Optus grows EBITDA, underlying net profit in Q1 2014/15, but operating revenue drops

Overall net profit when exceptional items included also dropped by 1.8 per cent

Optus has reported growth in both earnings before interest, taxes, depreciation, and amortisation (EBITDA) and underlying net profit growth despite a 2.8 per cent decline in operating revenue.

EBITDA grew 4.4 per cent to $597 million for the first quarter ending June 30, 2014, while underlying net profit grew 12.3 per cent to $187 million when exceptional items relating to a provision for workforce restructuring were excluded. However, overall net profit dropped 1.8 per cent.

The company said the positive results reflected strong cost management and yield improvements as it continued to transform its business through improved customer experience, mobile product innovation and an accelerated rollout of its national 4G mobile network.

Total mobile revenue declined 1.5 per cent due to the continuing effect of the industry-mandated reduction in mobile termination rates (from $0.048/minute to $0.036/minute from January 1, 2014) and lower equipment sales, Optus said in a statement Mobile service revenue was stable.

Optus Country Chief Officer, Australia, Paul O’Sullivan, said, “Optus is changing the rules with mobile plans that allow customers to share data with up to five devices. Yet again Optus is giving customers more freedom in taking advantage of new technology.” During the quarter, Optus launched commercial 4G pilots in Darwin and Perth using early access commercial licenses on the 700MHz spectrum band.

“We’re upgrading our entire mobile network in preparation for access to 700MHz spectrum in January 2015, putting us well on track to offer 4G national coverage that reaches 90 per cent of the Australian population by the end of March 2015. This spectrum will be used to bring 4G coverage to regional locations and improve indoor 4G experience for more customers,” O’Sullivan said.

“Our 4G customer base continues to grow steadily, with a further 1.3 million mobile customers [defined as the number of 4G handsets on the Optus network] using our 4G network over the last 12 months”, O’Sullivan said.

New complaints to the Telecommunications Industry Ombudsman (TIO) were down 41 per cent for the March quarter compared to the same period last year.

It claimed that for the past 13 quarters, Optus has had the lowest TIO complaints of the three main telecommunications providers.

Optus Business revenue declined 3.0 per cent to $367 million> the company blamed price competition and a decline in legacy data revenues. EBITDA for the Australian enterprise business improved 2.0 per cent.

During the quarter, Optus Business won a 5-year deal to service Westpac’s domestic mobile device fleet and managed services across its offices in Asia, New Zealand, US and UK.

Optus' parent company, SingTel, said in its Q1 report: "Australia Consumer continued to execute on its transformation plan, leading the market with mobile product innovations and accelerating its national 4G network rollout, to improve customer experience and drive sustainable profitability. EBITDA increased 4.5 per cent although operating revenue declined $46 million or 2.6 per cent."

SingTel said Optus' consumer mobile revenue declined $234 million or 1.9 per cent.

The number of consumer 4G mobile customers was up 282,000 for the quarter. The total 4G customer base increased to 2.43 million from 2.15, quarter on quarter.

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