Media, mobile and billions: Billionaire John Malone aims high with Sunrise

The planned IPO is already an initial public offering (IPO), meaning it is not the first time on the stock market. But only a return to the capital market. Sunrise was listed on the stock exchange from 2015 to 2020 before Liberty acquired the company. This situation may seem unstable to investors. And contrary to expectations, the share price of its main rival, Swisscom, did not fall, but increased.

Liberty founder John Malone probably imagined it differently. He is one of the most influential media moguls in the world and in no way inferior to Fox News founder Rupert Murdoch. It’s just less well known. Nickname: Cable Cowboy. It is the second largest private landowner in the United States, with more than 2 million acres in seven states. And Sunrise’s latest authority is number two in the Swiss telecom market, behind Swisscom. He’s still hoping for a big comeback.

billionaire from colorado

The Colorado businessman grew up with cable TV. From the 1970s to the 1990s, he founded cable television company TCI in the United States, taking over biweekly companies, and also founded Liberty Media. At age 29 and with a doctorate from Johns Hopkins University, he was already CEO. In 1999, he sold TCI to AT&T for nearly $50 billion. This is how Malone made money.

His personal wealth is currently estimated at almost $10 billion. The company’s assets are invested in various TV, Internet, mobile phone and media companies around the world, including sports: Liberty Media owns Formula 1 and the Atlanta Braves, a baseball team in the United States. And just Sunrise. The Swiss mobile operator is part of Malone’s conglomerate: Liberty Global, which manages all business outside the US market.

Liberty Global acquired Sunrise for 6.8 billion francs at the end of 2020. It also merged with cable network operator UPC, which was then part of Malone’s universe. The aim at that time was to take market share from Swisscom, the leading company in mobile communications, internet and TV.

Not much has changed in this regard. It is not easy to steal the market share of the powerful Swisscom with the state behind it. It is still larger across all market segments.

A fierce competition

Although the three major telecommunications providers Swisscom, Sunrise and Salt have found their footing in Switzerland, they appear to be largely frozen: This is not a growth market, it is a shifting market, prices are falling, margins are low. There is no big change.

There have only been two events that have caught people’s attention lately: Sunrise has beaten Swisscom in the corporate customer business and is now connecting Migros locations and branches via the network in their place. In the mobile communications market, Salt opposes Swisscom by cooperating with the post office. Cheaper Salt subscriptions are available from post office branches and mobile operators benefit from customer access. The postal service is acquiring the “Post Mobile” mobile phone brand and expanding its business.

Swisscom looks to Italy

People tend to notice industry leader Swisscom’s commitment abroad. Domestically, it is losing market share in some places. The company offers Fastweb through its subsidiary for Vodafone’s operations in Italy. Rival Iliad, the investment firm of Salt founder Xavier Niel, also competed but was rejected.

Swisscom is also considering expanding into the Italian energy market. If consumers purchase electricity and telecommunications services from a single source, the aim is to penetrate more markets. But right now it’s still a fantasy.

What unites the three telecommunications providers is the effort to retain their respective premium customers in the mobile communications market. Its second and third brands are Swisscom and M-Budget, Wingo and Coop Mobile; Sunrise with Aldi Suisse, Swype, Lebara and Yallo; Salt with Das Abo, Gomo and Lidl Connect. Telcos don’t like to hear the word “cheap” because it makes people forget that basically everyone is roaming, broadcasting and transmitting on the same expensive infrastructure.

Companies in Switzerland have invested billions of francs over the years to modernize and expand the network to run their entire product range on it. Because in addition to high investments, prices in the final market are also constantly falling, leaving almost no money for further expansion. Projects are rescheduled, sometimes postponed, or canceled altogether.

Swisscom sues Sunrise

You can also make money by renting your own network to the competition. UPC mobile customers were on the Swisscom network before it was merged with Sunrise. However, since Sunrise and UPC merged, previous UPC customers who switched to Sunrise no longer needed the Swisscom network. However, the joint use agreement between UPC and Swisscom was still in effect. Swisscom is currently seeking 90 million francs in damages and is suing Sunrise. This shows that there is a lot at stake.

However, this does not change the logic of the market. All providers should consider product development across the entire offering: mobile communications, Internet, TV. Premiums and discounts for individual and corporate customers. Markets are clearly converging: TV is increasingly available online and streaming services are on the rise. The need for bandwidth and speed in mobile communications corresponds to this. Consumers also prefer to have everything from a single source, with full performance and at the lowest price.

This is the square of the circle: as bandwidth increases, so does the need for performance and speed in data transfer. This requires the latest transmission technologies: more glass fibre, less copper wire.

The bottleneck here is the supply from headquarters to households. Even as fiber optic networks grow larger, it doesn’t help much if data piles up because not enough fiber is installed in the cable, copper doesn’t provide the desired performance, or multiple homes have to share a connection. keeps construction costs lower. Swisscom is still discussing the details with the Competition Commission today.

Salt, the smallest provider of the three major groups, is less visible as a mobile operator in this space and mainly buys or leases capacity in fiber optic and other networks for expanded service.

Sunrise, on the other hand, inherited coaxial technology from former cable operator and Liberty brand UPC and has its own network. While this isn’t as cutting-edge as fiber optic, Sunrise has managed to use technical tricks to improve these connections to the living room so far that bandwidth and speed can keep up with Swisscom’s fiber optic offering. In the industry, Sunrise is also called “little Swisscom” because the company covers a wide range of telecommunications products, similar to Swisscom.

Malone stays alert

But this is not enough for a major breakthrough in the Swiss market. Therefore, Malone believes the spinoff Sunrise will have more development opportunities than his holding company. But only Liberty emerges, not Malone, as a spinoff and subsequent listing suggests. He becomes the direct controlling shareholder and continues to have the final say.

It has a system, whatever form it takes, and it’s media investor John Malone’s trademark and recipe for success: Sunrise will be listed with two classes of shares, one of which will receive disproportionately more voting rights and the other will focus on profitability. Malone holds the reins with his confidant and Liberty Global CEO Mike Fries and continues to participate in Sunrise’s profits.

Cable Cowboy has been doing it this way throughout its entire corporate structure for nearly four decades: “Winner takes all.”