8-K: Liberty Global Provides Preliminary Q3 Results for VM Ireland and Sunrise Holding

Liberty Global released preliminary unaudited financial and operating results for its VM Ireland and Sunrise Holding fixed-income borrowing groups for the third quarter of 2024.

Summary

• Liberty Global has released preliminary Q3 2024 results for VM Ireland and Sunrise Holding.
• VM Ireland saw a 5.6% year-over-year revenue decrease to 108.9 million, with a net loss of 23.6 million, primarily due to derivative losses.
• VM Ireland's adjusted EBITDA decreased by 10.7% year-over-year to 37.7 million.
• VM Ireland upgraded approximately 45% of its premises to full fiber by the end of Q3.
• Sunrise Holding reported a slight revenue decrease of 0.2% year-over-year to 799.1 million, with a net loss of 2.7 million.
• Sunrise Holding's adjusted EBITDA increased by 1.6% year-over-year to 293.9 million.
• Sunrise Holding achieved strong mobile postpaid net additions of 43,200 in Q3.
• Liberty Global's capital injection will result in a gross debt retirement of CHF 1.2 billion for Sunrise.
• Sunrise is expected to be spun off and begin trading on the SIX Swiss Exchange on November 15, 2024.

Sentiment

Score: 5

Explanation: The document presents mixed results with some positive operational highlights offset by concerning financial declines, particularly for VM Ireland. The Sunrise spin-off is a positive strategic move, but the overall sentiment is neutral to slightly negative due to the financial performance.

Positives

• VM Ireland experienced strong B2B revenue growth due to its entry into wholesale access.
• VM Ireland saw sequential and year-over-year improvement in fixed and mobile postpaid net additions.
• Sunrise Holding achieved strong net growth in mobile postpaid customers and growth in internet customers for the fourth consecutive quarter.
• Sunrise Holding's financial results are in line with expectations and they have confirmed their 2024 guidance.
• Sunrise Holding is set to pay a dividend of at least CHF 240 million in mid-2025.
• Sunrise Holding's debt paydown of CHF 1.2 billion is imminent.
• Sunrise Holding's adjusted EBITDA less P&E additions increased 7.4% year-over-year.

Negatives

• VM Ireland's revenue decreased by 5.6% year-over-year.
• VM Ireland's net loss significantly increased by 281.5% year-over-year.
• VM Ireland's adjusted EBITDA decreased by 10.7% year-over-year.
• VM Ireland experienced fixed customer net losses of 2,200 in Q3.
• Sunrise Holding's revenue decreased by 0.2% year-over-year.
• Sunrise Holding's customer ARPU decreased by 4.8% year-over-year.

Risks

• VM Ireland faces a highly competitive market environment which is impacting financial performance.
• VM Ireland's financial performance is being impacted by investments into its growth plan.
• Sunrise Holding experienced a decrease in mobile roaming revenue.
• Sunrise Holding's customer ARPU decreased due to the annualization of a previous price rise.

Future Outlook

VM Ireland is focused on building fiber and customer experience for long-term growth, while Sunrise Holding confirms its 2024 guidance, including a dividend payment in mid-2025 and a debt paydown by year end. Sunrise is also preparing for its spin-off and listing on the SIX Swiss Exchange.

Management Comments

• Tony Hanway, CEO of VM Ireland, stated that they are continuing their drive towards becoming a full fiber operator and are confident that their efforts are building strong foundations for sustainable long-term growth.
• Andr Krause, CEO of Sunrise, commented that they were able to accelerate customer growth and achieved very strong net growth in mobile postpaid customers and growth in internet customers for the fourth consecutive quarter.

Industry Context

The results reflect the ongoing trends in the telecommunications industry, including the push for fiber upgrades and the importance of mobile services. The spin-off of Sunrise is a strategic move to allow it to operate as a standalone Swiss company.

Comparison to Industry Standards

• VM Ireland's fiber upgrade progress of 45% is comparable to other European operators focusing on FTTH deployments, but the financial results are weaker than some peers.
• Sunrise Holding's mobile postpaid growth of 43,200 net adds is strong compared to industry averages, indicating a successful strategy in customer acquisition and retention.
• The debt to EBITDA ratios for both VM Ireland and Sunrise Holding are relatively high compared to some global benchmarks, indicating a need for continued deleveraging efforts.
• The planned spin-off of Sunrise is similar to other strategic moves by large telecom groups to unlock value and focus on core markets.

Stakeholder Impact

• Shareholders will be impacted by the financial performance of VM Ireland and the strategic spin-off of Sunrise.
• Customers of VM Ireland will benefit from the ongoing fiber upgrades.
• Customers of Sunrise Holding will benefit from improved mobile and internet services.
• Employees of both VM Ireland and Sunrise Holding will be affected by the ongoing strategic and operational changes.

Next Steps

• VM Ireland will continue its full fiber upgrade project.
• Sunrise Holding will proceed with its spin-off and listing on the SIX Swiss Exchange.
• Sunrise Holding will pay a dividend of at least CHF 240 million in mid-2025.
• Sunrise Holding will continue to focus on customer growth and stable financial performance.

Key Dates

Keywords

Liberty Global, VM Ireland, Sunrise Holding, Fixed Income, Q3 2024, Financial Results, Operating Results, Fiber Upgrade, Mobile Postpaid, Spin-off, Debt Paydown, Adjusted EBITDA