Sunrise Communications A

Good afternoon, ladies and gentlemen. Thank you for joining us today. Welcome to Sunrise's third quarter 2024 financial results call. This call follows the Liberty Global investor call as we are still reporting as part of Liberty Global. Please note that the financials presented in this call have been prepared in accordance with IFRS accounting standards. With me today are Audrey Krause, our CEO, and Yanni Frottier, our CFO. We will start the call with the presentation, which will be followed by a Q&A session. Let me now hand over to our CEO. André, please go ahead.

Thanks, Alex, and welcome everybody to our first quarterly results call for the third quarter of 24. Today, we want to talk you through three main topics and give you more color on the evolution of our business So firstly, I will talk about our commercial activities, campaigns and actions we have taken underpinning a strong netted result and trading momentum for the quarter. Secondly, we will also talk about our financial evolution in the quarter and also how that compares to our guidance given and Jani will do that. As well, Janni will also take you to the third topic, which is then about giving you an update on our spin-off and what are the steps in front of us. Also, of course, reflecting the shareholder vote that has happened last week and gave a 99% approval. And as such, the green light to go ahead will also give you some color on the recent refinancing that has happened on the back of the cash injection that we have received from Liberty. Now with that, let me straight move into the commercial momentum update that I want to give you. So starting off with our main brand activities in the third quarter, an important activity was the speed upgrade program that we initiated and launched in August, which essentially gives a two and a half gig speed to all existing one gig customers if they are on FTTH or if they are on HFC. So while we are speaking, we have upgraded 20% of our customer base, of our total customer base, hence all those customers that are sitting on or have been sitting on such 1G products to the 2.5G proposition, which is a free of charge upgrade. And we are also now in our front book go-to-market approach, are selling only 2.5G as an entry speed to all new customers, either on HFC or on FTTH. that has also underpinned a strong inflow of hfc customers again in the quarter in total we have seen 55 percent um share of hfc and the small portion of that is also on fixed wireless access but again we see good momentum on our hfc proposition hence we are also reconfirming our network strategy with the results of this quarter We have also underpinned this activity with a new marketing campaign, essentially a sequel of the campaign that we have done with Roger Federer and Marco Odermann back in Q1. Now, this campaign this time is again quite a funny one and also is having a tack-on which is talking about the boats getting an upgrade while they are in an airport lounge, of course, expecting that to be a flight upgrade, but essentially they are getting the two and a half speed upgrade. So that is also linked to the speed upgrade activity. Noteworthy is, I think, that we have gotten quite a strong publicity on the whole campaign, not only on this one, but also the first one back in Q1. And I think the likability and also the recall of customers of that campaign is standing out and is very strong. So I think it's, again, a good path also to underpin our premium brand positioning in the Swiss market. Thirdly, and also quite important element as we are all, of course, looking into what is the promotional intensity in the market, we have upgraded an important tariff, which was an online-only tariff. Hence, we have been selling that product only in our direct online channel. And it was priced quite aggressively and previously had a price point of around 35 Swiss francs. which has also caused action at our competitors to see what we are doing and to react to that. Now we have chosen in the third quarter to have a more for more pricing, have upgraded the price point to 39.90, and on the back of that have also included more roaming and more countries into the proposition. And I think the interesting component that we have observed afterwards is that also our competition has followed that pricing up activity, which I think is a good indication to us that we have the ability to impact the market pricing if we are taking actions. Beyond that, because I know everybody is keen to understand what is the promotional intensity in the market, we have seen that pretty stable. So we're not seeing further price aggressions on the promotional sides, but we see the environment pretty stable. And hence, I think the move that we have done here is also showing the ability to impact the environment with the things that we can do. Now with that, let me also talk about our Flex Upgrade program and the new Flex Bundle that we have implemented just with the iPhone launch this year. That is a proposition which is building on our device as a service strategy where we have in the past launched a Flex Upgrade program not only for the iPhone customer but also for Samsung customers. This product allows customers We have a flexible ownership and a monthly payment attached to that, which allows including insurances and including additional services to be very flexible in your exchange of a phone going to a new one. Now that we have now combined also with a mobile tariff so that you can buy a package, we've given here an example of 87 Swiss francs that gives you a mobile up L tariff, which is an EU unlimited flat rate, including an iPhone 16 Pro with 256 gigabits and including AppleCare and iCloud Plus. That is an unbeatable price point in the market with great flexibility on the product offering that we give. so that product we have seen is creating quite a good um i would say kpis and statistics for us so firstly the attach rate of the flex upgrade program to devices is 50 so it has a very high take rate we have also been able to push 20 um of the Flex Premium Bundle into any hardware sales that we have done so far in the quarter. So that is also working quite strong. And on the back of that, we have also been able to increase our