Four people who were familiar with the plans said private equity fund CVC Capital Partners is prepping to exit from Switzerland's second-biggest mobile operator Sunrise. The decision to divest the mobile operator was said to be due to the botched merger deal with a peer back in 2010, the sources added.
Three of the people disclosed that CVC had been in discussions with banks regarding their role in a listing or sale of Sunrise, although the trio said CVC has yet to set a mandate with the banks. The fourth source told Reuters that the Sunrise exit could happen in the next six to 18 months.
When asked for a comment, CVC declined to provide one.
Reuters calculated that Sunrise's valuation of its equity and debt would be around CHF3.2 billion or $3.6 billion, which was based on the mobile operator's core earnings multiplied to 5.1, which is what its peers in Europe are trading.
Currently, there are three operators in the telecoms market in Switzerland, a country which offers profit margins higher than many other countries in Europe. However, the report said Sunrise and rival Orange Switzerland has yet to gain critical mass that ex-monopolist Swisscom was able to achieve. Swisscom's market share remained stable at 62% in the past ten years, which Sunrise only saw a slight rise in its market share to 21%, which Orange has 17%.
CVC acquired Sunrise for CHF3.3 billion in 2010. Sunrise's proposed merger of Orange had been blocked by the Swiss Competition Commission. Orange at the time of the proposed merger was under France Telecom, but is now owned by Apax, a private equity group.
One of the sources stated, "Stock markets are buoyant and there is a lot of M&A activity in the sector - that has sped up CVC's exit considerations. To extract a maximum price, CVC will likely launch a dual track process that may result either in an initial public offering or a trade sale."
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