Sunrise Communications Ag Class A · SIX:SUNN

Sunrise Communications Ag Class A — FY2019 Earnings Presentation

39 slides from Sunrise Communications Ag Class A's earnings presentation, Feb 27, 2020

  1. Slide 1: 2019 Financial Results

    2019 Financial Results 27 February 2020

  2. Slide 2: Agenda

    2 Agenda Summary 2019 Review Q4 Financials Outlook Q&A

  3. Slide 3: Sunrise defined market pace and accelerated adj. EBITDA growth

    3 Sunrise defined market pace and accelerated adj. EBITDA growth - 5% higher dividend proposed André Krause CEO

  4. Slide 4: Summary

    4 Summary Sunrise defined market pace in 2019 2020 Outlook Financial +3.3% +2.7% +3.9% 210m +5% Service Gross profit Adj. EBITDA Adj. eFCF Dividend Elevate quality growth revenue CHF 4.40 challenger strategy to next level Customer +163k -65k +39k +36k Deliver top Postpaid Prepaid Internet TV and bot

  5. Slide 5: 2019 with accelerated growth as Sunrise executed on its quality strategy

    5 2019 with accelerated growth as Sunrise continued to execute on its quality strategy André Krause CEO

  6. Slide 6: 2019 with growth investments in 3 areas

    6 2019 with growth investments in 3 areas … Network Customer Innovative converged quality interface products  Fastest & largest 5G in CH (connect and  Leading NPS and ‘time to close’ open feedbacks  Launched 5G FWA and handsets, among 1. RootMetrics); 5G in 426 cities/ towns; strong  Ongoing sho

  7. Slide 7: Making Sunrise an industry reference

    7 … making Sunrise an industry reference … Outstanding connect test Strong in 2019 BILANZ 22 telecom ranking 21 20 20 Network quality up 42% since 2011 1) Sunrise Salt UPC Swiss- Best universal provider in B2B Sunrise com 100 Ahead of large competitors in Swisscom residential mobile and TV 2) % of m

  8. Slide 8: Resulting in customer and GP momentum

    … resulting in customer and GP momentum Accelerated Turned gross profit into customer growth growth mode Net adds in k GP growth YoY 1) 2.5% 2.7% 163 0.0% 62 -4.1% -5.9% 39 -21 2015 2016 2017 2018 2019 33 36  Gross profit improved to CHF 1,252m in FY’19  Driven by customer growth and B2B momentum,

  9. Slide 9: Delivering adj. EBITDA and dividend growth

    9 Delivering adj. EBITDA and dividend growth 3.3% 2.3% Service Strong customer 0.5% revenue growth offsetting MTR growth lower ARPUs -4.0% -5.2% Progressive dividends 3.9% 2.3% +47% Adj. Gross profit growth 0.8% 4,40 EBITDA partly reinvested into 4,20 4,00 growth key priorities Tower Tower -1.8% 3,3

  10. Slide 10: Delivered continued commercial momentum and accelerated adj. EBITDA growth

    10 Delivered cont. commercial momentum and accelerated adj. EBITDA growth Uwe Schiller CFO

  11. Slide 11: Gaining market share in postpaid

    11 Gaining market share in postpaid Postpaid mobile net adds Prepaid mobile net adds (‘000) (‘000) 42 43 40 41 38 -1 14 12 11 Data -6 15 9 Sim Voice -30 -28 28 31 26 30 29 & data -50 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19  Postpaid with +9% subscription growth YoY, leading to 

  12. Slide 12: Continued internet and TV customer growth

    12 Continued internet and TV customer growth Internet net adds TV net adds (‘000) (‘000) 15 11 10 Base 12 8 9 3 redefinition Base 6 9 redefinition 1 6 7 7 OTT 10 8 6 5 3 Classic Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19  Internet continues to grow customer base: Sunrise  TV with

  13. Slide 13: Postpaid ARPU decrease softening

    13 Postpaid ARPU decrease softening Mobile postpaid Mobile prepaid Internet & TV ARPU ARPU ARPU Postpaid down CHF -1.9 YoY (Q3: CHF -2.2) Prepaid down CHF -0.8 YoY (Q3: CHF -1.3) Internet down CHF –1.1 (Q3: -0.8) Value measures have been put in place in Q3 and will be monitored 36.5 36.0 35.8 35.5 3