iPhone orders and sales in the third quarter by 5% year on year. which is remarkable because our impression is rather that the iPhone evolution year on year has been rather stagnant or slightly declining. So we have a standout performance on the back of that product. Now, not only on our consumer main brand, but also on our Flanker brand, we have had strong commercial activity and results. On our Flanker brand, we have another, I would say, attractive milestone reach. We have now 1 million RGUs in the customer base of Yellow. That is obviously spread between our mobile products and our fixed products and also our TV products, but we see a continuously dynamic growth. And I think that is a testament of that positioning working very well. Also churn rate is improving year on year. I think, of course, important to note that on the fixed side, we have some increase in absolute churn because we have more customers coming out of contract as the customer base is still pretty young. But also the volume is very low so that that doesn't really make a meaningful impact on the total numbers. We have also worked on being more present with our yellow brand. We of course are very much focused on online, but we also have selective availability in our own shops. So we have brought up a new shop at the Zurich Main Station, which is a very high frequent location and very good for us to drive more customer inflow. And also we have started a unique campaign together with uber eats where you can actually have a proposition and a product and with yellow as part of that beyond that also we see nps continuously improving for yellow on a high level and we are also investing into modernizing the digital infrastructure and the customer journeys for that product to keep them lean and mean which is a very important part of the proposition And on the back of the activities, we have also seen decent performance in the third quarter again. talking about the b2b side of our business as well also here good new logos that we have been winning tesla is actually not a new logo but it's a contract prolongation that we have been able to do the attractiveness with tesla is obviously that the fleet is growing and our sim cards are in every tesla in switzerland and hence we are also growing on the back of the tesla growth so that's a very good relationship and partnership with Tesla. Let me also flash out Zauber, which has recently joined us, which is largely also looking at international roaming offers that they need to be present at the racing circuits across the globe. And we have been also able to prolong our extensive partnership with FC Basel, where we are not only providing mobile, but also fixed services and have a broad partnership here that is now going into a prolongation. Next to that, not only on the inflow side, but also on the quality side, we are continuing to invest and to make progress. We have done an ISO certification on ISO 22301, which is important also for our ability to convince and win particularly large customers. that require us to have this ability. And also I think with the logos that we have won on a variety of tests in the quarter, that's a good testament of our ability to provide high quality products and services to the B2B customers in Switzerland. lastly on the very right you see um the and you probably have seen the world championships in cycling which have been happening in the months of october in switzerland was a big event in zurich we have been the sole technology partner helping that event to happen have provided lots of technological infrastructure and connectivity. We have provided that free of charge and in return got also the opportunity to have a sponsoring presence, but also have some support to our Sunrise Moments program, giving customers the ability to have Money Can't Buy experiences on that event. So with that, let me summarize the commercial performance in the numbers that we have been reporting today. Very strong mobile postpaid net additions, 48,000 customers for the quarter. Also on the fixed side, 5,000 net additions for the quarter. So that's on the fourth quarter in a row where we are seeing positive net ads. And I think we can clearly see that we have stabilized and turned around the fixed net business across the different brands. um also our fmc quota has further increased so we are continuously also cross-selling um customers onto fmc propositions which is also over time of course helping the churn evolution and which we have been seeing improving um also important as you know we are migrating the former upc customers over to the sunrise product portfolio We have also seen now 120,000 migrations happening in the third quarter. And with that, we are fully on track to migrate all of the customers by end of the year with probably maybe some remaining customers in difficult circumstances, not in terms of pricing, but in terms of product setups. But the vast majority of that migration exercise will be ending by the end of this year. On APU, we are seeing continuous pressure on both on mobile, less and a bit more on fixed. The drivers for the third quarter are also, I would say, specific because we have the price increase in Q3 last year is no annualizing. Hence, we see less or zero impact from the price increase in the year-on-year evolution for the first time. secondly on the mobile side we had also a quarter with a third quarter that usually has a lot of roaming exposure because of vacations we see customers benefiting from richer tariff offerings having more included roaming offerings and as such the variable consumption of roaming is year on year reducing which is driving a remarkable impact impact on this quarter and lastly on the fixed side the impact is largely driven by the repricing of the customer base of um upc that while they are migrating over are getting then closer to front book prices um but also of course driving a significant churn reduction impact for us going forward so with all of that we are very much in line with our expectations i would say probably a bit stronger even in terms of growth momentum if we look at net additions. But overall, we see us very well on track towards our targets for this year. And with that, Jani, what does it mean financially?

