Q4 2023 with strong financial results and continued mobile postpaid growth. Financial guidance 2023 achieved.

"We’ve closed the year with a strong Q4. Mobile postpaid customer growth, the improved trend in the broadband customer base and growth in B2B took effect. In addition, our cost discipline and efficiency improvements supported us in achieving our targets", summarised André Krause, CEO of Sunrise. "Our 2024 guidance confirms the positive development and the return to EBITDA growth. To this end, we’ll continue to strengthen our leading fixed and mobile connectivity, launch new services for B2B and B2C customers, further enhance the customer experience and loyalty of our existing customers, and win new customers by inspiring them with our products and services. These operational priorities and our leaner corporate structure form the foundation for our EBITDA growth".

Operational results

Sunrise continued its customer growth in the mobile postpaid segment in the fourth quarter of 2023. The company gained +31,000 net mobile postpaid1) RGUs in the last three months of 2023, despite the impact of delayed activations. This is expected to have a positive impact in Q1 2024. Over the full financial year 2023, Sunrise gained +132,000 net mobile postpaid1) RGUs.

As a result of increased marketing activities, the broadband customer base remained stable in Q4 2023 despite the delay in activations, highlighting the continuous improvement over the previous quarters. For the full year, there was a slight decline of -3,000 broadband RGUs compared to the previous year.

At the end of 2023, there were a total of 2.836 million mobile RGUs (3.278 million including second SIM cards), 1.180 million broadband RGUs (1.250 million including SMEs) and 1.200 million TV RGUs (1.267 million including SMEs). FMC penetration was 58.1%, an increase of +0.7% compared to the end of 2022. With the cross- and upselling of convergent products, Sunrise continues to drive the growth of the FMC rate in the existing customer base.

Focus on service, network quality and innovation in 2023

In the past year, Sunrise as the main brand focused on the continuous improvement of service quality, network quality and innovative offers.

Sunrise has received multiple awards for its service quality, as well as for the outstanding broadband Internet it offers its customers via the fixed and mobile networks.

In the postpaid segment, Sunrise launched Flex Upgrade, a unique device-as-a-service product that is in high demand among customers. The prepaid offering has been greatly expanded and now covers practically every need and application. Sunrise is the first telecoms provider to combine Switzerland and Europe in a flat-rate tariff for mobile Internet and to activate 5G for all prepaid customers at no extra cost.

The momentum of the flanker brands yallo, Lebara and swype was further strengthened with a strong yallo multi-channel campaign and newly launched offers for existing customers. The swype offering was also expanded, with a Swiss and European roaming flat rate and surfing on Switzerland’s largest 5G network. The flanker brands and yallo in particular made a strong contribution to growth in 2023.

Sunrise Business was again able to grow strongly in 2023 and celebrated many successes in 2023, with new contracts and contract extensions/upgrades, for example with BKW, Casale, Heineken Switzerland, Baden Cantonal Hospital, Swissport, Swiss International Air Lines, TCS and Migros. Sunrise Business further strengthened its position in the market via new customer wins and innovative offerings. Mobile Private Network (MPN) solutions for customised 5G networks, mobile products for smart collaboration, IoT solutions and comprehensive security solutions to defend against cyber threats were a particular focus.

Financial results

A return to revenue growth was achieved in Q4 2023, rising to CHF 795.4 million (+2.5%) in the quarter on a rebased basis and compared to the same quarter of the previous year. The main contributors to revenue growth were higher revenue from consumer subscriptions including flanker brands, increased device sales in the mobile and fixed network segments and B2B revenue growth. All segments include the positive impact of the July 2023 inflation-related price increase.

Consumer Mobile revenue reached CHF 339.5 million (+4.8% YoY on a rebased basis), benefiting from customer growth, hardware business and revenues outside the mobile-subscription business. The improvement compared to Q3 was driven by the improved performance from variable revenues including roaming. 

The Consumer Fixed business achieved revenue of CHF 294.5 million (-0.7% YoY on a rebased basis) and was supported by the inflation-related price increase, as well as favourable impacts from the hardware business and transmission fees. At the same time, the effects of the ongoing rightpricing of the subscriber base counteracted the revenue trend.

The B2B business grew primarily with revenue from subscriptions, integration services and mobile devices, reaching CHF 151.5 million (+1.9% YoY on a rebased basis). Headwinds came primarily from lower variable mobile revenue.

Segment Adjusted EBITDA2) also returned to growth once again, increasing +5.6% in Q4 2023 on a rebased basis compared to the prior-year quarter and reached CHF 254.9 million, including CHF 4 million of costs to capture3). The increase in Segment Adjusted EBITDA2) on a rebased basis is mainly due to higher revenue from Consumer Mobile subscriptions and B2B revenue growth. Slightly lower operating costs (Opex) due to lower costs to capture3) supported the positive result, although higher direct expenses for device sales were also incurred.

Adjusted EBITDA less P&E Additions2)4) rose +55.4% YoY on a rebased basis to a total of CHF 96.0 million in Q4 2023, including CHF 16 million of costs to capture. This was primarily due to lower investment costs (Capex) as a result of lower costs to capture YoY.

Sunrise continued to make substantial investments of CHF 159.0 million (20.0% of revenue) in networks, product innovations and digital services in Q4 2023, including CHF 12 million of costs to capture in P&E Additions.

Adjusted Free Cash Flow reached CHF 324.0 million, reflecting an increase of CHF 54.0 million.

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 Q4 2023 Fixed Income Release.

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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 21,000 RGU in Q4 2023 and 103,500 in FY 2023.

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 Q4 2023 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 recognized 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 recognized 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, amortization 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.