Sunrise Communications AG (SUNN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Sunrise Second Quarter 2026 Financial Results Conference Call and Live Webcast. I am Matilda, the Chorus Call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions] 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 fact. 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 the 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.

Thank you, operator, and good morning, ladies and gentlemen. Welcome to our Second Quarter 2026 Financial Results Call. Thank you for joining us today. With me in the room to lead you through the presentation are Andre Krause, our CEO; and for the last time, as we've announced at the beginning of June, Jany Fruytier, who will be stepping down as CFO of Sunrise at the end of the month. More on that to follow in the presentation. As always, we will start the call with a presentation, which will be followed by a Q&A session. And with that, I'd like to hand it over to Andre. Please go ahead.

Thanks, Alex, and good morning, everybody, also from my side. Let me start with a quick summary of our Q2 results. And I would start with, as expected, we have seen some softer revenue dynamics in the second quarter, but we are seeing also an improvement on our commercial trends. In fact, revenue declined by 2.6%, which is a reflection of the lapping of the 2025 price increase and also somewhat lower customer dynamics over the last quarter, and particularly on the fixed side and also some tougher hardware comparisons that we had in the second quarter compared to the second quarter last year where we had the 3G switch and some hardware device impacts following those. Commercial performance has improved in the second quarter, and this is establishing also the foundation for a improving second half year. Across our brands, we have stepped up our commercial execution. We have launched our Sunrise Rewards program, and we are seeing some encouraging first results, and we will talk a bit more about that in a minute. We are also working to expanding our Yallo retail footprint, and we have also run a brand refresh campaign to revitalize the brand. We are also, across all of our B2B segments, establishing new products and innovations in order to accelerate growth. And that all has driven an improving net add performance in the second quarter with 3,000 postpaid additions and 21,000 -- sorry, 21,000 postpaid additions and 3,000 Internet additions. With all of that, we see ourselves well positioned for the second half year. We are expecting the revenue dilution to be further supported by the price increase that we have implemented as of the 1st of August. We are on that basis, fully reiterating our guidance, including also the DPS growth of 2% through a dividend per share of CHF 3.49. And we will also update today a bit on some of the team changes that have happened in between on the commercial side, but also, as Alex talked about on the change of the CFO side. Now let's jump into a bit more details, and I'd like to usually start off with our commercial performance. And let me give you a bit of a deep dive into the DNA of the revenue evolution that we are seeing in the second quarter. Now this is a complicated chart. Let's take it piece by base. So essentially, we are seeing 3 layers of impacts that have driven the revenue evolution of the second quarter. Firstly, looking about the pricing actions, then we have implemented a price increase last year at the beginning of April, which was lapping in April this year, i.e., the second quarter was running dry of any positive contribution from a price increase. And the new price increase that we have announced at the beginning of May is going to be implemented or has been implemented on the 1st of August. As such, it didn't have any impact on the second quarter. And therefore, that was clearly having an impact on our revenue evolution. Secondly, also the subscriber dynamics following the UPC fixed customer base migration, which we ended at the mid of last year, remember that. Following that, we have seen softer dynamics on the customer base from Q2, I would even to Q1 this year, where we run almost flattish and then turn negative on the back of some accelerated churn on the back of that switch off, which obviously has also changed the customer base dynamics which are not supporting to offset the ARPU pressure that is coming from the competitive market environment. Now overall, we are seeing that trend to turn around. We have talked about the 3,000 net additions and that we were adding on the Internet side and also the acceleration on the mobile side. So I think the momentum here is turning, and I think that will be supportive also of some revenue improvements that we are expecting for the second half of the year. Lastly, also a bit of a technicality because the introduction of the new mobile portfolio that we've talked about over the last couple of quarters is giving some technical new reallocations of revenue components for converged customers that is exaggerating the revenue impacted ARPU impact on the fixed side, and it's benefiting the mobile side. So that gives you a bit of an explanation. There's also more data on the detailed impact of that in the back of our presentation that we are sharing. So with all of that, I think we are expecting a gradual improvement now for Q3 and Q4 as we are coming out of those, I would say, culmination of headwinds that has led to the revenue evolution that we are reporting today. Now with that explanation, let me also dig a bit deeper on the most important commercial actions of the quarter. And by far, I would argue the most important one and the largest one that we have been working on for quite a while is the introduction of Sunrise Rewards. The program was soft launched in April, fully rolled out to all of our customers during the course of May, and we are seeing encouraging first results. Now before I get into that, let me quickly summarize what is the intention of this program because this is more than just a normal RGU loyalty program. At the end, what we are creating is a currency for Sunrise customers to buy incremental products with us. As such, it's a simulation for cross and upsell to drive more RGUs, which in turn will also drive more stickiness and i.e., less churn into our customer base. And that is the intent of that program. No, it not only provides customers access to attractive incremental products, but