Sunrise Communications AG (SUNN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Sunrise Fourth Quarter and Full Year 2025 Financial Results conference call and live webcast. I'm Moritz, the chorus call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. Page 2 of the presentation details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Sunrise's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Sunrise's filings with the Securities and Exchange Commission, including its most recently filed 20-F. Sunrise disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in conditions on which any such statement is based. At this time, it's my pleasure to hand over to Alex Herrmann, Vice President, Investor Relations. Please go ahead, sir.

Thank you, operator, and good morning ladies and gentlemen. Welcome to our fourth quarter and full year 2025 financial results call. Thank you for joining us today. As per usual, Andre Krause, our CEO; and Jany Fruytier, our CFO, are with me today and will lead you through the presentation. On Slide 3, which you can see on the screen, you will find the agenda for today's call. Andre will kick off with a summary of the 2025 achievements. This will be followed by an overview of the commercial performance as well as an update on recent trading dynamics. Following that, Jany will take over to discuss our financial performance for the full year as well as the fourth quarter. We'll finally shift the focus on the outlook for this year and conclude with the key messages before we move to the Q&A session. And with that, it's my pleasure to hand over to Andre. Please.

Thanks, Alex, and good morning, everybody. As you have seen, we have a lot of ground to cover. So let's straight jump into our summary of the key activities and results of 2025, which was a pretty busy and dense year. Again, in '25, we have continued to launch a number of new innovations, product portfolios, features across our 3 segments, our Sunrise Main brand, our Flanker brands and B2B. Let me flesh out the Swiss Connect Portfolio, which was a milestone achievement that we launched this year and the launch of our home security product, along with the hockey-right expansion that we could do for the next 10 years. And then if we look at our Flanker brands, also a portfolio refresh with some increased speed and optionality in that portfolio. And in Q4, the CHmobile launch, which we're going to talk a bit more in detail about later. On the B2B side as well, we continue our focus on the SME segment with launch of new packages for that segment. And we recently just yesterday, have announced also a further future portfolio, with inclusion of some additional ICT services. Now all of that has enabled us also to continue a good momentum on commercial trading. We have continued to grow our mobile RGUs, 82,000 additions for the full year. We have stabilized our fixed RGUs, slight decline of 3,000 throughout the year. We have finalized our UPC migration. So all of the UPC tariffs have been migrated to the Sunrise portfolio and gives us now the optionality to work with those customers in a very different way. We have also onboarded a large Swiss retail lighthouse customer, which we've talked about in the past. We have also renewed our contract with Swiss Post and started a testimonial campaign with Swiss Post, which I think was also a very strong campaign nailing down our position on the B2B side. And we have also fully ramped up our first FVNO customer with Digitec. Now that has all enabled us to deliver our financial results in line with our guidance. So we are fully delivering against the guidance that we have set with a revenue decline of 1.1% within the broadly stable environment, a growing adjusted EBITDAaL of plus 0.9%. And then also, if we look into the free cash flow at CHF 380 million, that is exactly in the middle of our guidance, which allows us to propose a dividend of CHF 3.42, which would be a 2.7% dividend growth year-on-year. And this is a proposal that will go to the AGM and will be subject to the AGM voting happening in May. Now I would say additionally important to flesh out for this year, we talked about that in the third quarter already that the one thing that was not really meeting our expectations was the stabilization of the fixed consumer base, which at this moment in time is somewhat delayed. We see that the ARPU trend is softening. We'll see that later. However, there is still a significant impact, and we expect that to take somewhat longer than what we have expected, hence, also a continued impact on that in 2026. However, on the positive side, I think we have also been able to reduce our OpEx run rate throughout the year of '25, and we'll have some additional upsides coming in '26 and '27, alongside with also our opportunity to reduce our CapEx, and we'll talk about that when we discuss our outlook for '26. Now with that, let me also talk about our infrastructure evolution in the last year. Q4 is always the quarter where we get the results of the annual connect test. And again, I mean, with 975 points, that was the strongest ever outcome that Sunrise could deliver. If we look at that from a global perspective, as this test is carried out with -- across the globe, we are amongst the 5 best networks in the world. I think that is a stunning result. Switzerland does have 3 networks in the top 10. So Switzerland, in general, is a very high-quality network environment. But I think we are personally very proud about the achievement that we could deliver not just in this year, but we have an outstanding rating for the last 10 years. And I think that is also a pretty unique achievement. I would also like to flesh out that we have continued our innovation leadership on the mobile network side. You remember that in the middle of the year, we were talking about our 3G switch-off, which allows us to reallocate spectrum and to now actually are having a network that is only based on 4G and 5G with 5G having a massive footprint on 5GSA. And with that, we have -- I would argue, the most modern network across Europe. And that network obviously allows us now also to slim down some of our investments in capacity as we are benefiting from a massive capacity that we are having on our network, particularly on the 5GSA side. Not only on mobile, but also on the fixed broadband side, our hybrid network strategy is working very well. Firstly, Sunrise does offer the largest gigabit footprint in Switzerland with the ability to have access to fiber, to have an HFC footprint that is even larger. And beyond that, we are also benefiting from our 5G footprint that covers all of the areas where today also customers can only benefit from copper infrastructures. So that is the largest gigabit footprint really that is available to customers in Switzerland. HFC continues to capture a stable share of inflow. With our 2.5 gig upgrade that we did already in '24, we are still extremely competitive with this offer, and we see that this offer is getting a lot of customer traction. You see also on the right-hand side that with fixed -- with FTTH growing, obviously, our share of own networks, if we look at HFC and fixed wireless access is pretty stable at around 56%. And additionally, interestingly, also our unit cost, if we look at the blended unit cost across all technologies are even slightly reducing. Main reason for that is that there is a bit of a compensatory effect of a slight increase of FTTH. But on the other hand side, also copper is reducing and copper is having the highest price points. And as such, there's a bit of a counter effect that helps us to even see unit costs slightly reducing. I would also like to update you today on our achievements on the sustainability side. Across our 3 key areas that we are covering, we could make substantial progress. If we talk about our people side, then firstly, our engagement score of employees, again, has been in the top 25% in the top quartile. So there was a very strong achievement. Also, if we look at female leaders shares, we could increase to 18.9% and will further increase in the years to come. And also the gender pay gap is now below 2.5%, which is a benchmark number across Switzerland. On the planet side, we have continued to reduce our Scope 1 and Scope 2 greenhouse gas emissions by 49%. So that is a massive achievement. We also have stepped up our activities if it comes to circularity. So 165,’000 CPEs have been refurbished, and we have traded in more than 22,000 mobile phones. That number keeps growing. So we are well on track in regards to our planet targets. And this has also led to additional certifications and ratings. We have now our greenhouse gas reduction targets, SBTi approved and validated. We have continued to certify against the various