Three sets its sights on 4G as profits hit £86m!

By Daniel Thomas, Telecoms Correspondent

Three, the British mobile operator owned by Hong Kong’s Hutchison Whampoa, more than trebled its operating profit to £86m in the first half of this year, driven by an increase in smartphone customers drawn to its competitively priced data tariffs.

Three confirmed plans to boost its mobile network with 4G superfast mobile services before the end of the year, although this will be later than its rivals in the UK. O2 said on Thursday that its 4G network would go live at the end of August, becoming the second operator after EE to roll out superfast mobile, while Vodafone is expected to reveal its plans next week.

However, Three said it would simply add the 4G services for customers without changing contracts or charging extra, which is likely to set a benchmark for pricing in the UK for next-generation services that other operators hope will yield a premium.

Richard Woodward, Three’s chief financial officer, said all customers on a smartphone tariff with an enabled phone will be given 4G automatically by the end of the year. He predicted that the introduction of new smartphones this autumn – when Apple is expected to launch its latest iPhone – would help boost smartphone customer numbers in the second half of the year. “We’re attracting more and more customers, but importantly these are very engaged customers, delivering growth to the bottom line,” said Mr Woodward.

The mobile group, which is the smallest of the four operators in Britain, added 168,000 customers in the second quarter. This increase in mobile users, alongside cost management initiatives, helped almost double earnings before interest, tax, depreciation and amortisation from £109m to £188m, with the ebitda margin rising from 11.8 per cent to 18.8 per cent.

The operator has 7.5m active users on its network, up 10 per cent on 2012, and it said high-spending smartphone customers were driving the leap in direct smartphone contract sales of 87 per cent. Even so, gross average revenue per user fell 2 per cent to £20.80. Service revenues rose 0.5 per cent to £667m.

So-called “pre-pay”, contract-less customer numbers also grew in spite of a wider industry decline in those numbers, and Mr Woodward said the group would continue to focus on this market with new simple price plans.

Data usage went up more than 50 per cent in a year, with customers using 1.5gb of data on average in the second quarter, underlining the need for robust and high-speed mobile networks.

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