Thank you, André. So if we go one slide further, yes, super. So on the left, you see the Q3 results, and then on the right, the year-to-date. If we zoom in first to Q3, we can see a slight revenue decline of 1.3%. which was partially driven by the roaming impact that andre spoke about before on top of that we have the continued right pricing and lastly this was the first quarter where we weren't benefiting anymore from the price increase that we executed last year that slight revenue decline translated into a slight ebit doll growth on the back of lower direct cost combined with a optimized opex spend When we then focus on CAPEX, you can see a significant decline in comparison to last year, which is in part the cost to capture that is phasing out. The other part is an overall phasing within the year. So that when we get to adjusted EBITDA minus P&E additions or OFCF, we can see a meaningful growth of around 16%. When we go to the right side of the graph and we focus on the year to date, you can see that the minus 1.3% revenue growth in the quarter has translated into a slight revenue decline for the year to date. However, on EBITDA, still a growth of 1.1%, as in H1, we were benefiting from the price increases. CapEx year to date, you can see a slightly less decline, and that is due to the phasing that I spoke about before a second ago. And then on adjusted EBITDA, you can see a still 5.3%, which is then a combination of the adjusted EBITDA plus the year-to-date lower capex, again, as we phase out the cost to capture. Down to adjusted FCF, you can see we have generated 190 million year-to-date, which is the decline versus prior year, however. that has mostly to do with the phasing of the network and capital movements, which I'll speak about slightly later on in the presentation. But all in all, these nine-month financials make us comfortable to hit our full year guidance, which I'll refer to a little bit later. So if we go to the next page, we break down the various drivers of the adjusted FCF. And for everyone to be aware, this is the way we're going to report our financials going forward, where on the slides we'll speak about the three main segments, consumer, B2B, and infrastructure and support. In the backup and in the fact sheets, we'll then also disclose the fixed and mobile breakdown in both subscription and non-subscription. And as such, I'll use some of those elements in the explanations of how we get to the year-over-year movements. So when we focus on revenue, we can see a minus 10 million decline year-over-year, which is predominantly driven by the decline that we see in consumer, which is effectively driven by two elements. On the one hand, the lower roaming usage that we typically see within the quarter, as André spoke about, as we include more of those roaming charges in the bundles, together with the right pricing that is a combination of in-year and annualization of last year right pricing. There is, of course, in-consumer partially offset by volume growth in both mobile and fixed of the Flanker brand, together with volume growth in B2B and slight growth in the infrastructure space, which is effectively the build to suit agreements that we have with Cellnex. When we then go to the right and we focus on adjusted EBITDA, It's important to note that between gross profit and OPEX, there is a year-to-date reclassification of leasings that has to do with the fact that we moved from US GAAP to IFRS, and as such, we had to make a number of corrections. But excluding or normalized for those corrections, what we see is a slight decline in gross profit on the back of the consumer decline that I spoke about before. offset by b2b and the infrastructure growth together with slightly lower opex year over year as we are continuing to drive an opex optimization program and the final phasings of course to capture that are falling out that drive then the 0.4 percent year over year Here, what we see on the left side is the adjusted EBITDA minus capex. And what you can see, especially if you focus on the quarter, that we are significantly reducing our capex asset that is in part because of the lower CPE. We send out lower CPEs within the quarter. On top of that, the IT transformation that is coming to an end is also driving lower capex and the cost to capture of the integration is also impacting that together with the phasing throughout the year, but partially offset by mobile capacity and 5G spent within the quarter. As I said, that normalizes out when we go to the right on a year-to-date basis where the difference is not as meaningful anymore. And what you can see then is that we get to around 119 million FCF for the first nine months. On the bottom of the slide, what we have tried to illustrate, given that, of course, we have guided for 