"Since the start of the year we’ve been making the promotions for the main brand less aggressive and are now also seeing this reflected in a calming of the market. Despite this, in the second quarter of 2023 we recorded continued net growth in mobile postpaid customers, continued B2B growth, stable mobile revenue and improved trends in the financial results. The impact of rightpricing among our existing fixed-line customers continues to diminish. At the same time, we’re focusing on retaining value in the customer base and creating targeted incentives to generate a high degree of loyalty. As a result, six months into the year everything is going to plan and we’re very much in line with the guidance for the full year 2023, which we can confirm as unchanged," sums up André Krause, CEO of Sunrise.

Operating results

After a solid start to 2023, Sunrise recorded continued growth in its customer base in the mobile postpaid segment in Q2 2023, with a net increase of +24,000 mobile postpaid1) subscriptions. The lower net growth in the mobile postpaid segment compared to the previous quarters is due primarily to the promotions aimed at new customers being less aggressive, with Sunrise also creating more incentives to increase customer loyalty. Sunrise is therefore implementing its strategy of enhancing its position in the market by emphasizing the added value of its services and further increasing the value of its existing customer base.

The slight decline of 2,800 Internet subscriptions in the broadband segment compared to the same period in 2022 is due to the impact of rightpricing in the Consumer Fixed business and the gradual withdrawal of the UPC brand. As anticipated, this effect continued to diminish in Q2 2023 and is expected to decline further in the second half of the year. In addition, the less aggressive promotions have had an impact in the broadband segment.

The impact of the inflation-related price increase on July 1 was limited in both the mobile and broadband segments and is fully in line with expectations. The intensified measures to increase customer loyalty and retain value in the customer base, as well as the marketing measures that are planned for the second half of the year, are expected to have a positive impact on achieving the guidance for 2023 as a whole.

As of the end of June 2023, there were a total of 2.803 million mobile RGUs (3.246 million including second SIM cards), 1.188 million Internet RGUs (1.251 million including SMEs) and 1.230 million TV RGUs (1.293 million including SMEs). FMC penetration reached 58%, which was up +0.8% compared to the same period in 2022. FMC rate growth continues to be driven by sales (upselling and cross-selling) of convergent products in the existing customer base.

Successful segmentation strategy

The main brand Sunrise: Sunrise offers an unrivalled range of entertainment and, especially during the summer months when people tend to watch less TV, Sunrise Moments provides unforgettable live experiences at music festivals and other events. This also helps to boost customer loyalty.

Sunrise has also bolstered its prepaid offers. Whether for alarm systems, GPS trackers, smartwatches, kids’ phones, tablets or smartphones, the new «Unlimited 365 days» packages are available for a variety of applications. With «Europe 7 days» and «Europe 30 days», Sunrise was also the first telecom provider in Switzerland to launch two prepaid packages that combine Switzerland and Europe for flat-rate surfing. And all Sunrise prepaid customers now benefit from the advantages of the largest 5G network in Switzerland at no extra cost.

yallo continues its success as the full-service provider for price-conscious, digitally savvy customers, gaining market share and playing a significant part in making Sunrise successful. The focus is not just on new customers. With exclusive «Member» offers, yallo is now also rewarding its existing customers.

Sunrise Business was again able to secure many new subscriptions and contract renewals/upgrades, e.g., Heineken Switzerland (contract renewal for Business mobile postpaid subscriptions as well as an offer for employees beginning this summer) and BKW (new subscription for mobile data for smart-meter solution). In addition, two new solutions that make it easier, more efficient and secure for businesses to make calls were launched on the market:

• Operator Connect integrates fixed-line calling into Microsoft Teams as a purely cloud-based service, which means companies no longer need to invest in hardware.
• The Business Ready Mobile option allows small companies to benefit from selected corporate services, such as 24/7 professional support, an infrastructure check and licenses for a security solution to tackle cyber threats.

Financial results

In Q2 2023, revenue declined slightly to CHF 733.6 million (-1.0%) on a rebased basis compared to the same quarter in 2022. This decline is mainly attributable to lower revenues in the Consumer Fixed segment due to ARPU pressure on the main brand offerings. It was partially offset by continued strong growth of the secondary brands (yallo, Lebara and swype as the «flanker brands») and growth in the B2B segment, including wholesale. Revenue in the Consumer Mobile segment remained stable.

The individual business units contributed to the quarterly results as follows: Consumer Mobile CHF 295.7 million (+0.1% YoY on a rebased basis); Consumer Fixed (including Internet, TV, telephony and other services) CHF 286.2 million (-3.8% YoY on a rebased basis); B2B CHF 140.8 million (+3.3% YoY on a rebased basis); and other revenue CHF 10.9 million.

In Q2 2023, Segment Adjusted EBITDA2) decreased slightly on a rebased basis by -0.1% compared to 2022 to reach CHF 258.0 million, including CHF 2.5 million of costs to capture3). The decrease in Segment Adjusted EBITDA2) on a rebased basis is mainly due to the decline in revenue that was partially offset by lower costs to capture.

Adjusted EBITDA less P&E additions2)4) increased in Q2 2023 on a rebased basis by +2.9% YoY to a total of CHF 147.9 million, including CHF 13 million of costs to capture. This is primarily due to the largely stable Segment Adjusted EBITDA trend and lower P&E additions on a rebased basis driven by lower costs to capture and integration costs.

Continued high levels of investment amounting to CHF 110.1 million (15% of revenue) were made in networks, product innovations and digital services, including CHF 10.1 million of costs to capture in P&E additions.

Confirmation of FY 2023 financial guidance:

• Low single-digit decline in revenue
• Low to medium single-digit decline in Segment Adjusted EBITDA2) (including costs to capture3))
• Opex and Capex costs to capture3) ~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)

The detailed financial results for Sunrise can be found in the UPC Holding Q2 2023 Fixed Income Release.

Acquisition of local partner cable networks

As of April 1, 2023, Sunrise acquired the local cable networks of EW Aadorf and those in the communities of Wesen/Amden and Lufingen with a total of around 3,000 households connected. These households will now all receive Sunrise services (including UPC and yallo products) from a single source, including unified support with the basic connection. This means customers will continue to benefit from the attractive Sunrise portfolio and any new offers that Sunrise launches.