3 UK close to break-even target thanks to mobile broadband sales

3 UK close to break-even target thanks to mobile broadband sales
3 UK is close to its elusive break-even target after ending 2008 with revenues up 9%, and it cut its costs, thanks largely to over one million mobile broadband sales.

The operator secured £1.6bn in revenue last year, with almost 90% generated from contracts. 3 has struggled to show strong profits in the past, but has now posted a 19% gross margin.

Crucially, costs have been drastically reduced by 66%. The bulk of this comes from the fruits of the network’s share deal with T-Mobile kicking in, but also the reduction in hardware costs from selling mobile broadband subscriptions as well as easing its reliance on expensive third-party commissions.

3 appeared to have improved its notoriously inefficient customer base by taking the number of active subscribers up from 76% to 87%. Its churn rate also fell from 2.6% to 1.6%.

One negative implication from the surge of dongle sales on its base is a sharp drop in ARPU, falling by 14% to £33.60.

The network’s parent company, Hutchison, now has 2.5 million dongle customers across the world, of which one million are in the UK and Ireland.

3 UK’s CEO, Kevin Russell (pictured), told Mobile: ‘The next year will illustrate the effect that HSDPA networks can have. With a high capacity network reaching across the country, you can start to impact the world of Wi-Fi.’

He added: ‘We are beginning to see a convergence between mobile and the internet that highlights the potential that mobile networks can deliver, such as the opportunities outlined by the Government’s Digital Britain report.’

The operator’s UK arm grew its customer base by 23% to 5.4 million in 2008, which it also attributed to the influx of mobile broadband customers.

3 Group now has 18.4 million customers worldwide.

See interview on 3’s new strategy – page 10
Written by Mobile Today
Mobile Today

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