360 to 370 million of free cash flow, how one gets from the 119 after nine months to 360 for the full year. And of course, this is illustrative, and as such, it's not always the same per quarter, but gives you a good sense of what typically happens in our free cash flow generation. So first of all, the adjusted EBITDA has some, but very limited seasonality throughout the quarters. CapEx typically does have a bit of seasonality where throughout the year, the CapEx ramps up on the P&E additions, but then another effect, and that's especially between Q4 and Q1, that is then offset in the networking capital as we recognize the CapEx spend through either vendor financing or our payment terms. And so therefore, you can see that Q4 is overly positive and Q1 is overly negative, normalizing out at adjusted EBITDA minus P&E additions. Then the last element, which is important to note, is that we have semi-annual interest payments that we do in Q1 and Q3. And so with that, I think it's important to note that the fact that we are only at 120 million after nine months is very normal and we're very comfortable to us. And again, once we get to Q4, I'll show you how that works and what the net movements are in all of the different categories that we classify here. So with that, let me quickly go back to the guidance. And Andre mentioned it earlier. We are reiterating the guidance that we gave during the Capital Markets Day. With revenue broadly stable, adjusted EBITDA stable to low single-digit growth, with capex at around 16 to 18% of revenue and the 360 to 370 free cash flow that I spoke about before. Important to note that this still includes that 10 million of spin-off costs, operational spin-off costs, if you will, that are included in that. For 2025, over the 2024 cash flow, the 240 million of dividend that we have continuously mentioned, and just for everyone to remember, we expect those dividends to be tax-free for Swiss residents for more than five years at least. All right, so let me now give you an update on where we are with the spin. So a lot of boxes here. Important to note that, as André said, last Friday we had the shareholder vote that significantly approved the spin as such. So that has been ticked off. Today and tomorrow, we're in the process of first of all, getting the capital injection from Liberty and then retiring a large chunk of the net debt reduction that we're expecting by year end. I'll show you in a second what that means. From there, there's a number of dates that are important. First of all, next Monday, where we'll have the distribution record date, meaning that is the date at which you need to hold a Liberty share to get a Sunrise share. But then the ADSs that are in relation to the new Sunrise shares will be distributed on the 12th. The first day of trading starting on the NASDAQ for those ADSs on the 13th. Then the day after with the ability to cancel those ADSs and receive the actual underlying Swiss Sunrise shares by the end of the day. so that on the 15th at market opening, there's actual Swiss liquidity in the system for the trading to then start. Lastly, we expect five trading days later to be included in the Swiss performance index or the SPI. Then when we go to the next slide, I think an update on where we are with our debt structure. So as we communicated during the CMD, we're expecting to get to a four and a half net leverage to EBITDA by the end of this year. That comes about from the 6.1 billion that you see in the table on the left as per the 30th of September to the pay down that we're currently executing today and tomorrow, plus the further cash to be generated that I spoke about before, which is approximately above 200 million. By tomorrow, we will be at 4.9 billion of outstanding debt, which is still slightly above four and a half. But with the free cash flow that we're going to be generating in the remainder of the year, we'll get to that four and a half. Now, what you can see in the table is that we have focused on retiring the senior credit of the loans effectively, which were the most expensive instruments. Secondly, what we focused on by doing so was focusing on around the 21, 29 and 31 maturities. And so by doing that, we have actually slightly extended the average tenure of our debt from 4.7 to 4.8 years. And by doing so, we have also further stabilized the weighted cost of debt to around 3%, which was slightly above 3% before. By doing so, what we have effectively achieved is that the amount of near-term maturities have gone down and effectively approximately 80% of those maturities are at 29 or further above. So with that, a very stable and predictable debt stack for the upcoming years as we go into the journey of paying dividend. And with that, I think I hand it back over to you, André.

