Three is expecting consumer demand for smartphones to fuel further growth after the operator’s profits increased by more than 100% for the first half of this year.
Three CEO David Dyson was speaking after the operator revealed earnings before interest and tax (EBIT) of £26m for the first six months of 2012. This was up 117% on 2011, when it recorded EBIT of £12m. Including capital expenditure costs of £95m, Three was EBITDA positive for the first time. Sales at the operator increased 5% to £918m.
Three CFO Richard Woodward said that on a like for like basis, with the effects of changes to mobile termination rates (MTRs) stripped out, revenue growth would have doubled.
Dyson was bullish about the increase in sales and profit. He claimed it had been driven by its unlimited data plans attracting customers wanting to buy smartphones, as well as network investment. When asked how long he felt it would continue, he said: ‘If the market continues to move towards smartphones and data we are definitely brilliantly positioned to capitalise on that. We will invest in the network to deliver quality but ensure it has the right cost structure to deliver value to our customers. We believe it will [continue to grow]. We will maintain good levels of growth within our business.’
However, Dyson refused to be drawn on his thoughts about the forthcoming 4G auction. Three missed out on the guarantee of sub-1GHz spectrum it had been seeking to add to its 2.1GHz holding. Dyson said his team was currently working through the document, which stretches to more than 1,000 pages. However, given the potential scenarios and outcomes involved, he was not prepared to comment further.
Three added one million new customers in the last 12 months, with net contract growth of 9% and 382,000 net additions. Contract churn also shrank by half a percentage point to 1.4%. Blended ARPU was marginally down year on year from £22.09 to £21.66. However, the operator increased its data revenues with non-voice ARPU up from £8.61 to £10.40. Average handset data use has more than doubled in the past year to over 1.1GB per month.
Overall, Three’s registered customer base is up more than 13% to over 8.4 million. Dyson said: ‘The key highlight for me is the numbers reflect our performance in the market. The one million growth in customers is really supported by strong growth in the smartphone side. The majority of this growth is coming from contract customers. There’s a significant shift happening in the UK, with the trend towards smartphones and the need that comes with it to have a great network.’