Sunrise Communications Ag Class A · SIX:SUNN
Sunrise Communications Ag Class A — Q1 2019 Earnings Presentation
31 slides from Sunrise Communications Ag Class A's earnings presentation, May 16, 2019
Slide 1: Q1 2019 Financial Results
1 Q1 2019 Financial Results 16 May 2019
Slide 2: Agenda
2 Agenda Summary Operational Update Financials Conclusion Q&A
Slide 3: Summary
3 Summary Olaf Swantee CEO Sunrise continues to lead the market - raising adj. EBITDA guidance
Slide 4: Summary
4 Summary • Customer growth in key focus areas continued • Mobile postpaid (+9% YoY), internet (+10%), TV (+14%) • Supported by continued B2B customer wins (Q1 includes: Valora, University Hospital Zurich) • Service revenue up +2.7% with customer growth more than offsetting lower ARPUs; total revenu
Slide 5: Operational Update
5 Operational Update Olaf Swantee CEO New record postpaid net adds; Network leadership by pioneering 5G
Slide 6: New record postpaid net adds since 2010
6 New record postpaid net adds since 2010 Postpaid mobile net adds (‘000) Prepaid mobile net adds (‘000) 42 43 12 Secondary 31 30 31 14 (data) -10 11 9 8 Primary 28 31 -30 -30 20 22 23 -39 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 -50 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 • Postpaid with strongest net adds since 2010,
Slide 7: Growing internet and TV customer base
7 Growing internet and TV customer base Internet net adds (‘000) TV net adds (‘000) 15 9 8 9 Base 7 Base 11 5 6 3 redefinition 1) redefinition 1) 9 9 7 10 6 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 • Internet continues to grow customer base: Sunrise • TV with solid growth: Sunrise
Slide 8: ARPU trends continuing
8 ARPU trends continuing Blended mobile ARPU • Blended mobile ARPU roughly stable YoY, as increasing Blended mobile ARPU: (CHF) postpaid subscriptions have higher ARPU than decreasing -1.6 32.3 32.9 31.7 31.1 30.5 prepaid subscriptions YoY -1.1 -1.1 -2.1 YoY -1.6 -1.1 • Postpaid down CHF -1.0 YoY du
Slide 9: Network leadership by pioneering 5G
9 Network leadership by pioneering 5G First on 5G – becoming a true network leader 5G monetization on-track 100 test 5G 5G mobiles • Strong 5G spectrum acquired at attractive price, MBB boxes launched in Q2 launched in including 100 MHz in 3.5-3.8 GHz Q1, providing • First operator in Europe to laun
Slide 10: Update on acquisition of UPC Switzerland (1/3)
10 Update on acquisition of UPC Switzerland (1/3) Update on key transaction milestones 1 Management roadshow with over 170 investors since announcement, broad support from vast majority of existing and new investors 2 Merger control notification submitted, regulatory clearance expected in H2’19 3 In
Slide 11: Update on acquisition of UPC Switzerland (2/3)
11 Update on acquisition of UPC Switzerland (2/3) UPC Q1’19 results demonstrating improving leading indicators and KPIs • Record March total customer sales growth of 30% YoY Turnaround plan • Improving trajectory with RGU losses slowing on track • Customer ARPU returning to growth (+3.6% YoY in Q1’1
Slide 12: Update on acquisition of UPC Switzerland (3/3)
12 Update on acquisition of UPC Switzerland (3/3) New Sunrise – stronger company positioned for long-term growth Sunrise New Sunrise 1) Mobile Broadband TV Mobile1) Broadband TV Scale advantage strengthens 12% 6% 25% 26% 30% 31% Sunrise position to successfully operate in the long-term Sunrise own n
Slide 13: New Sunrise - positioned for growth and shareholder returns
13 New Sunrise - positioned for growth and shareholder returns Transaction creates a stronger and more valuable Sunrise Strong commercial momentum as demonstrated by our recent results and increased guidance for 2019 expected to continue on the combined business, underpinned by a clear execution pla
Slide 14: Q1 Financials
14 Q1 Financials André Krause CFO Higher service revenue, GP and adj. EBITDA
Slide 15: Financial Overview Q1
