Sunrise Communications A

Thank you, operator, and good morning, ladies and gentlemen. Welcome to our fourth quarter and full year 2025 financial results call. Thank you for joining us today. As per usual, Dr. Krause, our CEO, and Yanni Fortier, our CFO, are with me today and will lead you through the presentation. On slide three, which you can see on the screen, you'll find the agenda for today's call. Andre will kick off with a summary of the 2025 achievements. This will be followed by an overview of the commercial performance, as well as an update on recent trading dynamics. Following that, Jani will take over to discuss our financial performance for the full year, as well as the fourth quarter. We'll finally shift the focus on the outlook for this year and conclude with the key messages before we move to the Q&A session. And with that, it's my pleasure to turn it over to Oliver.

Thanks, Alex, and good morning, everybody. As you've seen, we have a lot of ground to cover, so let's straight jump into our summary of the key activities and results of 2025, which was a pretty busy and dense year. Again, in 2025, we have continued to launch a number of new innovations, product portfolios, features, across our three segments, our Sunrise main brand, our Flanker brands, and B2B. Let me flesh out the Swiss Connect portfolio, which was a milestone achievement that we launched this year in the launch of our home security product, along with the hockey right expansion that we could do for the next 10 years. And then if we look at our Flanker brands, also a portfolio refresh, which some increased speed and optionality in that portfolio. And in Q4, the CH Mobile launch, which we're going to talk a bit more in detail about later. On the B2B side as well, we continue our focus on the SME segment, this launch of new packages for that segment. And we recently, just yesterday, have announced also a further future portfolio, which inclusion of some additional ICT services. Now, all of that has enabled us also to continue a good momentum on commercial trading. We have continued to grow our mobile RGUs, 82,000 additions for the full year. We have stabilized our fixed RGUs, slight decline of 3,000 throughout the year. We have finalized our UPC migration, so all of the UPC tariffs have been migrated to the Sunrise portfolio. It gives us now the opportunity to work with those customers in a very different way. We have also onboarded a large Swiss retail lighthouse customer, which we've talked about in the past. We have also renewed our contract with Swiss Post and started a testimonial campaign with Swiss Post, which I think was also a very strong campaign, nailing down our position on the B2B side. And we have also fully ramped up our first FW&O customer with Digitech. Now, that has all enabled us to deliver our financial results in line with our guidance. So we are fully delivering against the guidance that we have set with a revenue decline of 1.1% within the broadly stable environment, a growing adjusted EBITDA of plus 0.9%. And then also, if we look into the free cash flow, it's 80 million. That is exactly in the middle of our guidance, which allows us to propose a dividend of 342, which would be a 2.7% dividend growth year on year. And this is a proposal that will go to the AGM and will be subject to the AGM voting happening in May. Now, I would say additionally important to flesh out for this year, we talked about that in the third quarter already, that the one thing that was not really meeting our expectations was the stabilization of the fixed consumer base, which at this moment in time is somewhat delayed. We see that the output trend is softening. We'll see that later. However, there's still significant impact and we expect that would take somewhat longer than what we have expected, hence also a continued impact on that in 2026. However, on the positive side, I think we have also been able to reduce our OPEX run rates throughout the year of 2025, and we'll have some additional upsides coming in 2026 and 2027, alongside with also an opportunity to reduce our CAPEX, and we'll talk about that when we discuss our outlook for 2026. Now, with that, let me also talk about our infrastructure evolution in the last year. Q4 is always the quarter where we get the results of the annual Connect test. And again, I mean, with 975 points, that was the strongest ever outcome that Sunrise could deliver. If we look at that from a global perspective, as this test is carried out across the globe, We are amongst the five best networks in the world. I think that is a stunning result. Switzerland does have three networks in the top ten. So Switzerland in general is a very high quality network environment. But I think we are personally very proud about the achievement that we could deliver not just in this year, but we have an outstanding rating for the last ten years. And I think that is also a pretty unique achievement. I would also like to flash out that we have continued our innovation leadership on the mobile network side. You remember that in the middle of the year we were talking about our 3G switch-off, which allows us to reallocate spectrum and to now actually having a network that is only based on 4G and 5G, with 5G having a massive footprint on 5G SA. And with that we have, I would argue, the most modern network across Europe. And that network obviously allows us now also to slim down some of our investments in capacity as we are benefiting from a massive capacity that we are having on our network, particularly on the 5GSA side. Not only on mobile, but also on