Sunrise to buy Liberty Global’s Swiss cable unit for €5.5bn

Olaf Swantee Sunrise.jpg

Swiss operator Sunrise is to buy Liberty Global’s cable operation in the country for the equivalent of €5.5 billion.

The deal, to acquire UPC Switzerland, will put Sunrise in the number two position – behind Swisscom – in mobile, TV, fixed broadband and fixed voice, claimed the company.

Sunrise CEO Olaf Swantee (pictured) said: “We will create a stronger, truly converged challenger and significant value for our shareholders. We are committed to accelerating innovation and enhancing customers’ experience, building on the enlarged scale of the combined business and superior next generation network infrastructure.”

UPC Switzerland has access to 2.3 million homes – 60% of the total of Swiss homes – and plans to upgrade connections with cable broadband technology to enable up to 1Gbps in the short term and then 10Gbps. UPC has its own fibre backbone.

Sunrise already has fibre-to-the-home (FTTH) covering 30% of homes, Swantee told Capacity earlier this week. The company is also planning to use fixed wireless 5G technology to expand coverage.

Sunrise said this morning that it has signed a binding agreement to buy the operation for an enterprise value of 6.3 billion Swiss francs – €5.5 billion at current ranges.

This is the latest part of an adventurous expansion by Sunrise, whose shares are listed on the Zürich-based SIX Swiss Exchange.

Just days ago at Mobile World Congress (MWC) in Barcelona, Swantee was explaining plans to use 5G fixed wireless to expand broadband coverage. “By the end of March we’ll have 150 cities and towns covered,” he told Capacity.

The company is using 100MHz of spectrum in the 3.5GHz band that it acquired in Switzerland’s auction “just two weeks ago”, said Swantee. “I sometimes like taking some risks. My technology people I insisted should start building before the auction. I was convinced we could get the spectrum at the right price.”

Sunrise paid about 92 million Swiss francs, he said – about €81 million.

Huawei is already supplying the 5G infrastructure for Sunrise, said Swantee. However supply of the customer premises equipment is limited, so Sunrise will be nominating “100 5G pioneers” to try out the service. “As production ramps up we will drive the volume up.” Sunrise will be charging 59 Swiss francs (€52) a month, he said.

Peter Kurer, the lawyer and former banker who chairs Sunrise, is noted for his liking for business adventures – particularly when he headed the Swiss bank UBS. But earlier he helped to create Swiss engineering firm ABB and drug company Novartis.

After taking on UPC Switzerland’s debts, Sunrise will make a net payment of 2.7 billion francs (€2.4 billion) and will also raise 4.1 billion francs (€3.6 billion) through a rights issue. If Sunrise’s shareholders block the rights issue or if regulators block the whole deal, Sunrise will have to pay a termination fee of 50 million francs to Liberty Global.