ESO norms. And on the back of that, we have been able to achieve the EcoVadis Platinum Medal. So I would argue not only on the business evolution in terms of trading and financials, but also in regards to sustainability, Sunrise is well on track. And as you know, sustainability is part of our company targets and all management is incentivized to also push on the sustainability front. Now with that, we're not only talking about the full year, but we're also talking about the fourth quarter. The fourth quarter is always quite important given the higher liquidity that sits in the quarter. And I would like to update you a bit on what are our key observations on Black Friday and also give you a bit of an update on the CHmobile launch. Starting off with Black Friday, we have seen somewhat lower market liquidity despite the fact that, again, competitors have started the period pretty early on. So our hope for a reduced time frame of Black Friday activities did not come true. Essentially, we have seen the first competitor already launching Black Friday activities on the last Friday in October. We have executed our follow-up strategy. And interestingly, I think everybody has perceived somewhat lower trading volumes and less liquidity. And as a result of that, we have seen most of the Black Friday offers being expanded into December. So essentially, while we were hoping for a lower period, we have seen a rather longer period. Now as we have been talking about in the Q3 results, we have launched CHmobile, our C segment online-only mobile offering into the Black Friday period, and we have only been reactive with that. So we have been, if you want, the last that has launched that activity. We have been benefiting from the fact that the launch was well published across the media. So we haven't spent a lot of money really on marketing, but we were benefiting from a lot of PR that we were getting. And as you know, our launch promo at CHF 9.90 price was quite attractive. However, if you look into the comparison that you see in the middle of the page, you see that this was not really disruptive as the price point was actually also covered by other players during the Black Friday period. Now most recently, the CHmobile price point is in the range of CHF 13 to CHF 16. Now we have also introduced not only a monthly cancelable product, but we also now have an option that a customer could pick a 24-month tariff, which is then slightly less expensive. So that gives us the optionality to also create decent stability with into that customer base going forward. And we'll see how that goes. I think also with the current pricing range, we are well in the range of our C brand competitors, I would argue. And we are not really pushing the price points lower than necessary, but we are swimming within that marketplace to capture a decent share of liquidity. Talking about liquidity and success, you also see a bit -- some indications on how we are seeing the trading happening. Essentially, what I can share with you, the CHmobile contribution to our Q4 results, which I will talk about in a minute, has been less than -- well less than 50% of the inflow was coming from that. However, also important to note that many customers that we have written the orders in Q4 will only become activated in Q1 and Q2. Reason for that is that most of the customers are coming with an O&P, 85%. And of course, with the number portability, there's a certain time delay between the order and the activation. However, what we can tell is that from the O&P insights, we can estimate a bit on how the distribution of the inflow is actually looking like. So according to our expectation as well, we have seen that the A segment contribution of CHmobile was rather limited, well in line with what we have expected, but it was largely fueled by the B and C segment. And also, if we look at cannibalization of our own brands, we see that our own Flanker brands and the A segment was -- were rather limited impacted, but of course, also some of our MVNO partners were seeing some outflow on the CHmobile offering. Overall, I would argue that this is well in line with our expectations. We see limited cannibalization, and we see the attraction of the C segment really happening for very price-sensitive customers moving within the C segment or moving down from the B segment into the C segment. So I think our strategic rationale of participating in the segment is well displayed by those numbers. Well, let's also talk about some of the recent evolutions. Also part of the Q4 was the Flex Upgrade cycle that we have seen with the launch of the -- the successful launch of the iPhone in the fourth quarter. Our customer base has grown by 60% on the Flex upgrade products. The attachment rate on new customers is above 40%. Recommendation rate of the product of those -- of customers on this product is more than 90%. And obviously, this product is also fueling the device returns and supporting our ESG ambition very well. So we are very happy with this product evolution and still this is a product that is somewhat outstanding in the market and gives us a unique selling proposition at this moment in time. If we talk a bit about also the recent pricing developments that we have seen in the market, I think we are observing at this moment some promotional in Q1. You've heard already previously about the price increase that Swisscom has announced at the beginning of the year as part of their Q4 results. Sunrise, having done 2 price increases in the past 3 years, we are not foreseeing at this moment a general price increase in 2026. However, we will continue to monitor the market, and we will do certain selective price increases in certain tariff elements. This could be pay-go elements, voice elements, other feature pricing that we have across our customer base where we sense we have an opportunity to catch up to the market. And this opportunity is not small. It will actually potentially give us up to 50% of the pricing upside that we were getting from last year's price increase, we think is possible to achieve by not doing the general price increase, but executing some of those selective price increases that I was mentioning. Now lastly, on this page, let me quickly talk about the liquidity that we are observing. I was talking about the fact that we have seen less liquidity during Black Friday, hence, the prolongation of the promotions. And we are perceiving now that the market in Q1 continues to be on the lower end, while we also see that the promotional activities are easing somewhat. I think that is well reflecting the reality that the attraction of price is not necessarily growing, but rather declining. So we'll see how that evolves going forward, but it will, of course, have an impact on the inflow evolution in Q1, while at the same time, we are also seeing that some of the Black Friday outflows will only happen in Q1 as well. What is good to see is that the churn seasons that we see in Q1 so far are showing a 10% improvement, which is in line with our expectation that churn should reduce, which I think is a general positive. However, Q1 in total, I think, will be from a trading volume perspective, a rather lower quarter that we have to expect. Now with that, let me conclude my first section here with the overview on the trading results of the Q4. Our postpaid net additions on the mobile side were at 31,000 additions, the best outcome of the year, but of course, also helped by the liquidity that sits in the market in the fourth quarter. On the fixed side, we could further improve from the negative minus 7,000 in Q3 to minus 2,000, however, we are expecting that Q1 will remain to be a challenging quarter with some of the Black Friday outflows that we are seeing, and we'll talk about the outlook that we have later on. The FMC quarter further increases to 59.8%. That's a 1.8 percentage point increase over the full year. So we still see that FMC is a driver to our customer base, and we would also expect that to continue. Talking about ARPUs, we do see on the mobile side in Q4 an ARPU of CHF 29.2. That is a year-on-year growth that is helped by price increase and also helped by the accounting change that we were talking about in the earlier quarters that is shifting a bit of the bundle accounting value towards the mobile and away from the fixed. So consequently, you also see some incremental impact on the fixed ARPU, which is now at around CHF 56 and a 4% year-on-year decline, as you can see from the decline rates, we see some softening of that decline, which I think is what we are indicating about that we are seeing still pressure on the ARPU, but we are expecting some easing as we are going through the year of '26. Now with that, I hand over to Jany for the financials.