it also drives other benefits. You see some examples on the slides. But at the moment, we have a campaign out where customers can get vouchers for coffees. We have, of course, tickets not only to music concerts, but also to cinemas. We have our partnership with Zurich Film Festival, which allows us to give money can't buy events on top of the product attractions that we want to drive to our customers. Now our first results are, as I said, encouraging. We do see that customer awareness is pretty good. 60% of the customers are already after 3 months, well aware of the program. We've seen already 60,000 redemptions across the usage of that program, we do see an NPS uplift, lower churn and also incremental sales. Now needless to say, a program that is 3 months old, yet has not delivered any tangible financial contribution to the results that we are talking about today. But I think it's a start of a significant change towards driving more loyalty, also giving customers something in return for the loyalty that they give with us and turning around a bit the paradigm that customers were challenging us on which was that new customers would always get the better deal. There is no history with the program and that I think is an important commercial trend change, then we are convinced we will be able to monetize well in the future. Now not only on the consumer side, but also on the B2B side, we are pushing ahead. We have seen a number of additions that we did in the second quarter. As part of that for the small and medium businesses, we have launched our SME Ready bundle offers with some latest additions around insurance bundle. We have also stepped up our partner ecosystem. You remember that was a shortcoming on our distribution side. We have, I would say, closed the gap on the partner portal, which is, of course, an important interaction channel for all of our partners, but we have also stepped up our engagement with partners, and we are seeing now the numbers rising in terms of partners working with us. And secondly, also on the back of that, of course, a broader go-to-market and particularly on the medium-sized businesses. Also, I would like to reiterate the coming product launch with our exclusive partnership with PHOENIQS. PHOENIQS, you remember is a unique sovereign AI solution in Switzerland. On the back of that partnership, we will be able to provide attractive LLM offerings, Chat offerings and GPU as a service offerings that we will launch during the course of the second half year. And we are pretty excited about that to come because we think this is a very unique offering at attractive terms. So stay tuned for that launch in the coming months. Now with that, let me summarize the commercial results of the quarter. As usual, so firstly, on the net adds, you are seeing the 21,000 postpaid net additions, that's remarkable set up from Q1. Important to say this is not only driven by inflow but also by churn improvement. So the net result is also helped by gradually improving churn. And we're not only seeing that on mobile. We, in particular, also seeing that on the fixed side. So the performance improvement is, of course, due to the commercial activities for us new customers but also helped by improving churn trends that we are seeing throughout the segments. Also on the Internet side, and we talked about the importance of that, given the ARPU pressure that is sitting in this business segment, and I think important to note that this ARPU pressure is not coming from decreasing price points on the front book, but it's more the narrowing between the front book and the back book. that is driving this ARPU pressures. Now therefore, the 3,000 positive net additions, I think, is a significant turn towards growth, which will help us to offset some of that ARPU pressure going forward and will help us to mitigate the trends as we go forward. FMC continues to be stepping up quarter-by-quarter or more or less like a Swiss clock work, again, another 0.6 percentage points gain, up now to 61.1%. And rest assured, also on the FMC side, we will use our rewards program to push these numbers ahead further. Then talking about the ARPUs. Again, as I talked about, both numbers, mobile and fixed are impacted by the FMC discount allocation that has changed with the mobile portfolio. The details of that you find in the back. We do see that the mobile ARPU year-on-year is a bit under pressure. The key driver that is always out there is the mix change. That's the mix change between first and secondary SIMs, which are driven by family offers or also other devices that are coming in like watches, but also the mix between the different brands that are operating on different price points. On top of that, we have also seen some pressure which is coming from a tougher base in last year on roaming and prepaid, but that is expected to be a more temporary impact and probably will phase out over the coming quarters. Then talking about fixed, clearly, that's the most important trend impacting our revenue evolution. We see CHF 54.5 ARPU, that is a significant evolution from where we have been saying last year. Again, important to say, we do see that our inflow values are essentially not only stable, but it is slightly improving. However, the back book, if you want, versus front book delta is narrowing and that is the key pressure point here. We are expecting, nevertheless, that the trends in the second half year are going to improve as we are speaking. Lastly, and most importantly, through the price rise that is now landing in the 1st of August. And let me add some color here because I think you're all curious to understand how that is going. Now as I said, it's the 1st of August, we are speaking now at the end of August. So we haven't seen it fully. But so far, the trends are very encouraging. We have seen better-than-expected dynamics in terms of net lending of the price increase, also churn is more moderate than what we have expected, and also the NPS impact is quite less than what we have been seeing previously. So from that perspective, it looks very promising. However, I want to stay cautious on that comment because we launched at the beginning of August, that is vacation time in Switzerland. And hence, we don't know whether there is still some reaction to come in September. And hence, we will also wait to see that full landing, but the first indications are quite positive from our perspective. With that, I hand over to Jany.