the fixed broadband side, our hybrid network strategy is working very well. Firstly, Sunrise does offer the largest gigabit footprint in Switzerland. with the ability to have access to fiber, to have an HFC footprint that is even larger. And beyond that, we are also benefiting from our 5G footprint that covers all of the areas where today also customers can only benefit from copper infrastructures. So that is the largest gigabit footprint really that is available to customers in Switzerland. HFC continues to capture a stable share of inflow. With our two and a half gig upgrade that we did already in 24, we are still extremely competitive with this offer. And we see that this offer is getting a lot of customer attraction. You see also on the right-hand side that with fixed, with FTTH growing, obviously, our share of own networks, if we look at HFC and fixed wireless access, is pretty stable at around 56 percent and additionally interestingly also our unit cost if we look at the blended unit cost across all technologies are even slightly reducing main reason for that is that there is a bit of a compensatory effect of a slight increase of ftth but on the other hand side also copper is reducing and copper is having the highest price points and as such there's a bit of a counter effect that helps us to even see unit costs slightly reducing. I would also like to update you today on our achievements on the sustainability side. Across our three key areas that we are covering, we could make substantial progress. If we talk about our people side, then firstly, our engagement score of employees, again, has been in the top 25%, in the top quartile. So there was a very strong achievement. Also, if we look at female leader shares, we could increase to 18.9%. It will further increase in the years to come. And also the gender pay gap is now below 2.5%, which is a benchmark number across Switzerland. On the planet side, we have continued to reduce our Scope 1 and Scope 2 greenhouse gas emissions by 49%. So that is a massive achievement. We also have stepped up our activities if it comes to circularity. So 165,000 CPEs have been refurbished, and we have traded in more than 22,000 mobile phones. That number keeps growing. So we are well on track in regards to our planet targets. And this has also led to additional certifications and ratings. We have now our greenhouse gas reduction targets, SBTI, approved and validated. We have continued to certify against the various ESO norms. And on the back of that, we have been able to achieve the EcoVadis Platinum Medal. So I would argue not only on the business evolution in terms of trading and financials, but also in regards to sustainability, Sunrise is well on track. And as you know, sustainability is part of our company targets and all management is incentivized to also push on the sustainability front. now with that we're not only talking about the full year but we're also talking about the the fourth quarter and the fourth quarter is always quite important given the higher liquidity that sits in the quarter um and i would like to update you a bit on what are our key observations on black friday and also give you a bit of an update on the ch mobile launch starting off with black friday um we have seen somewhat lower market liquidity Despite the fact that, again, competitors have started the period pretty early on, so our hope for a reduced timeframe of Black Friday activities did not come true. Essentially, we have seen the first competitor already launching Black Friday activities on the last Friday in October. We have executed our follower strategy. And interestingly, I think everybody has perceived somewhat lower trading volumes and less liquidity. And as a result of that, we have seen most of the Black Friday offers being expanded into December. So essentially, while we were hoping for a lower period, we have seen a rather longer period. Now, as we have been talking about in the Q3 results, we have launched CH Mobile. our seed segment online only mobile offering into the Black Friday period, and we have only been reactive with that. So we have been, if you want, the last that has launched that activity. We have been benefiting from the fact that the launch was well published across the media. So we haven't spent a lot of money really on marketing, but we were benefiting from a lot of PR that we were getting. And as you know, our launch promo at 9.90 priced was quite attractive. However, if you look at the comparison that you see in the middle of the page, you see that this was not really disruptive, as the price point was actually also covered by other players during the Black Friday period. Now, most recently, the CH Mobile price point is in the range of 13 to 16 Swiss francs. Now, we have also introduced not only a monthly cancelable product, but we also now have an option that a customer could pick a 24-month tariff, which is then slightly less expensive. So that gives us the optionality to also create decent stability into that customer base going forward. And we'll see how that goes. I think also with the current pricing range, we are well in the range of our seed brand competitors, I would argue. And we are not really pushing the price points lower than necessary, but we are swimming within that marketplace to capture a decent share of liquidity. Talking about liquidity and success, you also see some indications on how we are seeing the trading happening. Essentially, what I can share with you, the CH Mobile contribution to our Q4 results, which I will talk about in a minute, has been well less than 