Sunrise Communications Ag Class A · SIX:SUNN
Sunrise Communications Ag Class A — Q2 2019 Earnings Presentation
31 slides from Sunrise Communications Ag Class A's earnings presentation, Aug 22, 2019
Slide 1: Q2 2019 Financial Results
1 Q2 2019 Q1 Financial Results 16 May 22 August 2019 2019
Slide 2: Agenda
2 Agenda Summary Operational Update Financials Conclusion Q&A
Slide 3: Summary
3 Summary Olaf Swantee CEO +3.4% adj EBITDA growth with cont’d strong commercial momentum
Slide 4: Summary
4 Summary • Customer growth in key focus areas continued • Adj. EBITDA up +3.4%; B2B transition on-track with GP • Mobile postpaid (+10% YoY), internet (+9%), TV and EBITDA in growth territory (+15%) • Supported by B2B, with commercial momentum • 2019 guidance range tightened at high end coming from
Slide 5: Operational Update
5 Operational Update Olaf Swantee CEO 10% postpaid customer growth YoY; double digit internet and TV net adds
Slide 6: Postpaid customer base up 10% YoY
6 Postpaid customer base up 10% YoY Postpaid mobile net adds (‘000) Prepaid mobile net adds (‘000) 42 43 40 14 12 Secondary -6 30 31 15 (data) -10 9 8 28 31 -30 22 23 26 Primary -39 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 -50 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 • Postpaid with +10% subscription growth YoY, leading
Slide 7: Double digit internet and TV net adds
7 Double digit internet and TV net adds Internet net adds (‘000) TV net adds (‘000) 15 11 11 Base 12 redefinition 9 8 9 3 OTT (since Q2) 9 Base 7 6 redefinition 10 8 Classic 6 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 • Internet continues to grow customer base: Sunrise • TV with so
Slide 8: ARPU trends continuing
8 ARPU trends continuing • Blended mobile ARPU relatively stable YoY, as increasing Blended mobile ARPU postpaid subscriptions have higher ARPU than decreasing Blended mobile ARPU (CHF): -1.6 32.9 prepaid subscriptions 32.3 31.7 31.1 31.8 • Postpaid decreased CHF -2.5 YoY due to 2nd SIM dilution, Yo
Slide 9: Update on acquisition of UPC Switzerland (1/5)
9 Update on acquisition of UPC Switzerland (1/5) Update on key milestones to creating a stronger and more valuable Sunrise UPC Switzerland Q2 results ahead of Sunrise expectations (leading to CHF 10-15m higher FY’19 opFCF expectation) and in-line with 1 Liberty Global’s budget 2 Integration planning
Slide 10: Update on acquisition of UPC Switzerland (2/5)
10 Update on acquisition of UPC Switzerland (2/5) UPC Q2 in-line with Liberty’s turnaround plan - ahead of Sunrise expectations 2) UPC Switzerland revenue (CHFm) • RGU net adds, revenue, OCF targets achieved 315 316 Turnaround plan • Success in major investments in UPC TV, 1 Gbps and digitisation on
Slide 11: Update on acquisition of UPC Switzerland (3/5)
11 Update on acquisition of UPC Switzerland (3/5) Revised cost and revenue synergies estimated at ~CHF 280m run-rate in year 4, synergies NPV at ~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 Ca
Slide 12: Update on acquisition of UPC Switzerland (4/5)
12 Update on acquisition of UPC Switzerland (4/5) Revised total run-rate synergies resulting in a ~CHF 0.3bn increase in synergies NPV to ~CHF 3.1bn 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
Slide 13: Update on acquisition of UPC Switzerland (5/5)
13 Update on acquisition of UPC Switzerland (5/5) Sunrise Board concludes that Freenet’s concerns are not justified and not in the best interests of shareholders Freenet proposal Sunrise considerations • Committed to maintaining a prudent capital structure and progressive dividend policy • Open to c
Slide 14: Q2 Financials
14 Q2 Financials André Krause CFO Higher service revenue, GP and adj. EBITDA
Slide 15: Financial Overview Q2
15 Financial Overview Q2 excl. IFRS 16 1) Total revenue: Service revenue 2): Revenue • Revenue down -1.7% due to lower revenues from (CHFm) mobile hardware and hubbing (both low margin) -1.7% +3.1% • Service revenue up +3.1% driven by customer 463 455 374 386 growth, offsetting lower ARPUs; sequenti