Thanks, Andre. Also welcome everyone from my side. On this slide, you see on the left, the Q2 results and then H1 on the right side. I'll mostly focus on Q2, but we'll make a couple of comments around H1 as well. Andre already addressed in his opening remarks, revenue down 2.6%, very much driven by the continued pressure on residential fixed with some mobile subscription pressure as well, especially in residential on the back of the usage that we spoke about. Also, of course, both have impacted, as Andre said, by the price increases. On the non-subscription side, we saw some positives also in B2B, especially on GP, we saw some positives, but I'll speak in a bit more detail about that in a second. This time, EBITDAaL down at 3.8% as we did see some OpEx improvements, however, not enough to offset the gross profit pressure that we were faced with. On the positive side, we saw CapEx going down to CHF 102 million, which is around 14.3% CapEx to revenue, which sort of then made us increase our adjusted EBITDAaL less be in the additions on the back of that reduced CapEx. And furthermore, you see a meaningful step-up in adjusted free cash flow both for Q2 as well as for H1 as we were helped by, on the one hand, some phasing elements. Secondly, active management of the various organic net working capital cycles that we manage and interest was approximately flat versus prior year as Q2 typically doesn't have a lot of interest payments, but I'll speak about that in more detail later during the presentation. Last thing, and I think the absolute number is important to note, CHF 204 million generated in Q2 of the CHF 380 million to CHF 400 million that we have guided for full year. So I think that in itself is a strong indication that we're well underway to hit our full year results. Then when we focus on revenue, you see on the left, like always, residential, then B2B and then Infra and Support, which is mostly in relation to the rollout of our mobile sites. If you focus on residential subscription, the CHF 21 million is a step up from what we have seen in prior quarters. And as Andre said, is in relation to impact of lower volumes that we're annualizing still in this quarter as well as the lack of support from price increases that we expect to pick up in Q3 again. On the mobile side, volumes have been positive in residential over the last quarters, but the price increase we're helping. And this quarter, very much we saw the usage that partially fell away. And so therefore, a net reduction. On the non-subscription side, for both residential, actually and B2B, we see increases. Part of that is in relation to higher hardware and handset sales as well as various fee changes that we have implemented from the beginning of the year, which are sort of yielding the expected benefits. On B2B, subscription revenue, slightly softer than what we have seen in prior quarters with both approximately flat. That is, in part, again, also driven by price increases, but it's also because, especially Q2 are actually from end of '24 until Q2 '25, we had a significant ramp-up in relation to the deal that we have spoken about in the past. And so therefore, this actually was the lost our comp quarter that we had to compete with. And on the back of that, one could expect H2 to be stronger from a B2B subscription revenue perspective as well. Then when we go to EBITDAaL, you see gross profit, first then OpEx and leases. You see the consumer fixed residential subscription revenue falling through to GP with around CHF 22 million. At the same time, you see B2B and wholesale growing. So this is where you, on the one hand, see the fees and nonsubscription falling through as well as some cost optimizations that we have done, Infra and Support, again, is that same different phasing of tower sales that we saw in the quarter versus prior year, in line with full year expectations of slight growth on that line specifically. Opex down CHF 8 million. This time very much focused on the external costs, mostly in IT and other external expenses like marketing and in general, sort of external support cost. Labor in itself was broadly stable, even though we implemented the reorganization earlier in the year from which the majority is starting to -- was starting to impact from April. Having said that, I think as you've -- we've also been transparent about last year, especially, we had a very successful employee shareholding program where we gave meaningful discount for employees to participate and becoming owner of Sunrise. That we did do this year again, but in a lower discount and smaller program. Therefore, the net benefit that we saw from the reduction was offset in large by the lower benefits that we got from this year's ESPP program. Also in April, we typically do an indexation on salaries for the inflation. And even though inflation in Switzerland was low, there was a partial increase on the salary base from that. So that sort of rounds out Opex. Leases, slight reduction in this quarter as we were, especially in Q1, had a very good leasing trajectory but as we also then highlighted there, there was some phasing in that. So therefore, again, I think if you look at the H1 performance of leases, gives you a better sense of the full year outlook. And I'll speak about that in a second. Then when we go to adjusted EBITDAaL less P&E additions and adjusted free cash flow, EBITDAaL, we spoke about. So then focusing a little bit on CapEx. You see, in general, most CapEx categories going down. Some of it is phasing. I think you saw this year, especially Q1, we were front-loading our CapEx. And so therefore, again, the rest of the year, one should see some tailwind. Having said that, there is also net reductions in our CapEx spend, I think most notably, on the one hand, lower mobile capacity benefited from last year's road map. There we switched off 3G, and we installed 5G stand-alone in order to implement both those changes, we had to ramp up our CapEx investments in Q1 and Q2 last year, which