Creates the leading fully-integrated nationwide challenger – a stronger and more valuable Sunrise Converged customer base with scale New Sunrise will more than double Sunrise’s current customer base: 3.0 mi
Slide 5: Update on acquisition of UPC Switzerland
Update on acquisition of UPC Switzerland Management roadshow in September with strong support on the strategic, industrial logic and the significant value creation from 1 clearly identified in-market synergies 2 Approval from the Swiss Competition Commission (WEKO) received on 26 September 2019 with
Slide 6: Significant cost, capex and revenue synergies
Significant cost, capex and revenue synergies Synergies NPV of ~CHF3.1bn – Sunrise shareholders retain >60% Announcement Feb 2019 Upward revision Aug 19 Cost & Capex synergy NPV ~CHF2.4bn +0.3bn ~CHF2.7bn Total synergy NPV ~CHF2.8bn +0.3bn ~CHF3.1bn Includes incremental ~CHF30m one-off costs to inte
Slide 7: Revised funding mix – CHF2.8bn rights issue
Revised funding mix – CHF2.8bn rights issue CHF1.3bn reduction in rights issue size, with higher leverage supported by higher synergies and lower blended WACD1) CHFbn Sources Feb-19 Revised Uses Feb-19 Revised Rights Issue 4.1 2.8 Cash payment to LGI 2.7 2.7 UPC Switzerland net debt contributed2) 3.
Slide 8: Dividend guidance and policy
Dividend guidance and policy CHF350-370m FY'19 total dividend and continued progressive dividend policy FY'19 dividend amount in the range of CHF350-370m based on the higher number of shares expected to be outstanding 1 post the rights issue At the 2020 AGM, Sunrise shareholders will be given a choi
Slide 9: ~3.6x Jun-19 leverage post run-rate cost synergies
1) ~3.6x Jun-19 leverage post run-rate cost synergies Reported leverage below 3.0x post achieving run-rate synergies, thereafter targeting below 2.5x LTM Jun-19 leverage post run-rate cost synergies1) 2) 3) Medium-to-long term reported leverage2) 4.2x 0.1x 4.0x 3.6x 0.1x 3.5x Assuming 50% of shareho
Slide 10: Key dates and next steps
Key dates and next steps Date Milestone 30 September 2019 Publication of EGM invitation on the website of Sunrise 30 September 2019 Publication of Shareholder Information Document 1 October 2019 Publication of EGM invitation in official gazette (Schweizer Handelsamtsblatt) 2 October 2019 Dispatch of
Slide 11: Creating the leading Swiss telecommunications challenger
Creating the leading Swiss telecommunications challenger
Slide 12: New Sunrise – creating the leading fully-integrated Swiss telecommunications challenger
New Sunrise – creating the leading fully-integrated Swiss telecommunications challenger 1 Creates the leading fully-integrated nationwide challenger – a stronger and more valuable Sunrise Converged customer base with scale New Sunrise will more than double Sunrise’s current customer base: 3.0 mi
Slide 13: New Sunrise – recurring scale across all elements of the bundle
1 New Sunrise – recurring scale across all elements of the bundle Gaining Market Share New Sunrise Customers Other Mobile1) Broadband TV New Sunrise Other New Sunrise 16% Internet 27% 17% 30% 2,959 173 Broadband Mobile1) Internet 1,304 Swisscom Swisscom 1,160 57% 53% 2,785 New Sunrise 31% 677 1,041
Slide 14: New Sunrise – combining two highly complementary companies
2 New Sunrise – combining two highly complementary companies Switzerland Leading • High-speed Next generation broadband • Leading mobile network and customer service nationwide network infrastructure • the most reliable mobile data network - 96% 4G infrastructure • covers ~60% of Swiss households ba
Slide 15: New Sunrise – securing the broadest and deepest digital infrastructure in Switzerland
3 New Sunrise – securing the broadest and deepest digital infrastructure in Switzerland Technology Sunrise access Download speed (Mbit/s) Swiss household coverage Expected future evolution Mobile BB • Own mobile network can be used for Mobile Broadband Up to 900 MBB ~100% (MBB); 5G roll out to push
Slide 16: Transaction offers attractive valuation, substantial synergies
