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Sunrise reaches financial targets for the year 2023

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Sunrise reaches financial targets for the year 2023

Thanks to the renewed positive trend in revenue and adjusted EBITDA, Sunrise ends the year with a solid 4th quarter, achieving all financial targets for 2023.

«2023 ends with a positive quarter, mainly the result of the increase in the number of customers with Mobile Postpaid subscriptions, the improving trend for the broadband segment and the growth of the B2B segment. Furthermore, rigorous discipline in cost management and optimization of efficiency supported the achievement of our objectives”he declares André Krause, CEO of Sunrise, and adds: «For 2024 we expect to confirm this positive trend as well as recover in terms of EBITDA. To this end, we will further strengthen our core landline and mobile connectivity, launch new services for B2B and B2C customers, enhance customer experience and strengthen customer loyalty, and acquire new customers through our exceptional products and services. These operational priorities, together with a leaner corporate structure, lay the foundation for the growth of our EBITDA.”

Operational results

In the 4th quarter of 2023, Sunrise recorded an increase in the number of Mobile Postpaid customers, totaling a net increase of +31,000 Mobile Postpaid RGUs1) compared to the same period of the previous year and despite delays in activations. However, a positive impact is expected in Q1 2024. Over the full financial year of 2023, Sunrise achieved a net increase of +132 000 RGU Mobile Postpaid).

Following the intensification of marketing activities, the broadband customer base remained stable, despite delays in activations in the 4th quarter of 2023, as demonstrated by the continued improvement compared to previous quarters. Compared to the previous year, there was a slight decrease of -3000 RGUs per broadband year-on-year.

At the end of 2023 there were a total of 2,836 million Mobile RGUs (3,278 million including secondary SIMs), 1,180 million Broadband RGUs (1,250 million including SMEs) and 1,200 million TV RGUs (1,267 million including SMEs ). FMC penetration stands at 58.1%, which corresponds to an increase of +0.7% compared to the end of 2022. The increase in Sunrise’s FMC rate continues to be driven by Cross-Selling and Up-Selling sales of products converging on customers with existing contracts.

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Service, network quality and innovations

Over the past year, Sunrise, as the flagship brand, has focused on constantly optimizing its network and service quality, as well as bringing forward innovative offers. For the quality of its service, Sunrise has been awarded numerous awards, not least for its exceptional broadband Internet network, which is offered to customers via fixed and mobile networks.

In the Postpaid sector, Sunrise has launched Flex Upgrade, an innovative Device-as-a-Service offer, highly requested by customers. The Prepaid offering has been significantly expanded in order to respond to a greater number of needs and applications. Last but not least, Sunrise is the first telecommunications operator to offer a single flat rate for mobile Internet in Switzerland and Europe and to activate 5G for all prepaid customers at no additional cost.

The momentum of secondary brands («Flanker Brand») yallo, Lebara, swype was further encouraged by aeffective multi-channel campaign for yallo and with new offers offered to customers with existing contracts. The Swype offer has also been expanded with a flat rate for roaming in Switzerland and Europe and browsing on Switzerland’s largest 5G network. Secondary brands, particularly yallo, contributed significantly to growth in 2023.

Sunrise Business recorded strong growth in 2023 and achieved numerous successes with new contract signings, extensions or updates, for example with BKW, Casale, Heineken Switzerland, Kantonsspital Baden, Swissport, Swiss International Air Lines, TCS and Migros. Sunrise Business has also further strengthened its position thanks to these acquisitions and the portfolio of innovative offerings. Specifically, particular attention was paid to Mobile Private Network (MPN) solutions for tailor-made 5G networks, Mobile products for smart collaboration and comprehensive IoT and security solutions.

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Financial results

In the 4th quarter of 2023, revenue returned to growth, reaching CHF 795.4 million (+2.5%) on an adjusted basis and compared to the previous quarter. This is mainly attributable to higher turnover in the private customer segment, including sub-brands, in the mobile and fixed network sectors, as well as higher revenues in the B2B segment. The indexation of prices to inflation in July 2023 had positive repercussions in all segments.

Revenue from Mobile subscriptions from private customers stood at CHF 339.5 million (+4.8% on an adjusted basis and compared to the previous year) and were supported by the increase in the number of customers, the sale of hardware as well as from revenue external to the sale of Mobile subscriptions. The positive evolution compared to the 3rd quarter is due to a more favorable comparison of variable revenues, including roaming.

Fixed-line sales to private customers generated revenue of CHF 294.5 million (-0.7% on an adjusted basis compared to the previous year), supported by the indexation of prices to inflation, the success of hardware distribution and transmission costs. At the same time, revenue dynamics were hindered by the effects of the ongoing harmonization of prices for the customer base with existing contracts.

The B2B segment grew mainly thanks to revenues generated by subscriptions, integration services and mobile devices, reaching CHF 151.5 million (+1.9% on an adjusted basis compared to the previous year). The unfavorable trend is mainly attributable to the variable turnover generated by mobile telephony.

In the 4th quarter of 2023, adjusted EBITDA by segment2) also returned to growth by +5.6% on an adjusted basis and compared to the previous year, reaching CHF 254.9 million, of which CHF 4 million in costs of acquisition3). The adjusted growth in segment-adjusted EBITDA2) was primarily attributable to higher revenue generated by mobile subscriptions for private and B2B customers. This positive result was also favored by a slight reduction in operating costs (OpEx), linked to lower acquisition costs3), although higher expenses were incurred for the sale of devices.

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In the 4th quarter of 2023, adjusted EBITDA net of property, plant and equipment acquisitions2)4) increased by +55.4% on an adjusted basis compared to the previous year to a total of CHF 96 million, including CHF 16 million acquisition costs. This figure is mainly attributable to the reduction in capital expenditure (CapEx), due to lower acquisition costs.

In the 4th quarter of 2023, Sunrise continued to make significant investments of CHF 159 million (20% of revenue) in networks, product innovation and digital services. Also included in this quarter are CHF 12 million of costs in acquisitions of property, plant and equipment.

Adjusted Free Cash Flow stood at CHF 324 million, an increase of CHF 54 million.

Three months

to 31 December 2023

Financial year 2023

to 31 December 2023

in CHF million, except percentage figures on an adjusted basis in %2) on an adjusted basis in %2) Turnover 795.4 2.5% 3035.2 (0.2%) Private mobile customers 339.5 4 .8% 1252.6 0.5% Private landline customers 294.5 (0.7%) 1153.6 (2.6%) B2B 151.5 1.9% 577.2 1.4% Other 9 ,9 26.6% 51.8 23.2% Adjusted EBITDA by segment2) 254.9 5.6% 1031.1 (2.0%) Adjusted EBITDA net of acquisitions of property, plant and equipment2)4) 96 .0 55.4% 504.6 5.9%

Forecast for the 2024 financial year

Revenue growth broadly stable Segment-adjusted EBITDA5) (incl. acquisition costs): stable to low-single-digit growth Acquisition costs OpEx and CapEx: ~ CHF 15 million (of which mainly CapEx) Acquisitions of property, plant and equipment as a percentage of revenues (incl. acquisition costs): 16-18% Adjusted FCF(5): between CHF 360 and CHF 400 million

Details regarding Sunrise’s financial results are included in the revenue release Q4 2023 Fixed Income Release.

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