Three UK posts revenue growth amid Vodafone merger talks

Three UK posts revenue growth amid Vodafone merger talks

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Three UK posted revenue growth of 5% to £610 million for Q1, 2023 as talks of a merger with Vodafone UK continue.

The CK-Hutchison-owned firm also noted a 7% margin increase to £389 million, citing customer growth and supporting initiatives.

Active customer base increased by almost 565,000 or 6% year-on-year to 10.3 million, mainly driven by the growth of its SMARTY business and B2B offerings, which offset the non-contract churn from MVNO competition.

Robert Finnegan, chief executive of Three UK said: “We have continued to see growth this quarter with a strong year-on-year performance reflected in a 6% increase in our active customer base, 5% in revenue and 7% in margin. We also delivered our new IT systems, which will transform our customer offering and give customers flexibility to choose their plan.

“However, our returns remain below the cost of capital. Connectivity is crucial to how we live and work; for the industry to continue investing in the UK’s digital infrastructure, market structural change is needed.”

High inflation and market competition remained challenging, Three UK says. Encouragingly for the company, though, the total margin grew strong year-on-year and remains relatively stable quarter driven by increase in customer base and various pricing initiatives.

With regards to the merger with Vodafone, Three UK appears to be hopeful of reaching a deal.

Frank John Sixt, CFO of CK Hutchison said that while a deal with Vodafone is difficult, it remains “probable”.

"Although I would say they are extremely difficult to draw a conclusion with on the one hand, but on the other hand they are in the end very good partners,” he said.

"So, the first part makes me a little bit more sceptical, but the second part makes me a little bit more optimistic.”

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