LONDON (Reuters) – CK Hutchison’s Three UK reported a first-half operating loss of 30 million pounds ($39 million) and continued negative cash flow, which it said showed the need for it to merge with larger rival Vodafone to invest in a better combined network.
Britain’s competition regulator is scrutinising the proposed tie up between the country’s third and fourth largest mobile networks after it raised concerns that the $19 billion deal announced last year could result in higher prices for consumers. It will report in December.
Chief Financial Officer Darren Purkis said Three recorded growth in its Smarty sub-brand and wireless home broadband in the first six months of the year, helping offset top-line declines in its core contract voice business.
Total revenue increased 9% to 1.34 billion pounds, it said.
The group reduced capital expenditure costs excluding spectrum to 230 million pounds from 275 million pounds a year earlier, but it was still loss making in terms of core earnings minus capex.
“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 on Thursday.
“The only viable way for us to invest in a network is through the proposed merger with Vodafone that would unlock 11 billion pounds of investment.”
($1 = 0.7780 pounds)
(Reporting by Paul Sandle; Editing by Kirsten Donovan)
