Cutting Room: Three proves B2B exit was a wise move


As Three continues to go from strength-to-strength, Samantha Tomaszczyk explains how its exit from the B2B market just over a year ago is a blessing in disguise

If there’s one thing that can be said about Three, it’s that it likes to do things differently. Just as Vodafone, and T-Mobile and Orange’s parent company EE, announce a major push into B2B (see Mobile News, issue 544), Three brands the market as little more than a  “distraction” and says its exit last year has actually benefitted the company.

It seems to have a point. It is just over a year since it stopped taking on new B2B customers – a move that surprised few – with less than one per cent of its base (then around seven million) connected to B2B.

Now the firm appears to be going from strength to strength. This month, Three announced operating profit growth of 231 per cent to £86 million.

In the first six months of 2013, it saw contract customer numbers rise five per cent (264,000) to 5,535,000. Granted, O2 added more than this (292,000) in Q2 alone, but for the UK’s youngest operator, it’s not bad.

Three stated that since its B2B exit in April 2012, it has been able to focus fully on its target market: high-end smartphone users.

This was a brave admission – not many businesses would admit they’re not very good at multitasking – but one that shows Three in a positive light as a company that knows its strengths and weaknesses.

Out of its depth
The B2B market was certainly a weak spot for Three – and, in truth, it’s hard to remember anyone we’ve spoken to over the past few years which have championed it in B2B. Its business website (which still exists for its last few remaining customers) shows B2B services are limited to “getting emails delivered to your phones” and online bill analysis – hardly a plethora.

In addition, Three’s strategy of undercutting the other operators and offering increasingly larger allowances for declining prices, wasn’t washing with B2B customers who were prepared to pay for better customer service.

Fortunately for Three, however, this same strategy is working with consumers. The rise in profits shows it is attracting high-end smartphone buyers. In fact, 60 per cent of the smartphones it now sells are 4G-compatible, the company said.

By the time it launches 4G in Q4, around one million customers will have 4G devices – and all of these will automatically be able to use Three’s 4G network (because of its ‘no price premium’ promise).

What this means is, depending on how fast Three rolls out 4G, it will have one million 4G customers (EE’s target for the end of the year) without even trying. Of course, if its 3G roll-out is anything to go by, it could be a while before Three has ‘nationwide’ 4G coverage and can achieve this number.

Nevertheless, it appears that Three’s exit from the B2B market has been a blessing in disguise.