15 Financial Overview Q1 excl. IFRS 16 1) Total revenue: Service revenue 2): Revenue • Revenue down -2.6% due to lower revenues from (CHFm) hubbing and hardware (both low margin) -2.6% +2.7% • Service revenue up +2.7% driven by customer 458 447 362 372 growth in mobile postpaid and internet/TV, offs
Slide 16: Service revenue growth driven by postpaid and internet/TV
16 Service revenue growth driven by postpaid and internet/TV Revenue bridge (CHFm) Q1’18 Revenue 458 • Mobile hardware: depends on handset innovation, launches, Δ mobile hw pricing and attachment rate; variations across quarters lead to -7 (low-margin) -5% revenue volatility Δ hubbing -14 • 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% 2.9% 3.1% 3.4% 2.2% 1.4% 1.6% 1.5% Q1’18 Q1’19 Q1’18 Q1’19 12,2 305 +5,1 In CHFm 293 In CHFm 158 153 82.2% Service GM 1) 81.1% Q1’18 Q1’19 Q1’18 Q1’19 • Gross pr
Slide 18: Higher eFCF driven by EBITDA and NWC
18 Higher eFCF driven by EBITDA and NWC Q1 LTM equity FCF (CHFm) 1) Capex (CHFm) Q4: 365 Reported 640 602 303 Landline Access EBITDA • EBTIDA supported in Q1 by underlying 60 124 Customer growth Δ NWC 6 (49) growth and the sale of 133 towers 38 38 Innovation & Development • NWC: positively impacted
Slide 19: Conclusion
19 Conclusion Olaf Swantee CEO Strong start to the year – raising guidance
Slide 20: Investing into strategic priorities
20 Investing into 3 strategic priorities Network quality Customer interface Innovative converged products • Outstanding mobile network with leading • NPS strongly up since introduction in 2013, • 5G MBB box launched by end of Q1, with dropped call ratios, 58 Mbit/s average evidenced by No. 1 ranking
Slide 21: Q1 conclusion
21 Q1 conclusion • Strong subscriber growth in mobile postpaid, internet and TV, incl. record postpaid net adds Customers • Test 5G MBB products launched in Q1; 5G antennas in 152 cities /villages FY’19 guidance raised after strong start to the year • Accelerated service revenue growth driven by Rev
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 1) • Introduced as per Jan 2019, replacing previous • EBITDA: CHF +40m to CHF +45m positive impact is standards (e.g. IAS 17); impact on: expected in FY’19 • P&L lease recognition: reallocation from COGS • Net debt: CHF 265m increase as
Slide 25: Bridge adjusted to reported EBITDA
25 Bridge adjusted to reported EBITDA Q1 EBITDA bridge (excl. IFRS 16) Adj. EBITDA Q1’19 147 • Share-based payment provisions for multi-year compensation plans Share based payment • Prior year related events include among others adjustments of (1) provisions/accruals based on newly available informa
Slide 26: Income Statement
26 Income Statement Q 1 2 0 19 Q 1 2 0 19 Q 1 2 0 18 Cha nge CHF million with without without with January 1 - March 31 IFRS 16 IFRS 16 IFRS 16 IFRS 16 (% ) Re ve nue Mobile services 302 302 302 (0.2) - Thereof mobile postpaid 201 201 190 6.1 - Thereof mobile prepaid 19 19 25 (23.0) - Thereof mobile
Slide 27: Cash Flow Statement
27 Cash Flow Statement Q 1 2 0 19 Q 1 2 0 19 Q 1 2 0 18 Cha nge CHF million with without without with January 1 - March 31 IFRS 16 IFRS 16 IFRS 16 IFRS 16 (% ) Ca sh flow Reported EBITDA 175 163 137 27.4 Change in NWC 40 33 (15) (359.4) Net interest (9) (6) (6) 64.8 Tax (21) (21) (23) (6.9) CAPEX (1
Slide 28: Leverage ratio
28 Leverage ratio March 31, December 31, March 31, Net debt (CHFm) 2019 2018 2018 Senior Secured Notes issued February 2015 0 0 500 Term loan B 1’410 1’410 910 Senior Secured Notes issued June 2018 200 200 0 Total cash-pay borrowings 1’610 1’610 1’410 Operational lease 269 5 8 Total debt 1’879 1’615
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 • This document and any materials distributed in connection herewith (including • Statements made in this Presentation may include forward-looking statements. any oral statements) (together, the “Presentation”) do not constitute or form a These statements may be identified by the fact
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