Sunrise Communications Ag Class A · SIX:SUNN

Sunrise Communications Ag Class A — Q3 2016 Earnings Presentation

30 slides from Sunrise Communications Ag Class A's earnings presentation, Nov 10, 2016

  1. Slide 1: Sunrise Communications Group AG Q3'16 financial results

    Sunrise Communications Group AG Q3’16 financial results – 10 November 2016

  2. Slide 2: Agenda

    Agenda 1 Summary & operational update Olaf Swantee (CEO) 2 Financials André Krause (CFO) 3 Conclusion Olaf Swantee (CEO) 4 Q&A 2 © Sunrise

  3. Slide 3: Q3 summary: Subscriber momentum alongside improved eFCF

    Q3 summary Subscriber momentum alongside improved eFCF • Continued subscriber growth momentum in key focus areas • Another strong quarter for mobile postpaid with 5.8% YoY growth, despite competitive environment • Accelerated internet growth of 8.1% YoY alongside 19.8% YoY IPTV growth • Revenue decl

  4. Slide 4: Improved quality reflected in BILANZ telecom ranking

    Improved quality reflected in BILANZ telecom ranking Mobile 1) Points reached (max 30) Sunrise 23 Swisscom 20 Salt 19 Internet 1) • Sunrise again with best results of «big providers» Sunrise 23 for the residential market in 2016 Swisscom 20.6 • 10k telecom user participated in independent annual sur

  5. Slide 5: Accelerated primary SIM net adds in postpaid

    Accelerated primary SIM net adds in postpaid Postpaid mobile net adds (‘000) Prepaid mobile net adds (‘000) 24 21 22 3 18 20 3 -7 10 5 Secondary 10 -17 21 18 Primary 12 15 -27 8 -34 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 -47 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 • Postpaid supported by multi-brand approach, leading

  6. Slide 6: Broadband momentum up 2x over the same period last year

    Broadband momentum up 2x over the same period last year Internet net adds (‘000) TV net adds (‘000) 9 7 7 7 7 5 6 5 5 3 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 • Internet with continued net adds, leading to 363k total • TV net adds supported by enhanced Sunrise Smart TV subscribe

  7. Slide 7: ARPU trends continuing with pressure easing in mobile

    ARPU trends continuing with pressure easing in mobile Blended mobile service ARPU (CHF) • Blended mobile still down CHF -0.8 YoY, but sequentially improving 34,2 32,7 33,4 31,4 32,2 • Postpaid down CHF -2.7 driven by 2nd SIM dilution, Freedom HW unwind and value effect; eased pressure compared to Q2

  8. Slide 8: Commercial focus on iPhone 7 launch and TV promo

    Commercial focus on iPhone 7 launch and TV promo iPhone 7 orders well above iPhone 6S TV promo to support convergence • iPhone 7 orders 69% above iPhone 6S in first • Dedicated TV push with promo in October 30 trading days • New internet and TV customers get 12 month TV for free • Demand exceeding s

  9. Slide 9: Agenda

    Agenda 1 Summary & operational update Olaf Swantee (CEO) 2 Financials André Krause (CFO) 3 Conclusion Olaf Swantee (CEO) 4 Q&A 9 © Sunrise

  10. Slide 10: Fading revenue pressure

    Fading revenue pressure Revenue (CHFm) • Revenue down -1.9% compared to -3.2% in Q2’16 -9 primarily supported by improved development of low- (-1.9%) margin hardware revenue 487 478 • Moderating service revenue 1) decrease of -3.8% compared to -4.1% in Q2’16; continued subscriber growth momentum in

  11. Slide 11: Improving mobile postpaid revenue trend

    Improving mobile postpaid revenue trend ∆ Mobile postpaid revenue YoY (CHFm) 1) 0 • Positive subscriber momentum driven by investments in network, customer interface, and -2 innovative converged products -3 • Starting to offset fading hardware unwind and -4 negative impacts from both roaming and val

  12. Slide 12: Focus on Q3 revenue

    Focus on Q3 revenue Q3’16 revenue bridge (CHFm) Q3’15 revenue 487 • Hubbing: international trading business which is volatile by nature Δ hubbing +1.4 -1.4 • Mobile HW: revenues are dependent on handset innovations / launches; Q3’16 +1% supported by iPhone 7 launch Δ mobile HW -1.5 7.2 Service reven

  13. Slide 13: Roaming update

    Roaming update Sunrise roaming: ‘Pay For What You Need’ • Roaming included in high-end tariffs, while attractive roaming add-on option packages provided for low and mid-end tariffs • This keeps low and mid-end tariff prices low, meaning low-frequency travelers are not cross subsidizing high-frequenc

  14. Slide 14: Continued cost containment

    Continued cost containment Adjusted Opex1) (CHFm) Adjusted EBITDA1) margin (excl. hubbing) (%) 32.7% % Opex of revenue (excl. hubbing) 32.3% -3% 149 151 145 -0.8% 143 144 37.2% 36.4% Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q3’15 Q3’16 • Adj. Opex down 3% YoY driven by various efficiencies • Lower EBITDA margi

