8-K: Liberty Global Provides Preliminary Q4 2023 Results for Sunrise Holding and VM Ireland

Liberty Global released preliminary, unaudited financial and operating results for its Sunrise Holding Group and VM Ireland fixed-income borrowing groups for the quarter ended December 31, 2023.

Summary

• Liberty Global has released preliminary Q4 2023 results for Sunrise Holding Group, which includes operations in Switzerland and Slovakia, and VM Ireland, which includes operations in Ireland.
• VM Ireland reported a 0.4% decrease in full year revenue to 468.1 million and a 1.8% decrease in Q4 revenue to 124.3 million year-over-year.
• VM Ireland's full year net loss was 8.8 million, and Q4 net loss was 34.4 million, a 279.2% decrease year-over-year.
• VM Ireland's full year Adjusted EBITDA decreased 10.7% year-over-year, but Q4 Adjusted EBITDA increased 6.1% on a rebased basis.
• VM Ireland's full fiber upgrade project is progressing, with almost one third of the network upgraded by the end of Q4.
• Sunrise Holding reported a 5.8% increase in Q4 revenue to 845.1 million and a 2.4% increase on a rebased basis.
• Sunrise Holding's Q4 earnings from continuing operations increased 18.3% year-over-year to a loss of 138.8 million.
• Sunrise Holding's Q4 Adjusted EBITDA increased 5.8% year-over-year and 5.4% on a rebased basis.
• Sunrise Holding achieved approximately 70% of its run-rate synergies by the end of 2023.
• Sunrise Holding's 2024 financial guidance includes broadly stable revenue and stable to low-single-digit growth in Adjusted EBITDA.

Sentiment

Score: 5

Explanation: The document presents mixed results, with some positive developments in mobile and fiber upgrades, but also significant declines in net earnings and some EBITDA metrics. The forward-looking statements are cautiously optimistic, but the overall sentiment is neutral to slightly negative.

Positives

• VM Ireland experienced continued growth in mobile subscription revenue.
• VM Ireland launched wholesale network access to Sky customers.
• VM Ireland is progressing with its full fiber upgrade project.
• VM Ireland's Q4 Adjusted EBITDA increased on a rebased basis.
• Sunrise Holding achieved all 2023 financial guidance.
• Sunrise Holding experienced strong revenue and Adjusted EBITDA growth in Q4.
• Sunrise Holding returned to stable broadband net additions.
• Sunrise Holding continued to see growth in mobile postpaid.
• Sunrise Holding achieved approximately 70% of its run-rate synergies by the end of 2023.
• Sunrise Holding was awarded the Outstanding rating in the connect Mobile Network Test 2024 for the eighth consecutive time.

Negatives

• VM Ireland's full year revenue decreased by 0.4% year-over-year.
• VM Ireland's Q4 revenue decreased by 1.8% year-over-year.
• VM Ireland's full year net earnings decreased to a loss of 8.8 million.
• VM Ireland's Q4 net earnings decreased 279.2% year-over-year to a loss of 34.4 million.
• VM Ireland's full year Adjusted EBITDA decreased 10.7% year-over-year.
• VM Ireland experienced fixed customer net losses in Q4.
• Sunrise Holding's Q4 earnings from continuing operations decreased to a loss of 138.8 million.
• Sunrise Holding's full year Adjusted EBITDA decreased 1.7% year-over-year.

Risks

• VM Ireland faces challenges from lower acquisitions and higher churn due to overbuild.
• VM Ireland's heavy investment in fiber upgrades will impact both opex and capex in 2024.
• Sunrise Holding faces a competitive environment which has impacted customer ARPU.
• Sunrise Holding experienced a delay in activations which impacted broadband performance.
• Both VM Ireland and Sunrise Holding are subject to risks related to macroeconomic dynamics, technological changes, and regulatory conditions.

Future Outlook

VM Ireland will continue to invest heavily in its fiber upgrade, expand its footprint, grow its wholesale business, and enhance customer experience. Sunrise Holding anticipates Adjusted EBITDA growth and continued capital discipline in 2024, underpinning another year of Adjusted FCF growth. Sunrise Holding's 2024 financial guidance includes broadly stable revenue and stable to low-single-digit growth in Adjusted EBITDA.

Management Comments

• Tony Hanway, CEO of VM Ireland, stated that 2023 was a crucial year for Virgin Media as they successfully delivered on key growth initiatives.
• Tony Hanway also mentioned that heavy investment will continue in 2024 as they execute against strategic priorities.
• Andr Krause, CEO of Sunrise, commented that they delivered a strong Q4 with a return to topline growth and mid-single digit Adjusted EBITDA growth, allowing them to comfortably achieve all financial guidance for 2023.

Industry Context

This announcement reflects the ongoing trends in the telecommunications industry, including the push for fiber upgrades, the importance of mobile services, and the need to manage costs and improve profitability. The competitive environment in both Ireland and Switzerland is also a key factor influencing the results.

Comparison to Industry Standards

• VM Ireland's fiber upgrade progress is comparable to other European telcos investing in next-generation networks, such as Vodafone and Deutsche Telekom.
• VM Ireland's mobile subscriber growth is in line with industry trends, but the fixed customer losses highlight the competitive pressures in the Irish market.
• Sunrise Holding's strong mobile performance and synergy execution are similar to other telcos that have undergone mergers or acquisitions, such as the merger of Virgin Media and O2 in the UK.
• Sunrise Holding's focus on cost management and capital discipline is a common theme among European telcos seeking to improve profitability.
• The debt levels of both VM Ireland and Sunrise Holding are within the range of other European telcos, but the leverage ratios are something to monitor.

Stakeholder Impact

• Shareholders may be concerned about the decreased net earnings and Adjusted EBITDA for VM Ireland and the decreased full year Adjusted EBITDA for Sunrise Holding.
• Customers of VM Ireland will benefit from the ongoing fiber upgrades and new service offerings.
• Customers of Sunrise Holding will benefit from the increased 5G bandwidths and new entertainment options.
• Employees of both companies will be impacted by the ongoing strategic initiatives and cost management efforts.

Next Steps

• VM Ireland will continue its full fiber upgrade project and focus on strategic priorities.
• Sunrise Holding will continue to drive synergy execution and focus on mobile and B2B growth.
• Both groups will complete their Q4 compliance reporting requirements.
• Liberty Global will issue audited financial statements for each of its fixed-income borrowing groups prior to the end of April 2024.

Key Dates

Keywords

Liberty Global, Sunrise Holding, VM Ireland, Fixed Income, Broadband, Mobile, Fiber Upgrade, Adjusted EBITDA, Revenue, Synergies