Three UK publish 2023 full year results
- Growth in certain customer segments driven by B2B, 5G Home Broadband and SMARTY
- EBIT loss for the first time since 2010
At Three UK our mission is to provide better connectivity, every day, for every customer. The strategy to deliver this is centred on four key objectives: improve the network experience; grow the business; transform customer experience; and achieve our financial objectives.
Financial highlights
- Revenue up 3% to £2.59bn (2022: £2.52bn) driven by customer growth in certain customer segments (SMARTY, B2B and 5G Home Broadband)
- Margin up 9% to £1.67bn (2022: £1.53bn)
- Operating expenses increased to £1.02bn up 23%* y-o-y (2022: £828m*) due to increased network and IT running costs, greater site numbers and inflationary pressures
- Reported EBITDA of £402m, down 34% y-o-y (2022: £612m)
- Reported EBIT loss of £117m (2022: £147m profit), reflecting higher operating expenses and an increase in depreciation and amortisation due to recent higher network investment
- Reported CAPEX of £454m, down 39% y-o-y (2022: £743m)
- Active customer base up 3% or 310k y-o-y bringing the total to 10.6m (2022:10.3m)
- Total contract customers up 7% y-o-y to 9.06m (2022: 8.48m) as a result of increases to B2B, 5G Home and SMARTY base
- B2B customer base increased by 67% y-o-y
- 5G Home broadband almost doubled y-o-y
- SMARTY surpassed 1m customers, with 37% growth y-o-y
- Prepaid customers down 15% y-o-y to 1.56m (2022: 1.82m)
Operational highlights
Network – reduced CAPEX spend with a focus on meeting regulatory requirements:
- Replaced equipment on more than 350 sites to comply with requirements of High-Risk Vendor legislation
- Post year-end, launched SCONDA project to trial small cell Open RAN in an urban environment in Glasgow city centre in partnership with Mavenir
- Completed construction of 150 sites as part of UK’s Shared Rural Network, which will transform connectivity for residents and businesses in rural locations across the UK
- Three UK’s network now carries more mobile data traffic than any other UK operator (Enders Analysis)
- UK’s Fastest 5G Network, according to Ookla with median download speeds of 226.27 Mbps in H2 23
- Top UK 5G Experience, according Rootmetrics
- Average data usage, per customer, per month increased by 20% to 30GB (2022: 25.1GB)
- 5G Home average data usage, per customer, per month of 374GB.
- 4700 5G sites across 650 towns and cities
- Expanded 4G and 5G network in London Underground stations, with network launches at 18 stations.
- Broadened agreement with Amdocs in deal to simplify IT operations
Commercial – focus on improving customer offering:
- Transformed customer offering, with flexibility to customise individual plans following roll out of IT transformation programme and launch of ‘Three Your Way’
- Continued to bolster and grow Three Loyalty platform, Three+, with 4m redemptions that saved our customers £13.1m
- Awarded Best Network for Business at the Mobile Industry Awards
Support colleagues and customers
- Ongoing cost of living support for customers, including:
- Launch of a social tariff offering unlimited calls, texts, and data to customers in receipt of certain benefits
- Revamped our ‘Discovery’ service, which teaches essential digital skills to communities across 295 stores, in schools and community groups. In 2023, we reached 350+ schools, colleges, and youth organisations across the UK, delivered 800 workshops with 34000 people benefitting from a Discovery workshop
- Through our Samaritans partnership and Chelsea FC sponsorship we encouraged football fans to talk about their mental health with half time takeover at Stamford Bridge
- Competitive benefits and perks for employees, as well as support during cost-of-living crisis:
- Pay increases for all retail and head office staff, with biggest rises targeted at those earning the least
- Launched our green car scheme for employees, achieving 3.2% uptake
- Named in The Times Top 50 Employers for Gender Equality 2023
Robert Finnegan, Chief Executive Officer of Three UK, said:
“I am pleased to report another year of progress for Three UK.
“This year we have successfully increased our customer base, delivered topline revenue growth, and improved our margin. This was largely driven by the performance of certain segments such as SMARTY, 5G Home Broadband and B2B.
“But the cost of rolling out and maintaining our 5G network, and our commitment to improving connectivity across the UK, has impacted our profitability with negative reported EBIT for the first time since 2010.
“This financial performance is clearly unsustainable despite scaling back our 5G investment. With the current market structure of four MNOs, where there are two scaled players who have the ability to invest but do not face enough competitive pressure to do so, and two players (Three UK and Vodafone) who lack the scale to be credible challengers, the UK will continue to lag behind on 5G. The UK has the slowest data download speeds in the G7 and ranks 22nd out of 25 European countries in terms of 5G availability and download speeds.
“We are committed to improving our service for our customers and our country, creating additional jobs, and supporting the digital transformation that is taking place across the UK. The merger with Vodafone will enable the investment of £11bn in the UK over 10 years to create one of Europe’s most advanced standalone 5G networks in full support of Government targets.”
*As the tower asset deal was completed in November 2022, the 2022 opex number includes the performa contribution from the tower assets for January to November 2022
Media enquiries:
Headland
Andy Rivett-Carnac / Chloe Francklin