  15. Slide 15: Improved equity FCF, in-line with expectations

    Improved equity FCF, in-line with expectations Cash flow LTM Q3’16 (CHFm) Reduced Capex 9m’16 (CHFm) = LTM Q2’16 177 143 Reported 617 610 112 EBITDA 91 Mobile Tax (35) (32) Landline 48 43 IT, Shops & Other 16 9 Interest (52) (51) 9m’15 9m’16 • Reiterating CHF 220-230m Capex guidance 2016 Δ NWC (48)

  16. Slide 16: Agenda

    Agenda 1 Summary & operational update Olaf Swantee (CEO) 2 Financials André Krause (CFO) 3 Conclusion Olaf Swantee (CEO) 4 Q&A 16 © Sunrise

  17. Slide 17: On-track with key priorities

    On-track with key priorities ‘Quality’ category in BILANZ ranking 1) • Nr. 1 of ‘big providers’ in BILANZ residential category ‘Quality’ Network 4,4 4,2 • Network investment ramp-up led to strongest mobile network quality 3,9 quality 3,6 improvement 2012-15, as confirmed by independent “Connect test

  18. Slide 18: Q3 conclusion

    Q3 conclusion Q3 recap Outlook • Continued subscriber growth momentum in focus areas • Moderation in service revenue decrease with postpaid reaching stabilization • FY’16 guidance is reiterated • Continued Opex improvement YoY as expected, partly compensating revenue headwinds on EBITDA level • Equi

  19. Slide 19: Agenda

    Agenda 1 Summary & operational update Olaf Swantee (CEO) 2 Financials André Krause (CFO) 3 Conclusion Olaf Swantee (CEO) 4 Q&A 19 © Sunrise

  20. Slide 20: Appendix

    Appendix 20 © Sunrise

  21. Slide 21: Income Statement

    Income Statement P&L (CHFm) YTD 2016 YTD 2015 Q3 2016 Q3 2015 Mobile services 932 966 324 325 thereof mobile postpaid 575 583 201 201 thereof mobile prepaid 125 151 41 50 thereof hardware 174 181 62 55 Landline services 305 349 100 113 thereof landline voice 114 129 37 41 thereof hubbing 93 106 32 3

  22. Slide 22: Cash Flow Statement

    Cash Flow Statement Cash Flow (CHFm) YTD 2016 YTD 2015 Q3 2016 Q3 2015 EBITDA 444 450 156 164 Change in net working capital (61) (54) 7 1 thereof handset receivable factoring impact (1) 55 (22) (18) Movement in pension and provisions (2) 4 3 2 Interest (paid) / received, net incl. foreign currency i

  23. Slide 23: Leverage slightly up in Q3 due to final spectrum payment

    Leverage slightly up in Q3 due to final spectrum payment September 30, December 31, September 30, Net debt (CHFm) June 30, 2016 2016 2015 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) 1'860 1'860 1'860 1'860 Financial

  24. Slide 24: Focus on Q3 revenue (including postpaid split)

    Focus on Q3 revenue (including postpaid split) Q3’16 revenue bridge (CHFm) Q3’15 revenue 487 Δ hubbing +1.4 -1.4 • Hubbing: international trading business which is volatile by nature +1% • Mobile HW: revenues are dependent on handset innovations / launches; Q3’16 Δ mobile HW -1.5 7.2 supported by iP

  25. Slide 25: Bridge adjusted to reported EBITDA

    Bridge adjusted to reported EBITDA Q3’16 EBITDA bridge (CHFm) Adj. EBITDA Q3’16 162 • Restructuring expenses of CHF 4m were recorded in Q3’16 1) Restructuring (4) Share based payment • Share-based payment provisions for multi-year (1) compensation plans expenses Non-recurring / • Non-recurring / non

  26. Slide 26: 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 Q 2 '14 Q 3 '14 Q 4 '14 Q 1'15 Q 2 '15 Q 3 '15 Q 4 '15 Q 1'16 Q 2 '16 Q 3 '16 52.6 52.5 Service ARPU R e v e nue • Pre Freedom tariffs: P&L Service revenue and P o stpaid Service 202 2

  27. Slide 27: Prepaid subscriptions based on 3 and 12 month activity rule

    Prepaid subscriptions based on 3 and 12 month activity rule Market and performance update • Decreasing prepaid customers as a result of pre- to postpaid migration: postpaid flat rate plans providing similar cost control like prepaid; demand for high value smart phone instalment plans which are not a

  28. Slide 28: Thank you for your interest in Sunrise

    Thank you for your interest in Sunrise 28 © Sunrise

  29. Slide 29: 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 29 © Sunrise

  30. Slide 30: 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 — Q3 2016 Earnings Presentation on 6ix