Optus doubles NBN customers as mobile subs hit 10 million

Optus now has 453,000 NBN customers and more than 10 million mobile subscribers, with CEO Allen Lew telling ZDNet that the telco is also examining the 3.6GHz spectrum band for possible 5G use.
Written by Corinne Reichert, Contributor

Optus has announced doubling its National Broadband Network (NBN) customers during the FY18 financial year, with CEO Allen Lew revealing to ZDNet that Australia's second-largest telco has expanded its 5G research to the 3.6GHz spectrum band.

Lew added that Optus has yet to choose its infrastructure technology partner for the 5G rollout.

"The [5G] preparations are certainly ongoing, we haven't chosen a partner yet, but we have been looking at different options and different infrastructure providers," Lew told ZDNet during the telco's FY18 financial results call.

"We are also in the process now of looking at propagation characteristics for the 3.6GHz frequency, which is a higher frequency range than we've used before, and to make sure that we understand the impact of buildings, trees, geography, etc, on that.

"So we are progressing along well in our plans in order that we can launch the 5G fixed-wireless access service in January next year for Australians."

The CEO also addressed the effect of the recent ZTE backlash on Optus' 5G plans.

"As far as Optus is concerned, we are a very responsible telecommunications provider and we have proven in the past that we will work with the government authorities to make sure that we have an infrastructure that meets the needs of not just the consumer but more importantly has the protection and security necessary," Lew said on Thursday.

"When we make our final decision on [5G] infrastructure provider, we will take all this into consideration."

Pointing to its 5G fixed-wireless rollout in early 2019 and 5G technology showcase during the Commonwealth Games last month, Optus said it is "leading in 5G".

"We have benefited from the showcase that we put up in the Gold Coast to better understand which of the applications that we had up there have resonated with customers, and we now have a clear indication of when we need to go out to market, what we need to provide, in addition to just pure connectivity and super high-speed broadband services," Lew told ZDNet.

As of the end of March, Optus had 10.106 million mobile customers -- 3.7 million in prepaid, 5.3 million in post-paid, and 1.1 million in mobile broadband -- up from 9.7 million this time last year. However, the telco declined to disclose its Australian mobile market share.

While Optus' own hybrid fibre-coaxial (HFC) broadband customers dropped by 9.6 percent to 396,000, unbundled local loop (ULL) broadband customers dropped by 17.9 percent to 339,000, and business-grade broadband customers fell by 5 percent to 24,000, it also almost doubled its NBN customers, which jumped from 228,000 to 453,000 during the year.

For the full year, Optus reported total net profit of AU$817 million, up from AU$794 million a year ago, with earnings before interest, tax, depreciation, and amortisation (EBITDA) growing from AU$2.7 billion to AU$2.8 billion. During the year, the telco brought in operating revenues of AU$8.7 billion, up from AU$8.4 billion.

Across the consumer space, Optus made AU$7.2 billion in operating revenue, up by 3.9 percent year on year thanks to success across mobile and pay TV.

Consumer mobile revenue was up by 3.9 percent to AU$5.2 billion, with Optus building 366 new mobile sites during the financial year and upgrading 6,783 mobile sites to 4G. Almost 5,800 of these sites were upgraded to 700MHz spectrum, with its 4G network now reaching 96.9 percent of the Australian population.

Mobile average revenue per user (ARPU) has continued falling, however; prepaid ARPU was AU$20 per month, down from AU$22, and post-paid ARPU was AU$44, down from AU$46, although mobile broadband ARPU was AU$21, up from AU$19 a year ago.

In response to TPG's upcoming mobile network launch, Lew said he is waiting to see whether the company can achieve a network that reaches 80 percent of the population using just AU$600 million in capital expenditure.

"We respect our competitors, and I'm not here to question how [TPG] will achieve the coverage that they claim with amount spent. Let's see what materialises when they do launch their network, and what they can achieve with 600 million," Lew said on Thursday.

"Our experience clearly with our two major infrastructure suppliers who have a global presence clearly indicates that it's not achievable, but let's see what they can produce."

On pay TV, Optus reported revenue growing by 12 percent to AU$116 million, with TV customers increasing from 456,000 to 491,000 as of March 31. At the start of May, Optus announced extending its exclusive Australian broadcast rights for the English Premier League (EPL) for another three years, at the same time opening it up to non-telco customers and launching a new app.

Lew told ZDNet that Optus is continuing to look to acquire the broadcast rights to other football tournaments. He added that Optus is not looking to expand its media content offerings beyond football and National Geographic at this stage.

"Right now, we've got two very good pieces of content ... we want to approach our content strategy on a step-by-step basis, let's make sure that we're getting traction with these two before we try and go beyond these two genres," Lew told ZDNet.

"At this time, I would say I have no plans to go beyond these two. I want to make sure that we monetise and create the value that we need out of these two first, and then if necessary we will take the next step."

Optus' consumer segment was slightly brought down by voice revenue decreasing by 14.4 percent to AU$325 million; broadband revenue by 13.5 percent to AU$398 million; wholesale data and IP by 0.7 percent to AU$230 million; wholesale voice by 9.2 percent to AU$98 million; and wholesale satellite by 13.4 percent to AU$244 million.

"Wholesale fixed revenue declined due to the cessation of Optus satellite services to NBN and the repricing of certain satellite broadcast contracts," Optus explained.

"Fixed revenue was impacted by NBN's temporary suspension of connecting and migrating customers to the NBN's HFC access network."

Across its enterprise business, Optus brought in operating revenue of AU$1.5 billion, up by 1.2 percent -- ICT and managed services grew by 3.5 percent to AU$632 million, which Optus said was due to growth across its cybersecurity, cloud, and unified communications offerings; data and IP remained fairly stable, at AU$322 million; voice dropped by 5.7 percent to AU$305 million, although the telco said this was less than the industry decline; and mobile rose by 5.4 percent to AU$288 million.

Optus cited "major ICT contract wins", with the telco having signed managed services deals during the year with Hoyts and Hastings Deering.

It also launched Optus Go, a suite of "simplified" enterprise IT solutions across connectivity, collaboration, and cloud, in February; and announced Cloud-UCX, a cloud-based unified-communications-as-a-service (UCaaS) solution for service providers in partnership with BroadSoft, in September.

Optus additionally pointed to its Internet of Things (IoT) partnership with the Royal Botanic Garden Sydney to roll out smart cells across smart nodes to provide free Wi-Fi, electric vehicle charge points, smart lighting, and ranger assist buttons.

Optus' parent company Singtel on Thursday announced FY18 net profit of SG$5.5 billion, up 41.5 percent from SG$3.9 billion, on operating revenue of SG$17.5 billion, up from SG$16.7 billion last year.

EBITDA was SG$5.1 billion, up from SG$4.998 billion last year, which Singtel attributed to its digital businesses along with growth in its mobile and fixed broadband customer base in Australia.

Related Coverage

Editorial standards