Transaction offers attractive valuation, substantial synergies
Slide 17: UPC transaction accelerates Sunrise's transformation at an attractive valuation
UPC transaction accelerates Sunrise’s transformation at an attractive valuation Offers immediate access to UPC’s leading nationwide owned high-speed broadband network as well as TV 1 and entertainment platform 2 Creates the leading fully-integrated Swiss telecommunications challenger – Mobile, Broad
Slide 18: Attractive valuation compared to precedents
Attractive valuation compared to precedents Favourable multiples relative to precedent convergence transactions even when based on trough FY’19 financials and more so when considering low Swiss interest and tax rates EV / EBITDA1) – UPC Switzerland EV / OpFCF1) – UPC Switzerland ~11.0x ~22.5x 9.9x 7
Slide 19: UPC Switzerland – 2019 H1 results in-line with Liberty's turnaround plan
UPC Switzerland – 2019 H1 results in-line with Liberty’s turnaround plan Ahead of Sunrise expectations leading to CHF10-15m higher FY’19 OpFCF expectation • RGU net adds, revenue, OCF targets achieved UPC Switzerland revenue (CHFm) 2) Turnaround • Success in major investments in UPC TV, 1 Gbps and d
Slide 20: Substantial and actionable synergies with NPV of CHF 3.1bn
Substantial and actionable synergies with NPV of CHF 3.1bn Run-rate synergy estimates (CHFm) +~5 +~30 +~5 +~40 +~5 +~45 ~50 ~280 ~40 ~230 ~45 ~40 ~35 ~90 ~10 ~235 ~90 ~190 ~60 ~55 COGS SG&A Other Opex Capex Cost & Capex Revenue Total • Fixed network • Removing • Central allocations • IT & network •
Slide 21: New Sunrise – a stronger and more stable company
New Sunrise – a stronger and more stable company UPC has potential to add significant scale and profitability to Sunrise and accelerate the Company’s transformation process LTM June 2019 combined revenues1) (CHFm) LTM June 2019 combined adj. EBITDA1), 2) (CHFm) 33% 47% 39% 1,273 3,130 597 1,210 1,85
Slide 22: Sunrise's track record of financial and operational outperformance
Sunrise’s track record of financial and operational outperformance
Slide 23: Sunrise's management and Board – Experience, expertise and track record of value creation
Sunrise’s management and Board – Experience, expertise and track record of value creation Management team and… …Board of Directors with significant leadership experience Olaf Swantee André Krause Peter Kurer, Chairman Ingrid Deltenre Chief Executive Officer Chief Financial Officer Partner, BLR & Par
Slide 24: Sunrise has outperformed peers since IPO
Sunrise has outperformed peers since IPO Total Shareholder Return Indexed Returns (Since IPO %) (Since IPO) 44% 60% 39% 50% Indexed Returns prior to announcement of 40% potential acquisition of UPC Switzerland 30% 26% 31% 20% 17% 10% 0% (10%) (20%) (30%) (29%) (11%) (40%) Feb 2015 Oct 2015 May 2016
Slide 25: Sunrise has added market share, grown subscriber numbers and delivered shareholder value since IPO
Sunrise has added market share, grown subscriber numbers and delivered shareholder value since IPO Pre-IPO (2014) 2018 Market shares Mobile Mobile Internet2) TV2) Internet2) TV2) (post-paid)1) (post-paid)1) 19% 9% 2% 22% 12% 6% Increasing market share gains RGUs (‘000) CAGR ’14-’18 7.0% 8.8% 22.8% 1
Slide 26: Continued momentum – Evidenced by Q2 '19 financial results
Continued momentum – Evidenced by Q2 ’19 financial results Service revenue 2: Total revenue: Revenue (CHFm) • Strong subscriber growth in mobile postpaid, internet and TV • Service revenue up +3.1% driven by customer +3.1% -1.7% Customers growth, offsetting lower ARPUs; sequential 463 455 • 5G cover
Slide 27: Strong board oversight of process, extensive diligence and detailed integration planning
Strong board oversight of process, extensive diligence and detailed integration planning • We involved an experienced board at all stages of the process – Board consistently involved throughout strategic process: 40 meetings to discuss UPC opportunity alone – Board reviewed all aspects of the transa