  14. Slide 14: Financial Overview Q4

    14 Financial Overview Q4 excl. IFRS 16  Revenue up 5.2% driven by service Total revenue CHF m Service revenue revenue, furthermore higher revenues +5.2% +5.2% from mobile hardware and hubbing 511 400 Revenue (both low margin) 486 380  Service revenue up +5.2% (Q3: +2.0%) Q4’18 Q4’19 Q4’18 Q4’19 

  15. Slide 15: Service revenue growth

    15 Service revenue growth … Service revenue driven  Mobile hardware: Volatile as it by postpaid and internet/TV depends on innovation, launches, pricing and attachment rate  Hubbing: International trading business which is volatile by nature +4%  Postpaid: Strong customer growth CHF m 8 511 drive

  16. Slide 16: Driving gross profit growth

    16 … driving gross profit growth Gross profit growth… …partly reinvested into operational momentum GP growth YoY 2) GP CHF m Adj. Opex growth YoY 2) Adj. Opex CHF m +7.1 320 -0.9 312 4.9% 4.2% Service 159 158 156 158 3.7% 82.2% 80.0% 3.4% 155 GM 1) 2.6% 2.3% 1.8% 1.9% 1.7% -0.5% Q4’18 Q4’19 Q4’18 Q4

  17. Slide 17: Focus on Capex and leverage

    17 Focus on Capex and leverage Capex Leverage ratio CHF m Net debt / adjusted EBITDA Tower 2,6 2,7 303 2,5 2018 157 47 38 60 0,2 IFRS 16 2,0 2,0 2,3 2019 185 54 39 92 91 460 Infrastructure Innovation Growth Landline Spectrum 2015 2016 2017 2018 2019  Infrastructure: 5G network, IT, shops and facili

  18. Slide 18: Focus on equity free cash flow

    18 Focus on equity free cash flow eFCF impacted by spectrum, landline access and M&A CHF m 232 210 198  Reported EBITDA down mainly due to M&A one-off costs, offsetting underlying growth 22 (157) 149 (14)  Capex 2019 impacted by spectrum (CHF 91m 3)), landline access payments to Swisscom Incl. spe

  19. Slide 19: Growing EBITDA by continued focus on quality and 5G leadership

    19 Growing EBITDA by continued focus on quality and 5G leadership André Krause CEO

  20. Slide 20: Quality strategy proven to be successful

    20 Quality strategy proven to be successful … Top 3 network internationally High quality Excellent infrastructure in network mobile and landline Grow market share Multi brand Covering distinct approach customer segments Grow top and bottom line NPS Service Focus on customer Customer 69 centricity an

  21. Slide 21: Offering further growth potential

    21 … offering further growth potential Market share Cross selling Underrepresented in B2B Sunrise market share 2019 growth B2B market share 23% 11% 20% 9% Other 2-4P 4P 13% 9% Convergence in base 2-4P 6% 3% 1P Swisscom 2015 2019 Mobile postpaid, internet and TV market shares based on subscriptions a

  22. Slide 22: Elevating our strategy to the next level

    22 Elevating our strategy to the next level Next level of quality challenger strategy Grow Leading Leading position in fiber and 5G: Target fiber coverage of market share 50-60% by 2025, partnerships in all directions will be future proof considered, get attractive access conditions; cover non-fiber

  23. Slide 23: Profitable growth driven by investments

    23 Profitable growth driven by investments … Elevated 2020 Capex to drive network excellence Infrastructure Innovation Growth Landline Spectrum Accelerated 2019 185 54 39 92 91 460 5G and 4G+ Progressive rollout 2020 ~311 incl. 130-150 5G/4G+ ~ 48 ~ 42 ~30 410-450 dividends 2021 Normalized Capex 250

  24. Slide 24: And focus on efficiency

    24 … and focus on efficiency Review operating model to increase efficiency  Further increase e-sales and self-service functionalities Digitalization  Increase focus on digitalization and automation of Efficiency processes program  Increase efficiency of IT (e.g. system consolidation, agile Adj. E

  25. Slide 25: Financial outlook 2020

    25 Financial outlook 2020  Service revenue growth driven by B2B and cont’d 2020 Higher customer momentum in postpaid, internet, and TV guidance revenue  Revenues of low-margin hardware and hubbing to remain volatile Revenue CHF 1,875-1,915m Adj. EBITDA CHF 675-690m Capex CHF 410-450m Higher adj. 

