The head of Sunrise Communications remains “very confident” that it will land its acquisition of cable rival UPC after pledging to launch one of Europe’s first 5G networks in Switzerland this month using Huawei equipment. Sunrise has agreed to buy Liberty Global’s Swiss cable business for SFr6.3bn, which will be funded by an SFr4.1bn rights issue.
The structure of the funding has been designed so that Sunrise is not saddled with a large debt position but has created a problem for the company after Freenet, the German company that owns about a quarter of its shares, said it would not participate in the fundraising. Shares in Sunrise came under significant pressure last week as a result.
Olaf Swantee, chief executive of Sunrise, said he expects shareholders to approve the deal despite the initial reaction. “We can create a really strong internet story for Switzerland. We are very confident this will go through,” he said.
André Krause, chief financial officer of Sunrise, said the high levels of synergies — anticipated at SFr2.8bn — means the price it is paying Liberty is “fair” but that it has “heavy lifting” to do. “It will take time to narrow down some views,” he said of the reaction to the rights issue, which is larger than its market capitalization.
For Swantee, the UPC acquisition is a critical step in Sunrise’s plan to create one of Europe’s largest “truly independent challengers” in telecoms. If cleared by regulators and shareholders, Sunrise will have a 24 percent market share in mobile, 31 percent in television and 29 percent in broadband, according to the company.―Financial Times