Slide 28: Summary conclusions
Summary conclusions
Slide 29: New Sunrise – A stronger and more valuable Sunrise
New Sunrise – A stronger and more valuable Sunrise • Creates the leading fully-integrated Swiss telecommunications challenger with scale and increased market share • Combines Sunrise’s best-in-class mobile network with UPC’s state-of-the-art high-speed broadband network, TV and entertainment platfor
Slide 30: Appendix and supplemental information
Appendix and supplemental information
Slide 31: Synergies supported by industry benchmarks
Synergies supported by industry benchmarks UPC Switzerland MVNO and TSA charges plus Sunrise fixed access costs underpin saving opportunity Cost & Capex synergies as % of combined cost base (COGS + Opex + Capex) 7.5% 9.0% 2.6% 5.1% 3.8% 4.8% 3.9% 4.8% 5.4% 6.8% 8.0% 11.7% 4.2%1) na Synergies support
Slide 32: UPC Switzerland is the leading business and consumer broadband cable business in Switzerland
UPC Switzerland is the leading business and consumer broadband cable business in Switzerland Business Overview Historical Revenues (CHFm) • UPC is a leading provider of communication and entertainment 1,357 1,349 1,296 • Provides video, broadband internet and telephony services to 2.2 million RGUs •
Slide 33: UPC Switzerland – a strong 3P provider
UPC Switzerland – a strong 3P provider Switzerland's #2 broadband internet and TV provider1) Strong and growing B2B business2) New Sunrise New Sunrise Internet TV CHFm 30% 31% 169 18% Switzerland 25% Switzerland 155 Switzerland 13% 6% Other Other 69% 69% Jan-01 Jan-01 Dec-17 Dec-18 Attractive margin
Slide 34: 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 needs Leading integrated telecom provider for SoHo than retail customers and SME companies Business Mass Difficult to targe
Slide 35: UPC Switzerland has a well invested and upgradeable network
UPC Switzerland has a well invested and upgradeable network HFC network Outstanding backbone and transmission network • Network currently based on DOCSIS 3.0, with partial migration to DOCSIS 3.1. UPC has announced availability of 1GB/s in their entire network until the end of September 2019 • Clear
Slide 36: UPC Switzerland B2C business overview
UPC Switzerland B2C business overview Business Overview Happy Home • Provides customers with television, internet, telephony and mobile products • New UPC TV + new remote control • Mobile offering includes handsets and SIM-only contracts • Up to 500 channels, including • Payment for handsets can be
Slide 37: UPC Switzerland B2B business overview
UPC Switzerland B2B business overview Business Overview Benefits for New Sunrise • Established full-service telecommunications provider with strong ICT • Company can use its own infrastructure and connect its landline and partners mobile communications networks to offer more innovative and higher •
Slide 38: Overview of combined capital structure (1/2)
Overview of combined capital structure (1/2) Feb-19 Revised CHFbn Amount Pro forma leverage1) Amount Pro forma leverage1) UPC Switzerland net debt contributed 3.5 2.9x 3.5 2.9x Sunrise Term Loan B ("TLB") 0.5 0.4x 1.4 1.2x Incremental Sunrise Term Loan B ("TLB") - - 0.3 0.2x Sunrise CHF notes - - -
Slide 39: Overview of combined capital structure (2/2)
Overview of combined capital structure (2/2) Sunrise Combined CHFm, unless stated otherwise (H1'19) Adjustments (H1'19) Maturity Cost of debt Maturity profile (CHFm) Sunrise Term Loan B (“TL B”) 2.00%2) 1’910 Sunrise 1,410 300 1,710 2024 RCF 200 Sunrise CHF notes 200 (200) - UPCB Finance IV Ltd 5.37
Slide 40: Pro forma simplified structure at closing
Pro forma simplified structure at closing cash LG CE Holding BV Sunrise Communications (seller) Group AG shares LGE Mobile Challenger Financing B.V. Intermediate Group S.A. UPC Senior UPC Sunrise Communications Sunrise TL B Notes Holding B.V. Holdings S.A. 99% UPC UPC Holding II UPC Broadband Sunris
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