Sunrise Communications Ag Class A · SIX:SUNN
Sunrise Communications Ag Class A — FY2015 Earnings Presentation
33 slides from Sunrise Communications Ag Class A's earnings presentation, Mar 10, 2016
Slide 1: FY'15 financial results
Sunrise Communications Group AG FY’15 financial results – 10 March 2016
Slide 2: Agenda
Agenda 1 Q4’15 Highlights Libor Voncina (CEO) 2 2015 Review Libor Voncina (CEO) 3 Financials André Krause (CFO) 4 Outlook Libor Voncina (CEO) 5 Q&A 2
Slide 3: Highlights: Strong subscriber momentum and eFCF growth
Highlights Strong subscriber momentum and eFCF growth • Sunrise continues to grow subscriptions in its focus areas • Mobile postpaid with another strong quarter despite competitive environment (+6.0% YoY) • Internet (+4.5% YoY) and IPTV (+25.0% YoY) subscriber growth with another strong quarter • Cu
Slide 4: Agenda
Agenda 1 Q4’15 Highlights Libor Voncina (CEO) 2 2015 Review Libor Voncina (CEO) 3 Financials André Krause (CFO) 4 Outlook Libor Voncina (CEO) 5 Q&A 4
Slide 5: 2015: Strategic levers initiated in 2013 are paying off
2015: Strategic levers initiated in 2013 are paying off … Connect test improvement 2012-15 • Network investment ramp-up led to strongest mobile network quality Network improvement since 2012 – confirmed by independent “Connect test” 92 quality 24 • Capex-light landline access strategy with increased
Slide 6: … but are not yet sufficient to offset headwinds
… but are not yet sufficient to offset headwinds EUR CHF exchange rate 1,6 • Stronger CHF negatively impacted hubbing and handset sales Market Removal of EUR peg • Roaming price change as well as higher liquidity and more environment 1,2 attractive offers at the value end of the market had negative
Slide 7: Hence, cost efficiency measures accelerated
Hence, cost efficiency measures accelerated Opex levers Adjusted Opex1) (CHFm) 35.8% 33.7% • Organizational streamlining announced in 2015 enabling further simplification and digitalization -9,5% • Commercial and service activities reorganized 684 across the residential and business segments, 619 %
Slide 8: Equity FCF acceleration well on track – CHF 3 dividend proposal
Equity FCF acceleration well on track despite headwinds – CHF 3 dividend proposal Revenue (CHFm) -99 (-4,8%) Strong subscriber momentum 2'075 1'976 1 driven by growth levers, but offset by headwinds FY’14 FY’15 Adjusted EBITDA (CHFm) 1) -11 (-1,8%) Strong cost focus enabled lower 2 decline in adj. E
Slide 9: Agenda
Agenda 1 Q4’15 Highlights Libor Voncina (CEO) 2 2015 Review Libor Voncina (CEO) 3 Financials André Krause (CFO) 4 Outlook Libor Voncina (CEO) 5 Q&A 9
Slide 10: Stable Q4'15 EBITDA despite lower revenue
Stable Q4’15 EBITDA despite lower revenue Revenue (CHFm) -43 (-7,7%) • Revenue down -7.7% in Q4 compared to -8.5% in Q3 555 512 • Strong subscriber momentum driven by growth levers • Offset by headwinds: lower hubbing and mobile hardware (CHF strength); structural declines in prepaid mobile and land
Slide 11: Maintained subscriber momentum in postpaid in Q4'15
Maintained subscriber momentum in postpaid in Q4’15 Postpaid mobile subscriber base (‘000) Prepaid mobile subscriber base (‘000) +11% -18% 1.400 1.233 21 -31 1.320 21 24 -3 -6 -48 1.145 14 1.258 13 15 16 -55 17 -13 -17 -47 1.014 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 2015 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q
Slide 12: Q4 acceleration in broadband
Q4 acceleration in broadband Internet subscriber base (‘000) TV subscriber base (‘000) -2% +80% 348 342 134 -8 327 5 5 7 -10 -5 1 2 5 3 107 7 8 10 74 8 6 9 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 2015 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 2015 • Internet experiencing strongest increase in more than • TV net a
Slide 13: Fading ARPU pressure in Q4
Fading ARPU pressure in Q4 Blended mobile service ARPU 1) : ∆ YoY (CHF) • ARPU down 3% (CHF -1.0) to CHF 32.7: Pressure mainly from mobile postpaid as a result of Freedom HW unwind, roaming and value mix -1,0 -1,7 -1,8 • ARPU pressure is fading supported by reduced Freedom -2,2 HW unwind effect Q1’1
Slide 14: Focus on Q4 revenue
Focus on Q4 revenue Q4’15 revenue bridge (CHFm) Q4’14 revenue 555 Hubbing: international trading business, done in foreign currencies, negatively Δ hubbing -6 -11 impacted by recently strengthened CHF Δ mobile HW -11 -21 Mobile HW: revenues dependent on handset innovations and launches Service reven
Slide 15: Cost containment supporting Q4 adjusted EBITDA margin
Cost containment supporting Q4 adjusted EBITDA margin Adjusted Opex1) (CHFm) Adjusted EBITDA1) margin (excl. hubbing) (%) 31.9% 30.0% -11,9% 170 +1.9% 162 157 149 34.7% 143 % OPEX of revenue 32.8% 76 78 70 Commercial 66 66 Non-commercial 85 94 88 83 77 Q4’14 Q1’15 Q2’15 Q3’15 Q4’15 Q4’14 Q4’15 • Adj
Slide 16: Solid Q4 eFCF leading to net debt reduction