Thank you, Andre, and also welcome from my side, everyone. When we look at the first slide here, Andre spoke about it already, we have achieved all of our guidance metrics and are proud of that, that was driven by a strong quarter in terms of revenue with 0.5%, leading to a 1.1% decline for the full year. We'll speak in a second about what drove that. EBITDAaL growth at around 1%, driven by cost optimizations with CapEx around CHF 480 million or 16% for the full year, leading to CHF 380 million of adjusted free cash flow, which is approximately 5% growth versus what we saw in '24, which then led to around 4.5x net leverage ratio, which is approximately stable versus prior year. Then if we go to the next page, first, perhaps on Q4 quickly. So, 5% growth, which I already spoke to, which was driven by effectively 3 things. So on the one hand, we saw non-subscription revenue in residential growing at CHF 9 million, which was a mix of higher handset volumes as well as fee increases. For the full year, that is much less elevated, but Q4 was a good quarter in terms of handset sales. Then secondly, on B2B, again, also strong growth in the nonsubscription revenue, which was around CHF 11 million, which also was driven by a number of fee adjustments as well as wholesale voice and device sales. Then when we look at the subscription revenue in residential, we saw a continuation in terms of decline versus what we had seen in prior quarters and mobile growing slightly. What we can see there is that we have continuous volume growth. And even though that ARPU is improving, we're still continuing to see some usage loss in part because of the new portfolio that we have. And as such, mobile was flattish in Q4 and also for the full year. Perhaps when we go to the full year, again, 3 things to mention. So on the one hand, mobile, when we focus on subscription revenue in residential, Mobile is minus [ 2 ], which is a combination of around 40,000 adds in the year with is improving ARPU on the back of reductions of usage on the one hand, with the price increase offsetting. The CHF 60 million decline in subscription is very much driven by the continued pressure that we see on ARPU. Andre spoke about that, and this is perhaps where we expected to be further along in terms of the temporary of that ARPU. Full year CHF 6 million increase in the nonsubscription bid, which is predominantly driven by the fee increases because handset sales were slightly down. On B2B, we see 2 things. On the one hand, we see subscription slightly growing for both Fixed and Mobile, I think 2 things that are important to note is, again, that also especially on B2B, we see the usage of mobile revenues declining with volume growth. And on the fixed side, we were impacted by a hard comp for 2024 because of that significant and big enterprise deal that we recognized in '24 with number of one-off revenues that were there. On the nonsubscription side, it's similar to what I just discussed for Q4, so a mix of wholesale revenues plus MVNO growth plus some fee adjustments. On the inference support side, a slight growth for the full year, but not meaningful, which is driven by the slight increase of the tower sales that we have done to Cellnex. But we then go to EBITDAaL, full year growing at 0.9%, whereas Q4 minus 1.4%. That 1.4% is driven by effectively a decline in GP, which is now normalized again versus what we saw in Q3 where we had all of those accounting adjustments. And again, perhaps different than what we see -- saw in the prior quarters a slight decline, which was driven by a flat OpEx. That flat OpEx had a number of give and takes because on the one hand, we saw continued cost savings because of the recurring savings program. Secondly, we saw slightly lower commissions and marketing spend that what we saw in '24 because volumes in general were a little bit tempered as Andre has already referred to. But then we had a number of phasing elements in terms of our labor cost. So therefore, OpEx flat. When we go to the full year, and we explained 0.9% growth, then again, the residential decline is driven by the fixed subscription decline, B2B growing nicely at around CHF 10 million and Infra more or less flat when it comes to GP, as I said, that is the Cellnex tower sales. The CHF 36 million of OpEx full year savings as a number of elements. But I think important to note there that of that CHF 36 million, we estimate that more than 50% of those costs are recurrent and so therefore, are expected in '26, but then there were a couple of one-off elements for nonrecurring elements that sort of further supported that CHF 36 million decline. So on the one hand, we saw a significant uptake of the employee share program that we communicated in prior quarters already. And then again, similar to what I just discussed in GP also, but then on the benefiting side, lower cost in B2B because of the initial cost that we had in '24in relation to that one-off deal. And then lastly, we did see a number of improvements, both in terms of our bad debt and in our supply chain net cost. But all in all, doing well. And then lastly, which also helped to the result, is there the full year reduction of lease cost. I think Andre spoke about that already this. On the one hand, we did see a slight increase in our overall portion of fixed customers that are on lease infrastructure. However, because of the various contracts that we have and our management of those contracts, together with the reduction of DSL, we are seeing year-over-year improvement in our full leasing cost, which then got us to the CHF 1,007 million EBITDAaL. When we go to the next page, and we focus on CapEx, then I think important to call out is, on the one hand, Q4 as reductions across all of the categories, that is predominantly because of the different phasing that we had in '25 versus that what we had in '24. So if you look at it in Q1, we had significant higher investments, Q2 and Q3 were more or less flat. And so therefore, Q4 was slightly lower. When you look at the full year results, there also, you see a reduction of our total CapEx. And I think that's where I'd like to focus on because on the one hand, we had slightly lower coverage CapEx, which was, again, coming from that big deal predominantly from the big B2B deal. Capacity was slightly lower because as Andre said, we were preparing for the 5G stand-alone and the 3G switch off last year. So in this year, we could reduce our investments in relation to that. And then lastly, the product and enabler savings. So that in '25, we actually had significantly less and sort of no more integration costs anymore, which we still had in '24. So those 3 elements drive the full year CapEx reduction and sort of gives us also confidence for what we're going to guide for in a second when it comes to '26. Then summarizing all of this in -- to our free cash flow. So before we go into the details, I'd like to point out one thing, and that is that -- as you are aware, '24 included only 1.5 months of cost in relation to our standalone, whereas in '25, we now have full year stand-alone cost. And as we have previously communicated, we are rebasing our 2025 numbers for those changes. However, there's one exception in that we don't adjust the free cash flow because cash is cash and otherwise, our cash balances wouldn't sort of communicate anymore. And so therefore, especially if you look at the 2025 full year financials and we focus on working capital and other, you see CHF 32 million negative, which effectively is that adjustment of those rebates. So actually, that is important to note in the working capital. On the one hand, EBITDAaL, therefore, is growing, but the offsetting element is in working capital, so that other free cash flow, it doesn't impact the number. Now going back to the full year growth that we were able to achieve. So we see that is effectively because of 2 things that are predominantly driving it, on the one hand, lower CapEx, and on the other hand, reduced interest cost and of course, that is as a result of the deleveraging that we did in Q4 2024. And so therefore, had lower interest costs in 2025. Then on the next page, when we focus on our debt, I think, again, 3 things for you to take away. So on the one hand, we were able to significantly improve our maturity profile when it comes to our debt. You see that in the bottom 2 graphs, where we significantly pushed out to '28 and '29 maturities to '31 and '32. We were able to do that whilst keeping our WACD approximately flat at 2.8%. And I think that gives us the opportunity to now opportunistically look when and if markets are beneficial to where we are now, but there is no way any hurry for us to do so. And then lastly, what is also important is that we did reduce our gross debt by around CHF 180 million in Q4 like we have communicated. Now that CHF 180 million reduction is not for sake showing up in our net leverage ratio. That is because, on the one hand, we have the stand-alone cost. So therefore, the denominator is slightly lower. Secondly, because of all of the refinancings we did amortize the cost in association with those refinancings. And so therefore, then the debt balance is creeping up a bit. But what is, again, important and is in line with what we have communicated is that we will continuously repay our debt -- our gross debt on a yearly basis. When you then go to the next page, Andre spoke already about it. We are proposing and have agreed with the Board to propose to the AGM CHF 3.42, for Class A shares and the Class B shares will be still getting CHF 0.34. That drives then around CHF 250 million of expected dividend which is an increase of around 2.7%. And also important here to highlight that the dividend payout is approximately 66% of our total free cash flow. Now as you are aware, but let me reiterate all of that dividend for Swiss citizens is withholding tax-free and also for foreign investors is then withholding tax-free. That, of course, CHF 250 million dividend, minus the CHF 380 million of free cash flow of -- CHF 380 million minus CHF 250 million gives us around CHF 100 million plus to be used to delever again for 2026 as a sort of guidance for you to think about. Then lastly, the date of AGM planned and invited for the 7th of May, which then will lead us to pay by the 13th of May. Good, one sentence on the ADS. So during -- after the Q3 results call, we communicated that we had terminated the Class A ADSs that resulted in us doing an ABB or not us, but the custodian bank doing an ABB of approximately 4.7 million shares we had communicated. But I think it's important if you look at recent share price evolution that, that ran through that. We have now also have terminated our Class B shares that we did as part of end of January, there was a significantly lower amount of shares to be sold, and so therefore, no ABB, but just a small placement of those shares. And with that, Andre, over to you.