  26. Slide 26: Q&A

    Sunrise A

  27. Slide 27: Appendix

    Sunrise Appendix

  28. Slide 28: Revenue bridge 2019

    28 Revenue bridge 2019 Revenue bridge  Mobile hardware: Depends on handset innovation, launches, pricing and attachment rate  Hubbing: Increased focus on profitability led to lower revenue while GP remained roughly stable CHF m +3% -2% 1887  Postpaid: Strong customer growth 1876 driven by investm

  29. Slide 29: M&A one-off costs almost fully paid by YE'19

    29 M&A one-off costs almost fully paid by YE’19 Deal related one-off costs CHF m  Share purchase agreement with Liberty Global 5 terminated on Nov 12th, 2019 16  Termination triggered penalty payment of CHF 50m  Total one-off costs of CHF 112.5m paid by YE’19: 23 Includes penalty, underwriting fe

  30. Slide 30: Adjusted to reported EBITDA bridge

    30 Adjusted to reported EBITDA bridge EBITDA bridge CHF m excl. IFRS 16 161 (1) 0 624 (3) 2 (79) 544 (89) 71 Adj. EBITDA Share based Prior year events Non-recurring / Reported Adj. EBITDA Share based Prior year events Non-recurring / Reported Q4’19 payment non-operating EBITDA Q4’19 FY’19 payment no

  31. Slide 31: Sunrise with top mobile network quality

    31 Sunrise with top mobile network quality International mobile network quality 977 974 967 963 961 959 955 951 946 945 923 914 913 908 906 903 900 897 885 879 876 869 866 857 839 837 834 828 826 824 764 758 697 621 Yoigo; ES Orange; ES Tre; SE Movistar; ES Telia; SE T-Mobile; CZ Vodafone; UK Vodafo

  32. Slide 32: Landline access overview

    32 Landline access overview Fiber FWA ~30%+ fiber coverage  5G rollout expected to support use of fixed wireless access (FWA)  Fixed wireless substitution in selected Utilities: In 2018, entered into 20 years agreement areas without FTTH with utilities for access at defined scope of fiber  Attrac

  33. Slide 33: Update on MTR

    Update on MTR New MTR negotiated for 2020/21 Financial impact on Sunrise 4,30 3,90 3,50 3,40 3,30 3,10 2,95 2,80 2,80 2,80 Largely neutral 2017 2018 2019 2020 2021 on gross profit Rp./min to Swisscom Rp./min. to Sunrise / Salt  New mobile termination rates (MTR) negotiated for 2020/21,  2020/21 MT

  34. Slide 34: Update on IFRS 16

    Update on IFRS 16 IFRS 16 accounting standard Financial impact on Sunrise Introduced as per Jan 2019, replacing  Adj. EBITDA: CHF 44m positive impact in FY’19 previous standards (e.g. IAS 17); impact on  Net debt: CHF 254m impact as per Dec 2019 (total lease liability incl. former finance lease: C

  35. Slide 35: Income Statement

    35 Income Statement 2 0 19 2 0 19 2 0 18 Cha nge CHF million with without without with January 1 - December 31 IFRS 16 IFRS 16 IFRS 16 IFRS 16 (% ) Re ve nue Mobile services 1’271 1’271 1’271 0.0 - Thereof mobile postpaid 835 835 802 4.1 - Thereof mobile prepaid 76 76 96 (21.5) - Thereof mobile hard

  36. Slide 36: Cash Flow Statement

    36 Cash Flow Statement 2 0 19 2 0 19 2 0 18 Cha nge CHF million with without without with January 1 - December 31 IFRS 16 IFRS 16 IFRS 16 IFRS 16 (% ) Ca sh flow Reported EBITDA 588 544 602 Change in NWC (27) (21) (49) Net interest (39) (28) (30) Tax (46) (46) (50) CAPEX (460) (460) (303) Repayments

  37. Slide 37: Leverage ratio

    37 Leverage ratio December 31, September 30, December 31, Net debt (CHFm) 2019 2019 2018 Senior Secured Notes issued February 2015 0 0 0 Term loan B 1’410 1’410 1’410 Senior Secured Notes issued June 2018 200 200 200 Total cash-pay borrowings 1’610 1’610 1’610 Operational lease 263 259 5 Total debt

  38. Slide 38: Investor Relations

    38 Investor Relations Stephan Gick stephan.gick@sunrise.net +41 58 777 96 86 investor.relations@sunrise.net www.sunrise.ch/ir

  39. Slide 39: Disclaimer

    Disclaimer This document and any materials distributed in connection herewith (including any oral Statements made in this Presentation may include forward-looking statements. These statements statements) (together, the “Presentation”) do not constitute or form a part of, and should not be may be ide

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