Three's customer base has passed the 9 million mark, as the operator reported full year earnings of £101 million, up 237% on 2011.
The UK's fourth largest operator, which only posted a profit for the first time in 2011, added 900,000 customers during the past 12 months, a growth of 11%. Post-pay customers account for 58.1% of Three's total base. It now has 9.1 million customers, with growth largely driven by an 18% growth in contract customers. Service revenue was up 3% to £1.35bn, with total revenue up 9% to £1.95bn.
Three traditionally trades at a much lower margin compared to its larger competitors, which fuels its aggressive growth strategy. This was reflected in the downwards tick of average revenue per user, down 3% to £21.19. Contract customers also paid on average 3% less compared to 2011 at £27.75. Prepay customers' ARPU was £6.89.
Three's parent Hutchison Whampoa said it was trying to push up its margins by snapping up higher margin customers and moving its existing base onto more lucrative contracts. Three's Ebitda margin increased by 56.1% to 14.4%. Churn decreased slightly by 0.2 percentage points to 1.5%.
Three added more contract customers in the second half of 2012, which is when the peak release schedule for smartphones lies. It had 425,000 net adds during the latter six months of last year. Similarly, it had earnings of £74 million during the second half of 2012.
Dave Dyson, CEO of Three, said: 'Our consistent and strong growth reflects our passion for and focus on providing a great smartphone experience. In the past few months we have more than doubled our spectrum holdings and invested in upgrading our network with Ultrafast technology. This investment in network capability and quality further strengthens our customer experience and our opportunity for continued growth.'
Richard Woodward, CFO of Three, said: 'We’ve added nearly a million customers while simultaneously increasing revenue and profitability. To achieve strong growth in all three of these areas at the same time makes us particularly proud. Our continued success in 2012 has been driven by our increasing scale, based on a growing number of profitable, satisfied customers. This, combined with efficient cost management, ensures that our top line growth is converted into earnings.'
Author: Graeme Neill