DJ Continued customer growth momentum and stable full year revenue and Adjusted EBITDA
Sunrise UPC GmbH / Key word(s): Annual Results Continued customer growth momentum and stable full year revenue and Adjusted EBITDA 2023-02-23 / 07:00 CET/CEST
----------------------------------------------------------------------------------------------------------------------- . Executed on key integration milestones in 2022; on target to deliver in line with synergy roadmap. Keyintegration milestones delivered in line with the roadmap, achieving nearly 50% of run-rate synergies in 2022 andon track to deliver run-rate synergies of approximately CHF 325 million by 2025. . Successfully integrated Sunrise brand, leveraging the Swiss-Ski partnership. Continued commercialmomentum in Q4 2022: net increase of +51,600 mobile postpaid^1) subscriptions in the mobile segment, +9,200Internet subscriptions in the broadband segment and +2,000 TV subscriptions. . For the full financial year 2022, Sunrise reports a total net increase of +217,600 mobile postpaid^1),+19,100 broadband and +8,700 enhanced video RGUs and counts a total of around 5.2 million subscriptions (mobile,broadband and TV RGUs) at the end of Q4 2022. . Fixed-mobile convergence (FMC) continues to grow in 2022: as of December 31, 2022, 57.4% of fixedbroadband customers also use a mobile postpaid plan (+1.1% YoY). . Q4 Results were impacted by accelerated rightpricing efforts of the fixed line customer base, expected tocontinue with a moderating trend throughout 2023. . Revenue^2) decreased in Q4 2022 (-2.2% rebased) compared to the same period in the prior year and reachedCHF 773.8 million, while it remained stable for the full financial year 2022 at CHF 3,035.2 million (0.0% rebased)compared to the prior year and in line with full year guidance. . Segment Adjusted EBITDA^2) decreased in Q4 on a rebased basis -8.1% YoY (including "costs to capture"^3))and reached CHF 247.9 million. Full-year 2022 Segment Adjusted EBITDA remained stable on a rebased basis (-0.3%)and reached CHF 1,085.0 million in line with full-year guidance. . Sunrise continued to invest on a high level in Q4 2022 with CHF 172.9 million and in the full year withCHF 549.3 million, leading to an Adjusted EBITDA less P&E additions^2)4) decrease by -15.1% YoY (including "cost tocapture"^3)) on a rebased basis and reaching CHF 75.0 million. For the full year 2022, Adjusted EBITDA less P&Eadditions increased by +1.0% to CHF 535.7 million.
André Krause, CEO of Sunrise, is satisfied with the full financial year 2022: "We succeeded in achieving our operational and financial targets for 2022 despite a continued competitive landscape. Execution of the Sunrise rebranding was a key milestone in our synergy roadmap and is underpinning strong mobile performance, supported by our wider customer initiatives such as our Swiss-Ski partnership and Sunrise Moments loyalty experiences. Our challenger brands continue to perform well and encouragingly we saw a return to broadband net add growth in Q4. However, we do expect a challenging 2023 outlook as we continue to navigate through headwinds in fixed relating to movement and rightpricing from the UPC brand. Finally, we remain focused on synergy execution and delivering for our customers, with lower cost to capture spend in 2023 and continued capital discipline supporting FCF growth."
Operational results
Sunrise continues its strong customer growth in Q4 2022. Overall, the company recorded a net increase of +63,200 RGUs in mobile postpaid1), broadband and enhanced TV in the last three months of 2022.
For the full year 2022 Sunrise grew its market share by adding net +206,300 (mobile postpaid, broadband, enhanced video) RGUs. By the end of 2022, there was a total of 2.766 million mobile RGUs (3.196 million including second SIM cards), 1.183 million broadband RGUs (1.246 million including SME) and 1.217 million TV RGUs (1.273 million including SME). This represents an FMC penetration of 57.4%, an increase of +1.1% compared to year-end 2021. Sunrise continues to drive FMC rate growth with cross- and upselling of convergent products such as its Sunrise Up portfolio in the existing customer base.
New portfolio, yallo, B2B and partnerships support strong growth
With the positioning of Sunrise as the main brand, the launch of the Sunrise Up portfolio, and the establishment of yallo as a full-service offering with mobile, Internet, and TV, Sunrise was able to drive forward its customer growth. Strategic partnerships allow Sunrise to provide unique customer experiences e.g. with Sunrise Moments and streaming services with Sunrise TV. The partnership with Swiss-Ski underlines Sunrise's positioning as a leading quality provider. Sunrise provides worldclass network infrastructures awarded again by independent network benchmarks (connect mobile network test 2023, connect broadband test 2022).
