Freenet, a Germany-based provider of mobile communications services, said it is acquiring a 23.8 per cent stake in Sunrise Communications for about €714 million ($805 million) from funds advised by CVC Capital Partners, with the option to buy a further 0.73 per cent stake.
The move comes days after the Swiss mobile operator said former EE chief Olaf Swantee is to become its new CEO following the departure of Libor Voncina on May 9.
Christoph Vilanek, CEO of Freenet, and CFO Joachim Preisig, will be invited to join the board of directors of Sunrise once the transaction is completed, which is expected to happen "soon".
Vilanek said there are strong parallels between the two companies in terms of their financial profiles.
"The acquisition of the shares from CVC Capital Partners is a great opportunity for Freenet that we have been delighted to grasp," he said.
Sunrise has a share of around 22 per cent of Switzerland's mobile market and a total of 3 million mobile and fixed customers. Freenet, which sells mobile services on a wholesale basis using the networks of all four German mobile network operators, has more than 12 million mobile customers.
Lorne Somerville, a partner at CVC who took over the role of chairman after the sudden death of Dominik Koechlin but is not standing for re-election this year, noted that CVC is now handing over to a "new major shareholder" after five years of ownership.
Freenet said the investment would be financed with borrowed capital in the form of a bank bridge loan. It added that the transaction would see Freenet's EBITDA increase by around €10 million to a total of €410 million in 2016, while free cash flow would rise by €30 million to about €330 million. It is also maintaining guidance of revenue growth this year as well as a slight rise in customer numbers.
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