3 accounts: another worrying year.

clohamon

3 have released their 2009 accounts.

The company has so far lost €341M since 2001 which would be higher had it not booked tax credits of €58M over the last few years.

Revenue is up this year to €81M from €70M in 2008 but it still lost money on trading; another €65 million, though this was cushioned by a €25M subsidy from the NBS to give an overall operating loss of €40M. (The subsidy was booked against operating costs rather than capital expenditure.)

It has so far invested €325M in its network but there is WIP and the remainder of the NBS spend to come for 2010, there remains also a €67M obligation on its UMTS roll out, along with €26M still to pay on the license fee itself. To make matters worse it is expected to have to pay out €50M + for the new 800/900 Mhz spectrum licences, half of which will have to be paid up front.

All of which means that it now owes its parent company €660M to which it is adding a further €18M a year in capitalised interest. The parent has reduced its interest rate from 5% to 2.9% for 2009 otherwise interest costs would be over €30M per year.

It is difficult to see how this project can ever make a real return. You might hate their business model and the customer service but you have to admire their stamina and the depth of their pockets.

watty

And they sell Mobile Data subsidized by voice by 100:1

drunkmonkey

watty wrote: »

And they sell Mobile Data subsidized by voice by 100:1

I'd say that's the other way round.

clohamon

watty wrote: »

And they sell Mobile Data subsidized by voice by 100:1

Yes, the problem seems to be they don't have enough voice. Its very strange that they haven't made more of a breakthrough. If Millward Brown can be relied on, they're neck and neck with Tesco at 1% of the market each.



With such a heavy dependence on data revenue it will be a very interesting to see if they can find a formula that makes money.

drunkmonkey

clohamon wrote: »

they're neck and neck with Tesco at 1% of the market each.

Lol, No, Have a read of the report, 3 are excluded from those figures.

I'm sure there's a plan to make money somewhere, Mr Lee isn't bankrolling it for nothing.:)

watty

drunkmonkey wrote: »

I'd say that's the other way round.

And you are WRONG... It's about building customer base, not profit for 3 today.
All Internet data has to enter and leave 3 Network. That's charged each way
Some voice is on the network
Some voice is incoming calls so 3 gets paid
Some Voice is outgoing calls to 3 pays

Voice
€20 is 300 minutes outgoing = about 27MByte out (codec speed x time/ 8)
That's 54MByte on Network
If same amount of incoming calls then 108Mbyte total
Add maybe 25% of 3 to 3 calls = 135Mbyte a month on Network (any back haul) and 27Mbyte/300 Minutes to be paid for leaving network
Assume people get called as much by people off network as they call... that adds not just 54Mbyte traffic, but Revenue. Almost as much as has to be paid to other operators.
So the €20 for 300Minutes has low overall cost as 3 will get revenue from incoming calls and voice data rate is about 12kbps each way, compared to a typical 100kbps each way for VOIP, or 100kbps to 5000kbps for data download.
3's "skype" phone does not use VOIP or Skype on the network. The call is a regular 3G call. Equipment at the "edge" of 3's Network converts to/from Skype VOIP if it's an IP source/destination.

Data
€19.95 is 15GByte cap.
Assume 1/2 of that is used on average.
That's 7.5GByte = 7500 MByte that has to be paid for leaving & entering network. AND 7,500 MByte on Network and 7,500 on Back haul.

In UK

The operator also reckons it's now carrying half the country‘s wireless data - 100TB a day, which accounts for 97 per cent of the overall traffic including voice. 3 is publicly very pleased with that, but just like the other operators voice still brings in around two-thirds of company revenue - so the three per cent of traffic that is spoken is subsidising all those YouTube sessions to an enormous degree.

via http://www.theregister.co.uk/2010/10/14/3_biggest/

3 Ireland are building customer base. But not making money. Voice contracts and PAYG subsidises Data.

Compare Over Minutes charge of Voice calls with over Cap data charges..
Over CAP data charges are over €100 a Gigabyte.
Over Package voice charges are ??? (can't find them!).

You are dreaming if you think they can make money selling 7.5GByte used of Mobile traffic for under €20. The Cap is assuming most people don't use up to it.

Unlike UK though, in Ireland, 3 doesn't seem to have enough voice sales. So there isn't enough voice to pay for the Data user growth, hence they make a HUGE loss.

3 could end up regretting the NBS and their marketing emphasis on "Broadband" because neither makes them money and the Satellite part of NBS is costing them maybe x5 what their budget was.

watty

It seems Clearwire's 3.5G Network (data, not really voice), aka Mobile WiMax is not making a profit.

http://www.theregister.co.uk/2010/11/05/clearwire_layoffs/

They already ditched their "pre-WiMax" network in Ireland, it's now owned by Imagine.

watty

The Sympathy O2 gets for wanting to charge Content providers instead of Customers.

http://forums.theregister.co.uk/forum/1/2010/11/11/content_producers_should_contribute_to_mobile_internet_costs_says_o2_chief/#c_910916

clohamon

watty wrote: »

The Sympathy O2 gets for wanting to charge Content providers instead of Customers.

http://forums.theregister.co.uk/forum/1/2010/11/11/content_producers_should_contribute_to_mobile_internet_costs_says_o2_chief/#c_910916

Very hard to change to a €/bit model without all of them doing it at the same time. And If they do that it looks like a cartel. Time for TIF to give them a bit of cover.

bealtine

clohamon wrote: »

Very hard to change to a €/bit model without all of them doing it at the same time. And If they do that it looks like a cartel. Time for TIF to give them a bit of cover.

3 have just announced they won't be sponsoring the Irish Open anymore....

clohamon

bealtine wrote: »

3 have just announced they won't be sponsoring the Irish Open anymore....

'could never understand that, i thought they were going after the younger demographic. I'd love to see how they justified that on paper , clearly it didn't work in practice.

paulm17781

clohamon wrote: »

'could never understand that, i thought they were going after the younger demographic. I'd love to see how they justified that on paper , clearly it didn't work in practice.

They were probably hoping to make inroads into the business market.

3, I left solely because of your woeful customer service. Perhaps this is a part of why you're doing so badly???

paulm17781

paulm17781 wrote: »

They were probably hoping to make inroads into the business market.

3, I left solely because of your woeful customer service. Perhaps this is a part of why you're doing so badly???

That is definitly one of the reasons in my opinion....disgruntled cutomers wont wait around long now with bad service if they cant get a resolution efficiently (also bad for business like my own if anything should go wrong) plus there are 3 other alternatives out there who have being in the market longer and will probably be in better shape for future developement as well

I cant see three living up with the others in terms of development if they keep bringing in massive losses - o2's nabbing of the iphone when it originally came out was quite a marketing sucess - they will need something major like that to grab the headlines plus with most smart phone priceplans being similar across the board i cant see much change in users porting over :P altho meteor do do a nice 10gb addon (only real difference i noted and no i dont work for them either LOL )

plus you have meteors 14.4 and vodafones 21.6 mbps networks coming online (not real speeds but will be used as effective marketing tools)