CK Hutchison’s Three UK reported a GBP 30 million (USD 39 million) operating loss for the first half of the year and persistent negative cash flow, emphasizing the necessity of merging with Vodafone to invest in an enhanced joint network.
Britain’s competition regulator is examining the USD 19 billion merger between the country’s third- and fourth-largest mobile networks and has expressed concerns that the deal might lead to increased consumer prices. A report on the matter is expected in December.
Related: CMA Concludes Initial Probe into Vodafone-Three Merger
Meanwhile, Chief Financial Officer, Darren Purkis, noted that Three UK saw growth in its Smarty sub-brand and wireless home broadband during the first half of the year, which helped mitigate declines in its core contract voice business.
Total revenue rose 9% to GBP 1.34 billion, the company announced. It also reduced capital expenditure, excluding spectrum, to GBP 230 million from GBP 275 million the previous year, though it still reported a loss in core earnings after accounting for CapEx.
Related: Vodafone-Three Merger Faces Further Delay as CMA Extends Investigation
“We are having to reduce our CapEx due to the financial constraints and we’ve continued to make a loss as a result of the increased cost base,” Purkis said. “The only viable way for us to invest in a network is through the proposed merger with Vodafone that would unlock GBP 11 billion of investment.”
In May, the UK government reportedly issued a final order granting conditional approval for the Vodafone-Three merger.
Previously, the Secretary of State had given the green light to the deal, contingent upon specific conditions, including the establishment of a “National Security Committee” by both companies to monitor sensitive operations that could impact national security.
Also Read: BT Slams Proposed Vodafone-Three UK Merger
