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Optus blames ACCC for operating revenue decline

Optus blames ACCC for operating revenue decline

Telco claims decline driven by regulated reduction in mobile termination rates

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Optus has pointed the finger at the Australian Competition and Consumer Commission’s (ACCC) regulated reduction in mobile termination rates, after reporting operating revenue decline for the second quarter and half year ending September 30.

Its parent company, Singtel, released the company’s financial results, which reported a nine per cent drop in operating revenue from $2.1 billion this quarter from $2.3 billion the same time last year.

Meanwhile, its quarterly EBITDA was $633 million, and its net profit for the quarter amounted to $184 million.

In a statement, Optus said the decline was driven by the ACCC’s regulated reduction in mobile termination rates, and higher service credits associated with device repayment plans.

From January 1, mobile termination rates declined from $0.36 per minute to $0.17 per minute for calls, and $0.075 to $0.003 for SMS.

This marks the second time the telecommunications company has pushed the blame over to the ACCC.

In the last quarter, its operating revenue slipped 13 per cent, as a result of higher financing costs and ACCC’s reduction in mobile termination rates.

When the ACCC gave telecommunications providers, consumers and lobby groups one month to state their case for or against domestic mobile roaming, Vodafone Hutchison Australia called for a green light, but Optus and Telstra stood united against.

Telstra and Optus both argued that the case for mobile roaming will negatively impact their network investment across Australia, with both telcos maintaining this stance.

Optus CEO, Allen Lew, said the company's performance for the half year “was affected by moderating growth from heightened competition in the Australian mobile market”.

Lew added that through including the impact of lower mobile termination rate, Optus' mobile service revenue is expected to decline by mid-teens for the financial year ending March 31, 2017.

Despite its falling operating revenue, and excluding the impact of mobile termination rates and device repayment plan credits, postpaid average revenue per user (ARPU) increased three per cent year-on-year.

In Mass Market Fixed, operating revenue increased six per cent, which it attributed to the demand for its home broadband entertainment bundles and NBN plans.

At the end of September 2016, Optus had 164,000 broadband customers on the NBN, up 130 per cent year-on-year. Optus now has a total of 1.11 million broadband customers.

“These first half results reflect Optus’ efforts to drive customer growth through differentiated content," Lew added.

"Optus has successfully deepened its engagement with customers, achieving a record quarter of customer growth for our branded mobile business, and strong demand for Optus’ entertainment content."

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