Three UK boss says Vodafone merger is ‘vital’ to offset investment costs
The chief executive of Three UK has said it is “vital” that the telecoms company merges with Vodafone as its current capital expenditure levels are too high.
Chinese-owned Three reported that total revenue increased to £664m and total margin rose to £424m, both up nine per cent year on year in the first quarter.
Boss Robert Finnegan said it was a “solid start to the year,” but the company continues to be “impacted by inflationary pressures, and market conditions remain challenging.”
“Our EBITDA-CAPEX remains negative, as it has been since 2020, which is unsustainable long-term.”
Rising costs and investment into its network meant capital expenditure remained in the red in Three’s first quarter, at negative £130m. This was slightly lower than the negative £140m capex it posted in the first quarter of 2023.
“I believe that merging with Vodafone is vital to give us the required scale to invest, grow and compete to create a best-in-class network for the UK,” he added.
It is understood that Three UK is making tentative plans for the new merged entity with Vodafone but the telco is still bruised after its proposed tie up with O2 was quashed by competition regulators in 2016.
Three and Vodafone argue the new deal will create a stronger third player to compete with BT and Virgin Media O2, as well as provide an £11bn investment into the UK’s 5G infrastructure.
The deal is currently undergoing a phase two investigation by the Competition and Markets Authority (CMA), which is concerned it could leave consumers worse off and impede competition in the telecoms market.
Three also said today it added over 300,000 customers in the first quarter, taking its total to 10.6m.
Its business division and cheaper Smarty brand fuelled this customer growth, offsetting churn from its traditional core business.