Sunrise with strong customer growth and solid financial results in Q1 2024 – guidance for FY 2024 confirmed

«We have started 2024 with a strong operational and solid financial result. We continued our growth momentum in mobile postpaid across all segments, despite a generally less liquid market compared to the previous year. At the same time, we achieved strong net growth in the Internet segment that was also driven by increased customer loyalty,» summarises André Krause, CEO of Sunrise. «Overall, we are well on track, fully confirm our guidance for the 2024 financial year and expect positive effects of operational cost optimisation in the following quarters. We also look forward to being listed on the Swiss stock exchange SIX again soon.»

Operational results

Although the market showed slower growth momentum with lower liquidity in the first three months of 2024 compared to the previous year, Sunrise was able to further drive its customer growth in the mobile postpaid segment in Q1 2024. The company gained +28,000 net mobile postpaid¹⁾ -RGUs in Q1.

At the same time, Sunrise recorded a return to growth in the Internet segment with +6,200 broadband RGUs, reflecting another sequential improvement versus the previous quarter.

The growth momentum was supported in particular by measures that were already taken last year, such as switching existing customers to the current product portfolio in a value-neutral manner, increased activities to increase customer loyalty and stronger positioning of the main Sunrise brand. yallo as a secondary brand and B2B also contributed to the continued growth.

As at 31 March 2024, there were a total of 2.854 million mobile RGUs (3.300 million including second SIM cards), 1.187 million broadband RGUs (1.258 million including SMEs) and 1.194 million TV RGUs (1.264 million including SMEs). Fixed Mobile Convergence (FMC) penetration was 58.7%, an increase of +1.1% compared to the same quarter last year. With the cross-selling and upselling of convergent products and additional services such as cybersecurity, Sunrise continues to drive the growth of the convergence rate FMC in the existing customer base, so that an increasingly large proportion of fixed broadband customers are also using a mobile postpaid offer.

New offers and service quality support growth ambitions

In March, Sunrise launched a series of new offers under its main brand that are aimed not only at new customers but also at existing customers, thus supporting growth and greater customer loyalty. On the one hand, the focus is on the youth segment for anyone under the age of 27, which benefits from the new Sunrise Young portfolio. On the other hand, digitally savvy customers are be addressed with new mobile, Internet and TV offers that can only be purchased online from Sunrise. With new cybersecurity options, Sunrise offers additional services for the comprehensive protection. Existing customers were rewarded with an exclusive loyalty discount.

The positioning of the secondary brands («flanker brands») yallo, Lebara and swype was further strengthened with a new yallo multi-channel campaign. And thanks to the 5G upgrade, all existing yallo customers benefit from more speed on Switzerland's largest 5G network free of charge. Thanks to maximum transparency and cost control, the swype carefree offer also continues to be successful and is particularly popular with the young, cost-conscious and digitally savvy generation.

In Q1 2024, Sunrise Business again concluded numerous new contracts and contract renewals/upgrades, including companies such as AFRY Switzerland Ltd. (engineering, design, and advisory services) and Basellandschaftliche Kantonalbank BLKB.

Sunrise Business continues to successfully expand its position in the market and is targeting SMEs with new offerings, for example with the new Managed Security Services offered together with Accenture, which offer GenAI-supported real-time monitoring of a company's entire IT landscape around the clock; the cloud and connectivity solutions to be provided together with AWS, which focus on security, convenience and peace of mind for SMEs in «cloudification»; or the expanded portfolio for the modern workplace with the Managed Workplace service.

With its focus on the best service quality, Sunrise – following a test victory in Q3 2023 – once again scored highly in a hotline test conducted by the renowned trade magazine «connect». Sunrise received the highest ratings in all categories in the connect mobile hotline test (three times «outstanding», twice «very good») and is among the top trio of 20 hotlines tested in comparison with network operators in the D-A-CH region.

Furthermore, Sunrise announced the takeover of the cable network of Services industriels de Lausanne (SiL) for the surrounding Lausanne region with over 17,000 connected households during this year. In the future, Sunrise will provide its services directly and will ensure the continuous supply of innovative services of the highest quality to its customers. Sunrise will modernise and future-proof the cable network for both consumer and business customers.

Financial results

As expected, the Q1 2024 financial results are below the figures achieved in Q4 2023, primarily due to the absence of supportive seasonal phasing effects which uplifted the Q4 2023 results.

In Q1 2024, Sunrise generated a stable revenue of CHF 746.8 million on a rebased basis and compared to the prior-year quarter (0.0%), while there was a decline in revenue in the consumer mobile and fixed-network business. 

