Sunrise CEO does not expect a rapid exodus of US investors
Published: Wednesday, Oct 30th 2024, 12:20
Updated At: Thursday, Oct 31st 2024, 00:59
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Sunrise CEO André Krause does not expect a rapid exodus of US investors following the spin-off of the telecoms provider from its parent company Liberty Global. However, an independent Swiss company will have a different shareholder structure over time than it does now as part of Liberty Global.
"We expect that significantly more Swiss and European shareholders will take a closer look at the Sunrise share," said Krause in an interview with the news agency AWP on Wednesday. But the change will probably take place gradually over the next one to two years.
"I don't think there will be a sudden change. I would be surprised if there was a rapid, massive change in a short space of time. I don't expect that," said the Sunrise CEO. "From the discussions we have had with the larger shareholders, it is clear that they are definitely interested in the Swiss Sunrise."
Traffic light on green
At an extraordinary general meeting last Friday, Liberty Global shareholders voted with over 99 percent in favor of the spin-off of Switzerland's second-largest telecommunications group.
The next step is the trading of subscription rights for the new Sunrise share, which will start on November 13 on the US technology exchange Nasdaq. This will allow Liberty shareholders to decide whether or not they wish to remain invested in Sunrise. On November 15, trading in Sunrise shares will then start on the Swiss stock exchange SIX.
High debt could be a brake on growth
However, Sunrise's high level of debt could act as a brake on the interest of local institutional investors such as Swiss pension funds. Thanks to a 1.2 billion capital injection from Liberty Global and the free cash flow generated by Sunrise, this should be reduced to 4.5 times operating profit EBITDA by the end of the year.
"From discussions with investors, we know that there are investors for whom Sunrise's debt is too high to invest. But that is not the majority," said Krause. Most investors have funds through which they can invest in investments with higher debt, including Sunrise.
On the other hand, Sunrise offers a "very attractive dividend". Next year, at least CHF 240 million will be distributed for 2024, which will be tax-free for Swiss investors as the dividend will be paid from capital contribution reserves, said Krause.
And the distribution should increase over the next few years. The attractiveness of the dividend is the advantage of Sunrise shares over comparable stocks, said Krause.
There used to be very few US investors
In comparison: "When Sunrise was first listed on the stock exchange, around 75 percent of shareholders were from the EU and 20 percent were from Switzerland. The proportion of US shareholders was very small," said Krause in an interview with "Finanz & Wirtschaft".
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