Liberty Global CEO Sees Sunrise as Possible Swiss Partner

(Bloomberg) -- Sunrise Communications Group AG is one of the Swiss operators being looked at as a potential partner for Liberty Global Plc, said Mike Fries, chief executive officer of the cable TV giant.

Liberty Global is primarily focused on improving its network and product, while also “playing on the side with some opportunities,” Fries said Monday in a Bloomberg Television interview. Asked whether a deal with Sunrise was a possibility, he said, “There aren’t many operators in the market, so that would be one of them.”

A deal with Sunrise would bolster Liberty Global’s operations in a country where it’s struggled. The Swiss market is difficult because there are four operators, all offering wireless, fixed-line, Internet and TV services, Fries said at a conference this month. The company has brought in a new CEO in the country, is introducing new set-top boxes and improving its broadband offering, he said.

Liberty Global and Sunrise were in talks about a potential partnership to combine and expand their businesses in Switzerland, people with knowledge of the matter said in March. The people said the discussions were in the early stages and were seen as potentially paving the way for a joint venture between Liberty’s UPC unit and Zurich-based Sunrise, which has a market value of about 4 billion Swiss francs ($4.2 billion). The companies were working with advisers as they evaluated strategic options, they said.

The combined business’s structure could mirror the deal that billionaire John Malone engineered two years ago for London-based Liberty Global, his European cable-TV company, with Vodafone Group Plc in the Netherlands, the people said. Liberty Global and Vodafone, the world’s second-largest mobile carrier, in 2016 agreed to combine their Dutch businesses to create a provider of internet, TV and mobile services.

Fries, at the Goldman Sachs Group Inc. conference on Sept. 13, raised the prospect of an initial public offering for Liberty Global’s Swiss unit. Sales have declined in recent years for Salt, the mobile operator controlled by French billionaire Xavier Niel, Sunrise, and Swisscom AG, yet the companies are priced at 8 to 10 times earnings, he said.

“So maybe we should just take Switzerland public,” Fries said at the conference. “It might be the answer to the question. But having said that, we are looking at all of our options and I think we are, in many ways, a fulcrum asset there.”

Sunrise shares rose 0.7 percent to 89.90 Swiss francs at 9:30 a.m. in Zurich. They have returned 6.3 percent this year including dividends, compared with a 13 percent decline for the Stoxx 600 Telecommunications Index in francs. The company, previously owned by CVC Capital Partners, went public in an initial public offering in 2015. German phone carrier Freenet AG is Sunrise’s largest shareholder, owning about a quarter of the stock.

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