Slide 16: Service revenue growth driven by internet/TV and postpaid
16 Service revenue growth driven by internet/TV and postpaid Revenue bridge (CHFm) Q2’18 Revenue 463 • Mobile hardware: depends on handset innovation, launches, Δ mobile hw pricing and attachment rate; variations across quarters lead to -12 (low-margin) -4% revenue volatility Δ hubbing -7 • Hubbing:
Slide 17: GP growth partly reinvested into operational momentum
17 GP growth partly reinvested into operational momentum Growth YoY 2) Gross profit Growth YoY excl. tower 2) Adjusted Opex 4.2% 4.9% 3.7% 2.6% 3.4% 2.2% 1.4% 1.6% 1.5% 1.8% Q2’18 Q2’19 Q2’18 Q2’19 7,8 311 +2,7 303 In CHFm In CHFm 154 156 Service GM 1) 81.0% 80.6% Q2’18 Q2’19 Q2’18 Q2’19 • Gross pro
Slide 18: eFCF impacted by spectrum and landline access
18 eFCF impacted by spectrum and landline access Q2 LTM equity FCF (CHFm) 1) Capex (CHFm) Q1: 426 Reported 365 650 640 91 Spectrum EBITDA 124 Landline Access Δ NWC 1 6 • EBITDA supported by underlying growth 98 Customer growth 38 36 in Q2 48 50 Innovation & Development Capex (426) (365) • Capex impa
Slide 19: Conclusion
19 Conclusion Olaf Swantee CEO Q2 growth confirms strategic focus on quality
Slide 20: Investing into 3 strategic priorities
20 Investing into 3 strategic priorities Network quality Customer interface Innovative converged products • 5G in 262 cities /villages by mid Aug; • Achieved highest score in DACH region in • Launch of first commercial 5G MBB rate plan; strong 5G spectrum position ‘connect’ shop test introduced TV O
Slide 21: Q2 conclusion
21 Q2 conclusion • Strong subscriber growth in mobile postpaid, Customers internet and TV • 5G coverage in 262 cities /villages by mid August • Continued service revenue growth driven by FY’19 guidance range tightened at high end customer momentum Revenue • Ongoing service revenue diversification in
Slide 22: Q&A
22 Q&A ?&!
Slide 23: Appendix
23 Appendix
Slide 24: IFRS 16 update
24 IFRS 16 update IFRS 16 accounting standard Impact on Sunrise • Introduced as per Jan 2019, replacing previous • EBITDA: CHF +40m to CHF +45m positive impact is expected in standards (e.g. IAS 17); impact on: FY’19 • P&L lease recognition: reallocation from COGS • Net debt: CHF 263m impact as per
Slide 25: Bridge adjusted to reported EBITDA
25 Bridge adjusted to reported EBITDA Q2 EBITDA bridge (excl. IFRS 16) Adj. EBITDA Q2’19 155 • Share-based payment provisions for multi-year compensation plans Share based payment • Non-recurring / non-operating events mainly represent costs for one- (1) time events, e.g. advisory fees related to th
Slide 26: Income Statement
26 Income Statement Q 2 2 0 19 Q 2 2 0 19 Q 2 2 0 18 Cha nge CHF million with without without with April 1 - June 30 IFRS 16 IFRS 16 IFRS 16 IFRS 16 (% ) Re ve nue Mobile services 302 302 315 (3.9) - Thereof mobile postpaid 208 208 203 2.5 - Thereof mobile prepaid 20 20 25 (21.2) - Thereof mobile ha
Slide 27: Cash Flow Statement
27 Cash Flow Statement Q 2 2 0 19 Q 2 2 0 19 Q 2 2 0 18 Cha nge CHF million with without without with April 1 - June 30 IFRS 16 IFRS 16 IFRS 16 IFRS 16 (% ) Ca sh flow Reported EBITDA 157 146 147 6.6 Change in NWC (20) (18) (15) 29.8 Net interest (12) (8) (12) (2.7) Tax (1) (1) (5) (86.3) CAPEX (143
Slide 28: Leverage ratio
28 Leverage ratio June 30, March 31, June 30, 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 266 269 7 Total debt 1’876 1’879
Slide 29: Have a sunny day
Have a sunny day
Slide 30: Contact Information
30 Contact Information Investor Relations Uwe Schiller uwe.schiller@sunrise.net Stephan Gick stephan.gick@sunrise.net Contact www.sunrise.ch/ir investor.relations@sunrise.net +41 58 777 96 86
Slide 31: Disclaimer
31 Disclaimer • The information contained in this investor 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, an
Sunrise Communications Group — Q2 2019 Earnings Presentation on 6ix