Solid Q4 eFCF leading to net debt reduction Cash Flow Q4’15 (CHFm) Reduced Capex FY15 (CHFm) 356 Reported 166 276 EBITDA 213 174 Mobile Tax (4) Landline 119 75 IT, Shops & Other 24 26 Interest (12) FY’14 FY’15 Δ NWC • Capex reduction well on track after peak year 2014, 22 (before factoring) despite
Slide 17: Strong cash flow generation in 2015
Strong cash flow generation in 2015 Cash Flow FY’15 (CHFm) Reported 616 EBITDA Tax (34) Interest significantly down YoY benefitting from reduced Interest (97) debt and lower cost of debt capital following IPO & debt refinancing; further reduction in 2016 expected Δ NWC (45) Δ NWC negatively impacted
Slide 18: Agenda
Agenda 1 Q4’15 Highlights Libor Voncina (CEO) 2 2015 Review Libor Voncina (CEO) 3 Financials André Krause (CFO) 4 Outlook Libor Voncina (CEO) 5 Q&A 18
Slide 19: Strategic outlook
Strategic outlook Follow multi-brand strategy • Differentiate Sunrise brand as the premium challenger through improved quality and brand experience, customer service, as well as relevant and innovative convergent offerings at a non-monopolistic price with no hidden costs • Use multi-brand approach t
Slide 20: Financial outlook 2016
Financial outlook 2016 Revenue headwinds expected to fade in 2016 • We expect continued momentum in mobile postpaid, internet, and TV Guidance 2016 • Current revenue headwinds expected to fade, but not yet fully offset by growth drivers million CHF • Higher international termination rates since Q4’1
Slide 21: Agenda
Agenda 1 Q4’15 Highlights Libor Voncina (CEO) 2 2015 Review Libor Voncina (CEO) 3 Financials André Krause (CFO) 4 Outlook Libor Voncina (CEO) 5 Q&A 21
Slide 22: Appendix
Appendix 22
Slide 23: Demand for bandwidth
Update on partial revision of telecommunication act Increasing demand for bandwidth • Content up for discussion includes • Regulation regarding access to operators’ in house cabling and ducts, roaming, spectrum liberalization, Demand for bandwidth network neutrality, product unbundling, consumer pro
Slide 24: Overview of results – Income Statement
Overview of results – Income Statement Financial Results FY 2015 FY 2014 Q4 2015 Q4 2014 CHF million Mobile 1'304 1'350 338 367 Landline Services 472 521 123 138 of which hubbing 142 163 36 47 Landline Internet 200 204 51 51 Total revenues 1'976 2'075 512 555 % yoy growth (4.8%) (7.7%) Revenues (exc
Slide 25: Overview of results – Cash Flow Statement
Overview of results – Cash Flow Statement Cash Flow FY 2015 FY 2014 Q4 2015 Q4 2014 CHF million EBITDA 616 639 166 167 Change in net working capital (45) (53) 9 29 thereof handset receivable factoring impact 42 - (13) - Movement in pension and provisions (6) (3) (10) (1) Interest (paid) / received,
Slide 26: Leverage ratio at 2.6x
Leverage ratio at 2.6x December 31, September 30, Net debt Dec 31, 2014 2015 2015 CHF million Senior Secured Notes - - 746 Senior Secured Notes issued July 2012 - - 520 Senior PIK Toggle Notes - - 631 Floating Rate Notes issued July 2012 - - 201 Senior Unsecured Notes - - 675 Utilized RCF - - 73 Sen
Slide 27: Adjusted to reported EBITDA bridge 2015
Adjusted to reported EBITDA bridge 2015 FY’15 EBITDA adjustment bridge (CHFm) Adj. EBITDA FY’15 627 Restructuring expenses (20) • Restructuring expenses of CHF 20m were recorded in H2’15 • Reduced headcount led to a reduced pension IAS 19 curtailment gain 16 liability, resulting in an IAS 19 curtail
Slide 28: Freedom tariff – P&L impact
Freedom tariff – P&L impact Postpaid ARPU Postpaid P&L CHF 55.7 54.0 55.9 52.9 53.6 52.9 52.6 53.9 Service ARPU CHFm Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 • Pre Freedom tariffs: Service revenue and hardware P&L Revenue Q4 YoY revenue component recognition Postpaid Service 202 206 211 195 1
Slide 29: Prepaid customer development
Prepaid customer development Market and performance update • Decreasing prepaid customers as a result of pre- to postpaid migration: postpaid flat-rate plans provide similar cost control like prepaid, furthermore prepaid rate plans are less suitable in a market with a high adoption of smart phones r
Slide 30: Analyst expectations
Analyst expectations Sell side analyst consensus (CHFm) Mean Q4'15 revenue 502 • Sell side consensus collected by Sunrise as per 1 March Q4'15 adjusted EBITDA 161 2016 1) FY'15 revenue 1’966 • Contributors: Barclays, Berenberg, Citigroup, Credit FY'15 adjusted EBITDA 622 Suisse, Deutsche Bank, Goldm
Slide 31: Thank you for your interest in Sunrise
Thank you for your interest in Sunrise 31
Slide 32: Contact information
Contact information Investor contact Media contact Investor Relations Corporate Communications Uwe Schiller Stephan Gick Stefan Kern uwe.schiller@sunrise.net stephan.gick@sunrise.net stefan.kern@sunrise.net +41 800 333 000 investor.relations@sunrise.net +41 58 777 96 86 32
Slide 33: 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 — FY2015 Earnings Presentation on 6ix