Yes. Let's talk about our '26 outlook. And I would like to give you a bit of an update on our strategy that we are pursuing -- heading into the year. There's really no big change, but some small adaptations. The direction is absolutely the same. And there are 5 topics that I want to lead you through. And starting off with our 3 top line growth engines. Of course, our largest business, our Main brand business. Here, we're going to change gears towards a positioning in the A segment, we will rather focus in the direction of innovation, loyalty and service. And with that enabling an increase of share of wallet with our customers. And that we are attempting to stabilize the customer ARPU via incremental Fixed-Mobile Convergence, multi-mobile offerings. You may have seen our recent campaign that we launched just a week ago on family offers and incremental new service offerings that we want through the phase of innovation, loyalty and service push towards our customers to stabilize here and to drive certain growth. Also important, as we talk about our Fixed Broadband business on the Main brand. We want to see and manage a great deal stabilization. We will work on reducing the churn further down. And we are also taking actions to change the repricing dynamics to drive that stabilization during the course of '26. Talking about our Flanker brands with the good growth, and we want to accelerate somewhat. We are now with our launch of CHmobile, we are participating well in the C-segment, and that should drive positive full year contribution. We are very much focused on a follower strategy and we are not intending to drive market pricing down, but our multi-brand strategy is designed to cover all of the segments in the market, which we know with the launch of CHmobile are covering well. There's a strong focus on profitability across our Flanker brands. We are focused on a lean setup digital-first to make sure that the lower price points that we make accessible to those customer segments are also driving good financial results. On the Yallo side, in particular, where we have grown to a certain size, we are expecting also dynamics changing towards more base management, and this is a more mature brand, which is something that we are starting to implement and focus more on than in the past. On the top line growth side, of course, important to our B2B segment. We want to continue to win market share across all segments in B2B. However, there will be an increased focus on the SME segment, where with the SME bundles that we have launched in '25, but most recently, just yesterday, we announced our SME Future Ready bundle, which is a collection, not only of access and connectivity products, but also ICT service security predominantly an additional service that we provide which makes this easily accessible also for SME customers, which we believe is a driver going forward. Now moving away from the 3 top line businesses. Talking about excellent infrastructure, we will continue to drive quality improvements in our infrastructure. I was earlier talking that we think we can reduce our CapEx exposure, and that is benefiting from the fact that we have rolled out our infrastructure to a large extent on the mobile side and that our hybrid network strategy on the fixed side allows us to be rather CapEx light. But we will continue to drive quality and accessibility for our customers of a great reach and the right products to go forward. Efficient operations. You've heard about the OpEx improvements that we have seen. We will continue to drive that. Of course, the reorganization will help us to become more agile, which will drive significantly more, I think, opportunities going forward to become a leaner as an operation. We will also make a push towards using AI increasingly to -- and that, of course, also have already a certain impact in '26. And lastly, also on the CapEx side, it's not only all about our infrastructure, but also IT spend, where we are foreseeing that with the usage of AI, some of the software developments will become significantly cheaper than in the past. And lastly, but probably most importantly, what is key for us is our employee base. We want to continue to invest in talent. We want to drive engagement up. And with that, I think that is the key driver of the execution of our strategy and helping us to continue our path forward. Now with that, Jany, how does that convert into financials?

