Swiss telecommunications company Sunrise has agreed to acquire cable operator UPC Switzerland, a wholly-owned subsidiary of Liberty Global, for an enterprise value of CHF6.3 billion (€5.5 billion).
With the transaction, Sunrise wants to reinforce its position as the second-largest market player in mobile, TV, broadband and fixed-line telephony after Swisscom and as the incumbent telco’s leading converged challenger.
“Today’s announcement is an important milestone for Sunrise, our customers, employees and shareholders. Together with UPC Switzerland, we will create a stronger, truly converged challenger and significant value for our shareholders,” said Olaf Swantee, CEO of Sunrise. “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.”
Mike Fries, CEO of Liberty Global, said: “Today’s announcement further validates our strategy of building or enabling national champions in our core European markets. After 13 years of investment, innovation and growth, UPC Switzerland will combine with Sunrise to form a strong challenger in the Swiss market. This is a great moment for the Swiss consumer as network quality, product innovation and customer experience is at the heart of both companies. We are extremely proud of what we have achieved in this market, and are thrilled for our shareholders who will benefit from yet another example of value creation. After an investment of $1.6 billion in 2005, we will have realised at closing $6.5 billion of dividends and equity proceeds, or nearly four times our capital in this market.”
Severina Pascu, CEO of UPC Switzerland, added: “Today’s agreement will lead to a new fully converged national challenger on the Swiss market. The merger of the two entities will drive further investments and more innovation for the benefit of Swiss residential and business customers.”
Eric Tveter, chairman of UPC Switzerland, said: “We are very proud of the many successes we have achieved since Liberty Global’s acquisition of Cablecom in 2005. The combination of the two companies will now create a unique challenger in the communication and entertainment business.”
UPC is Switzerland’s leading cable operator with access to 2.3 million homes (60% of total Swiss homes), serving 1.1 million customers. With more than 3 million customers, Sunrise is a strong player in the mobile market, and also offers TV, internet and fixed-line telephony.
The takeover comes as no surprise following Sunrise’s confirmation that it is in “advanced negotiations” with Liberty Global regarding the acquisition of UPC Switzerland.
The transaction is subject to regulatory clearance which Sunrise anticipates to receive in the second or third quarter of 2019. The closing is expected to take place during the second half of 2019. The combined business will continue to be called Sunrise and to be listed on the SIX Swiss Exchange.
Liberty Global has been favourable towards consolidation in the Swiss market with its total of four full service providers Swisscom, Sunrise, UPC and Salt, and discussions with Sunrise regarding a combination of their assets in Switzerland have been going on for a while.
The decision to exit Switzerland is in line with Liberty Global’s recent moves to sell its cable subsidiaries in Austria, in Germany and Eastern European countries and its DTH satellite operations in Central and Eastern Europe.