50% of the inflow was coming from that. However, also important to note that many customers that we have written the orders in Q4 will only become activated in Q1 and Q2. reason for that is that most of the customers are coming with an omp 85 percent and of course with a number portability there's a certain time delay between the order and the activation however what we can tell is that from the omp insights we can estimate a bit on how the distribution of the inflow is actually looking like So according to our expectation as well, we have seen that the A segment contribution of CH Mobile was rather limited, well in line with what we have expected, but it was largely fueled by the B and C segment. And also if we look at cannibalization of our own brands, we see that our own Flanker brands and the A segment were rather limited impacted. But of course, also some of our MD&O partners were seeing some outflow into the CH Mobile offering. Overall, I would argue that this is well in line with our expectations. We see limited cannibalization and we see the attraction of the C segment really happening for very price sensitive customers moving within the C segment or moving down from the B segment into the C segment. So I think our strategic rationale of participating in the segment is well displayed by those numbers. Well, let's also talk about some of the recent evolutions. Also part of the Q4 was the flex upgrade cycle that we have seen with the launch of the successful launch of the iPhone in the fourth quarter. Our customer base has grown by 60% on the flex upgrade products. The attachment rate on new customers is above 40%. Recommendation rate of the product of customers of this product is more than 90%. And obviously this product is also fueling the device returns and supporting our ESG's ambition very well. So we are very happy with this product evolution and still this is a product that is somewhat outstanding in the market and gives us a unique selling proposition at this moment in time. If we talk a bit about also the recent pricing developments that we have seen in the market, I think we are observing at this moment some promotional changes in Q1. You've heard already previously about the price increase that Swisscom has announced at the beginning of the year as part of their Q4 results. Summarize, having done two price increases in the past three years, We are not foreseeing at this moment a general price increase in 2026. However, we will continue the market and we will do certain selective price increases in certain tariff elements. This could be PAYCO elements, voice elements, other feature pricing that we have across our customer base, where we sense we have an opportunity to catch up to the market. And this opportunity is not small. It will actually potentially give us up to 50% of the pricing upside that we were getting from last year's price increase we think is possible to achieve by not doing a general price increase but executing some of those selective price increases that I was mentioning. Now, lastly on this page, let me quickly talk about the liquidity that we are observing. I was talking about the fact that we have seen less liquidity during Black Friday, hence the prolongation of the promotions. We are perceiving now that the market in Q1 continues to be on the lower end, while we also see that the promotional activities are easing somewhat. I think that is well reflecting the reality that the attraction of price is not necessarily growing, but rather declining. So we'll see how that evolves going forward, but it will of course have an impact on the inflow evolution in Q1, while at the same time we are also seeing that some of the Black Friday outflows will only happen in Q1 as well. What is good to see is that the churn ceases that we see in Q1 so far, are showing a 10% improvement, which is in line with our expectation that churn should reduce, which I think is a general positive. However, Q1 in total, I think, will be from a trading volume perspective, a rather lower quarter than we have to expect. Now, with that, let me conclude my first section here with the overview on the and trading results of the Q4. Our post-paid net additions on the mobile side were at 31,000 additions. That's the outcome of the year, but of course also helped by the liquidity that sits in the market in the fourth quarter. On the fixed side, we could further improve from the negative minus 7,000 in Q3 to minus 2,000. However, we are expecting that Q1 will remain to be a challenging quarter with some of the Black Friday outflows that we're seeing, and we'll talk about the outlook that we have later on. The FMC quota further increases to 59.8%. That's a 1.8% pitch point increase over the full year, so we still see that FMC is a driver through our customer base, and we would also expect it to continue. Talking about APUs, we do see on the mobile side in Q4 an APU of 29.2. That is a year-on-year growth that is helped by price increase and also helped by the accounting change that we were talking about in the earlier quarters that is shifting a bit of the bundle accounting value towards the mobile and away from the fixed. So consequently, we also see some incremental impact on the fixed APU. which is now at around 56, and a 4% year-on-year decline. As you can see from the decline rates, we see some softening of that decline, which I think is what we are indicating about that we are seeing still pressure on the APU, but we are expecting some easing as we are going through the year of 26. Now, with that, I hand over to Jani for the financials.

