Europe (Region) Mooted UPC-Sunrise Deal Would Increase Convergence, Reduce Competition

摘要

Reportedly, a takeover of Liberty Global-owned UPC Switzerland by telecom operator Sunrise is being discussed. This is not the first time such a deal has been proposed, but we believe conditions are now more favourable than on previous occasions, given Liberty Global’s ongoing rationalisation of its European assets and Sunrise’s eagerness to strengthen its market position in light of third operator Salt’s move into converged services. This deal would be the latest evidence of the accelerating consolidation wave that has been characterising the European telecom landscape (see ‘Telecoms Consolidation View Playing Out In Europe’, January 23 2019) and in line with both our views that consolidation and convergence will be key aspects of telcos’ strategies in 2019 (see ‘Telecoms, Media And Technology Key Themes For 2019’, November 20 2018). In 2018, Liberty Global sold its Austrian assets to Deutsche Telekom and reached a deal to sell its operations in Germany, Romania, Hungary and the Czech Republic to Vodafone. Offloading UPC’s assets in Switzerland would be consistent with this strategy, enabling the company to shift its resources from less profitable markets (UPC Switzerland’s revenues were down by USD20.3mn y-o-y in 9M18) towards more attractive opportunities elsewhere and to ease its significant debt burden.