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Optus Profits Drop Out

By Oonagh Reidy | Friday | 17/05/2013

Profits slump as telco calls on 4G for revival

Optus' quarterly revenue to March 31 (Q4) declined 5%, as it announces a profit slump of 7.5% for the year FY13. 

The telco said the Aussie mobile market remains "subdued" as revenue fell in its core business although is now betting big on its fledgling 4G LTE network to kickstart revenues. 

Optus FY 13 net profit fell 7.5% to $728m compared to FY12, and was down 7% for the quarter. 

The telco insisted its results were "stable" against a backdrop of negative growth in the mobile industry.  

Optus earnings EBITDA rose 3% as it goes into cost cutting mode in the quarter, and 1% for full year 2013 (FY13), to AU$2.38bn. Operating expenses declined 9% to AU$1.49 billion, attributed to improved cost discipline, lower acquisition, retention costs as it got rid of its biggest dealer TeleChoice in October. 

Despite declining mobile revenues, Optus managed to grow its postpaid mobile customers by 28,000 for the March quarter, as postpaid churn fell slightly compared to previous quarter to 1.6%. 

Optus postpaid customers now comprise 57% of the total base, at 4.09 million, up 2% from a year ago

It now has 785,000 4G mobile handsets on its network, in comparison to Telstra's  2.1 million 4G customers although this includes mobile broadband users also. 

Kevin Russell, Optus Chief Country Officer, said Optus is betting big on 4G, its fledgling network, to drive future revenues. 

"Optus is focused on driving sustainable, profitable growth and positioning itself to capitalise on mobile data revenue growth."

''Revenues on data will be driven by 4G'' adding, the telco wants to "increase penetration of 4G handsets" and get its data plans right.

Optus fell significantly behind rival Telstra in the race for 4G LTE customers, whose services is still confined to major cities, while Telstra plans a 4G invasion, covering 66% of the population by the end of the year, and just spent $2.1bn on additional spectrum. 

Russell said Optus spectrum purchased cost the telco $649m, means its "well-placed to execute a major combined network rollout that will support a strong and sustainable experience for our customers." 

"Optus is building a strong, highly competitive mobile network through investments that are delivering enhanced 3G in-building coverage and 4G services in major population centres."

Optus also said lower average revenue per user from discounted bundled plans led to a revenue declining almost 5% in its Consumer and SMB fixed business. 
But it's not just with 4G that the Singtel owned telco is looking to boost its business 

As the NBN rolls out, it has created a separate division "to focus on mass market fixed revenue opportunities"  for its broadband division. 

In response to industry changes, Optus said it is "positioning its brand with a focus on customer experience, enhancing 3G and 4G network investments, restructuring its retail network and online capability, and making significant service improvements."

In FY 14 Optus expects revenue to slump, and mobile service revenue is expected to decline by mid single digit level.

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