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Three’s network ‘unsustainable’ without Vodafone merger, bosses admit

Three mobile chief Robert Finnegan warns a merger is necessary to help build UK's networks - Geoff Pugh
Three mobile chief Robert Finnegan warns a merger is necessary to help build UK's networks - Geoff Pugh

Three’s investment in its network is unsustainable in the long term unless it merges with Vodafone, the mobile network’s boss has admitted.

Robert Finnegan, chief executive of Three UK, said the company had pumped large sums of money into its 5G network and needed more cash to secure its future.

He said: “Looking to the future, high levels of investment will still be needed to deliver the networks that the UK requires but levels of capex spread across the current set of four individual players are unsustainable.

“As good connectivity continues to be critical to how we live and work, structural change is needed in the industry through consolidation.”

Darren Purkis, Three’s chief financial officer, added: “Very simply, we’re spending more than we’re earning. It’s unsustainable in the long term.”

Three and Vodafone have been locked in talks for months over a merger that would create a major new player in the market with 27m customers.

However, discussions are understood to have been held up by disagreements over price, as well as the abrupt departure of Vodafone chief executive Nick Read in December.

Any deal would likely face scrutiny from competition regulators amid concerns about reducing the number of UK mobile network operators from four to three, alongside EE and O2.

It may also be reviewed under national security takeover laws due to concerns about Three’s Hong Kong-based owner CK Hutchison.

Mr Purkis insisted that the deal would be good for consumers and dismissed concerns about Three’s links to mainland China.

He added: “CKH invested heavily into the UK across a number of sectors and businesses for a number of years. I think they’ve been known in the UK for a long time and provided significant volumes of jobs and investment.

“I don’t want to comment on political issues, but I think that ownership at the moment is strong and has never really been called into question.”

The finance chief also insisted there was a future for the Three brand after the merger with Vodafone, but said no agreement had been reached.

The comments came as Three reported a 3pc rise in revenue to £2.5bn in 2022 as its customer base rose by 614,000 to more than 10m.

Earnings rose 3pc to £612m, though margin increases were offset in part by higher costs linked to network investment and surging inflation.