Yeah, thank you very much, Yanni. And let me summarize the key takeaways from our today presentation before we open up the Q&A. So firstly, you have seen strong commercial momentum across our three growth engines, our consumer main brands, our yellow business, but also our B2B business. And with the growth momentum, we are now going into the fourth quarter, which is a very important and instrumental quarter also for defining our exit run rate and starting point, of course, for next year. But given the activities that we have seen and given momentum that we have seen, I think we are very well positioned to drive that forward. Secondly, also the Q3 financials, although impacted on the top line side by The pricing annualization from last year, the roaming impact and the right pricing is fully in line with our expectations. And as such, we are reiterating our guidance that we have given on the Capital Markets Day in September. And lastly, the spinoff is fully on track. Investors and shareholders have green-lighted the transaction. We've seen the coming steps of the transaction. There's quite some complexity for actual shareholders involved and as such Liberty has also announced that there will be an additional call this Friday which gives the opportunity to clarify further questions if they were existing with you to understand any technicalities linked to the transaction to conclude. So with that, thanks for the attention so far, and I hand back to Alex for the Q&A.

Thank you, André and Janne, for the explanations. And with that, operator, over to you to please start the Q&A.

We will now begin the question and answer session. Participants wishing to ask a question may dial in by telephone and register at any time by pressing star and 1. Please note that only questions from research analysts will be taken. Once you register, you will hear a tone to confirm that you have answered the queue. Anyone who has a question may press star and 1 at this time. Our first question comes from Aronof Drubesha, UBS. Please go ahead.

Hey, all. Thanks for taking the question. It's on promotional activity in the Swiss market. So you kindly referred to that offer where you stepped the pricing up. But if I look online, I can still see that SALT and and even yellow have some offers that are 70% discounted for life. So with Black Friday also coming up and the promotional period, is there not a risk that this can become even more aggressive in the months to come? Or as you said previously, are you seeing a lot more signs that the market's becoming a lot better in terms of competitive dynamics? Thank you.