we're now benefiting from not having to spend the same amount. On the coverage side, again, referring back to that say, mega or big B2B customer. Last year, we were finalizing the rollout of that project. And so therefore, the coverage CapEx in B2B specifically was on an above average run rate in terms of spend. On free cash flow, what you can see here, adjusted EBITDAaL coming through interest, as I said, approximately flat deck slightly better. I think we have guided for that as well that this year, we still expect a very low tax rate as we're finalizing the benefits on the one hand from our NOLs. On the other hand, from some of the tax attributes that were generated as part of the merger, which we are expecting to run out by the end of this year so that -- so the '27 and '28, we start to become the taxpayer like we have guided. But therefore, the CHF 2 million this year-over-year is more phasing than anything else. The majority of the benefit coming from working capital at CHF 45 million, which is lower seasonal supplier payments and improved working capital management, as I referred to earlier, resulting in the CHF 204 million free cash flow. Then let's go to the next slide. And what I wanted to hear before I round up the guidance for this year and quickly talk about the capital structure. Yes, Andre referred to it, and I sort of highlighted some of the revenue tension that we have seen in H1 and especially in Q2 because of the dynamics described. I think what we can show as a stand-alone company and a public company since beginning of '24, which you see here. So this is not quarters, this is half years. But what we have tried to show you is that even though revenue has been under pressure this year, we have a good track record of managing our costs down in a sustainable way across all different cost dimensions and expect get to continue in the coming period. So when we start with OpEx, you can see between 2% to 3% on average of OpEx reductions in each of the half years, that is done through continuous focus on organizational simplification, automation and process streamlining. I think here, the magic word going forward is AI. We're hard working on that sort of to ensure that we can unlock the benefits that one could expect from that in the coming period as well as very stringent and cost-conscious attitude and sort of perspective in the business. And of course, as you simplify the operating model, also the cost generated by the operating model should linearly -- or not linearly, but at least follow that same direction. On leases, what we see is a number of things. So on the one hand, we continue to focus on our network footprint and our leasing portfolio, we continue to actively manage the different type of contracts that we have with both Swisscom and SFN for the whole buying of fiber that we do. And of course, yes, the whole buy share increases as a percentage of our total customers yet through the management of these different contracts, the average cost per customer from an whole buy perspective actually has been reducing like we showed, I think, last quarter. And lastly, P&E additions. We have state-of-the-art mobile networks and fixed networks, both through fiber and HFC. We are able to provide 2.5 gig and provide fantastic customer experiences, I think also as shown by the Umlaut perspective, then, of course, over the last 5 years as we have integrated the both companies. We had a big focus also on the IT infrastructure and the product setup as we are behind that and have sort of done a big effort on digitization. We're now starting to see sort of the more sustainable run rate in terms of CapEx intensity that as we have guided for, I think, very much in line. All of that, even though revenue was flattish over the last 3 years has resulted in us driving free cash flow up and as said, guiding for this year to CHF 380 million to CHF 400 million. We then go to the next page, just rounding off the guidance. Andre said it already, we're fully reconfirming our guidance with broadly stable revenue, around CHF 1 billion of EBITDAaL, below 15% of CapEx to revenue, resulting into CHF 380 million to CHF 400 million of free cash flow. And as we achieve that, we expect to pay CHF 3.49 for Class A share or $0.35 per Class B share, which implies 82% year-over-year. Now I think to get to this, and I think that's why I also laid out the cost elements, and we spent some time explaining the commercial trajectory. H2 does need to sequentially improve versus what we have seen in Q2. H1 versus H2, perhaps is already less of a step up, but we are comfortable that with the commercial focus that we have, the price increases that we have done and the continued cost focus, we're looking to deliver those results. And then before I hand back over to Andre, one last slide. During Q2 were actually in July. So you'll see it in Q3, but given that we are behind it, I wanted to raise it. We issued a EUR 500 million senior secured euro notes maturing in 2023. We'll use all of those proceeds to pay there are not the full, but 90-plus percent of the 29 maturities that were the last short-term dated maturity back. The remaining of the 29 maturities will be paid from organic free cash flow in this year. By having done that, we effectively have no maturities before 31 and the majority actually after 32. Our total weighted cost, therefore, now is 2.8%. And also, we have effectively moved once we repaid the last bid to a fully all secured senior capital structure, which again, is a sign that the guidance that we have given of 3.5 to 4.5x of leverage to our EBITDAaL is the right trajectory, and we don't need unsecured in itself to support that capital structure. Lastly, before I hand back, all of our instruments, even though some of them are floating are then hedged, both from an interest and a currency perspective, so that there is until maturity no actual risk to any fluctuations in both currency or interest market environment. With that, Andre, back to you.