In the B2B area, Sunrise achieved an overall revenue increase of +4.0% for the entire financial year and reached CHF 569.1 million. Numerous new contracts and renewals/upgrades of existing ones with enterprise customers such as the Swiss Post, Swissgrid and Hallenstadion Zurich contributed to this.
In Q4 2022, B2B revenue decreased by -5.7% year-on-year mainly due to a decline in the low-margin wholesale hubbing voice business.
Financial results
Revenue declined slightly to CHF 773.8 million (-2.2% YoY) on a rebased basis in Q4 2022. Full fiscal year 2022 revenue was stable on a rebased basis with annual revenue of CHF 3,035.2 million (0.0%). The decrease in Q4 2022 was largely driven by (i) a decrease in fixed subscription revenue due to ARPU pressure on main brand offerings that was only partially offset by strong trading momentum in yallo and (ii) a decrease in low-margin business wholesale revenue.
The individual business units contributed to the Q4 results as follows: consumer mobile CHF 324.0 million (+2.6% YoY), consumer fixed (including Internet, TV, telephony and other services) CHF 301.1 million (-5.1% YoY) and B2B CHF 148.7 million (-5.7% YoY). Over the full financial year 2022, the units developed as follows: residential mobile CHF 1,246.6 million (+3.3%), residential fixed CHF 1,219.5 million (-4.8%) and B2B CHF 569.1 million (+4.0%).
Segment Adjusted EBITDA2) decreased by -8.1% year-on-year in Q4 2022 on a rebased basis and reached CHF 247.9 million, including CHF 6.9 million "costs to capture"3). The decrease in Segment Adjusted EBITDA2) is attributable in particular to the impact of the decline in ARPU in the fixed network, the revenue decline in B2B (mainly due to wholesale) and different phasing of programming costs at MySports. Looking at the full year 2022, Segment Adjusted EBITDA remained stable on a rebased basis (-0.3%) and reached CHF 1,085.0 million, including CHF 36.4 million "costs to capture"3).
Adjusted EBITDA less P&E additions2) 4) decreased by -15.1% YoY to a total of CHF 75.0 million in Q4 2022 on a rebased basis, primarily due to the decrease in Segment Adjusted EBITDA combined with the continued investiments on a high level. For the full year 2022, Adjusted EBITDA less P&E additions increased by +1.0% to CHF 535.7 million, on a rebased basis. Both comparisons include the adverse impact of CHF 36.1 million and CHF 136.1 million "costs to capture"3) in Q4 and FY 2022 respectively.
3 months Full financial year 2022
ended December 31, 2022 ended December 31, 2022
In CHF million, exception % figures rebased in %2) rebased in %2)
Revenue 773.8 (2.2)% 3,035.2 0.0%
. Consumer Mobile 324.0 2.6% 1,246.6 3.3%
. Consumer Fixed 301.1 (5.1%) 1,219.5 (4.8%)
. B2B 148.7 (5.7%) 569.1 4.0%
Segment Adjusted EBITDA2) 247.9 (8.1%) 1,085.0 (0.3%)
Adjusted EBITDA less P&E additions 2)4) 75.0 (15.1%) 535.7 1.0%
The detailed financial results of Sunrise can be found in the UPC Holding Q4 2022 Fixed Income Release.
EBL and Sunrise finalize acquisition of EBL's telecom division
As of January 1, 2023, Sunrise has taken over EBL's telecom business. The total of around 60,000 existing telecom customers, who previously had access to Sunrise services (including UPC & Yallo products) via EBL's network, will continue to benefit from the attractive Sunrise portfolio, which will now be offered from a single source.
FY 2023 financial guidance: . Low-single digit revenue decline . Low to Mid-single digit Adj. EBITDA2) decline (including costs to capture3)) . Opex and Capex costs to capture CHF 50 million (CHF 10 million in Opex) . Property and equipment additions as a percentage of revenue (including costs to capture3)) 15-17% . Adjusted FCF2): Between CHF 320-350 million (growth vs 2022)
Press Release (PDF)
Sunrise Media Relations media@sunrise.net 0800 333 000
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1) including B2B and second SIM cards; excluding second SIM cards in line with LG's definition, organic postpaid adds were 44,000 and 178,500 in Q4 and FY 2022, respectively.
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 UPC Holding Q4 2022 Fixed Income Release should be consulted for any definitions and adjustments.
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