Good. So when we go to the next slide, similar topics than what Andre just spoke, but let me try to quantify for you out there that are trying to model our guidance. So in general, with all 3 brands, we expect an improvement. And as such, we do expect revenue to improve. Having said that, there is, of course, a partial offset, and Andre spoke about it. So we did a price increase in '25, we are doing price increases in '26 as well, albeit at a lower level. So therefore, all things equal, we get less benefit from that. We then do, however, expect a gradual improvement in fixed volumes as well as ARPU. In the end, ARPU should drive the revenue line, but we see that more back ended of the year with Flanker brand predominantly growing on the mobile side and therefore, a slight acceleration, Andre spoke about B2B and wholesale on the back of SME and expanded ICT services. So again, they're an accelerated growth to be expected. Then when we go to OpEx and CapEx. So fundamentally, with some of the changes that we have done and the run rates that we're seeing we believe that we can drive structurally lower cost over the medium term and as such, are able to offset perhaps a slightly delayed turnaround that what we saw in fixed. When we zoom in OpEx, a number of things happening. So if you think about it from a labor, sales and marketing and external spend perspective, we expect to drive external spend down like we have done in part supported by the AI office that we have set up and the first initiatives that are taking shape. Sales and marketing, we see a bit of an increase as we are expecting commercial growth across all 3 elements. So therefore, again, one should assume some growth on that line? And then on the labor side, 2 things happening. So on the one hand, less benefit from the ESP program that we run in '25, but of course, then a positive from the lower labor on the back of the restructuring that we did. When we focus on CapEx, a similar story. So on the one hand, we expect to drive efficiencies predominantly in slightly lower capacity investments as we have the 5G stand-alone network which still has ample capacity left, lower CPE replacement and more focused innovation investments, which then also is supported by AI efficiencies on the one hand, which would drive coding costs down, if you will. On the other side, as we have set up this AI office in our company, we are expecting to invest to drive that rollout of capabilities. And together, we are continuing and are actually increasing our investment in our mobile coverage. So with that, we then get to the guidance, and I think Andre spoke already about it, but let me recap. So revenue, we expect broadly stable, get a slight improvement versus what we have seen in '25. That then leads to approximately CHF 1 billion of EBITDAaL, with lower CapEx driving a slightly improving free cash flow from CHF 380 million to CHF 400 million. So we are expecting growth from what we have seen in '25. Now there is one offsetting element that you see to get from adjusted OFTO down to free cash flow, which is a negative on working capital. So on the one hand, we are there encountering, of course, the restructuring cost in relation to the benefits that we get from our restructuring. Therefore, one should assume that on a free cash flow basis, the restructuring doesn't drive cash flow in '25, but will of course, in '27 as the savings on the one hand, annualized, whereas most of the restructuring costs fall away. Then lastly, we are doing various prepayments of our Swisscom leasing contracts. And so again, driving a slight net working capital negative? And then lastly, as we continue to time between years, we're also offsetting some of the benefits that we saw in Q4 2025. With all of that, we then expect and on us delivering our guidance, we expect to propose CHF 3.49 for a Class A share, which will be approximately 2% growth versus what we are intending to pay in May. Then lastly, with all of the moving parts that you have just seen, we are reconfirming our adjusted free cash flow trajectory and with that, are able to continue to underpin our progressive dividend per share for the upcoming years. We go to the last slide. I hand over to Andre again.

