Sunrise comes through corona crisis with mild symptoms
Sunrise survived the peak of the corona pandemic in the spring with only mild symptoms. Switzerland's second-largest telecoms group was able to keep sales and operating profit stable. Since the restrictions were eased, Sunrise is back on track for growth.
In the second quarter, Sunrise was able to increase sales very slightly by 0.3 percent to CHF 456 million despite the week-long lockdown. However, adjusted operating profit before depreciation and amortization (EBITDA) decreased by 1.4 percent to CHF 163 million.
On balance, however, net income fell by 17 percent to CHF 21 million, as Sunrise announced in a communiqué on Thursday. The significant decline was due to higher amortization and taxes as well as exchange rate effects.
Roaming revenues slumped
The closure of most of the stores had a negative impact on growth because fewer subscriptions were sold in the stores, said Group CEO André Krause in an interview with the AWP news agency on Thursday. At the same time, however, there were fewer cancellations by customers. This was compensated for by above-average sales via the Internet and the customer service hotline.
Sunrise gained new customers in mobile subscriptions, TV and Internet business. By contrast, the bloodletting in prepaid continued, as customers continued to switch to subscriptions. In addition, prepaid sales were affected by the massive drop in the number of tourists due to the pandemic and the temporary closure of stores.
Moreover, Sunrise had virtually no roaming revenue during the lockdown because the borders were closed due to Corona. Business with corporate customers also suffered.
Thanks to a good start to the year, Sunrise increased sales by 1.5 percent to CHF 915 million in the first half of the year as a whole. Adjusted EBITDA even climbed by 2.2 percent to CHF 331 million. Net income, however, fell by 29 percent to 43 million francs. The diver is to blame for an extraordinary profit in the previous year, which had pushed up the 2019 half-year result.
Back on track for growth
Group CEO Krause expressed his satisfaction. Sunrise had come through the lockdown phase very robustly and was now back on track for growth. Business with residential customers had returned to normal with the easing.
Business customers, on the other hand, were still below the normal level. In the meantime, roaming revenues have picked up again because people are traveling more during the summer vacations. However, it will probably not be possible to make up the shortfall completely by the end of the year.
Krause therefore expects that only the lower end of the EBITDA target of 675 to 690 million Swiss francs will be achieved in 2020 as a whole. The Group CEO is sticking to the sales target of CHF 1.84 to 1.88 billion.
By then, the sale of Sunrise to UPC owner Liberty Global for CHF 6.8 billion should have been completed anyway. Joint integration planning will start in September, he said. Because of the restrictions imposed by competition law, the focus will be on topics relating to organization and processes, said Krause. Product planning, prices or market campaigns, for example, are not an issue, because UPC and Sunrise continue to be competitors in the market.
The cooperation with Salt to expand fiber-optic connections is already on hold, as the situation has changed completely as a result of the planned takeover and the merger with UPC. The situation will be analyzed after the billion-euro deal has been concluded and then a decision will be made on how to proceed, said Krause.
Liberty Global wants to take over Sunrise by October 28. After that, the company is to be delisted from the Swiss stock exchange. (SDA)
