Store closures and decline in roaming see Three Ireland’s revenue drop

Mobile operator Three Ireland felt the impact of the Covid-19 pandemic last year as restrictions to slow the spread of the virus closed retail stores and travel bans led to a decline in roaming revenue.

Revenue for 2020 was down 2 per cent to €593 million as customer roaming charges fell. However, Three Ireland reduced its pretax losses last year to €11 million, from €23 million in 2019, as expenses and cost of sales fell. Total losses fell to €31 million, down from €34 million a year earlier.

Gross profit was 1 per cent higher at €426 million, up from €420 million the previous year. The company pointed to turnover growth and improved profitability at tariff level and growth in new products and services, despite the ongoing challenges presented by the measures to contain the pandemic.

There was a reduction in net losses before tax to €11 million compared with a loss of €23 million in 2019. Operating profit was €58 million, up from €50 million the previous year.

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The network also caw capital investment increase by 2 per cent on 2018 figures, at €133 million for 2020. That investment included the ongoing rollout of 5G infrastructure, which saw 475 sites upgraded by the end of the year.

“In 2020, the activities of the company were impacted by the Covid-19 pandemic. This necessitated a significant pivot for our staff and business as we closed our offices, contact centre and shops for periods, moved to working from home and increased activity to our online channels,” Three Ireland said in the accounts.

“The closure of retail and reduced footfall impacted acquisition targets and some other revenues streams, while the curtailment of travel reduced roaming activity, resulting in an overall reduction in revenue from €603 million in 2019 to €593 million. However, the impact of these was significantly reduced by costs savings in acquisition, marketing, travel and administration.”

CK Hutchison Networks

The company transferred its tower business – including site infrastructure assets, associated liabilities, revenue and costs with a net asset value of €15.4 million – in July 2020 to a separate company within the group, CK Hutchison Networks. That measure included the cancellation of shares and the transfer of a realised profit of €946,155,000 to retained earnings.

In December last year, mast operator Cellnex agreed a deal to buy CK Hutchison Networks, including its Irish telecoms towers and sites, as part of a wider €10 billion deal that saw the company buy other Hutchison group-owned European assets. Documents filed early in 2021 showed Cellnex had spent €600 million in January acquiring the Irish assets, which included 1,150 towers and sites.

Three Ireland’s total assets less current liabilities were €1.7 billion for the year, down from €1.9 billion in 2019 as the transfer of site infrastructure assets had an impact.

The Irish arm of the business also received a €17 million capital contribution from CK Hutchison Networks Europe Investments which was used to repay some of its outstanding loans.

Staff numbers were broadly stable at 1,242 compared with 1,264 a year earlier. Despite this, staff costs increased to just under €90 million, up from €88.5 million in 2019, with increased social insurance costs, retirement benefits and wage bills.

Looking ahead, Three said the impact of the pandemic restrictions continued into the first half of 2021, with interim management results to end of June 2021 showing Three reduced its margin by 5 per cent.

The network said there was ongoing uncertainty over the pandemic, with the threat posed by new virus variants and potential Government actions. However, it did not expect a significant impact on its operations or financial performance.