Yeah, thank you for the question. So I think firstly, obviously Q4 is a very specific quarter. And given the Black Friday activities and also liquidity in the market, we are expecting that there will be extraordinary offers coming up. I'm not expecting necessarily them to be more aggressive than prior year, but they probably will be differentiated versus the offers that we have seen in Q3, and that would not be a big surprise to us. So having said that, what we are doing is we are very closely monitoring the competitive activities across the different tariff tiers and brands out there. And what we can see clearly is there is no further, if you want, deterioration of the market pricing by tariff tier. In fact, what we do see is quite some stability. We do some promotional activities in this respect, but we haven't seen any I would say, markable moves for a long period. Now, that does not mean, as I said, that we are not expecting for the Black Friday period that there will be extraordinary offers out there. And you can also already see that the offers that we have seen last year in Black Friday, we haven't seen throughout the year. So we would expect that some of those offers are temporarily coming back. for the period of the Black Friday, which we'll see how long that's going to be, whether it's going to be a Black November again, or whether a competitive environment is reducing to, let's say, a week or two. That would be an interesting note to take. But overall, we are not seeing a deterioration or a further aggression coming to market, but we see rather lots of stability. Last point I want to mention, because I think that's also important. We also perceive that the attractiveness to consumers is actually getting less for a number of reasons. One is the price delta that is perceived on those promotions is less and less important to consumers as they have repriced their own position over the last couple of years hence the incremental change is not motivating too many secondly as an industry we are shouting too much about promotions so the reason why being priced only is not pulling through to the same extent than what we have seen previously So we think, and I think there are some early indications of that, that the liquidity stimulated by promotional activities is becoming less and less over time. And we have seen some of that already also in Q3. And hence, we are also expecting on the back of that, the market environment not only being stable, but potentially also going back like the indication that we have given with a price point that we have taken up. on a product that was perceived as being quite aggressive and as a result have also seen followership from our competitors now there was a long way of saying we are not seeing really a deterioration but q4 will have of course a time period with black friday that will be different and we expect that to be similar in terms of aggression level to prior year thank you very much very clear all right

The next question comes from . Please go ahead.

Hi there. Thanks for taking the questions. First, this is a quick follow-up on the kind of mix shift in the base. I would love it if you could give us a bit of color about how the net ad inflow on your sub-brand versus your main brands has developed this quarter versus previous quarters. I think you're looking at the results The net ads do look very strong in mobile, a bit low in fixed. So it'd be interesting to know whether a lot of that's coming from Yalo in particular. And then the second question is related to the statistic you give on the 55% of customer net ads on broadband coming on HFC and FWA. Could you just give us a bit more of a breakdown? So how much of that 55% is FWA versus HFC? And then also related to that, in your CMD presentation, I think on slide 62, you did put a chart up about what share of the base is owned network rather than wholesale. And you said at the time it was 57%. I didn't clarify this at the time, but of that 57%, how much is cable? How much is FWA? And the reason I'm laboring this point is obviously it's a very important number for us to understand when we think about your future wholesale costs. and how those might change based on the net ad inflow on your own network and cable versus wholesale for Swisscom. Thanks very much.

All right. Yeah, thanks, Joshua, for the questions. So let me start with the mix shift. So as we have chosen not to give the granular numbers also for competitive reasons, but I can give you an indicative idea of what the composition is, let's say, on mobile, for example, because there will be inflow, of course, with the 48,000 net ads is more significant than it is on fixed. So on that one, you could assume that less than half of the inflow is actually coming from our Flanker brand. The remainder is actually split, I would say, one third B2B and two thirds actually coming from our consumer brand. So that doesn't give you the exact figures, but it gives you a pretty good idea that this is not just driven by the Flanker brand and hence also the mix shift is not actually making any material impact or dent on our ARPU evolution. Nevertheless, I think on the mix proportion, of course, we have different customer bases that are building up on B2B, on the consumer main brand and on Flanker brand. with different product propositions and also product mixes. And they drive their individual APUs with at the total, if you want, consolidated APU has an impact. And there is a mix shift in regards to that. But it's not driven by an over-proportionate exposure to one engine driving this. And secondly, on your question, I mean, simple speaking, well, we chose to actually give you the combined figure, but in fact, the FWA figure is a very low one. You could assume that being 1% to 2%. So the number is very much driven by HFC rather than by FWA. So also here, no big news or trend change in regards to what we have said in the capital markets day.

Thanks. And so maybe just to find a follow-up on the The 57% of your base, which you say, at 2023, was on cable or FWA. What percentage of that was cable versus FWA? I think there was a change in the definition on broadband net ads between Liberty's disclosure and your disclosure, which now includes FWA. So I just wanted to make sure we have that number.

