Ninth year of losses puts pressure on Three Ireland to make O2 deal

Hutchison Whampoa and its Irish mobile subsidiary Three told the European Commission it could not gain enough scale in the Irish market to become profitable, unless its proposed €850 million deal to buy O2 Ireland got the go ahead from EU regulators.

Hutchison, a conglomerate based in Hong Kong, yesterday disclosed figures that show Three Ireland made a pretax loss last year of €29 million. This represents the company's ninth straight year of losses since it entered the Irish market, bringing the accumulated total to more than €540 million.

Customer base
According to the figures from Hutchison, Three grew its revenues in the Irish market last year to €180 million. Its total registered customer base, it said, grew from 819,000 subscribers to 961,000, an increase of 17 per cent. Its number of active subscribers grew from 477,000 to 548,000, or 15per cent.

Three’s revenue per user, however, fell by an average of a tenth last year. Its prepay customers spend an average of €15.30, while postpaid or contract customers, the most lucrative segment, spend an average of €37.98.

Hutchison has invested over €1 billion in infrastructure and on spectrum since it entered the market here.

It is trying to convince European regulators, who have promised a decision by April 24th on its O2 bid, that it cannot make a return on such a large investment unless it drastically increases its customer base through acquisition.

The commission has expressed concerns about reducing the number for network operators from four to three.

To assuage such concerns, Three has agreed to divest spectrum directly to its rival Meteor, and to guarantee the retention of a network-sharing agreement between Meteor and O2. It is also prepared to open up its network to several new operators.