Sunrise and CEO Swantee abruptly part ways

Sunrise has entered 2020 with the surprise announcement that Olaf Swantee, previously one of the favourites to take over the top-job at BT, will no-longer be CEO.

The abrupt nature of the announcement is  not the usual course of action for a shift in management, though Swantee will remain in a support role until the Annual General Meeting in April. CFO André Krause has been promoted to CEO with immediate effect.

Details on the reason for a change in management are non-existent currently, though there will be plenty of rumours. Traditionally, telcos announce a CEO will be stepping down in ‘X’ number of months’ , allowing a transition period through to a named replacement. Stating Swantee has resigned with immediate effect is unusual and suggests there is more to the story.

This is speculation however; there might not be a grand conspiracy theory, this might just be way the Swiss like to do business.

Swantee joined Sunrise in 2016, having served as the CEO of EE in the UK for more than five years. His time at EE was a very successful one, taking over as CEO in the months following the formation of the company as a joint-venture between Deutsche Telekom and Orange. Over the course of the five-year period, Swantee oversaw the integration of the two existing businesses, as well as led EE to a leadership position in the UK market.

This success was then taken to Sunrise.

Figures curtesy of Ovum’s World Information Series

Joining just after the company’s IPO in 2015, Swantee oversaw a transformation in the business, investing in the network while also shifting the brand and company culture. Mobile subscriptions are now on an upward trajectory, broadband is stabilising, and TV is in a healthy position. Sunrise is formulating a challenge to the clear and dominant market leader, Swisscom, and Swantee can leave with his reputation enhanced.

This is perhaps what makes the announcement somewhat of a surprising one; Sunrise are in a healthy position. A new strategy, focused on under-30s, is currently underway, while the business is also gaining traction in the enterprise market. Revenues are heading the right direction, as is share price and dividend payments.

What is worth noting is that there may well have been a bit of friction following the recently aborted acquisition of UPC Switzerland, Liberty Global’s assets in the country. Integrating UPC Switzerland into the Sunrise business would have given a boost to mobile subscriptions, but also a notable injection in the broadband and TV units; UPC Switzerland’s network currently passes 50% of the homes in the country.

“Olaf was a visionary and recognised the importance of scale, as well as offering a broad range of services,” said Paolo Pescatore of PP Foresight. “This was underlined by his tenure at EE with aggressive moves into fixed broadband and TV.

“Realistically, the writing was on the wall given the collapse of the deal [UPC Switzerland]. This is a big blow to Sunrise and the Swiss market.”

Swantee was the champion of the $6.3 billion acquisition, a move which would have driven through a more complete convergence strategy in the business. However, the move was opposed by the telcos largest shareholder, Freenet, forcing the team to abandon the plans. Perhaps this friction could explain the sudden departure of a successful executive? No leader likes to have his/her strategy vetoed or undermined by investors.

Swantee is a big believer in the convergence strategy, with the acquisition of UPC Switzerland emphasising this. The Freenet opposition to the transaction might suggest a contrary belief as to how to make money in the telco industry. When major investors and CEOs come to a conflict of philosophies, usually one or the other makes an exit.

Whatever the explanation, Sunrise’s loss is someone else’s gain. Swantee is an experienced executive with a habit of being successful. We suspect that Swantee will not be unemployed for long.