Perhaps I can answer this one as it's a bit more technical. So when you look at the base, I think it's similar to what Andre just said. We have started to market this, but it's in very limited footprints where we believe it's a stronger proposition than our HFC network. And so as such, it's a similar low single digit percentage also when we speak about the base. Then when you refer to the net add additions for both and there is a walk by the way in the appendix there is a difference indeed between the liberty and the sunrise definitions that we are going to going forward continue with the sunrise definitions. It is not so much that the broadband additions now include FWA, which they didn't before. They in both scenarios did, but it has to do more with how we classify B2B customers and the timing of when you close the actual databases. So it is more technical in nature. It is not the fact that we are including more sales, if you will, than what we had before. And over a year, it more or less phases out. But in the quarter, we had actually quite a strong difference between the Liberty and the Sunrise going forward definitions. That is on fixed, if you will. On mobile, there is a bigger and continuous definition at difference. And that has to do with the fact on how we count second SIMs or data only SIMs, which is Swiss market practice to count as full postpaid net ads, whereas Under Liberty definitions, that was not the case. Positive news for everyone on the call is that from next quarter on, we will just be using the Sunrise definitions going forward.

Great, Claire. Thanks.

The next question comes from Ryan of Maurice Patry with Barclays. Please go ahead.

Thank you, guys, for taking the question and doing the call today. It's very useful and helpful, so thank you for that. A couple of really quite boring questions from me, please. The first one is just to understand on slide 17 on your debt structure, when you talk about the 6.1 billion of net debt at September 24, which includes, if I'm not wrong, not just your senior credit facilities, but also the vendor financing. So just to confirm that the 4.5 times leverage that you target post-spin does include things like vendor financing. I'm sure it does, but just to make sure it includes All the vendor financing is the first question?

Correct. So you can see it. That's what I tried to say. So we get at the moment to a performer of 4.9, which under, again, less 12 months EBITDA, which is slightly above a billion, gets us to close to 4.7. With the remainder of the free cash flow to be generated in the remainder of the year, there will then be a further potentially smaller portion of debt retirement with the rest as a cash balance to get us to 4.5 all in, including vendor financing, including all of the swaps, as you can see on the page here. Great.

And the second question is just clarity on some non-cash items. So I think... to the bond docs, the executive non-cash compensation, share-based compensations, there are 30 million Swiss francs a year. Just checking if that's the intention for that to be a similar run rate and when we'll get clarity of what that number will be for the years ahead. Thank you.

Yeah, so we have on our capital markets day and in the F4 findings even an indication of how the past did look like and we would expect that to be similar in the range of 25 to 30 million. Also, according to the Swiss regulation, there is a shareholder vote, a say on pay, where we will, of course, then prospectively talk about what is the amount of share-based compensation to be approved and also by the annual general meeting.

And one thing to add, I think it's important to add, is that, as André said, there will be, as part of the Comp Report, a clear overview of what we're granting as SPC. In our normal financials, that again is included on page 22, we break out the SPC line very transparently. as it is included in our OPEX, but then we break it out as we're not intending to cash settle it, but issue shares for that. The number that you see here is that the financial number that runs through our P&L, i.e. the vested number, whereas when we look at the compensation report, we talk about the granted number. But the two are very much reliant on a run rate basis, just for everyone to be clear.

That's helpful. Thank you for that. And just to double check, there's no With IPOs, which isn't, this isn't, sometimes there's extra payments in terms of non-cash compensation related to an event. There's nothing taking place here, is there? Is it just assuming the 30 million forever, or is there specific items related to the SPIN?

Well, there is a small specific item on top, but it will not materially differ from the 30 million that we are talking about.

Thank you.

All right.

The next question comes from the line of Robert Grindle, Deutsche Bank. Please go ahead.

