Mobile operator Three Ireland significantly narrowed its annual losses last year from €45 million to €2.5 million, according to its annual accounts. The company's revenues were hit, however, by regulatory changes to mobile charges.
The accounts also reveal that Three, which has a customer base of about two million and a market share of about 35 per cent, paid €15.4 million for its slice of next-generation 5G spectrum in a State auction in May.
Three's annual revenues fell from €693 million to €661 million in 2016, according to the financial statements. The company blamed this on reductions in mobile termination rates – the rates operators charge each other for calls between networks – and new European Union rules to curb roaming charges.
An accelerated cost-cutting programme, however, helped the market number two mitigate its losses. The company, which is led by chief executive Robert Finnegan, cut operating costs by about €50 million. Operating profits rose over the year by 170 per cent to €76 million, and its margins also increased.
The company's directors, who include Mr Finnegan and Frank Sixt, a senior executive at its Hong Kong parent Hutchison Whampoa, said that, through investment, it intends to continue "reducing losses, and ultimately [to] report profits".
Hutchison has backed Three Ireland significantly since its entry into the Irish market over a decade ago, helping it to fund its accumulated losses of €860 million. The financial statements say the Irish unit is confident of “long-term” funding from its parent.
Staff numbers at Three, which swallowed the former market number two operator O2 Ireland in an €850 million takeover in 2014, rose last year by about 40 to 1,127. It has a wage bill of €67 million.
The company attributed about €13 million of its labour costs to an ongoing upgrade of its network and the integration into its system of the former O2 network infrastructure. It is investing about €300 million in its network.
Recent results from its Hong Kong parent for the first half of 2017 show that the Irish unit continues to deal with challenges, including a 10 per cent decline in first-half revenues.
Those figures revealed that Three’s management has continued to squeeze its cost base, however, with improvement in some operating margins.
The company also reported an increase in customer churn in the first half of due to the implementation of price rises. The parent unit has suggested, however, that it expects churn to stabilise in the second half of 2017 and for its performance to improve.