Home & Office

Optus profit and revenue down amid 'heightened competition'

Optus' pay TV and mobile segments were the saving grace in its quarterly results report, with the telco's overall net profit falling by 17 percent to AU$39 million.
Written by Corinne Reichert, Contributor

Optus has published its results for the last quarter of the 2016 calendar year, reporting a year-on-year drop in net profit of AU$39 million, or 17.3 percent, to AU$188 million in total.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) similarly dropped, down by 5.2 percent to AU$650 million, while operating revenue was AU$2.21 billion -- down 9.3 percent from AU$2.43 billion.

Optus again attributed its decline in quarterly revenue to the regulatory decision in August 2015 to reduce the rate that mobile network operators can charge each other and fixed-line network operators for calls from 3.6 cents per minute down to 1.7 cents, and regulated SMS pricing from 7.5 cents to 0.03 cents per SMS.

Optus also acknowledged the "heightened competition" in the telecommunications market, and said it would continue pushing products such as its pay TV and Sports package to differentiate itself, as well as extending its mobile network across Australia.

"Optus is responding to moderating market conditions with an intense focus on innovative products, unique entertainment offers, and a strong network proposition," Optus CEO Allen Lew said.

Optus' consumer segment contributed AU$1.8 billion in revenue, down 9.8 percent from the same quarter the previous year. As part of this segment, mobile provided AU$1.35 billion, down 12.8 percent; mass market fixed services contributed AU$315 million -- AU$92 million in voice, AU$116 million in broadband, and AU$28 million in pay TV -- up 3.4 percent thanks to a 16.3 percent rise in pay TV revenue due to "strong demand of Optus' home broadband entertainment bundles" as well as its NBN offerings; and wholesale fixed services added AU$153 million, down 6.1 percent due to data and IP and voice revenue falling while satellite revenue remained stable.

In terms of fixed services, Optus reported having 192,000 National Broadband Network (NBN) customers, more than double the previous year's 88,000; 440,000 hybrid fibre-coaxial (HFC) customers, up from 433,000; and 429,000 unbundled local loop (ULL) customers, down from 491,000. Average revenue per user (ARPU) was AU$54 per month across all fixed-line services.

Its enterprise business made AU$389 million in revenue, down 6.5 percent. Optus lost revenue in all parts of its enterprise segment: IT and managed services was down 6.6 percent to AU$165 million; data and IP was down by 2 percent to AU$79 million; voice was down 8.8 percent to AU$78 million; and mobile was down 8.7 percent to AU$67 million.

Optus' mobile business was the only segment to grow: It added AU$9.57 billion in revenue, up from AU$9.37 billion during the same period a year earlier. Adding 153,000 mobile customers -- 90,000 on post-paid and 43,000 on prepaid -- between October and December, Optus brought its total number of mobile customers up to 9.57 million and offset its falling ARPU whereby post-paid ARPU was AU$46, down from AU$61; prepaid ARPU was AU$21, down from AU$28; and mobile broadband ARPU was AU$20, down from AU$23.

Optus did not disclose its mobile market share, but said it remains committed to extending its network under both the federal government's mobile blackspots program, which will see it build out 114 new mobile sites under round two, and by installing small cells across Australia.

"Our network strategy, which is focused on delivering reach, capacity, and reliability in both metropolitan and regional areas, is delivering real choice for customers," Lew said.

"With our continued commitment to investing in regional areas, which has been boosted by the recent mobile blackspots funding announcement, we are expecting to make further network improvements in 2017 and beyond."

As of the end of December, Optus said its 4G mobile network now reaches 95.9 percent of the Australian population.

Optus' parent company Singtel reported a quarterly net profit of SG$973 million and EBITDA of SG$1.22 billion on revenue of SG$4.41 billion.

Editorial standards