Thank you, André, and also welcome from my side, everyone. When we look at the first slide here, André spoke about it already, we have achieved all of our guidance metrics and are proud of that. That was driven by a strong quarter in terms of revenue with 0.5%, leading to a 1.1% decline for the full year. We'll speak in a second about what's both that. EBITDA growth at around 1%, driven by cost optimizations, with capex around 480 million or 60% for the full year, leading to 318 million of just free cash flow, which is approximately 5% growth versus what we saw in 2004, which then led to around 4.5 net leverage ratio which is approximately stable versus prior year. Then if we go to the next page, first perhaps on Q4 quickly. So 0.5% growth, which I already spoke to, which was driven by effectively three things. So on the one hand, we saw of non-subscription revenue in residential growing at 9 million, which was a mix of higher handset volumes, as well as fee increases. For the full year, that is much less elevated, but Q4 was a good quarter in terms of handset sales. Then secondly, on B2B, again, also strong growth in the non-subscription revenue, which was around 11 million, which also was driven by a number of fee adjustments, as well as wholesale voice and device sales. Then when we look at the subscription revenue in residential, we saw a continuation in terms of decline versus what we had seen in prior quarters and mobile growing slightly. What we can see there is that we have continuous volume growth. And even though that ARPU is improving, we're still continuing to see some usage loss in part because of the new portfolio that we have. And as such, mobile was in Q4 and also for the full year. Perhaps when we go to the full year, again, three things to mention. So on the one hand, mobile, when we focus on subscription revenue in residential, mobile at minus two, which is a combination of around 40,000 ads in the year, with improving ARPU on the back of reductions of Usage on the one hand with the price increase offsetting, the 60 million decline in subscription is very much driven by the continued pressure that we see on ARPU. André spoke about that, and this is perhaps where we expect it to be further along in terms of the tempering of that ARPU. Full year, 6 million increase in the non-subscription bid, which is predominantly driven by the fee increases because handset sales were slightly down. On B2B, we see two things. On the one hand, we see subscription slightly growing for both fixed and mobile. I think two things that are important to note is, again, that also especially on B2B, we see the usage of mobile revenues declining with volume growth. And on the fixed side, we were impacted by a hard comp for 2024 because of that significant and big enterprise deal that we recognized in 2024 with the number of one-off revenues that were there. On the non-subscription side, it's similar to what I just discussed for Q4, so a mix of wholesale revenues plus MVNO growth plus some fee adjustments. On the infra and support side, a slight growth for the full year, but not meaningful, which is driven by the slight increase of the tower sales that we have done to CellMix. But we then go to EBITDA, full year growing at 0.9, whereas Q4, minus 1.4. That 1.4 is driven by effectively a decline in GDP, which is now normalized again versus what we saw in Q3 where we had all of those accounting adjustments. And again, perhaps different than what we saw in the prior quarters, a slight decline, which was driven by a flat OPEX. That flat OPEX had a number of give and takes, because on the one hand, we saw continued cost savings because of the recurrent savings program. Secondly, we saw slightly lower commissions and marketing spend than what we saw in 24 because volumes in general were a little bit tempered, as Andre had already referred to. But then we had a number of phasing elements in terms of our labor costs, so therefore OPEX flat. When we go to the full year and we explain the 0.9% growth, then again, the residential decline is driven by the fixed Subscription decline, B2B growing nicely at around 10 million, and infra more or less flat when it comes to GDP, as I said. That is the sell next hour sales. The 36 million of OPEC's full year savings has a number of elements, but I think important to note there that of that 36 million, we estimate that more than 50% of those costs are recurrent and so therefore are expected in 26. But then there were a couple of one-off elements or non-recurrent elements that sort of further supported that 36 million applied. So on the one hand, we saw a significant uptake of the employee share program that we communicated in prior quarters already. And then again, similar to what I just discussed in GP also, but then on the benefiting side, lower cost in B2B because of the initial cost that we had in 24 in relation to that one of you and then lastly we did see a number of improvements both in terms of our bed debt and in our supply chain net cost but all in all doing well and then lastly um which also helped to the result is the full year reduction of lease costs i think andre spoke about that already this on the one hand we did see a slight increase in our overall portion of fixed customers that are unleashed infrastructure However, because of the various contracts that we have and our management of those contracts, together