Switzerland’s Sunrise Communications Group has confirmed it is in talks to buy Liberty Global’s cable operator UPC Switzerland.
The company said in a statementexternal link on Tuesday: “Sunrise confirms it is in discussions with Liberty Global regarding a possible acquisition of UPC Schweiz. Sunrise will only pursue a transaction that is strategically compelling and demonstrably value creative for its shareholders.”
The news of the talks had been reported last Friday by the Financial Timesexternal link.
In the past, the two companies have held talks about merging to create a major competitor to state-controlled Swisscom, the biggest telecoms company in Switzerland with CHF11.7 billion in revenue and 6.6 million mobile phone customers in 2017, out of a population of 8.4 million.
Sunrise, by contrast, had a total of 3.4 million customers in 2017, including 2.4 million mobile phone customers, and revenue of CHF1.85 billion francs.
UPC, meanwhile, had about 1.1 million TV customers amid falling subscriptions, and 138,000 mobile phone clients in Switzerland, company documents show.
Analysts say a tie-up makes sense, as Sunrise and UPC's fixed and mobile services would make the combined entity a stronger rival to the dominance of Swisscom.
"We also see 1-2 billion Swiss francs ($1 billion to $2 billion) of potential synergies," Barclays analysts told Reuters.
Recent rumours about UPC Switzerland’s future have been fueled by Liberty Global's divestments of several of its European entities. Last year, the group sold its cable networks in Germany, Hungary, the Czech Republic and Romania to the British mobile phone giant Vodafone for €18.4 billion (CHF 20.6 billion). Liberty Global had already sold its Austrian subsidiary, which was jointly managed with its Swiss UPC unit.