3’s UK and Ireland subscriber base has edged up to 4.7 million, with mobile broadband as the major contributor to the operator’s financial results last week. 3 reached 4.5 million customers in March this year, which upped to 4.7 million by June. The incremental benefit of 400,000 dongle customers saved 3 from what would have been a disappointing set of results for the first six months of this year.

The operator continues to be the dominant player in the UK dongle market, with a share believed to be around 60% of all mobile broadband customers. Most customers are now coming though 3’s direct channels, with the operator’s parent company, Hutchison Whampoa, citing ‘improved gross margin, tight cost controls and reduced acquisition costs’ as reasons to be positive. Although 3 benefits from not incurring the termination fees on dongles that it pays for voice calls, the 3G network has taken a hit on its average spend, as dongles don’t generate as much spend on average as traditional mobile voice and text packages.

Average customer spend is down 5% to £37.03. 3 hasn’t revealed the scale of its reduced costs but it will be buoyed from spending less to acquire customers, and customers not leaving the network at the high rate they were in previous years. However, the operator will have concerns about the relatively low rate of growth on its revenue. 3 pulled in £772m between January and June this year - a 7% increase compared with £2.7bn at O2, £2.4bn at Vodafone, £2.1bn at Orange and £1.4bn at T-Mobile. Kevin Russell, 3’s UK CEO, has previously cited revenue as a key priority. He told Mobile in June: ‘In five years’ time, 3 needs to be double the size it is today. Double in terms of revenue and margin size.’

One analyst said of 3: ‘The revenue is a problem for them. It needs to be the focus because their costs are stabilising, and they need to quickly improve the turnover to establish themselves as a major player. It’s too slow, and too little at the moment.’ Hutchison also cited the removal of discounted line rental deals and cashback as a factor in distorting a fair comparison of its results from previous years. It suggested that the high level of cashback promotions had inflated 3’s revenues in the past.

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