Three’s investment in its network is not sustainable in the long-term unless it mergeswith Vodafone, according to the boss of the mobile network.
Three UK’s chief executive Robert Finnegan stated that the company had invested large sums in its 5G network, and needed more money to ensure its future.
He stated that “Looking ahead, high levels will still be required to deliver the networks the UK needs but the current levels of capex across the four players is unsustainable.”
“As connectivity is still a critical part of how we live and work,” structural change in the industry via consolidation is necessary.
Darren Purkis is Three’s chief financial officers. He said: “Very simply we’re spending more money than we’re making. It is not sustainable in the long-term.
Three and Vodafone are locked in negotiations for months about a merger that would create an important new player in the market, with 27 million customers.
However, it is understood that discussions were stalled by disagreements about price and the sudden departure of Vodafone chief executive Nick Read, in December.
Competition regulators will likely scrutinize any deal due to concerns about reducing UK mobile network operators’ numbers from four to three, along with EE and O2.
Due to concerns over Three’s Hong Kong-based proprietor CK Hutchison, it may be subject to national security takeover laws.
Purkis insisted the deal was good for consumers, and dismissed concerns over Three’s connections to mainland China.
He said that CKH had invested heavily in the UK over a variety of sectors and businesses for a number years. They’ve been well-known in the UK for many years and have provided substantial amounts of investment and jobs.
“I don’t want to comment about political issues but I believe that the ownership at the moment, and it has never been really called into question, is strong.”
The finance chief insisted that there was a future for Three after the merger with Vodafone but stated that no agreement had been reached.
Three reported that its revenue rose 3 percent to £2.5bn in 2022, as its customer base grew by 614,000 to over 10m.
Earnings increased 3pc to £612m. Margin increases were partially offset by higher costs due to network investment, and rising inflation.