Continued strong customer growth and solid financial results in Q2 – guidance for 2024 confirmed

• In Q2 2024 Sunrise continued to grow and recorded net growth of +31,000 mobile postpaid subscriptions¹⁾ and +5,000 Internet subscriptions, marking the second consecutive quarter of broadband growth. Growth was supported by continuing commercial momentum and a significantly reduced churn rate.
• Revenue³⁾ increased slightly in Q2 2024 (+0.5% YoY) and reached CHF 737.5 million.
• Segment Adjusted EBITDA³⁾ recorded solid growth in Q2 2024 (+0.9% YoY) and reached CHF 260.3 million (including «costs to capture»⁴⁾).
• Adjusted EBITDA less P&E additions³⁾⁵⁾ fell by -9.5% in Q2 2024 YoY and reached CHF 133.9 million.
• Continued value-accretive investments in network expansion, product innovations and services (P&E additions, capex) amounted to 17.1% of revenue in Q2 2024 and totalled CHF 126.4 million.
• The Q2 2024 financial results are in line with expectations and Sunrise fully confirms its guidance for the 2024 financial year, including midpoint FCF growth of approximately CHF 60 million (+17% versus prior year).
• Preparations for the spin-off in Q4 2024 on the SIX Swiss Exchange are progressing as expected. Further information will be provided at the Capital Markets Day, which will take place on 9 September 2024 in Zurich.
• Commercial highlights: From August 2024, Sunrise will more than double the Internet speed on the hybrid fibre-optic cable network (HFC) from 1 Gbit/s to 2.5 Gbit/s. | After successfully gaining Migros (SD-WAN services) and landline phone services for SBB, Sunrise Business was able to renew its contract with Swiss Post for landline and mobile services.

«In Q2 2024, we strengthened our commercial momentum and reduced the churn rate significantly. As a result, we achieved net customer growth in broadband for the second quarter in a row, while continuing to drive growth in mobile postpaid and closing the first half of the year with a strong operational result,» André Krause, CEO of Sunrise, sums up. «We remain on track with our financial results and fully confirm our 2024 guidance. The price-increase effect will no longer be visible in the second half of the year. However, we expect positive effects from cost optimisation and increased customer loyalty. Preparations for the spin-off are progressing according to plan and we’re looking forward to the Capital Markets Day on 9 September.»

Operational results

Despite a market driven by aggressive promotions, Sunrise achieved strong growth of +31,000 net mobile postpaid¹⁾ subscriptions during the second quarter. At the same time, the growth trend in the Internet segment prevailed, where Sunrise achieved net growth of +5,000 broadband RGUs. Growth in both areas was supported in particular by lower churn rates. This was a direct result of a variety of initiatives to increase customer loyalty and satisfaction that were launched at the end of last year. 

When comparing half-year results (H1 2023 vs H1 2024), key performance indicators for customer experience have improved significantly, such as the reduction in customer complaints by -30%, the increase in satisfaction with the company by +300% overall (Company NPS) and the increase in satisfaction with loyalty offers or cancellation processing by more than +65% (Retention NPS). Moreover, as of the end of June 2024, more than 80% of hotline calls were answered within 30 seconds and more than 80% of customer requests were resolved in the initial contact. These results indicate that Sunrise continues to be firmly on course to become service champion. 

As of 30 June 2024, Sunrise had a total of 2.880 million mobile RGUs (3.327 million including second SIM cards), 1.192 million broadband RGUs (1.264 million including SMEs) and 1.186 million TV RGUs (1.259 million including SMEs). The proportion of fixed broadband customers who also use a mobile postpaid offer continues to grow steadily. Fixed-mobile convergence (FMC) penetration reached 59%, an increase of +0.9% compared to the same quarter of the previous year. With the cross-selling and upselling of convergent products and additional services, such as those for cybersecurity, Sunrise is continuing to drive the growth of the FMC convergence rate within its customer base.

Commercial highlights

Strengthened position as Switzerland's leading broadband provider: Sunrise offers a unique mixture of technologies (copper, HFC, fibre optics, 5G) through its own networks as well as through access to partner networks. As a result, the main brand Sunrise is the only provider to reach over 95% of Swiss households with fixed broadband offers (including 5G fixed wireless access) of 1 Gbit/s and more.

From August 2024, Sunrise will increase the maximum Internet speed on the HFC network from 1 Gbit/s to 2.5 Gbit/s. Together with its partner networks, Sunrise will reach a total of around 80% of Swiss households with this offer²⁾. Existing and new customers will benefit from more than twice the Internet speed. Sunrise is thus further expanding its position as the leading broadband Internet provider in all regions of Switzerland.

