Three CEO gets his excuses in early as lawyers circle Ofcom

In what would appear to be preparation for industry backlash, Three CEO Dave Dyson has laid out what he believes to be justification for taking Ofcom to court.

We shouldn’t be surprised about any developments here, as Three having a moan that bigger boys are picking on it has just become a natural fixture on the UK mobile landscape. Reforms to the next spectrum from Ofcom haven’t done enough to help Three, and instead of speaking through investments, it has chosen to try and bully Ofcom into giving it more help in stealing business from the top three MNOs. The result now looks likely to be some sort of legal battle.

“To be clear, we haven’t made any decisions on whether we will go down this path,” said Dyson. “But remember, 5G isn’t even standardized yet and there is unlikely to be any commercial activity until 2020.

“We had hoped Ofcom would have taken a different route that the one it has chosen. My view is this (a successful mobile industry) can only be delivered through effective competition. Our spectrum cap suggestion was to encourage competition, which is biased towards EE, O2 and Vodafone.”

Dyson repeatedly stated the team has not made a decision as to whether it would pursue legal options, but it would appear to be a likely outcome. Dyson also highlighted such action would only delay the spectrum auction by three months, and considering standardization and commercialization is still years away, this shouldn’t be a problem. It looks like the team is trying to convince themselves such action would not cause any lasting damage to the industry.

What Dyson doesn’t seem to appreciate, or is refusing to admit due to fear of backlash, is should the Three legal case be deemed successful, this will certainly add more time onto the three months. The three month period is just the initial battle, then there will be appeals, and should Three continue to win, there will have to be another review of the spectrum auction. All of a sudden, this becomes a very long time, and it’s the businesses and consumers will begin to suffer.

“Most people I speak agree with my view that the mobile industry in the UK is mediocre at best,” said Dyson. “As we prepare to distance ourselves from the EU it is fundamental to the UK’s future and economic success that we have a world class telecommunications infrastructure.”

This is a battle we can look forward to, but looking back over the last three months, Three has put together a pretty solid performance. Revenues across the quarter grew 10% year-on-year to £1.16 billion, while the customer base grew by 9% to 9.9 million active customers. This was primarily led by the prepaid market, as Three continues to broaden its ambitions and focus.

One of the few smudges on the report was a decrease in ARPU and AMPU. Gross ARPU stood at £18.79, a dip of 4%, while AMPU was at £12.63, down 1%. These are not earth shattering decreases, but representing the broader demographics which the company is now chasing. In layman’s terms, Three is starting to actively collect lower value customers which are being churned from the other providers.

“I would say we delivered a solid performance over the first half of the year,” said Dyson. “A part of our growth plan is to challenge the industry and improve how consumers use the internet on their phone. Our ambition is to get rid of rip-off roaming charges, and we will continue to work towards this goal. This is irrelevant of what is happening with Brexit.”

On the roaming side of things, Brexit is going to have little or no impact. The team are continuing to increase the number of countries where customers can use their plans without fears of astronomical bills, and Dyson confirmed the case would remain the same post Brexit. Nothing will change and roaming deals will remain exactly the same.

All in all, it’s been a relatively positive couple of months for Three, but keep an eye on the horizon. We get the impression there is a legal battle brewing over the spectrum auction, with Three returning to its moaning ways.