As it released figures showing a six-month period with a number of ups and downs, including a bright 5G Home Broadband business, leading UK mobile operator Three UK claims to have made progress in the first of half of the year, but has condemned the UK for having an “abysmal” ranked 5G mobile market with a “dysfunctional structure” denying it the ability to invest sustainably to fix the situation.
For the first half of the year ended 30 June 2024, the operator said its active customer base had risen by 3% year-on-year, representing 352,000, bringing the total to 10.9 million and up 400,000, amid strong competition from mobile network virtual operators and other providers.
Total contract customers were up 5% compared with the half-year period ago to 12 months to 9.2 million (H1 2023: 8.8 million) as a result of increases to its Smarty value-added mobile servicebusiness-to-business (B2B) services and the 5G Home Broadband division.
This subs growth was the driver of revenues rising to £1.335bn, a 9% rise compared with the first half of 2023, with net customer revenue up 6% and handset revenue up 10%, driven by customer growth in certain customer segments.
Total margin for the first half was £879m, up 9% on an annual basis, but operating expenses were up 5% to £548m, driven by an enlarged network and cost inflation. This all led to reported EBITDA up 31% compared with H1 2023 to £213m and a reported EBIT loss of £30m tumbling 61% year-on-year. Reported CapEx was £230m, down 16% annually, and EBITDA-CapEx was down £17m, as cashflow has remained negative – as it has done since 2020.
Looking at highlights of the first half-year, the operator said it was marked by continued focus on CapEx management, with spend focused on regulatory requirements, such as avoiding high-risk vendor (HRV) investments, and the shared rural network (SRN). .
Three said it achieved its July 2024 target of less than 35% of HRV traffic on its radio network and replaced equipment on more than 600 sites to comply with HRV requirements. Equipment has now been replaced on more than 900 sites. As regards the SRN, the company said it completed construction of 311 additional sites – of which 269 are now live as part of the programme.
As regards 5G, Three UK now has 4,900 sites, 500 more than at the end of the first half of 2023, across 656 towns and cities, with 62% population coverage. It has also expanded its 5G, and 4G, network at London Underground stations.
Yet, commenting on the results, Three UK CEO Robert Finnegan slammed the state of the UK industry, and called on UK authorities to green-light his company’s proposed merger with Vodafone, which he said would go some way in alleviating this situation.
“We have made progress in the first half of the year, with growth in certain segments such as Smarty, 5G Home Broadband and B2B,” he said. “Despite scaling back our CapEx, we continued to make a loss driven by the escalating inflationary costs of operating our network. Our cashflows have been negative since 2020, and our costs have almost doubled in five years, meaning investment in networks is unsustainable.
“UK mobile networks rank an abysmal 22nd out of 25 in Europe on 5G speeds and availability, with the dysfunctional structure of the market denying us the ability to invest sustainably to fix this situation,” said Finnegan. “Our merger with Vodafone will unlock £11bn worth of investment in digital infrastructure, creating a best-in-class 5G network for the UK and helping to grow the UK economy.”