German MVNO Freenet is paying out €714 million for a 24 per cent stake in Sunrise Communications Group, the Swiss operator.

The investment follows Sunrise’s announcement earlier this month that Olaf Swantee, the former CEO of EE, will join as its new chief in May.

The German firm bought the stake from CVC Capital Partners, the private equity firm.

Sunrise is vying for second spot with Salt (formerly Orange Switzerland) in the country’s mobile market, where Swisscom is dominant.  French billionaire Xavier Niel agreed to acquire Orange Switzerland for €2.3 billion at the end of 2014.

According to GSMA Intelligence, Sunrise had 2.6 million mobile connections at end-2015.

Freenet has an option to acquire an additional one per cent stake in Sunrise for the same price as its initial investment in April.

The transaction is being financed with borrowed capital. The financing structure is a bridge loan provided by a bank consortium with a term of three years.

The intention is for Freenet’s CEO, Christoph Vilanek, as well as the company’s CFO, Joachim Preisig, to join Sunrise’s board of directors. The transaction is expected to be completed “soon”, the German company said.

Freenet said its board of management has decided to support the proposals that the Sunrise board of directors will be submitting to the company’s annual general meeting on 15 April 2016.

“We have been watching the development of Sunrise Communications very closely for some time now. 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,” explained Freenet’s Vilanek.