Optus Business division talks tough

Summary:Despite burgeoning competition in the Australian enterprise telecommunications market, Optus's Business division today claimed it was the only credible alternative to former monopoly supplier Telstra. The comments came from Optus Business managing director John Simon, in a presentation in Singapore today to investors in Optus's parent company SingTel.

Despite burgeoning competition in the Australian enterprise telecommunications market, Optus's Business division today claimed it was the only credible alternative to former monopoly supplier Telstra.

The comments came from Optus Business managing director John Simon, in a presentation in Singapore today to investors in Optus's parent company SingTel. The slides from the presentation were sent to the Australian Stock Exchange this morning.

John Simon

Despite Simon's tough talk he admitted Optus Business only had around AU$900 million of the estimated AU$6.6 billion business telecommunications carriage market -- or 13.6 percent.

He claimed Optus was "under-represented" in the middle tier of companies with between 200 and 2,000 employees, and had a higher share in the corporate and government segment with 2,000 employees or greater.

Simon said Optus Business was seeing the most growth in the managed services market, where (not including figures from recently acquired ICT services company Alphawest) revenues grew 36 percent to AU$38 million for the three months ending 31 March.

In contrast, over the same period, Data and Internet Protocol (IP) revenue grew only 6 percent to AU$110 million. Voice grew 16 percent to AU$120 million.

"Optus Business's historical focus on scale has delivered 11 percent compound revenue growth ... but margins and cash flow are under pressure," noted the slides.

Customer trends
Simon said he saw six major technology trends within his division's customers:

  • Migration to IP-based virtual private networks
  • Uptake of Voice over IP (VoIP)
  • Use of wireless data
  • ICT managed services
  • Fixed to mobile migration
  • Migration to Ethernet

As a consequence of these trends, Simon said his division's strategy was to bring more of its customers onto its own network. He said this would be more profitable for Optus than using the networks of others such as Telstra.

Simon said Optus's ongoing AU$150 million rollout of consumer-grade ADSL broadband hardware into Telstra's telephone exchanges would assist with this process.

Optus Business also has access to a fibre customer access network in some locations in capital cities, and an existing business-grade ADSL network covering some 150 exchanges.

Some "traditional" data services will be retired, as Optus focuses on IP-based services, and Simon's division will also focus on Web-based self-service for corporate networks, with the aim of generating a better customer experience. The services provisioning process will be also speeded up.

Optus Business will additionally seek to grow its share of the mid-level (200-2000 staff) market.

Simon sees an opportunity to use his company's Alphawest asset to support Optus Business to capture new IP-based work.

He said an industry trend away from whole of business outsourcing and towards selective sourcing was positive for Alphawest, which remains under the shadow of giants IBM, EDS, CSC and to a lesser extent Telstra-owned KAZ.

Topics: IBM, Networking, Outsourcing, Telcos, Telstra, Unified Comms

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