Three recently revealed H1 revenue of £1.18bn, with wholesale margin growing 25 per cent year-on-year and an 8 per cent increase in customers.
The B2B customer base also increased 134 per cent from June 2021, reflecting significant ongoing investment in the customer proposition. Significantly, the company’s 5G home broadband customer base more than trebled year-on-year, showing the importance of new revenue streams.
Darren Purkis, chief financial officer at Three UK, caught up with Comms Business to explain what these results mean for the company moving forward. Purkis has been the company’s chief financial officer since June 2018 and has worked at Three for just over a decade, previously as deputy CFO.
Purkis explained that the company’s financial performance has been “underpinned” by growing customer numbers. He added, “We saw an increase in our contract customer base of 494,000, which was a 6 per cent growth to 8.2 million, and our overall total active base grew by 5 per cent to 9.9 million.”
Crucially, Purkis explained, Three has “continued to outperform the market”, with the company adding “almost as many customers as our competitors combined”.
When asked what is most significant about these particular results, Purkis said 5G has changed the game. He explained, “We’ve now got this 5G spectrum portfolio and it’s allowed us to get the 5G sites out fairly quickly.
“It’s heavy investment – and that’s why the EBITDA [earnings before interest, taxes, depreciation, and amortisation] is lower than the capex at this stage, which is not where we want to be and not sustainable – but it’s meant that we’ve got this momentum in our growing customer base.”
Compelling offerings
Purkis explained the company’s 5G home broadband offering is “competitive against fibre products”, before adding, “It’s great for people who don’t want to sign up for 18- or 24-month contracts, and the feedback on the product and the speeds have been excellent.”
The company has also ensured its B2B proposition can thrive. Prukin said, “We brought Mike Tomlinson on board a couple of years ago now. He has built a team of about 150 people. That [customer] base doubled last year; it’s doubling again this year. We’re growing across all areas, which is really encouraging. And that growth is allowing us to build momentum in the margin.”
Purkis simply summarised the focus for the company moving forward. He said, “5G, customer numbers and customer experiences is the future for us.”
He explained the company has been revamping its customer experience strategy, with Ofcom complaints reducing drastically from six per 100,000 this time last year, to two per 100,000.
He added, “If we get these things right, the customer numbers will follow and then the financials will follow that, and we’ve started to see that trend come through.”
A careful balance
Three UK says its mission is to provide better connectivity, every day, for every customer. The strategy to deliver this is centred on three key pillars: delivering growth, enhancing customer experience and increasing our brand awareness and appeal.
When asked how he balances delivering on the customer experience with controlling costs, Purkis said, “It’s an interesting one because you do have to get the balance right. There are a lot of headwinds that are starting to come through; staff cost is a big one, and we’ve increased our staffing because we’ve got the IT transformation programme and we’re building a B2B team.”
Purkis pointed to the company’s capex, which is larger that its EBITDA at the moment, and explained, “That’s not a long-term sustainable position, but we’ve taken the view that we need to invest, because otherwise we won’t get growth in the future. And we’re now starting to see that growth come through.
“We need to be prudent, we need to do the right thing, and we’re very focused on that. But we’re also making sure we are investing in important areas to see that future come through as well.”
Three is clear about its path to the future. Purkis said, “The strategy for us is: getting the network in a really strong position, getting the customer experience in a good position, and the financials will flow from both of those.”