Three Group Europe's H1 EBITDA boosted by UK and Ireland

Three Group Europe said underlying EBITDA improved in the first six months of 2015, with strong contributions made by its operations in the UK and Ireland.

The company, which groups together the European telecoms businesses of Hong Kong-based CK Hutchison, said the acquisition of O2 Ireland and improvements in UK net customer service margins helped drive up EBITDA by 20 per cent year on year to HK$7.8 billion (€878 million/$1 billion). In local currencies, EBITDA improved by 40 per cent.

However, adverse currency exchange effects caused overall group revenue to drop by 2 per cent to HK$31 billion. Before the conversion into the Hong Kong currency, revenue was 16 per cent higher in local currencies.

The total number of customers across Europe increased by 2 per cent to more than 30 million. Three UK and Three Italy, already the group's two largest units with more than 10 million registered customers apiece, are set to add more users to this overall figure if their respective merger plans are approved.

In the UK, Hutchison has agreed with Telefónica to acquire O2 UK for £9.25 billion (€12.6 billion/$14.5 billion) in cash plus a deferred payment of up to £1 billion based on future performance of the combined business. In Italy, the plan is to merge Three Italy with VimpelCom-owned Wind Italy. The two proposed deals, which are both subject to regulatory approval, are set to create the largest mobile operators in the respective markets.

Three UK has certainly been one of the bigger success stories within the group, reporting that more than 50 per cent of its customers are now using 4G services. The unit also saw revenue rise by 10 per cent year on year in the first six months to reach over £1 billion, while EBITDA increased by 34 per cent to £311 million.

In a research note, CCS Insight analysts said Three UK now considers itself to be far more than just a low-cost provider.

"A greater focus on network quality and new services indicates a confidence that it can compete head-to-head with its more established rivals. This may be particularly relevant as parent CK Hutchison readies to submit proposals to the European Commission in a bid to acquire O2," the analysts said.

Three Group has certainly not enjoyed an overnight success: indeed, CCS Insight noted that a decade after launching its UK business it still holds only a 12 per cent market share.

That could be set to change. "As the rapidly-evolving UK market continues to transform, there's no doubt Three has wind in its sails," CCS Insight said.

Three Group Europe also includes operations in Denmark, Austria and Sweden.

For more:
- see the results from Three Group Europe
- see this release from Three UK

Related articles:
Analysts: Three Italy, Wind merger pressures rivals, but regulator clearance not assured
VimpelCom, Hutchison agree to merge Wind and Three Italy
Hutchison plans fresh assault on Austrian market with Eety
Hutchison Whampoa to sell 33% of combined UK unit for up to £3.1B
Ovum: Telefónica, Hutchison Whampoa face 'fraught' fight for UK deal clearance

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