Well, thanks a lot, Jany. And before I move on, I guess, that's the moment to give a big thank you to you for the last 5 years and your solid running as the CFO was in Sunrise. You're up for the next role, becoming the CEO, wishing all the best and probably some luck as well as I know that you don't need it because you're going to make that. All right. Let me take that moment also to update you a bit on the composition of our management team and the recent changes. As you see, Andreas Tolpeit will become our new CFO from the beginning of September. Andreas has already joined the company this week and is currently working alongside Jany. I'm pretty sure that we're going to have a smooth transition on to Andreas. We've also had Wolfgang Elsasser, who is running our main brand business, who joined Sunrise at the beginning of July. And Veit Kment, who is running our flanker brands who already joined in June. So you'll see we have some very important roles of the business, new people heading, but I'm very positive and confident that this will only drive us from strength to strength going forward. Now with that, let me conclude today's presentation with the key takeaways of today. And so firstly, commercial momentum has been gaining traction, and that is reflected in the stronger net adds that we are reporting. We've seen lower churn, and we have also seen successful execution of our campaigns and also our activities around strengthening our commercial engine. We have seen secondly, strong adjusted free cash flow growth despite the peak revenue headwinds that we have been talking alongside today's presentation, and we are expecting a gradual improvement now in the second half year. And on the back of that, we are fully reiterating our guidance for 2026, underpinned by the pricing initiatives that we are implementing, improving subscriber momentum and the continued execution of our strategic priorities. With that, we conclude our today's presentation and opening up for Q&A.

