For the second year running Three have confounded their critics and detractors by turning in an increasing profit, year on year.
Significant to their 2011 results Three have also been able to announce a fairly encouraging porting ratio and an increase of UK market share to around 11%. For the smallest MNO to be able to put out such figures to industry and The City is encouraging news to their customers and staff. The firm is a long way from disappearing round the commercial U-bend and into oblivion.
As we head into the LTE auctions later on this year, and with a reduced number of MNOs following the EE construction of T-Mobile and Orange, it is ever more vital that Three succeed in the UK. There is no one to follow them and if the unthinkable happened it would be a black day for customer choice and compelling tariffs and propositions here. With the effective loss of two MNOs (counting the EE venture as a consolidation of two into one, and Three going) the UK would be left with just three operators. The richness of variety and choice that we currently enjoy would disappear. We'd likely face a model comparable to the USA, Canada and some European nations where the power of the MNO is disproportionately loaded against consumer choice.
If Three can pull off a similar success into 2013, acquire the necessary LTE licenses and some lower frequency spectrum, they'll be in a strong position to consider their longevity assured. It may also make them rather attractive for acquisition by a new parent. HWL may be able to realise a significant return on investment selling Three as a very strong going concern. Again, that would not be a bad thing at all if the new parent is in the business of growing them. But this is wild speculation right now. What happens next during 2012 will be defining for Three's future success.
Three claims it is currently gaining three times as many customers as it is losing to other networks.
The operator said the 3:1 porting ratio, which indicates customers switching their phone from one network to another, has helped it increase its share of the handset market to around 11 per cent.
Three said its share of monthly contract sales is also well above its current share of the market.
During 2011, Three added 1.26 million customers, “the vast majority” of which were postpaid handset customers, said Three chief financial officer Richard Woodward (pictured).
Woodward said: “I look at it every day in terms of the figures we get from GFK in terms of share in the marketplace now and I know what my churn is and I know where my customers come from.
“I also know that more customers port into me than port out by a significant margin.
“What I am critical on is what percentage share do I take in the market every week, and as long as that is higher than what my current share is and my churn is under control, then I am growing.”
In its full-year 2011 results, Three recorded underlying profits of £30 million and revenues of £1.7 billion, up 14 per cent on 2010.
Woodward said the 2011 results showed Three had turned a corner and wuld continue to record growth in revenues and profits in the future.
He said: “We have seen competition being fairly active in the first quarter, but we have come back fairly robustly.
“I think it will continue to be a highly competitive market but we are comfortable that we now have a growing brand awareness and a growing relevance. People are starting to take us much more seriously off the back of our network and the other things we are doing.”