Sunrise Communications AG (SNNRF)

Price$51.00Cached quoteAs of 2026-09-04 16:23 UTC

AI: Fair-priced

Price checkThe shares offer a high cash yield, but heavy debt explains much of the apparent cheapness.

The OTC quote is thinly traded, so the Swiss Class A listing is a better cross-check. Using 73.4 million Class-A-equivalent units, with Class B carrying one-tenth of Class A’s economic entitlement, equity value is about CHF 3.1 billion. Management guides to CHF 380–400 million of adjusted free cash flow, cash left after operating, financing and investment payments, equal to about 12–13% of equity value; the expected Class A dividend yields about 8%. Adding net debt gives total business value near eight times 2025 operating earnings before interest, tax, depreciation and amortization. That supports Fair-priced rather than an obvious bargain. SEC+4ADVFN+4Zonebourse Suisse+4 Pasted text

Big pictureRevenue is drifting lower, but cash from operations has stayed remarkably steady for four years.

The supplied history shows revenue easing from CHF 3.04 billion in 2022 to CHF 2.98 billion in 2025, while operating cash flow stayed between CHF 1.20 billion and CHF 1.28 billion. Operating earnings before interest, tax, depreciation and amortization rose from CHF 943 million to CHF 1.03 billion, but net income was negative in 2023–2025. Capital spending stayed within CHF 417–541 million. This subscription business is less economically cyclical than many sectors, yet pricing promotions and customer churn remain recurring pressures. Because management’s 2026 adjusted free-cash-flow guidance is CHF 380–400 million, I use that lower measure for valuation. Pasted text SEC+1

Business strengthStable cash generation and longer debt maturities help, but leverage still leaves little room for mistakes.

At end-2025, current liabilities of CHF 1.54 billion exceeded current assets of CHF 1.02 billion, and supplied net debt was CHF 5.34 billion against CHF 1.03 billion of operating earnings before interest, tax, depreciation and amortization. In July 2026, Sunrise priced EUR 500 million of 5% bonds due 2033 to refinance 2029 obligations, pushing substantially all debt maturities to 2031 or later and keeping average debt cost near 2.8%. That cuts refinancing risk without cutting leverage. The 2026 Class A dividend target is CHF 3.49, while economic-equivalent share units rose about 2.7% from end-2024 to June 2026. Pasted text SEC+2SEC+2

What could change the storyFaster debt reduction would create upside; weaker pricing or subscriber momentum would expose the leverage.

The bull case needs adjusted free cash flow to hold near CHF 380–400 million, revenue to stabilize, and retained cash after dividends to reduce debt. Second-quarter net additions were 21,000 postpaid mobile and 3,000 internet subscriptions, while management expects the August price increase to support revenue if customer losses stay contained. The bear case: customers could resist higher prices, subscriber gains could reverse, and debt reduction could stall. My inference is that sustained adjusted free cash flow above CHF 400 million with falling net debt would strengthen an undervaluation case; below roughly CHF 350 million would weaken it. SEC+1

AI: News

Second-quarter guidance heldSecond-quarter cash flow improved sharply, but revenue fell and management kept full-year guidance unchanged.

On August 19, second-quarter revenue fell 2.6% year over year and adjusted operating earnings before depreciation and amortization, after lease costs, fell 3.8%, while adjusted free cash flow rose 33.3%. Mobile postpaid net additions were 21,000 and internet additions were 3,000. Sunrise reaffirmed 2026 guidance for broadly stable revenue, about CHF 1 billion of adjusted operating earnings before depreciation and amortization, after lease costs, CHF 380–400 million of adjusted free cash flow and a CHF 3.49 Class A dividend. The Swiss shares closed about 0.7% lower that day; timing alone does not prove the results caused the move. SEC+2SEC+2

Debt maturity extendedA new long-dated bond pushed most debt maturities beyond 2030 without raising leverage.

On July 22, Sunrise announced EUR 500 million of new 5% bonds due 2033. The proceeds refinance debt due 2029, with the remaining stub planned to be paid from operating cash in the second half. Management said the transaction is leverage-neutral, extends weighted average debt life to 5.9 years and leaves substantially all debt due in 2031 or later at about 2.8% average cost. The Swiss shares traded up as much as 1.5% intraday; that move cannot be attributed solely to the refinancing. SEC+1

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Financial statements

	2025	2024	2023	2022
Revenue	CHF2.98B	CHF3.02B	CHF3.04B	CHF3.04B
Gross profit	CHF2.15B	CHF2.19B	CHF2.20B	CHF2.22B
Gross margin	72.14%	72.50%	72.50%	73.00%
Operating expenses	CHF2.06B	CHF2.08B	CHF2.19B	CHF2.30B
Operating income	CHF96.2M	CHF105.0M	CHF10.7M	−CHF85.4M
Operating margin	3.22%	3.48%	0.35%	−2.81%
EBITDA	CHF1.03B	CHF1.02B	CHF1.00B	CHF943.4M
EBITDA margin	34.61%	33.89%	33.04%	31.08%
Net income	−CHF108.5M	−CHF361.9M	−CHF312.2M	CHF84.0M
Net profit margin	−3.64%	−11.99%	−10.29%	2.77%