Three network ‘unsustainable’ unless it seals Vodafone deal

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 [capital expenditure], 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 in December of Nick Read, the Vodafone chief executive.

Any deal would probably 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 because of concerns about Three’s Hong Kongbased owner CK Hutchison.

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

The comments came as Three reported a 3pc rise in revenue to £2.5bn last year 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.