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German MVNO sees strong parallels with Swiss telco; CEO, CFO to join Sunrise board.
German MVNO and reseller Freenet on Friday struck a €714 million deal to buy 23.83% of Swiss telco Sunrise Communications held by private equity firm CVC Capital Partners.
The deal will see Freenet become Sunrise’s biggest single shareholder. Freenet’s CEO Christoph Vilanek and CFO Joachim Preisig will join Sunrise’s board. Freenet also plans to exercise an option next month to increase its holding to 24.56%.
"The acquisition of shares from CVC Capital Partners is a great opportunity for Freenet that we have been delighted to grasp," said Vilanek. "We understand their business model and, with regard to cash orientation and the financial profile, we can see strong parallels with our profile on the capital market."
CVC acquired 90% of Sunrise from Danish incumbent TDC in 2010, paying 3.3 billion francs (approximately €2.5 billion at the time). Sunrise’s IPO in February 2015 raised CHF2.24 billion, and saw CVC’s stake reduced to around 25%.
"After more than five years of CVC funds ownership we hand over to a new major shareholder. Freenet is an industry insider with more than 12 million mobile customers in Germany and leading edge retail capabilities," said Lorne Somerville, head of telecoms, media and technology at CVC Capital, and outgoing chairman of Sunrise.
Freenet said the deal will boost its 2016 EBITDA by approximately €10 million to €410 million, and increase its free cash flow to €330 million from €300 million.
To fund the purchase, Freenet has taken on a bridge loan with a three-year term from a consortium of banks.
Freenet did not say exactly when it aims to close the transaction, only that it is expected to happen soon.
The announcement comes a week after Sunrise announced that its CEO, Libor Voncina, is stepping down and will be replaced on 9 May by former EE chief executive Olaf Swantee.
At the same time, Somerville announced he will not seek re-election as chairman at the telco’s next AGM, which takes place on 15 April. He has nominated former UBS chairman Peter Kurer as his successor.
