Liberty Global is holding advanced talks to sell UPC Switzerland to Sunrise, according to the Financial Times. An enterprise value of EUR 4.3 billion is quoted. Sunrise, listed on the Swiss stock exchange, traded down 2.4 percent on 02 February, to close at CHF 81.75. Its market capitalisation is CHF 3.68 billion (EUR 3.23 billion), according Telecompaper. A merger of UPC Switzerland and Sunrise, in which German Freenet holds a 24.6 percent stake, would not come as a surprise. It would create a fixed-mobile network operator on a market that is increasingly focused on fixed-mobile offerings. As such, it would match Swisscom. At the same time, it would leave Salt, owned by Xavier Niel's NJJ Capital, as the last mobile-only operator. Salt entered the fixed-line market in March 2018 through an agreement with Swiss Fiber Network.
The deal also wouldn't come as a surprise because Liberty Global has been selling off assets, including most recently UPC Austria to T-Mobile Austria. A deal to sell Germany, Hungary, Czech Republic and Romania to Vodafone is pending and faces a regulatory delay. Furthermore, UPC Switzerland's performance has been lacklustre over the past few quarters. Last September, UPC Switzerland's previous CEO was quoted saying that a merger would make sense.
Assuming the deals with Vodafone and Sunrise are closed, Liberty Global's portfolio would be reduced to operations in the UK, Poland and Slovakia, as well as joint ventures in the Netherlands and Belgium.
UPC Switzerland reaches almost 80 percent of the population. Its revenues for Q3 2018 were down 7.1 percent to CHF 278 million. EBITDA came in at CHF 164 million, down 10 percent, corresponding to a margin of 59.0 percent. Meanwhile, Sunrise reported 2.0 percent revenue growth for Q3 at CHF 470 million. The adjusted EBITDA was flat at CHF 158 million, for a margin of 33.6 percent.