with the reduction of DSL, we are seeing year-over-year improvement in our full leasing costs, which then got us to the 1,007 EBITDA. When we go to the next page and we focus on CapEx, then I think Important to pull out is on the one hand, Q4 has reductions across all of the categories. That is predominantly because of the different phasing that we had in 25 versus what we had in 24. So if you look at it, Q1, we had significant higher investments. Q2 and Q3 were more or less flat. And so therefore, Q4 was slightly lower. When you look at the full year results, there also you see a reduction of our total capex. And I think that's where I'd like to focus on, because on the one hand, we had slightly lower coverage capex, which was, again, coming from that big deal, predominantly from that big B2B deal. Capacity was slightly lower because, as André said, we were preparing for the 5G era. standalone and the 3G switch of last year. And so in this year, we could reduce our investments in relation to that. And then lastly, the product and enabler savers in savings, so that in 25, we actually had significantly less and sort of no more integration cost anymore, which we still had in 24. So those three elements drive the full year capex reduction and sort of gives us also confidence for what we're going to guide for in a second when it comes to 26. Again, summarizing all of this into our free cash flow. Before we go into the details, I'd like to point out one thing, and that is that, as you are aware, 24 included only one and a half months of cost in relation to our standalone, whereas in 25, we now have full year standalone cost. And as we have previously communicated, we are rebasing our 2025 numbers for those changes. However, there's one exception in that we don't adjust the free cash flow because cash is cash and otherwise our cash balances wouldn't sort of communicate anymore. And so therefore, especially if you look at the 2025 full year financials and we focus on working capital and other, you see 32 million negative, which effectively is that adjustment of those rebates. So actually, That is important to note in the working capital. On the one hand, EBITDA therefore is growing, but the offsetting element is in working capital, so that on a free cash flow, it doesn't impact the number. now going back to the full year growth that we were able to achieve so we see that is effectively because of two things that are predominantly driving it on the one hand lower capex and on the other hand reduced interest cost and of course that is as a as a result of the deleveraging that we did in q4 2024 and so therefore had lower interest costs in 2025. good then on the next page when we focus on our debt i think again three things for you to take away so on the one hand we were able to significantly improve our maturity profile when it comes to our debt you see that in the bottom two graphs where we significantly pushed out to 28 and 29 maturities to 31 and 32. we were able to do that whilst keeping our wegty approximately flat at 2.8 percent And I think that gives us the opportunity to now opportunistically look when and if markets are beneficial to where we are now, but there is no way any hurry for us to do so. And then lastly, what is also important is that we did reduce our gross debt by around 180 million in Q4, like we had communicated. Now, that 180 million reduction is not per se showing up in our net leverage ratio. That is because on the one hand, we have the standalone cost. So therefore, the denominator is slightly lower. Secondly, because of all of the refinancing, we did amortize the cost in association with those refinancing. And so therefore, then the debt balance is creeping up a bit. But what is, again, important and is in line with what we have communicated is that we will continuously repay our gross debt on a yearly basis. When you then go to the next page, André spoke already about it. We are proposing and have agreed with the board to propose to the AGM 3.42 Swiss francs for class A shares, and the class B shares will be still getting 34 cents. that drives then around 250 million of expected dividend which is an increase of around 2.7 percent and also important here to highlight that that dividend payout is approximately 66 percent of our total free cash flow now as you are aware but let me reiterate all of that dividend for swiss citizens is withholding tax-free and also for foreign investor system withholding tax-free That, of course, 250 million dividend minus the 380 of free cash flow of 380 minus 250 gives us around 100 million plus to be used to deliver again for 2026 as a sort of guidance for you to think about. Then lastly, the date. So AGM planned and invited for the 7th of May, which then will lead us to pay by the 13th of May. Good. One sentence on the ADS. So after the Q3 results call, we communicated that we had terminated the Class A ADSs. That resulted in us doing an ABB, or not us, but the custodian bank doing an ABB of approximately 4.7 million shares. We had communicated, but I think it's important if you look at recent share price evolution that that ran through that. We have now also terminated our Class B shares that we did as part end of January. There was a significantly lower amount of shares to be sold, and so therefore no ABB, but just a small placement of those shares. And with that, André, back over to you.