[Operator Instructions] The first question comes from the line of Andrew Lee from Goldman Sachs.

I had 2 questions basically both on the same thing. Trying to understand the materiality of the improvements that you've highlighted throughout your call in terms of commercial momentum churn reduction efforts and the effective price rise implementation. The first question is a short-term question. So could you just talk us through the phasing of how those efforts will impact your revenue and EBITDAaL growth through the second half of the year. My understanding is that it's back-end weighted. Should we expect to see any improvement or any kind of material improvement in revenue and EBITDAaL growth in Q3? Or do you anticipate most of that coming through in Q4? And then second question, has anything changed structurally in terms of the improvement in your growth outlook. So should we see whatever the Q4 growth rates are in revenue and EBITDAaL growth as a good guide to your structural revenue and EBITDAaL growth going forward? Or to put it maybe more explicitly, what do you think that everything we've seen over the past few quarters and months translates to in terms of a growth outlook? You obviously had medium-term growth outlook of flat to low single digit depending on if we look at revenue and EBITDA. Is that something we should be seeing coming through in 2027?

All right. All right. Let me try to answer both of your questions. First, starting with the short-term outlook and then trying to address some of the long-term even though acknowledging that we're not giving next year's guidance in the mid of the year, but we'll do that with Q4. But anyway, that's a caveat I'll still give you some sense. So I think a couple of things to highlight on sort of Q3 and Q4. On the one hand, the first quarter where you do the price increases and again, from August, so that's right in the middle of the quarter, you typically have some adjustment. Andre spoke about it that on the one hand churn is good. But of course, when it happens, people call and there is some adjustments, you have to give some retention. And so therefore, typically, on the one hand, you don't see the full run rate because it was not from July 1. Secondly, you have some adjustments. And so Q3, even though it's starting to benefit from it, it is not seeing the full run rate because of those elements. Then secondly, Q3 is also the quarter when people typically travel. That's when a lot of usage around roaming also gets done. We spoke about it for Q2. That is in part because of the portfolio changes that we have decided on which work in general, but of course, then in the quarters where you have most roaming revenues are also biggest impact on a year-over-year perspective. And then thirdly, I think, especially on B2B, some of the things that we're talking about are more September, October. And so all to say that indeed, Q3, on the back of those reasons, even though the underlying recurring revenue is probably already improving, is not seeing the same step-up that one could expect for Q4. So that's your answer in short on sort of how to think about Q3 and Q4 for the outlook of the year. Then when we get to sort of '27 and onwards, you are right that '27 probably was in the range of midterm versus the capital markets guidance that we gave. Again, big caveat. First of all, I'm stepping away after this. So again, I don't want to be promising here as something that I'm not there for first. Secondly, it's the middle of the year, we don't give guidance for the next year. But I think if you model out in general, the Q4 trends, of course, price increases is something that is not debt recurrent in its nature, but the commercial trends that we're seeing that are improving. The fact that Andre spoke about the reduction of the reduced tension between front book and back book prices, especially on fixed, which were the majority of the issue is, I think you can get a sense of all things equal, how things should trend in terms of revenue. And I think I would leave it there for now. So you see an improving trend. What it exactly means this is not the time to talk about that, and that is not -- that's normal because of where we are in the middle of the year. Andre, I think to ask on your side.

Well, I think you made all the important points. I think the summary of that is gradual improvement to be expected in Q3 and Q4. We want to see the lending of the price rise, and we want to understand how the commercial momentum is evolving through the rest of the year. And then on that basis, give a guidance into next year and not speculate too early on any plans or indications that are not mature yet.

It sounds like it's a gradual improvement, but far more pronounced improvement in Q4 and Q3. Is that fair?

Yes, that's fair.

The next question comes from the line of from UBS.

All the best, Jany, in your new role. So just a couple of questions, please. The first is if we could just get an update on competitive dynamics in the market in both mobile and fixed and whether you've seen a meaningful change now that yourselves, Swisscom and all have put through your price rises. And just linked to that, because you've been mentioning how the ARPU, especially on the fixed side, is closing in now on the front book. Could you maybe give us an indication of when you may expect to see both mobile and fixed ARPU stabilizing or even growing going forward? The second question is just a bit more of a bigger picture question, really on how usually potential satellite impact in Switzerland. So given topography with very rural areas that are hard to service and relatively high pricing, do you see satellites as a significant threat or given the high levels of convergence and the extremely high-quality network, both on the fixed and mobile side, do you still think that satellites will be more complementary. So just curious to get your thoughts there as well.

