Sunrise Communications Ag Class A · SIX:SUNN
Sunrise Communications Ag Class A — FY2016 Earnings Presentation
34 slides from Sunrise Communications Ag Class A's earnings presentation, Mar 2, 2017
Slide 1: Sunrise Communications Group AG FY'16 financial results
Sunrise Communications Group AG FY’16 financial results – 2 March 2017
Slide 2: Agenda
Agenda 1 Summary & 2016 Review O. Swantee (CEO) 2 Q4 Financials A. Krause (CFO) 3 Outlook O. Swantee (CEO) 4 Q&A 2
Slide 3: Summary: Ongoing momentum alongside improving eFCF and dividend
Summary Ongoing momentum alongside improving eFCF and dividend Continuation of first nine-month trends into Q4: • Solid subscriber momentum in focus areas with 6.1% growth in mobile postpaid, 8.9% in internet and 21.7% in IPTV YoY; Mobile postpaid revenue and gross profit reaching slight positive de
Slide 4: Sunrise now leads the Swiss market with best mobile network
Sunrise now leads the Swiss market with best mobile network Winner in connect network test 2016 1) Winner in BILANZ telecom ranking 2016 2) % reached of max points Mobile: Internet: TV: 100 Sunrise Swisscom Sunrise 23 Sunrise 23 Sunrise 23 90 Salt 80 Swisscom 20 Swisscom 20.6 Swisscom 21 70 Salt 19
Slide 5: 2016: On-track with Key Priorities
2016: On-track with Key Priorities … Connect score 2016 Max 1000 • Outstanding mobile network with 0.125% dropped call rate (3G), 99.4% LTE population coverage, and 35 Mbit/s average Network experienced download speed for LTE 951 933 quality 878 • Capex-light landline access strategy with increased
Slide 6: Leading to subscriber growth in focus areas
… leading to subscriber growth in focus areas Mobile Postpaid subscriber growth YoY (in k) • Postpaid with solid net 80 86 adds 62 2014 2015 2016 TV subscriber growth YoY (in k) 33 29 • TV showing steady 27 growth after 2012 launch 2014 2015 2016 Internet subscriber growth YoY (in k) 30 • Internet t
Slide 7: With benefits offset by headwinds
… with benefits offset by headwinds Mobile postpaid ARPU YoY (CHF) Prepaid development -3.7 -3.6 -2.7 -2.5 Subs YoY (‘000) -131 -104 ARPU YoY (CHF) -1.0 -1.3 Q1’16 Q2’16 Q3’16 Q4’16 2015 2016 2015 2016 • Pressure from Freedom hardware unwind 1), promotions, • Subscribers down due to ongoing pre- to
Slide 8: Hence, cost efficiencies in focus
Hence, cost efficiencies in focus Opex levers Adjusted Opex1) (CHFm) • Organizational streamlining announced in -6% September 2015 619 581 • Ongoing efficiencies throughout 2016 including streamlining of management levels across Sunrise • Further cost savings identified based on sourcing optimizatio
Slide 9: 50% eFCF improvement – CHF 3.33 dividend proposal
50% eFCF improvement – CHF 3.33 dividend proposal Dividend increase of 11% Revenue (CHFm) -79 (-4.0%) Strong subscriber momentum 1’976 1’897 1 driven by key priorities, but offset by headwinds FY’15 FY’16 Adjusted EBITDA (CHFm) 1) Equity FCF (CHFm) -15 +77 (-2.5%) (50%) Strong cost focus partly 627
Slide 10: Agenda
Agenda 1 Summary & 2016 Review O. Swantee (CEO) 2 Q4 Financials A. Krause (CFO) 3 Outlook O. Swantee (CEO) 4 Q&A 10
Slide 11: Fading gross profit pressure
Fading gross profit pressure Revenue (CHFm) • Revenue down -2.3% in Q4 compared -1.9% in Q3, -12 (-2.3%) while pressure on gross profit moderated to -2.3% in 512 501 Q4 from -3.5% (Q3) • Service revenue 1) down -4.0%, roughly in-line with Q3; positive subscriber momentum in focus areas offset by hea
Slide 12: Solid primary SIM net adds in postpaid
Solid primary SIM net adds in postpaid Postpaid mobile net adds (‘000) Prepaid mobile net adds (‘000) 26 21 22 18 20 10 3 -7 10 5 Secondary 10 18 Primary 12 15 16 -27 8 -34 -37 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 -47 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 • Postpaid supported by multi-brand approach, leading • Pre
Slide 13: TV with strongest momentum since 2013
TV with strongest momentum since 2013 Internet net adds (‘000) TV net adds (‘000) 9 8 11 7 5 6 7 7 7 5 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16 • Internet with accelerated net adds, leading to 372k • TV with highest net adds since 2013, leading to 163k total subscribers; after usu
Slide 14: ARPU trends continuing
ARPU trends continuing Blended mobile service ARPU (CHF) • Blended mobile down CHF -0.9 YoY 32,7 32,2 33,4 31,4 31,8 • Postpaid down CHF -2.5 driven by 2nd SIM dilution, Freedom HW unwind and value effect; eased pressure compared to Q3 (CHF -2.7) supported by fading -1.0 -1.3 -1.3 -0.8 -0.9 YoY Free
Slide 15: Focus on Q4 revenue
Focus on Q4 revenue Q4’16 revenue bridge (CHFm) Q4’15 revenue 512 • Hubbing: international trading business which is volatile by nature Δ hubbing -1.4 3.6 • Mobile HW: revenues are dependent on handset innovations / launches; Q4’16 +1% supported by new iPhone, which was earlier launched (Q3) than la
Slide 16: Continued cost containment
