Olaf Swantee, head of Swiss operator Sunrise, expressed confidence that a deal to acquire Liberty Global’s cable business in the country will go ahead despite some hurdles, Financial Times (FT) reported.
Last week, Sunrise announced a deal to acquire UPC Switzerland in a deal which gave the cable business an enterprise value of CHF6.3 billion ($6.3 billion). The transaction will support Sunrise’s multiplay propositions.
However, German communications company Freenet, which holds around 25 per cent of Sunrise, is said to have reservations including the fact that the deal essentially sees Sunrise taking on all the risk, with Liberty Global walking away with cash.
And Sunrise is also planning a rights issue to fund the cash portion of the deal as well as repaying some existing debt (it will take on new debt related to UPC Switzerland). Freenet has indicated it may not participate in the fundraising, which may cause some headaches.
While Freenet has questioned the structure of the transaction, FT wrote that its management said the actual deal “makes a lot of sense” in principle, due to the way the telecoms and media sectors are moving. It has been suggested Freenet may not actually be in a position to support the deal financially even if it supports the market consolidation.
Andre Krause, CFO at Sunrise, noted the deal has high levels of synergies, but that it still has “heavy lifting” to do.