All right. Thanks,. Let me take on that. So firstly, on the competitive dynamics, I mean, we have seen the usual, I would say, summer promotion time ahead of the vacations, price points, net price points, post discounts, have been very similar to prior years. So we are not seeing deterioration. What we have been seeing post the price rises of our competitors, and that's also our own intention. I think it doesn't make sense to just raise the prices in the back book and then continue at a lower price level on the front book. So we intend to also stabilize the front book inflow prices by also having the price rise on the front book. Now that seems to work out quite well. So from that perspective, what we are seeing is a bit of a continuation, but I would say some upward trend on the pricing. And also, similarly, liquidity is at the same time, not necessarily growing. So liquidity will remain under pressure, i.e. the amount of customers that we distributed in the market, we believe, will not grow, but rather decline, which ultimately also means that there will be continued competition around liquidity, but I think that competition gets more rational. That doesn't mean that prices are not massively increasing, but we are not seeing a deterioration, and we have some indications of some increases here and there. And I think that's a positive indication. Whether that be is a trend change, I think, hard to say, but at least the indication I would argue, is positive on the competitive dynamics. On the ARPU dynamics, yes, you're right. I mean, as our front book and back book ARPUs are narrowing, the dynamics will soften over time. Now we have been not necessarily great in expecting how quickly what change is going to be expected. So I want to stay away from at this moment in time, give you an indication how we will continue. But definitely, if you look for us and also for our main competitors, I think we have a pretty decent evolution, and we are probably more towards stabilization than others. I think that's a positive indication. Nevertheless, not yet also full stabilization there. And to your question, are we expecting a turnaround towards a growing ARPU and fixed? I would be very cautious on that because the reality is that the front book price is not necessarily where the lowest price points are in the market. Hence, I'm not sure that there is a lot of room for ultimate price increases on the front book side on the fixed net side. So but nevertheless, the stabilization, I think, is definitely what we are expecting as a trend going forward. To your satellite question, I would say thank you for the question because there was a lot of speculation after the announcement of SpaceX and StarLink in particular. For Switzerland, definitely, we have extremely strong networks with a lot of not only population coverage, but also area coverage. That means the uncovered opportunity that satellite can fill in Switzerland is quite limited. Secondly, I think the physics in Switzerland are more challenging, particularly for indoor coverage, the way our houses are built makes it more complicated for satellite sequencers to get into indoors and a lot of mobile usage is, of course, with customers that are expecting a seamless handover between different situations in moving on the ground outdoor getting into indoor and to continue to see a seamless coverage. I think that is going to be extremely challenging for satellite to provide a better customer experience. And hence, we are not seeing that as a mobile replacement, but there's a potential additional technology that can help us to achieve better coverage. Slightly different on the fixed side because they are -- I mean, while we do have very strong infrastructures and also great coverage, our fixed wireless access product is actually a good one. And satellite is probably competing with that for the remaining market where a little bit speeds are not necessarily available because of the availability of technologies. But that is something to look at it. So we would not expect a satellite for Switzerland to be revolutionary to any of our products, but to be rather complementary, and that's how we are expecting that to shape out.

We now have a question from the line of Patrick Maurice from Barclays.

It's actually Maurice Patrick, but I'm sure you've got that. So a couple of questions from me. And again, all the best. I'm sure we'll see you at group when you're there, so but good luck. But the first question relates to customer inflow on different brands. Apologies if you did called out in the presentation, but just it'd be helpful to understand a bit around the extent to which your customer inflow is coming on the discount brand through the Yallo CH Mobile as opposed to the main brand? And if you can do that by fixed mobile, that would be super helpful. Second question. I'm not wrong, you've announced a new BTS deal with Cellnex of 300 new sites. Curious to understand the reason for that. Is it coverage? Is it capacity? You seem to signal capacity is totally fine. Also why using Cellnex for BTS rather than using colocation elsewhere, that would be helpful.

All right. Maybe can you give us some more color on your second question because I'm not sure we understand that, Maurice.

Yes. Just I mean, just your view on like further densification of mobile networks and new towers needed for coveraging capacity would be helpful.

Right. Okay. Let me start with the customer inflow. So I mean, as you know, generally, we are not providing all of the details quarter competitors commercial reasons. Some of our competitors are not providing any numbers. So we don't want to give too much indication of how successful in what segment we are. In general, I think the inflow is driven by all of our brands. And also, if you look at the net adds, the contribution from CH Mobile was not, I would say, massive on the net add figures, but yes, the flanker brands are contributing to our net add growth. The B2B business is adding to our net add growth and also our consumer business is adding to that. On the extent split in detail, we don't want to provide the granularity for the mentioned competitive reasons. On network further evolution, I think at this moment, our -- I would say, our grid is pretty strong, and we are looking always at opportunities to improve that going forward. But I think there is no urgency for infill for capacity or for coverage reasons at the moment. So it's not something that we are spending a lot of time on, but we are, of course, observing the opportunities that may arise if 5G networks are filling up. But at this moment, the grid that is a bit denser than in other countries because of the emission norms is not giving us a great necessity to think about a lot of it.