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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Sunrise Communications Group    SRCG   CH0267291224

SUNRISE COMMUNICATIONS GROUP

(SRCG)
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Sunrise continues to lead the market – raising guidance

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05/16/2019 | 12:50am EDT

Sunrise continues to lead the market - raising guidance

  • Strong customer growth in mobile postpaid (+9% YoY), internet (+10%) and TV (+14%); record performance in mobile postpaid
  • Service revenue increased +2.7% driven by customer momentum and B2B, while total revenue was down -2.6% due to lower hubbing and hardware sales
  • Gross profit growth of +4.2% in Q1, with improvement partly reinvested into growth momentum
  • Adj. EBITDA up +5.0% (incl. IFRS 16: +13.2%)
  • FY'19 adj. EBITDA guidance raised to CHF 613-628m (previous CHF 608-623m) after strong start to the year

Revenue (CHF m)

Q1'18

excl. IFRS 16

Q1'19

incl. IFRS 16

Q1'19

excl. IFRS 16

YoY

incl. IFRS 16

YoY

excl. IFRS 16

Mobile services

302

302

302

(0.2%)

(0.2%)

Landline services

89

71

71

(20.1%)

(20.1%)

Landline internet

67

74

74

10.2%

10.2%

Total revenue

458

447

447

(2.6%)

(2.6%)

Service revenue (total excl. hubbing & hardware)

362

372

372

2.7%

2.7%

Gross profit

293

305

305

4.2%

4.2%

EBITDA

137

175

163

27.4%

19.1%

Adjusted EBITDA

140

158

147

13.2%

5.0%

Net income

17

35

36

110.8%

115.3%

Equity free cash flow

1

33

Customers (in k)

Mobile Postpaid

1,625

1,772

9.0%

Mobile Prepaid

726

597

(17.7%)

Landline Voice

443

481

8.7%

Internet

431

472

9.5%

TV

221

252

14.2%

Olaf Swantee, CEO of Sunrise, comments: "In Q1 we successfully acquired 5G spectrum and, as the first operator in Europe, launched 5G in 152 cities and villages. Our network leadership, customer momentum and solid adj. EBITDA growth all confirm our strategic focus on quality across our networks, services and products."

Record postpaid net adds since 2010

Momentum in subscriber additions continued, with Sunrise achieving 43,200 postpaid net adds in Q1'19. This represents the company's strongest performance since 2010, enabled by B2B customer wins (Q1: Valora; University Hospital Zurich) and a focus on going the extra mile for customers. YoY, Sunrise grew net new mobile postpaid customers +9.0%, up from +8.5% in the previous quarter. The mobile prepaid customer base decreased YoY as customers continue to migrate to postpaid tariffs. Internet and TV subscribers rose by +9.5% YoY and +14.2% YoY respectively. These substantial increases were supported by 2-4P bundle offers, attractive TV content (which includes 'Sky Sport' and 'Sky Show'), focus on service excellence, and dedicated promotions.

Accelerated service revenue growth driven by postpaid

Service revenue increased by +2.7% YoY as a result of mobile postpaid, internet / TV and B2B revenue growth. This represents an acceleration compared to Q4'18 growth (+1.9% YoY), primarily driven by mobile postpaid. Q1 total revenue decreased by -2.6% YoY to CHF 447m, influenced by reduced hubbing and mobile hardware sales, which both carry low profitability.

Customer growth driving gross profit and adj. EBITDA increase

Gross profit rose by +4.2% YoY to CHF 305m, due to service revenue growth and improved service gross margin. Service gross margin expansion was supported by revenue mix effects, continued reduction in mobile termination rates, and landline access deals. Gross profit improvement was partly reinvested into growth momentum. Q1 adjusted Opex increased +3.4% YoY (excl. IFRS 16) as a result of variable onboarding and operational momentum costs, driving the company's strongest performance in postpaid net adds since 2010. Q1 adjusted EBITDA increased +5.0% (incl. IFRS 16 +13.2%) to CHF 147m. Reported EBITDA (excl. IFRS 16) of CHF 163m exceeded adjusted EBITDA, as a result of the sale of 133 telecom towers to Swiss Towers AG in January 2019. Q1'19 net income doubled to CHF 35m YoY, supported by adjusted EBITDA growth and the telecom tower disposal.

Improved underlying leverage ratio

Equity free cash flow increased from CHF 1m to CHF 33m in Q1 YoY. Net working capital and a higher reported EBITDA over compensated upfront payments for landline access. Net debt saw an increase in Q1 to CHF 1,420m vs. CHF 1,194m in Q4 - driven by IFRS 16 introduction which led to additional CHF 265m lease liability recognition per end of Q1. IFRS 16 let the pro forma ratio of net debt to adj. EBITDA increase to 2.17x, compared to 1.99x at YE'18. Excluding IFRS 16, the ratio would have improved to 1.90x, which compares to 1.94x in Q1 last year.

FY'19 adj. EBITDA guidance raised

FY'19 revenue continues to be expected between CHF 1,860-1,900m. After a strong start to the year, Sunrise is increasing its adj. EBITDA guidance from CHF 608- 623m to CHF 613-628m. Guidance incorporates continued growth investments and commercial pushes, primarily in Q2 and Q3. It refers to the standalone business and does not yet include the effects of IFRS 16. FY'19 Capex is reiterated in the range of CHF 420-460m. Upon meeting its FY'19 guidance, Sunrise expects to propose a dividend in the range of CHF 4.35-4.45 per share for FY'19, paid out of capital contribution reserves in FY'20.

Update on UPC Switzerland acquisition

Post announcement, Sunrise management has seen more than 170 investors and the transaction was received broadly positive. Merger control notification has been submitted and final regulatory decision is expected in H2'19. Integration planning has been started resulting in high level of confidence that synergies can be realized. Subject to regulatory clearance and EGM approval, the closing of the transaction is expected in Q4'19.

Please see www.sunrise.ch/reports for the IFRS report, the investor presentation, and further information.




Provider
Channel
Contact
Tensid EQS Ltd., Switzerland
www.tensid.ch


newsbox.ch
www.newsbox.ch


Provider/Channel related enquiries
marco@tensid.ch
+41 41 763 00 50
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Financials (CHF)
Sales 2019 1 889 M
EBIT 2019 194 M
Net income 2019 114 M
Debt 2019 1 341 M
Yield 2019 6,01%
P/E ratio 2019 28,8x
P/E ratio 2020 30,4x
EV / Sales2019 2,45x
EV / Sales2020 2,41x
Capitalization 3 286 M
Chart SUNRISE COMMUNICATIONS GROUP
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Technical analysis trends SUNRISE COMMUNICATIONS GRO
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TrendsNeutralBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 12
Average target price 78,91  CHF
Last Close Price 72,90  CHF
Spread / Highest target 23,5%
Spread / Average Target 8,24%
Spread / Lowest Target -23,2%
EPS Revisions
Managers
NameTitle
Olaf Meijer Swantee Chief Executive Officer
Peter Anton Joseph Kurer Chairman
André Krause Chief Financial Officer
Elmar Grasser Chief Technology Officer
Jens Jesper Ovesen Independent Non-Executive Director
Sector and Competitors