The “dysfunctional” British mobile market must consolidate from four to three operators, Three UK has urged, as it said its returns remained unsustainably below its level of investment.
Posting full-year results yesterday, Darren Purkis, chief financial officer, said that the mobile market structure was limiting returns and stifling network investment, with the quality of infrastructure “already poor”.
Ofcom said last month that it would assess any consolidation in the mobile market against the “specific circumstances of that particular merger” rather than on the appropriate number of networks.
The regulator’s clarification has renewed speculation of a tie-up between Three and Vodafone in the UK. Purkis, 49, said it was “just that at this stage — rumours”.
“We feel there is a need for consolidation, whether we are part of that we will need to wait and see,” he said.
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Purkis added: “With any consolidation there needs to be the right appetite from both parties. It’s never easy . . . It’s a matter of opportunity and circumstance.”
He said that markets in Austria, Italy and Ireland, where Three’s companies have merged, was proof consolidation improved investment.
Other industry bosses have called for consolidation. Nick Read, chief executive of Vodafone, has said the UK was among four European countries where he saw “a very strong case for consolidation without the need for punitive remedies” from anti-trust regulators and that it was a “very fragmented” and “crowded market place”.
Purkis made his comments alongside results for last year which showed that Three UK’s revenue rose 4 per cent to £2.4 billion and underlying earnings increased by 10 per cent to £609 million.
Its active contract customer base was up 7 per cent as it added more than half a million subscribers to bring its total to 8 million. Its net customer additions were the highest since 2012.
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Handset revenue rose by 13 per cent to £772 million due to the increase in its customer base coupled with average handset price growth, while registered contract churn fell.
Three UK is part of Hong Kong’s CK Hutchison group, which has mobile operations in 11 countries, and employs 4,800 people in offices in Reading, Glasgow and its 311 retail stores.
Yesterday Ofcom urged telecoms companies to do more to help customers struggling to pay bills. The regulator’s call comes amid the cost-of-living squeeze and the industry introducing price increases.
Ofcom said people suffering financial hardship should receive better support from phone and broadband providers. It wants them to work more closely with debt charities, avoid imposing service restrictions to force payment and to stress the help available for people struggling to pay.
Ofcom said its research showed that 1.1 million households, 5 per cent, are struggling to afford their broadband, or about one in ten among the lowest-income households.