Thank you and welcome back to the quarterly sell side events. I think Swisscom launched its own loyalty program in the last few weeks. How do you feel about that? Obviously, imitation is flattering. Are they more generous than you might have expected? And I heard the comment around promotional activity and that was reassuring. Is there anything else sort of outside of the obvious, like loyalty programs that the competitors are doing that's changed recently? Thank you.

Yeah, thanks, Robert, for the question. So I would say it's early days. So we have seen the first, I would say, launch components of the program. Don't know what else is yet to come. I think at this moment, we are not losing sleep over that. given the fact that we had our own Sunrise Moments program out for a while. And we are, of course, also working on further developing that. So I would rather say it's a bit of a catch-up move from Swisscom from my perspective. uh in generally speaking um and i think we are we are well prepped also with additional features that we're gonna launch through the course of next year um to further drive a lead on that and beyond that i've honestly not seen um larger moves of other competitors or brands um going in in any other direction at this moment but given the fact that i was saying we are expecting liquidity from a promotional perspective, potentially reducing going forward. I would expect people to think about what else to focus on to drive customer loyalty, but also to drive potentially liquidity in the market. So I think the game will stay interesting over the next couple of quarters and years.

I'm sure. Thanks, André.

Thanks, Robert.

Or any further questions, please press star and one on your telephone. Star followed by one. And the next question comes from . Please go ahead.

Hello. Thank you for taking my questions. I just have one question and a clarification, please. The first question is, are your comments on the pressure on roaming revenues? And because you're putting more and more customers into this roaming-inclusive tariffs, I'm just wondering if you can help us to understand what kind of a magnitude that out-of-bundle revenue you still generate, and how long should we think this pressure persists going forward? And then the cloud verification question is really on your comments on the pressure from UPC migration. I think you mentioned that going forward you expect it's kind of a neutral impact. I'm just wondering, Do you think it's too simplistic to think that the 58.8 would be roughly the ballpark that we think about fix ARPU going forward? Thank you.

Yeah, thank you. I'll hand over to Yanni in a second. But just to be clear, we are not intending to give detailed ARPU guidance, so we will probably give you a bit of an indication, but we will refrain from giving detailed

uh guidance on that but johnny all right great thanks andre so again i would like to refer to the page 23 where we break down our revenue in quite a bit of detail between residential customers b2b and then fixed and mobile and within mobile we go to subscription in that mobile subscription for residential where the majority of that usage sits you can see a decline of approximately 12 million quarter over quarter. A large chunk, more than half of that number is driven by the usage, the roaming usage decline. So that gives you a sense out of the total 25 or the total 12 million of revenue decline that we saw out of the quarter, how much of that comes from the mobile usage. I think what we're seeing is that This quarter we were especially impacted. Normal quarters, we don't see it as much. Of course, the benefit of including those things into a bundle means that in the slower roaming quarters, you potentially even have a slight upside versus charging roaming on an individual basis, whereas then in the roaming heavy quarter, you have to decline. That is not to say that I think we have grown our revenue by doing so. I think it is. to facilitate a trend and to basically optimize customer pricing by doing so. So it's not a full year growth, but it's also definitely not as exaggerated as what we see in this quarter. When it comes to the right pricing of the UPC customer base, I think one thing to add to what André said is that we expect the actual right pricing to be done by the end of this year or largely done by the end of this year. But that of course means that from a financial impact, we'll have a 12 month annualization, at least for the December customers into next year. So the good thing is, is that in this specific quarter, we have the annualization from last year and the in-quarter or in-year effect from this year. And as we get to next year, of course, as there's no more in-year activity, it just is the annualization. And so it will tail off so that financially we will largely be done by it by the end of next year. But the decline will temper every quarter as we get into next year. So that is the way to think about that. As André said, we don't give individual guidance on ARPU or how you should be thinking about that.

That's very clear. Thank you.

All right. I think we don't have any further questions at this moment in time. So with that, I think we can conclude our call. And thank you very much, everybody, for your participation. And we'll see you soon.