Liberty sells UPC Switzerland; Q4 up 1.2%
February 28, 2019
Liberty Global has agreed a deal to sell its Swiss business – UPC Switzerland – to Sunrise Communications Group in a deal worth $6.3 billion (€5.5bn) including debt.
Liberty Global expects the sale of UPC Switzerland to generate net proceeds of $2.6 billion, which it plans to use for general corporate purposes. The deal should close by the end of 2019.
“Today’s announcement further validates our strategy of building or enabling national champions in our core European markets,” Liberty Global CEO Mike Fries said in a statement. “After 13 years of investment, innovation and growth, UPC Switzerland will combine with Sunrise to form a strong challenger in the Swiss market.”
Olaf Swantee, CEO of Sunrise said: “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. 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. We have undertaken an extensive due diligence exercise, which gives us a lot of confidence in the deliverability of the synergies. We are excited about the prospects of the combined business.”
Peter Kurer, Chairman of the Board of Directors of Sunrise, added: “The Board is very pleased with today’s announcement that creates a stronger and more valuable Sunrise. We have full confidence in management’s ability to integrate UPC Switzerland smoothly and realise the significant synergies from the combination, to continue to deliver strong financial results and reward our shareholders for their support. We look forward to this new chapter in Sunrise’s history.”
Meanwhile, Liberty Global has reported its Q4 numbers, with revenues from continuing operations climbing 1.2 per cent to $2.949 billion.
In the discontinued European operations revenues plummetes by 10.3 per cent on the previous year to $894.7 million in Q4. Operating cash flow in the remaining operations was $1,301.6 million in Q4 (+0.9 per cent) and $554.1 million (-8.9 per cent) in the discontinued ones. Liberty’s net earnings in Q4 totalled $25.1 million, compared to a loss of $992 million a year earlier.
The media giant shed nearly 33,000 RGUs in the quarter, with gains by Virgin Media and its continuing CEE operations offset by losses in Belgium and Switzerland. By product, video and data adds showed a year-on-year decrease, while telephony net adds increased.
Fries commented: “The past fourteen months have been transformational for Liberty Global. After two decades of buying, building and growing world-class cable operations in Europe, we have announced or completed transactions in six of our twelve markets at premium valuations. Together these deals represent an aggregate enterprise value of $31 billion and net cash proceeds to the company, when completed, of $16 billion. It has long been our ambition to create or enable national champions, and we couldn’t be more proud of these fixed-mobile combinations, which will challenge incumbents, accelerate innovation and benefit customers for years to come.”
“After these transactions, in addition to a significant cash balance, a $2 billion strategic investment portfolio and over $2 billion in net tax assets, we will continue to be the largest cable operator in the UK, Ireland, Belgium, Poland and Slovakia. Together our operations serve 23 million RGUs and generate $11 billion of annual revenue. We also serve another 10 million RGUs and generate over $4 billion of annual revenue in The Netherlands through our 50/50 JV with Vodafone. Each of these businesses is entering a new period of reduced capital intensity and meaningful operating free cash flow (“OFCF”) growth. Also, in connection with the changing scope of our business, we initiated a broader reorganisation plan in January, which will result in a leaner operating structure. As we move through the year, we will have further updates on this initiative.”