UPDATED: Optus faces operating revenue decline

UPDATED: Optus faces operating revenue decline

Also reports loss in mobile service revenue

Telco service provider, Optus has announced a four per cent decline in operating revenue, to $2.24 billion, for its 2012 second quarter financial year results, ending September 30.

However, it reported a stable EBITDA, with a margin that improved by 1.1 percentage points to 25 per cent.

The company also reported that its mobile service revenue declined by four per cent since the last quarter, as a result of reduced mobile termination rates, service credits associated with device repayment plans introduced from October 2011, as well as lower equipment sales.

"We're refocusing our business in this new market reality. We are prioritising profitable growth over the chase of our customer numbers, we are strengthening the focus on core Optus branded activity and establishing Optus as a brand that leads in customer experience," Optus Australia consumer CEO, Kevin Russell, said.

He claimed the transformation will be ongoing and that the company has already taken some steps towards that goal, which includes its company restructure and partnership with Vodafone to improve network coverage.

Its EBITDA increased one per cent to $379 million from reduced traffic and selling expenses. Excluding the impact of service credits on device repayment plans, outgoing service revenue grew by one per cent.

Optus’ post-paid customer base grew with net additions of 132,000 for the quarter, including 60,000 from Vividwireless. Post-paid customers comprised 56 per cent of the total base, up three percentage points from a year ago.

But its pre-paid customer base declined by 100,000, as a result of handset subsidiary reduction and higher churn.

In the business and wholesale fixed sector, higher ICT and managed services revenue offset lower voice and data and IP revenue. Wholesale fixed revenue declined four per cent, while EBITDA was stable year-on-year.

In the consumer fixed business, the number of on-net broadband customers reached one million, up 8,000 customers from a quarter ago.

However, lower average revenue per user (ARPU) from discounted bundled plans led to a five per cent decline in on-net revenue. It attributed its eight per cent lower EBITDA to lower on-net revenue and higher selling costs.

In a bid to improve this, it recently implemented price increases and launched a new range of simplified fixed broadband and phone plans in October.

“In Singapore and Australia, we implemented a more sustainable data pricing structure to fund network investments and meet customer demand for higher speeds and better user experience,” SingTel Group CEO, Chua Sock Koong, said.

That month, Optus also further restructured its workforce to improve customer experience, centralise functions and leverage the scale of the group’s investments in digital capabilities – which lowered headcount by 350.

Following its partnership cut with TeleChoice and Boost, Russell also said that the company will be investing in 33 new Optus owned and operated retail sites, increasing its online focus, as well as reviewing its multi-channel brand strategy.

"We are clear on future direction and expect it to soar in profitability in the coming quarters," Russell added.

In a broader level, SingTel reported a net profit of $S868 million, down by two per cent.

Its overall revenue rose four per cent to $S1.67 billion and an increased EBITDA by two per cent.

“The group is focused on delivering sustained growth in our core business and developing new revenue streams. We will continue to build on our recent acquisitions to enhance our capabilities and extend our market leadership,” Sock Koong added.

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