Long Term Evolution 4G Boosts 3 UK Revenue, Profit, Indirectly

Long Term Evolution 4G networks are expected to boost mobile service provider revenue, though in some cases the revenue is generated only indirectly.

That clearly is the case for 3 UK financial results in 2013, and especially its performance in the fourth quarter of 2013.

Revenues and profit are higher since the 3 UK  launch of Long Term Evolution 4G services, though not because new LTE tariffs are higher than the older 3G tariffs. In fact, 3 UK customers pay no more for 4G than for 3G.

In fact, you might also attribute higher revenues to handset sales, rather than service revenues, itself a consumer spending shift to take advantage of LTE.

Though other service providers might point to higher LTE service tariffs, 3 UK is merchandising its LTE network to gain market share. That means direct revenue gains based on higher LTE service fees are not a factor.

That appears to be driving incrementally higher subscriber gains. Reporting 2013 results, 3 UK says it has more than tripled its profits after adding 565,000 new customers in 2013, driven by a 12 percent increase in contract customers, reaching 7.9 million active customers.

All of Three’s customers are now on a 4G tariff, the company says, with 1.7 million customers using a 4G device. But the key is that 4G is available at the same price as what 3G used to cost.

“In 2013 we...cemented our market leadership on data by continuing to strengthen our network and committing to give our customers 4G at no extra cost,” said Dave Dyson, 3 UK CEO.

Three also says it has doubled its operating profit from £101 million to £207 million, with total revenue increasing by five percent to £2,044 million.

Around 1.7 million customers are already using a 4G device, and it appears device upgrades are largely responsible for the better operating performance.

New subscribers willing to sign contracts for top-of-the-line smartphones helped boost the company's revenues nine percent year over year, reaching a first half total of £1bn for the first time since the network's launch in 2003.

In contrast, 3's service revenue has remained flat at £667 million for the first half of the year, while handset revenues grew 30 percent to £321 million.