Thanks, Jany. There was a long presentation. I want to, of course, give time for Q&A. Let me just quickly summarize. You've heard about we have achieved our 2025 guidance. The dividend proposal is as expected, CHF 3.42, which represents a 2.7% year-on-year increase. Secondly, while we have been seeing a delay in the Main brand fixed stabilization, that is well balanced by continued growth that we see in other segments alongside with improved OpEx and CapEx trajectories, we are capable to see a growing free cash flow growth into '26, which allows us also to give a progressive dividend per share outlook for next year, expecting slightly above 2% of dividend growth also for the year of 2026. With that, we'll close the presentation and open up for Q&A.

[Operator Instructions] The first question comes from Polo Tang from UBS.

It's Polo Tang from UBS. I've got 2 questions. The first one is just about your guidance of around CHF 1 billion for EBITDA. Can you maybe put some numbers on the building blocks to get to this EBITDA guidance? So for example, you've outlined your intention for selected price rises, but how much of an impact would this have? Can you also remind us how much of a benefit there was on EBITDA from employees taking stock in lieu of salary in 2025? And how should we think about the impact of cost savings or the potential for more commercial investments. So really just some numbers on the building blocks. And my second question is really just about the network road map longer term. So what's your latest thoughts on retiring your cable network in wholesale and fiber from Swisscom? Do you think that such a move could be accretive to your financials? And how complex would it be to implement and migrate the subscriber base?

Yes. Thanks for your questions, Polo. Let me take the second one first, and then Jany can give you some more detail on the guidance. So -- as we said, the timing of a potential change is very much driven by the dynamics that we are perceiving. At this moment, still, as we talked about, our HFC network is seeing a very stable inflow. Demand is very good. The product is very compatible -- very competitive. So I don't think that there is a short-term or medium-term change necessary on that strategy. I think as you've heard, also good to note that while there is FTTH share is growing, the fact that DSL is reducing and also there's a copper phaseout that Swisscom is exercising on the back of that, we -- the customers are not also getting a better product, but also unit prices for us are slightly more attractive. So at this moment, actually, we have not really spent too much time on driving that scenario to a conclusion. I think and this is unchanged. We are benefiting from the fact that we have a large subscriber base on the HFC side, and we will use the leverage that we have sitting on that, if you want customer base potentially moving over to a fiber solution to negotiate a good deal for us that ideally should be accretive. Whether that is achievable and when that's going to happen, hard to tell at this moment in time. We don't sense that there's any urgency to act at this moment.

Good. All right. Let me try to walk you through in a little bit more detail on what we're guiding. I think we try to go with the CHF 1 billion, Polo, closer to what our competitors are doing rather than guiding you just on sort of the movement. But appreciate that to CHF 1.0 billion EBITDAaL, perhaps also still raises some questions. But I think if you think about it from a CHF 1.0 billion with the typical rounding that gives you a sense of the up and down that you should be thinking about. Now how does that come together? On the one hand, we said revenue is slightly improving from -- versus prior years. And I think, again, there is a number of moving pieces, but if we look at 2025, where we saw minus CHF 35 million, we see an improvement from there for this year. Now how big that improvement is going to be. That's why we're guiding for broadly stable. I think, again, that is -- there is an improvement. How big that is, It's TBD. On the back of that, and I think what you can see for '25 on the one hand, we declined around CHF 35 million of GP, which again, on the back of improving the revenues, we should also expect a significantly improving gross profit in terms of decline. And then again, looking at 2025 OpEx which is improving by CHF 36 million, of which I said there is a number of things that are recurring and a number that are one-off. You then asked a question around the ESPP. So again, let me repeat the 3 different cost buckets that we typically highlight in our MD&A of the full year results. So personnel expenses probably flat to slightly down, on the back of the unwind of the ESPP incremental benefit that we saw in '25 versus the headcount reductions. Sales and marketing slightly up and then external costs down because of AI, our savings programs and a number of final one-offs that we are still seeing sort of annualizing into 2026. So that overall OpEx should be down in principle, offsetting the GP decline that we're seeing, so that with lease is approximately flat because, again, we do continue to see the leasing growing. But as Andre said, we see average cost coming down. So that you then get to approximately CHF 1 billion of EBITDA. So I hope that helps in sort of understanding the different elements.

Maybe just one follow-up in terms of price rises because you did mention selected price rises. So could you maybe just reference back to 2025 and remind us what impact that had -- and how should we maybe think about price changes for 2026?

Sure. So what is important there to remember, so we implemented in March and April. And so on the main brand, we did a 1.8% on fixed and mobile, Flanker brand, 1.5% on mobile only. Think about that, that it only touches in principle, the recurrent or the subscription revenue and in B2B, in parts of the base. We didn't give you an absolute amount because, of course, on the one hand, you have the gross price increases, but then you have some of the offsetting. I think what Andre did mention is that we are in times of conversion significantly above the market average of 50% to 60%. So I'll leave it there. Then last year, I think what we gave with new information. Today is that we expect with the selective price increases to do approximately 50% of what we saw in '25. And of course, then as a further benefit as well in '26, one has the annualization of Q1 price increases from prior year. So I hope that helps in sort of trying to frame how big the impact is without us disclosing the actual amount.

The next question comes from Robert Grindle from Deutsche Bank.

2 quick ones from me, I think. You mentioned your first FVNO customer. Just to confirm that you're white labeling fiber there, not your HFC network. Are you expecting that market to progress further? Prepayments to Swisscom were mentioned for leasing contract. What's the point and magnitude of that, please? Do you just get better terms from paying some early? And then I've asked about the risk of high-risk vendor switch out before, but I keep getting asked the question. So is there anything new on that front?

