Three UK delivers margin and EBITDA growth in Half-Year results

At Three UK our 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. All supported by an engaging, inclusive and ambitious culture whilst operating sustainably.

Deliver growth

• Revenue of £1.18bn was flat for the period (H1 2021: £1.18bn)
  • Net service customer revenues increased 3% to £754m (H1 2021: £734m)
  • Other revenues, which include accessories, increased 14% to £96m (H1 2021: £84m)
• EBITDA up 4% to £261m (H1 2021: £252m) due to an increase in margin driven by significant y-o-y customer base growth
• 3% margin growth to £743m (H1 2021: £719m) as a result of improvements across all areas of the business including strong growth coming through in Contract voice, B2B, SMARTY and Wholesale
• Active contract customer base increased by 494k or 6% y-o-y to 8.2m contract subscribers, outperforming the rest of the market in H1 and total active base grew 5% to 9.9m customers
• Wholesale margin grew 25% y-o-y, with an 8% increase in customers
• B2B customer base increased 134% from June 2021, reflecting significant ongoing investment in the customer proposition
• 5G home broadband customer base more than trebled y-o-y
• Capex up 9% to £334m (H1 2021: £307m), as we continue our end-to-end network and IT transformation

Enhance customer experience and broaden brand awareness

• Average data usage per customer, per month increased 24% y-o-y to 21.3 GB in June 2022
• 5G network coverage now at 56% of the UK’s population across 3,300 sites
• Recognised for third consecutive period as the UK’s Fastest 5G Network by Ookla, with median download speeds of 292.57 Mbps, an improvement y-o-y, and further evidence of Three’s successful network transformation
• 5G went live on SMARTY
• 4G network now covers 99% of the UK outdoor population carrying 28% of mobile data traffic (source: Enders UK)
• Confirmed plans to turn off 3G network by the end of 2024 to focus investments and spectrum resources on continuing to improve 4G experience and roll out of 5G

• The first operator in the world to offer VoLTE roaming
• Preparation continued for network coverage availability on London Underground
• Since its November 2021 launch, continued to bolster Three UK’s rewards app, Three+ including addition of exclusive presales for events, which are proving popular and supporting growth of more than 150% in app downloads
• Continued implementation of business transformation programme, 3Vision, including launch of new IT systems, with over 90 stores equipped and trained for go live in Q4 2022
• Successfully went live with new IT platforms in B2B in February for online and contact centre channels
• Launched Three Business Adapt to target medium-sized business sector, providing a flexible and scalable solution and giving cost-certainty
• Continuing sponsorship activity with Chelsea F.C. and enjoying a successful sponsorship with Channel 4’s Gogglebox
• In July, launched a new multimillion-pound campaign under Three UK’s brand platform ‘Life Needs a Big Network’
• According to Ofcom’s Q1 2022 report, Three achieved a y-o-y reduction from six to two complaints per 100,000 customers, demonstrating continued focus on the customer experience

Engaging, inclusive and ambitious culture, operating sustainably

• Continue to provide ongoing support to our colleagues during cost-of-living crisis. Increased pay for 2500 retail staff by up to 12.6% (excluding commission), surpassing the real National Living Wage, and promoted initiatives like access to Nudge, an interactive financial education tool
• Implemented a new hybrid-working model for all office staff and moved into new, modern offices in Green Park, Reading
• Extended our Reconnected programme, which recycles donated devices to help disadvantaged individuals get connected, with six months Unlimited data, calls, and texts on Three
• Introduced connectivity support package for refugees arriving in the UK from Ukraine, removed roaming charges for those in Ukraine and continue to refund charges associated with calls from the UK to Ukraine
• Continue to team up with Samaritans to help power one million new digital connections to their vital support services
• Where we are directly responsible for our energy supply, we have been using 100% renewable electricity since 2019, and our new head office in Green Park, Berkshire, is a sustainable building and has BREEAM excellent status
• Three UK, as part of CK Hutchison Group Telecoms’ wider sustainability policy, has committed to reducing its carbon emissions directly and indirectly by 2030; with target to achieve Net Zero in its own operations by 2040
• Partnered with Ecovadis to provide independent oversight of suppliers’ ESG credentials. Over 40% of our total third party spend is now covered by a current Ecovadis assessment, with a target of 95% at year-end

Robert Finnegan, Chief Executive Officer of Three UK, said:

“Our performance in the first half of 2022 is clear evidence of how our strategy to invest in our network and technology is delivering meaningful growth across our business divisions. We now cover 56% of the population with the UK’s Fastest 5G Network offering our customers a fantastic experience.

“As a result, we added almost half a million contract customers year-on-year, adding almost as many contract customers as our competitors combined in H1. In addition, we are seeing an increasing contribution from a broader range of divisions such as B2B, SMARTY and Wholesale. Pleasingly, this resulted in an improved margin and increase in EBITDA.

“Beyond network investment, we have also made significant progress in the development of our customer propositions. Specifically, we continued to evolve our B2B offering – with this customer base increasing over 130% in the period – and we believe there is a lot more to come from Three Business.”