Three UK reports FY18 results

Three UK today announces its full-year results for the year ended 31st December 2018.

Strategic Highlights

• The business continued to grow through its multi-brand, multi-product approach
• In parallel, it made significant progress on its wide-ranging business transformation
• Customer Net Promoter score improved to a record high of +15, the highest of all Mobile Network Operators*
• Employee Net Promoter Score at +21 is also at a record high
• Strengthened already market leading 5G spectrum position with additional spectrum in the 2018 5G auction. Three is the only operator in the UK capable of delivering the full potential of 5G with 100MHz of contiguous spectrum

Operational Highlights (vs FY17)

• Total active network connections reached 11.3m
• Active Three customer base of over 10m customers:
• Average monthly data usage per customer at 8.3GB
• 84% of customer base using 4G and 79% of data usage on 4G network
• Contract customer numbers up 1% to 7 million
• 99% of new contract sales through own channels
• Contract handset churn at lowest ever level at 1.1%
• 800,000 broadband customers across Three UK portfolio
• Significant progress during the year across network and IT to launch 5G in 2019

Financial Highlights

• Total revenue up 1% to £2.4bn
• Total margin up 1% to £1.5bn due to increased connections base, generating contract AMPU of £15.33
• CAPEX of £462m up 1% on 2017, with spending specifically on transformation doubling during the year to £245m
• EBITDA growth of 7% to £752m
• EBIT up 1% to £441m

Operational developments

Growing customer base and delivering customer-centric propositions

• Remained the UK’s leading provider of data as usage per customer grew by 22% to 8.3GB per month
• Customers responded with a two-point improvement to the Net Promoter Score to +15, the best-ranked mobile operator in comparison to the average for the mobile operators of -6, according to YouGov data
• Improved the overseas travel experience by partnering with easyJet to offer our customers speedy boarding and free hand luggage check in
• Strategic partnership with Snapchat to enhance our industry-leading zero-rated data platform, Go Binge
• Launched our targeted advertising campaign, “Phones Are Good”, to consolidate our market-leading position as the Best Network for Data
• Developed our multi-brand strategy by supporting the launch of Superdrug Mobile.
• Continued to see growth in MVNO customer numbers and wholesale margin, including our largest MVNO, iD Mobile who have a reported 975,000 customers as at January 2019
• In April 2019, we will rebrand our “Relish” home broadband proposition as “Three Broadband”

Delivering market-leading connectivity

• £2 billion committed so far to building out UK’s fastest 5G network
• Additional 20MHz of 3.4GHz spectrum acquired during 2018 5G spectrum auction to secure the industry-leading 5G position with a total of 140MHz of 5G spectrum, including a 100MHz contiguous block: the industry gold standard for full 5G
• Signed a fibre agreement with SSE to significantly enhance connectivity backhaul capabilities and pave the way for 5G trials by connecting cell sites and masts
• 21 new data centres live on our network to move the network closer to our customers
• World-first, fully-virtualized 5G ready Cloud core network deployed and in testing with Nokia
• Providing a better customer experience through the deployment of 4G carrier aggregation technology and switching spectrum used for 3G to 4G technology
• In February 2019, signed a two-year agreement with Central Saint Martins to provide 5G connectivity for fashion students to explore mixed-reality creativity

Dave Dyson, Chief Executive of Three UK, said:

“Three is fully embracing a business transformation to take maximum advantage of the opportunities digital businesses enjoy. 2018 was the year when we set the foundations in place for us to jump up to the next level and become the UK’s best-loved brand by our people and customers, meeting all our customers’ connectivity needs.

“UK consumers have an insatiable appetite for data and 5G is the key to delivering on that demand in a quality and cost-effective way. We acquired an extra 20MHz of 5G spectrum in the 2018 5G spectrum auction to secure a commanding lead on 5G spectrum assets and we are the only operator in the UK that can take advantage of the full potential of 5G.

“4G traffic continues to grow and now accounts for 79% of total network traffic. We have therefore also worked hard to improve our 4G network experience through redeployment of spectrum used for 3G to 4G, and added carrier aggregation technology.

“Another significant piece of the technology strategy, that is designed to deliver on customer expectations, comes in the form of a brand new Cloud-based digital IT infrastructure that provides flexibility, scalability and efficiencies. This has been under development for the last 2 years but we have made good progress and our customers and our staff will start to see the significant benefits of this from mid-2019.

“Despite this investment in technology for the future potential of the business, we have improved our profitability and delivered a consistent financial performance through a rigorous approach to cost control.

“2018 was also an important year for the business to strengthen its portfolio of brands. Over the course of the year, we have partnered with easyJet to offer Three customers priority boarding and free hand-luggage check-in, as well as adding Snapchat to our Go Binge offer. Our head turning Phones Are Good marketing campaign was voted 4th best advert of 2018 and has helped to improve our overall brand consideration.

“During the year we supported the launch of a new brand – Superdrug Mobile – and existing brands, iD Mobile and SMARTY, continued to grow, broadening our customer base and diversifying our revenue streams.

“Overall, I am pleased with the progress that the business has made in 2018. Only made possible with the hard work and commitment of our staff and partners, and I thank them for their dedication and support. We are well set up for some transformational shifts in 2019 for our customers and our employees. It will be a year when our customers will start to see the real benefits of the next generation of 5G “mobile” technology, a technology that will not only replace 4G, but will also replace the need for wired broadband services.”

Click on the image to view Three UK reports FY18 results

Please click here to access an on-demand audio webcast of the results presentation.