Yes. Thanks, Robert. Thanks for your questions. So let me start off with the FVNO. So indeed, we are reselling both actually, fiber and our HFC network. Reason for HFC is we are not market dominant, hence, we are not regulated on price. And also, we want to actually keep the utilization of that network up as long as possible. And as we are perceiving that over the midterm, potentially HFC utilization could decline for the benefit of fiber. We also are bringing on this first FVNO partner, which is Digitec Galaxus, who is bit like the Swiss equivalent to Amazon, who is not as successful in Switzerland, but that is a pretty large digital retailer that is not only doing the FVNO, but it's also having an MVNO with us. So that's, I think, generally positive. We're having some further conversation on other FVNOs, but I would not expect too many to launch given the complexity of dealing with a fixed customer is massively different than actually onboarding and maintaining mobile customers. Hence, the demand, I think, for these type of services is rather limited. And in the case of Digitec, I think they do have the capabilities to run these type of things. Before Jany talks about the leasing, let me quickly also touch on the high-risk vendor question referring to Huawei. I assume in our case, essentially, there was a recent news flow that the EU was considering to fully abandon Huawei. We had a recent touch point with the BAKOM in Switzerland who is currently preparing the legal revision of the telecoms law in which we assume that there is an option built in that a high-risk vendor can be excluded, not must be excluded, but can be excluded and that implementation will probably take a few years, and then it will probably come also with a certain light path in which the potential change has to be implemented. So at this moment in time, we also talk to them whether they are perceiving any change in the political discussions that there is more urgency on this, which is not at this moment what we are receiving. I would still continue to argue that we are very alert on the topic, but we also don't say that there is an immediate change.

All right. Thanks Andre. And then in relation to your second question in relation to the leasing. So what we are seeing, and I think we communicated that in the past, there are 3 types of excess contracts that we have with Swisscom. The BBCS pay-as-you-go on a monthly basis than sort of midterm contracts where we typically have 5-year leasing contracts and then your typical IRU. Now when it comes to the sort of 3 -- sort of 5-year [indiscernible] IRU, which typically are 20 years, there is typical payment terms associated with those contracts, which we negotiate with Swisscom, but won't disclose. And so what you're seeing is, as we are moving from the most expensive pay-as-you-go contracts to longer-term contracts we are then committing for specific volumes for specific times, which then have payment terms associated with it. So on the 1 hand, we see the average cost per lease line going down, which Andre spoke about. On the other hand, there is some cash flow impacts that are associated with that, which drives the total net working capital negative for 2026, that is there. So that's the way you have to think about it. So on the one hand, on EBITDAaL, we're seeing the benefits, but then the offsetting element in net working capital, which is part of our negative net working capital guidance that we're doing for the full year but not something for us to worry about, it doesn't impact our ability to drive free cash flow up in the long -- in the mid to long term.

Then the next question comes from Max Findlay from Rothschild.

I have a couple of questions. So firstly, on B2B subscription revenues, they declined again this quarter. Appreciate fixed has had a tough comps, but wireless growth has also declined this year. Just wondering if you could give us some more color on how growth accelerates from here. You mentioned the new bundle announced yesterday, but from memory there have been other bundles such as SME Ready announced earlier this year, and these have not really accelerated growth. So is there something different about this new bundle, also some commentary on the competitive environment would be great, particularly on the SME segment. I also have some questions on a couple of the OpEx lines from the annual report, namely professional expenses and IT expenses, which look to drop quite a lot in Q4. So professional expenses looked to have dropped by about CHF 20 million or 90% in the quarter year-on-year and look quite low at CHF 2.5 million in absolute terms. I guess some of this will be linked to the listing costs in '24, but it feels like there are other things contributing to this. So any color about this decline and potential tailwinds moving forward would be great. Similarly with IT expenses, these have been trending down 5% 9 months into the year, but dropped 40% in Q4. So some color on this step down would be very helpful.

All right, Max. Let me start off with the B2B question. Firstly, what we are seeing is Salt is attempting to drive the business also to the larger enterprises in Switzerland. We don't see that too successful at this moment, a, because of their product capabilities and b, because also I think their ability to serve those customers and not only just to sell the products, is at this moment, from our perspective, rather limited. However, we do see a bit of a step-up of the competition. Price competition is -- it has been intense. I think the key step up that you were talking about is to a certain extent driven by product, but to a larger extent, it's actually driven by channels. So you remember we were talking about that, and particularly in the SME side, we were missing indirect partners -- indirect partner sales because we never had historically had a strong footing in this. Now this is something that we have done a lot of work during the course of '25, and we are expecting that to significantly change during the course of '26. However, as you know, of course, also the conversion from leads into revenues is adding a longer trajectory. So while we are seeing the partner business to ramp up, it will probably take a time until we see some acceleration there. And of course, on the back of that, the importance on the price pressure that we see on traditional mobile and fixed access products, needs to be compensated and overcompensated also by this new ICT products, which are in security, cloudification, which particularly for the C-segment, are a very important discussion point, hence the importance of the revised product portfolio. So SME Ready portfolio was only a portfolio that was looking at traditional mobile and access, where the future portfolio that we just launched yesterday is including more of the ICT components and hence, gives different talking points and different price points that we can sell into the market. So that's how the acceleration from my perspective is going to take place.

All right. And then let me give you 2 high-level explanations on the questions that you asked around the various cost buckets, and then I would suggest we take it offline in terms of what's driving the details. I think there's 2 things what you are seeing here. On the one hand, I think the numbers that you refer to our financial accounts, which are as reported and not as rebased, as in the MD&A section, we actually do talk about it from a rebased perspective. Now what you're seeing in the actual operating expenses as reported is that in 2024, we had a number of costs from a reported perspective that are not recurring in 2025. And so therefore, you see a significant reduction of overall cost which, again, are normalized out in the MD&A section. And then lastly, especially on the IT expenses and some of the contracts that we had moved from one category to the other, mainly from IT to network expenses. And so therefore, there is some moves there. So -- that is, in general, what you're seeing in the normal as reported annual accounts, MD&A is different, but happy to take your specific questions on what's driving those moves from a reported perspective.

