New dawn for Sunrise after Liberty completes spin-off

The idea is that greater autonomy – combined with being listed on the SIX stock exchange in Zurich – will enable it to compete more effectively with incumbent Swisscom, tap investor appetite for telco challenger brands, and generate that all-important value for shareholders.

More or less the first item of business is the listing. Once Liberty shareholders have received their allotted Sunrise stock, its American depository shares (ADSs) will be listed on the Nasdaq on 13 November, while the listing of Sunrise's common stock on the SIX exchange will take place on 15 November.

"The successful completion of the spin-off marks an important milestone in our ongoing strategy to unlock value for Liberty Global shareholders, allowing them to directly participate in the future performance of Sunrise with its strong capital structure, attractive equity story, future cash generation potential and scope for dividends," said Liberty Global CEO Mike Fries. "Under the leadership of its experienced management team, Sunrise is well-positioned to continue to deliver innovative solutions and superior connectivity to Swiss consumers and businesses."

Indeed, it now falls to Sunrise's management, led by CEO André Krause, to realise the telco's supposed potential.

Sunrise gave an idea of what that looks like at its capital markets day in September, and while it talks a good game, its mid-term targets aren't exactly going to set pulses racing.

It expects revenue to be flat in 2025, and for it to see stable to low-single digit growth over the mid-term. EBITDA after leases (EBITDAaL) is a similar story: stable to low-single digit growth next year, followed by low growth in the coming years.

Capex as a proportion of revenue is expected to remain at around 15% going forward, while its mid-term adjusted free cash flow (FCF) is expected to exceed CHF410 million ($466.3 million) up from CHF370 million-CHF390 million in 2025.

Sunrise expects to pay its first dividend next May, when it will distribute as much as 70% of its FCF – so that's perhaps something for investors to get excited about.

Operationally speaking, for Sunrise to catch Swisscom, it has a mountain to climb – which is nothing if not apt for a Swiss telco.

According to Switzerland's Federal Communications Commission (ComCom), Swisscom's share of the postpaid mobile market stood at 56% at the end of 2023, while second-placed Sunrise accounted for 26%.

In the broadband market, Swisscom is sitting pretty at 46.5%, followed by Sunrise at 27.5%. It's a little closer in the digital TV (DTV) market, where Swisscom has a 40% share to Sunrise's 31.5%.

It's worth noting that in its capital markets day presentation in September, Sunrise cited market share stats from Ampere Analysis that were almost identical to ComCom's. That doesn't mean anything if Ampere's data is also taken from the end of last year, but if its numbers are more recent, then it shows how little Sunrise has been able to chip away at its bigger rival over the preceding nine months.The pressure is on Krause and his team to prove what they can do as an independent entity.