Sunrise Business gains prestigious customers: Following the announcement of the Migros deal in Q1, Sunrise Business was awarded another prestigious contract for the landline phone services of SBB in Q2 2024 and signed numerous other new contracts and contract extensions/upgrades with companies, such as the renewed contract with Swiss Post for landline and mobile services for all group companies and subsidiaries.

In light of the ongoing transformation from telco to techco, Sunrise Business is focussing increasingly on the provision of GenAI-supported managed services, the cloudification of SMEs and the managed workplace for companies of all sizes.

Outstanding sustainability as an integral part of corporate strategy

Sunrise sees sustainability as an integral part of its corporate strategy and operational business activities. The «Sunrise IMPACTS» sustainability strategy is based on the pillars of People, Planet and Progress, with Governance as its foundation. Sunrise has been awarded a platinum medal by EcoVadis for the sustainability targets it has achieved. EcoVadis is the global standard for corporate sustainability ratings, and with the platinum medal Sunrise now belongs to the top tier, which includes only 1% of globally rated companies. Sunrise also published its first comprehensive sustainability report in Q2 2024, which was drawn up in line with Global Reporting Initiative (GRI) standards and underscores the company’s dedication to driving its sustainability management forward with full transparency and strengthened commitment.

Financial results

The Q2 2024 financial results were in line with the expected results. Sunrise generated revenue³⁾ of CHF 737.5 million, which corresponds to slight growth of +0.5% compared to the same quarter of the previous year.

Revenue from Consumer Mobile subscriptions rose to CHF 301.7 million (+2.0% YoY) and was supported by net growth in postpaid mobile subscriptions, including subsequent activations from Q1, and by the effects of the general price increase that was implemented a year ago.

Consumer Fixed business generated revenue of CHF 279.1 million (-2.7% YoY), with the decline primarily attributable to lower monthly subscription income due to the ongoing rightpricing in the existing customer base which was only partially offset by last year’s general price increase and the stable hardware business.

Revenue in the B2B segment, including the mobile and wholesale business, reached CHF 149.1 million, representing strong growth of +5.9% YoY. This growth was driven primarily by the lower-margin wholesale voice business, good performance in the MVNO area, higher revenue for mobile and data subscriptions and the integration business, although lower revenues in hardware, voice and roaming partially offset growth.

Segment Adjusted EBITDA³⁾ rose in Q2 2024 compared to the same quarter last year by +0.9% to CHF 260.3 million, including CHF 2 million of «costs to capture»⁴⁾. The increase was driven primarily by revenue growth and stable operating costs (OPEX), with lower labour and marketing costs offset by higher external costs (e.g., energy/other). It was also partially impacted by higher direct costs, mainly in the B2B wholesale business.

Adjusted EBITDA less P&E additions³⁾⁵⁾ declined in Q2 2024 by -9.5% YoY to a total of CHF 133.9 million, including CHF 4 million of «costs to capture». The decline was primarily due to higher, phased investments (CAPEX) related to various company programmes.

Sunrise continued to make high levels of value-accretive investments totalling CHF 126.4 million (17.1% of revenue) in networks, product innovations and digital services in Q2 2024. This also included CHF 3.1 million of «costs to capture» in P&E additions in this quarter.

3 months

as at 30 June 2024

6 months

as at 30 June 2024

CHF million, exception % figures

in %

in %

737.5

0.5%

1,484.3

0.2%

Consumer Mobile

301.7

2.0%

604.0

0.5%

Consumer Fixed

279.1

(2.7%)

559.7

(2.5%)

B2B

149.1

5.9%

296.8

5.4%

Other

7.6

(26.9%)

23.8

(0.4%)

260.3

0.9%

504.6

0.7%

133.9

(9.5%)

247.4

(2.4%)

Confirmed FY 2024 financial guidance:

• Revenue growth: broadly stable
• Segment Adj. EBITDA⁶⁾ (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 FCF⁶⁾: between CHF 360–400 million

The detailed financial results of Sunrise can be found in the Q2 2024 Fixed Income Release

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1) Including B2B and secondary SIM cards; excluding secondary SIM cards and other differences in definition in line with LG's definition, organic growth in postpaid adds were 33,000 RGU in Q2 2024.

2) The robust Sunrise HFC network has approximately 60% geographical coverage in Switzerland and is the largest network offering 1 gigabit per second («Gbps») or higher speeds in Switzerland. It is also the largest HFC network in Switzerland by size.

3) The results on an rebased basis and according to the LG definitions 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 Q2 2024 Fixed Income Release should be consulted for any definitions and adjustments.

4) «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 additions5), and (iii) certain integration-related restructuring costs that are not included in Adjusted EBITDA or Adjusted EBITDA less P&E additions5). 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.

5) 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.

6) 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.