The next question comes from A.J. Zone from JPMorgan.

I've got a couple. The first is around your selective price increases. And my question is, why would you not do something more broad-based given you've seen the moves from Swisscom early this year. And obviously, there appears material runway for you guys to be able to do this. And the second question is around the CHmobile inflow. So you mentioned quite a large portion of you may come on board in H1. So with this customer base joining, what do you expect the mobile ARPU dilution to be for the next few quarters just from these inflows?

Thanks for the question, [ Tony ]. Let me take the selective price increase question first. So essentially, the reason why we are not doing a general price increase is driven by the fact that over the last 3 years, we were the ones that were volunteering 2 price increases to the market driven by inflationary cost pressure. And Swisscom did never follow any of those pricing moves. They only did follow last year with their second brand, Wingo. And they've decided only this year to make a move. So essentially, our price differential between Sunrise and the Swisscom offerings over the past years have reduced and is now somewhat increasing again. We also don't think that given the fact that we have had that inflationary pressure, and we had resulted -- reacted to that already. We don't think there is a strong argument for us at this moment in time to move. But we are looking into other pockets of opportunities. Hence, we are doing the selective price increases, which is not the headline prices of our tariffs, which we perceive don't necessarily need to be or could be upgraded given the price rises that we did in the past. But we think that there are certain pay-go price points, voice price points, international price point and other feature pricing that we can bring up to actually capture opportunities that we are perceiving in the market, which is driving a significant portion of the price increase impact that we were able to create last year. So because of that, we don't say that it's the right time for us to actually follow. But essentially, it's more like Swisscom that has been following what we did in the past and hence, we also are not proceeding that as an incremental large opportunity to general price increase. But as we also said, we will continue to monitor the market. And rest assured, if there was pricing opportunities that we sense, we reasonably could attack, we will do so. The second question on the CHmobile. So firstly, yes, we had a good start. As we said, the inflow that we got in Q4 in terms of net adds was well below 50% of the number that we have been reporting. A significant chunk of the orders is now to be expected in Q1 and Q2. I would not expect too much of an ARPU incremental downside given that while this was a successful launch, the volumes are still pretty low in comparison to our total base. So I don't assume that the CHmobile, in particular, will be a significant driver of any ARPU evolution. I think if you even look into the ARPU evolution, a large chunk of the ARPU pressure that we have seen in the past in mobile was coming rather from the fact of not a general price reduction, but from the fact that multi-mobile so family propositions with second and third mobiles being cheaper, we're driving that ARPU impact, then there was, if you want, general pricing pressure.

[Operator Instructions] The next question comes from Mollie Witcombe from Goldman Sachs.

Firstly, just on CapEx. To what extent is this step down in CapEx to sale is sustainable? You've talked about how some of it is infrastructure. So as I assume that part of that is going to carry on into the midterm? And how should we think about CapEx trending in your midterm free cash flow guidance? And then my second question is just on the B2C competitive environment. Your competitors said that they were still seeing high promotional -- highly promotional market in January and early Febuary. And I'm just wondering how that ties in with what you guys have said about seeing potentially some improvement. A little bit more color on how you're seeing the split in the market and how you're seeing competition in January and early February would be great.

All right. Thanks, Mollie, for your question. So CapEx was your first question. So yes, we think that there is a sustainable reduction in CapEx that we can assume. To the one extent, it's driven by the fact that we have done the mobile rollout investments on 5G. We have decommissioned 3G. There is some incremental, if you want, yet filling activities that we are doing, but we are sitting of ample capacity in our 5G network. Hence, we think that there is a reasonable assumption that this can be sustainable. Secondly, a large chunk of our CapEx is also driven by IT developments. And those IT developments, we are also assuming that not only short term, but also midterm, there's pricing upside that is driven by the efficiency that AI brings the software development in particular. And we are assuming that we can benefit from that. Now today, only a chunk of it is visible and tangible, but we assume that this may even grow going forward. Hence, I think overall, we are foreseeing that this CapEx change that we are guiding for can be assumed to be a stable one. Secondly, your competitive environment, I mean, I said pretty much already all in the presentation, and what we are seeing is that some of the promotional activities are easing in Q1. Now whether that is going to be sustainable, we have to see. Of course, every market participant has the message of the Swisscom price increase. We are certainly not a driver of any promotional aggression in the market. We are a follower. And in this moment, we are seeing, as I said, some of the easing. Now there are some typical promotional periods are still to come. We have seen Valentine's Day, which was rather calm, I would argue. We have Easter that comes in April. We have some hardware launches that are coming. So we'll have to see how that is evolving. But at this moment, I would cautiously see a positive evolution. And hopefully, that holds throughout the year.

Just wondering if I could follow up a little bit on what you've just said there. Your guidance, are you assuming that cautiously, I'm optimistic that there's a little bit of improvement or your guidance assuming a similar intensity of promotional activity as it was last year?

Our guidance is conservative because we don't know how stable this is going to be. So we are not necessarily assuming a significant easing throughout the course of the year? And secondly, I mean we haven't spoken about that, but we are also conservative on our top line guidance in particular because we sense that the chip shortage that we all see coming may have an impact on the supply of hardware devices. And that could have an impact, of course, also on our hardware revenue. So we have to see how that really evolves. And given little visibility, we have rather the conservative end on our guidance..

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Alex Herrmann for any closing remarks.

Thank you, Moritz. So with that, that concludes the call for today. If there are any further questions, which I assume, please do reach out to the Investor Relations team. Thank you for being with us today and speak to you soon. Have a good week.

Ladies and gentlemen, the conference has now concluded. Thank you for choosing chorus call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.