Consumer Mobile revenue reached CHF 302.3 million (-1.0% YoY on a rebased basis) and decreased due to lower device sales YoY, a declining prepaid base, partially offset by subscriber growth in postpaid revenue supported by flanker brand performance including the impact of the price increase across brands.

The Consumer Fixed business achieved revenue of CHF 280.6 million (-2.3% YoY on a rebased basis) and was primarily impacted by lower monthly subscription income due to the ongoing rightpricing in the existing customer base as well as lower variable income, which was also only partially offset by the general price increase and improved sales from the hardware business.

The B2B business grew primarily with revenues from the wholesale voice business with lower margins, subscription revenues, installation and integration services, revenues from mobile devices and from the MVNO business and reached CHF 147.7 million (+4.8% YoY on a rebased basis).

Segment Adjusted EBITDA²⁾ increased slightly by +0.4% in Q1 2024 on a rebased basis and compared to the same quarter of the previous year, reaching CHF 244.3 million, including CHF 1.6 million in «costs to capture»³⁾. The increase in Segment Adjusted EBITDA²⁾ on a rebased basis is mainly due to lower operating costs (OPEX) including a reduction in costs to capture and lower direct costs for hardware. The effects of operational cost optimisation will become more visible from Q2 2024.

Adjusted EBITDA less P&E additions²⁾⁴⁾ increased in Q1 2024 on a rebased basis by +7.6% YoY to a total of CHF 113.5 million, including CHF 5.0 million «costs to capture» in this quarter. This was primarily due to lower investment costs (CAPEX) as a result of lower costs to capture.

Sunrise continued to make high investments totalling CHF 131.0 million (17.5% of sales) in networks, product innovations and digital services in Q1 2024. This also included CHF 3.5 million «costs to capture» in P&E additions in this quarter.

Confirmed FY 2024 financial guidance for Sunrise:

FY 2024 financial guidance for Sunrise:

• Revenue growth: broadly stable
• Segment Adj. EBITDA⁵⁾ (including costs to capture): stable to low-single-digit growth
• Opex and Capex costs to capture: ~CHF 15 million (of which mainly Capex)
• Property and equipment additions as a percentage of revenue (including costs to capture) 16–18%
• Adjusted FCF⁵⁾: between CHF 360–400 million

The detailed financial results of Sunrise can be found in the Q1 2024 Fixed Income Release.

Press Release (PDF)

Sunrise

Media Relations

media@sunrise.net

0800 333 000

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1) Including B2B and secondary SIM cards; excluding secondary SIM cards in line with LG's definition, organic postpaid adds were 26,000 RGU in Q1 2024.

2) The results on a rebased basis are consistent with the results presented by the parent company. These non-GAAP figures are intended to supplement, and not replace, the U.S. GAAP figures contained in the financial statements of the parent company. The Q1 2024 Fixed Income Release should be consulted for any definitions and adjustments.

3) Costs to capture generally include incremental, third-party operating and capital costs directly related to integration activities, restructuring measures and certain other costs associated with aligning an acquired company with the business processes of the parent company to achieve synergies. These costs are necessary to align the operations of a business to be acquired (or a joint venture to be formed) with those of the parent company, or are associated with the acquisition. As a result, the costs to be recognised may include certain (i) operating costs included in Adjusted EBITDA, (ii) capital-related costs included in P&E additions and Adjusted EBITDA less P&E additions4), and (iii) certain integration-related restructuring costs that are not included in Adjusted EBITDA or Adjusted EBITDA less P&E additions4). As the achievement of synergies occurs over time, certain costs to be recognised are recurring by nature and are generally incurred within a few years of the closing of the transaction.

4) Due to a comment by the U.S. Securities and Exchange Commission SEC, Liberty Global has changed its formerly used term «OFCF» to «Adjusted EBITDA less P&E additions» as of Q3/21.

5) Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP performance indicators; see the Glossary for definitions. Quantitative reconciliations to net earnings/loss (including net earnings/loss growth rates) and cash flow from operating activities for our Adjusted EBITDA and Adjusted FCF guidance cannot be provided without unreasonable efforts as we do not forecast (i) certain non-cash charges including: the components of non-operating income/expense, depreciation, amortisation and impairment, restructuring and other operating items included in net earnings/loss, nor (ii) specific changes in working capital that impact cash flows from operating activities. The items we do not forecast may vary significantly from period to period.