Report: Liberty Global in Swiss talks with Sunrise

Liberty Global is reportedly in early-stage discussions with Swiss service provider Sunrise about combining their businesses in Switzerland.

According to a Bloomberg report, the negotiations could lead to a joint venture between Liberty’s UPC Switzerland and Sunrise similar to that struck between Liberty and Vodafone in the Netherlands in 2016.

Bloomberg cited unnamed people with knowledge of the matter and added the two sides may not reach an agreement. Sunrise’s share price dropped following the report, which Bloomberg said reflected investor disappointment that Liberty wasn’t in talks about a full Sunrise takeover.

Speaking on Liberty Global’s fourth quarter earnings call in February, company CEO Mike Fries said that Switzerland was a market in need of “rationalisation” and that Liberty had “some options” to consolidate or “become a larger player”.

Fries said he did not expect a significant financial turnaround for Liberty’s Swiss operation this year in the face of competitive challenges and the company’s investment in sport rights. He also compared Switzerland with the Dutch market, where he said it took the company “three years to really get the fixed business…back on track”.

In December, Fries spoke at the UBS Annual Global Media and Communications conference, where he said that Liberty would be a “buyer or a seller” in markets where it lacked scale.

“National scale is what matters in Europe,” said Fries. “In the connectivity business it is about national scale and we are driving towards that.”

The Bloomberg report comes after Vodafone confirmed in February that it is in “early stage discussions with Liberty Global” about potentially acquiring parts of its European operations.

T-Mobile Austria also agreed to buy Liberty Global-owned cable operator UPC Austria for an enterprise value of €1.9 billion at the end of last year.

In early 2017, Liberty Global and Vodafone completed the creation of their Dutch joint venture, establishing a converged fixed and mobile communications operator that can compete more effectively with KPN.

Liberty Global said at the time that the 50:50 JV, combining its Dutch unit Ziggo’s fibre-rich fixed-line network with Vodafone’s mobile operations, would create “a stronger converged competitor” in the Dutch market and deliver significant benefits to consumers.

UPC Switzerland and Sunrise both offer internet, TV, landline and mobile services in Switzerland.

Liberty declined to comment on the Bloomberg report.