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Sunrise counts cost of its failure to buy Liberty Global business

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Last month, Sunrise scrapped its takeover of Liberty's UPC Switzerland business when German firm Freenet, which holds 25% of the Swiss group, baulked on concerns the move was too expensive.

Zurich

SUNRISE Communications said on Wednesday it faces a hit of up to 125 million Swiss francs (S$172 million) from its failed bid to buy Liberty Global's Swiss unit, as the US cable company held out hopes a deal could be revived.

Sunrise's costs from the failed 6.3 billion franc deal, halted after opposition from the Swiss telecommunication company's biggest shareholder, include a 50 million franc break-up fee to Liberty Global, as well as 19 million francs in underwriting fees and already-incurred integration costs of 24 million francs.

Last month, Sunrise scrapped its takeover of Liberty's UPC Switzerland business when German firm Freenet, which holds 25 per cent of the Swiss telecommunications group, baulked on concerns the move was too expensive. Freenet said that adding cable assets made little sense as the industry was transitioning to faster 5G mobile technology.

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Liberty Global said late on Tuesday it was not completely writing off the transaction and held out hopes that a deal could be resurrected.

"We look forward to continuing our conversations with either the board or Freenet about a potential transaction that creates significant value for both sets of shareholders and Swiss consumers," Liberty Global said in a statement.

Sunrise, which also released third-quarter results on Wednesday, said intimations that the deal could rise from the dead were "no longer relevant" and that for now it was moving on.

"All further talk at this time is hypothetical and speculative," chief financial officer Andre Krause told Reuters in an interview.

Sunrise shares were down about 0.6 per cent by 1000 GMT, having fallen nearly 10 per cent so far this year.

Chief executive Olaf Swantee, responding to a suggestion that he could resign after failing to seal the UPC transaction and falling out with his largest shareholder, said he and other managers were simply focused on Sunrise and its go-it-alone strategy.

Mr Swantee, a Dutchman who previously ran British mobile phone company EE Ltd, added that chairman Peter Kurer, who has come under fire for trying to force the deal through despite objections from top stakeholders, continues to enjoy management's support.

"Grumblings in the press about him are to a large extent unfair," Mr Swantee said. "He's done a great job."

In the three months to the end of September, Sunrise reported a 52 per cent surge in net income to 48 million francs.

Revenue increased one per cent to 474 million francs in the period, it said, adding that it expects to reach 2019 targets that include revenue of between 1.86 billion and 1.9 billion francs and earnings before interest, taxes, depreciation and amortisation (Ebitda) of 618 million-628 million francs. Sunrise sees a dividend of 4.35 francs-4.45 francs per share. REUTERS