Continued cost containment Adjusted Opex1) (CHFm) Adjusted EBITDA1) margin (excl. hubbing) (%) % Opex of revenue (excl. hubbing) 29.9% 30.7% -12% 170 -0.2% 162 157 34.7% 34.5% 151 149 143 145 144 142 -1% Q4’14 Q4’15 Q4’16 Q4’15 Q4’16 • Adj. Opex slightly down YoY due to ongoing • Lower EBITDA margin
Slide 17: 50% improved equity FCF, in-line with expectation
50% improved equity FCF, in-line with expectation Cash flow FY’16 (CHFm) =FY’15 Reported 616 599 EBITDA • Tax extraordinary low due to Tax (34) (30) deductible impairment of investments in 2016 Interest (97) (51) • Interest expenses down following Δ NWC 2) (71) (26) 2015 debt refinancing (before fac
Slide 18: Capex and net debt development as expected
Capex and net debt development as expected Reduced Capex FY’16 (CHFm) Management view IFRS view • Capex reduction as anticipated, after Capex hike due to network 276 276 230 renewals in 2012-2015; Won ‘connect’ test despite reduction 230 18 • Capex presentation in IFRS financial statement was change
Slide 19: Agenda
Agenda 1 Summary & 2016 Review O. Swantee (CEO) 2 Q4 Financials A. Krause (CFO) 3 Outlook O. Swantee (CEO) 4 Q&A 19
Slide 20: 2017 outlook
2017 outlook 2016 achievements 2017 objectives • Mobile network leadership; Customer services • Further stabilize financial trends by continued further strengthened execution of 2016 achievements • Commercial momentum in mobile postpaid, • Deliver B2B transformation with an initial focus including y
Slide 21: Sunrise ONE - Everything unlimited
Sunrise ONE - Everything unlimited Catch convergent opportunity Trend towards convergence Launch Landline & Mobile in ONE package • Launch of true convergent tariff ‘Sunrise ONE’ in March to catch convergent opportunity • Convergence driven by converging devices, • Unlimited calls/SMS to all Swiss n
Slide 22: Financial outlook 2017
Financial outlook 2017 Revenue (excl. MTR) heading toward stabilization • Cont’d mobile postpaid, internet, and TV momentum driven Guidance 2017 by Sunrise ONE, ‘Connect’ test win and improved NPS • MTR changes to negatively impact revenue, while largely million CHF neutral on gross profit level– as
Slide 23: Agenda
Agenda 1 Summary & 2016 Review O. Swantee (CEO) 2 Q4 Financials A. Krause (CFO) 3 Outlook O. Swantee (CEO) 4 Q&A 23
Slide 24: Appendix
Appendix Sunrise
Slide 25: Income Statement
Income Statement P&L (CHFm) FY 2016 FY 2015 Q4 2016 Q4 2015 Mobile services 1'264 1'304 331 338 thereof mobile postpaid 768 775 192 192 thereof mobile prepaid 161 197 36 46 thereof hardware 253 260 79 79 Landline services 419 472 114 123 thereof landline voice 152 170 37 41 thereof hubbing 132 142 3
Slide 26: Cash Flow Statement
Cash Flow Statement Cash Flow (CHFm) FY 2016 FY 2015 EBITDA 599 616 Change in net working capital (68) (29) thereof handset receivable factoring impact (42) 42 Movement in pension and provisions (5) (6) Interest (paid) / received, net incl. foreign currency impact (51) (97) thereof IPO and refinanci
Slide 27: Leverage slightly up YoY due to final spectrum payment
Leverage slightly up YoY due to final spectrum payment December 31, September 30, June 30, December 31, Net debt (CHFm) 2016 2016 2016 2015 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
Slide 28: Focus on Q4 revenue (including postpaid split)
Focus on Q4 revenue (including postpaid split) Q4’16 revenue bridge (CHFm) Q4’15 revenue 512 Δ hubbing -1.4 3.6 • Hubbing: international trading business which is volatile by nature +1% • Mobile HW: revenues are dependent on handset innovations / launches; Q4’16 Δ mobile HW +7.2 0.9 supported by new
Slide 29: Bridge adjusted to reported EBITDA
Bridge adjusted to reported EBITDA FY’16 EBITDA bridge (CHFm) Adj. EBITDA FY’16 611 • Restructuring expenses include CHF 4m expenses related to streamlining of management levels across Sunrise, as well as expenses related to the managed Restructuring (7) service agreement for IT operations with Huaw
Slide 30: Freedom tariff – P&L impact
Freedom tariff – P&L impact Postpaid ARPU Postpaid P&L CHF 55.7 55.9 54.9 52.9 53.6 52.9 54.0 53.9 53.3 CHFm Q 1'14 Q2 Q3 Q 4 Q 1'15 Q2 Q3 Q 4 Q 1'16 Q2 Q3 Q4 52.6 52.5 52.3 Service ARPU R e v e nue • Pre Freedom tariffs: P&L P o stpaid Service 202 206 211 195 188 193 201 192 185 190 201 192 Service
Slide 31: Sunrise with leading mobile network quality in Europe
Sunrise with leading mobile network quality in Europe Mobile network quality across EU countries in 2016 1) Max 1000 Pt. Sunrise; CH 953 Swisscom; CH 930 A1; AT 923 H3G; AT 919 Telekom; DE 912 Telia Sonera; SE 884 TMA; AT 882 Salt; CH 877 Vodafone; DE 872 Vodafone; ES 865 Telstra; AU 864 Telenor; SE
Slide 32: Thank you for your interest in Sunrise
Thank you for your interest in Sunrise Thank you for your interest in Sunrise 32
Slide 33: 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 33
Slide 34: 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 — FY2016 Earnings Presentation on 6ix