Optus sees quarterly profit slip by $39 million YoY

Optus sees quarterly profit slip by $39 million YoY

Third quarter results affected by device repayment plan service credits and one-off items

Singtel subsidiary, Optus, has revealed the financial results for the third quarter 2016/17 financial year. The company reported a net profit if $188 million, down $39 million from the same time last year but up marginally by $4 million from the previous quarter.

Optus pointed the finger at device repayment plan service credits and one-off items for the decline in revenue, after blaming the ACCC for a decline driven by regulated reduction in mobile termination rates last quarter.

It said that “against a backdrop of heightened competition”, its earnings before interest and tax (EBITDA) totalled $650 million, with EBITDA margins improving 1.3 percentage points to 29.5 per cent. However, during the same period last year, EBITDA came in at $685 million.

Yet again, the company said its operating revenue declined 9.3 per cent due to the ACCC’s mandated reduction of industry mobile termination rates, higher service credits associated with device repayment plans, and one-off items in the corresponding quarter last year.

“From January 1, mobile termination rates declined from $0.36 per minute to $0.17 per minute for calls, and $0.75 cents to $0.003 for SMS. The lower mobile termination rates have minimal impact on profitability,” the company said in a report.

On the other hand, it said excluding the impact of mobile termination rates and device repayment plan credits, consumer blended mobile average revenue per user (ARPU), was stable year-on-year.

In its mass market fixed line business, the telco’s operating revenue increased by three per cent, reflecting what it says is “strong demand for home broadband entertainment bundles and NBN plans”. Optus now has 192,000 broadband customers on the NBN and a total of 1.13 million broadband customers.

Free cash flow for the nine months ending December 2016 was $298 million, up 15 per cent year-on-year.

Its 4G mobile services continues its growth momentum with 270,000 new sign-ups this quarter, amounting to 5.54 million as of December 31 last year and accounting for 58 per cent of its mobile base.

Its mobile handset customer base also saw growth, with Optus adding 153,000 mobile customers in the quarter, bringing the total number of mobile customers to 9.57 million. Postpaid handset subscribers grew by 90,000 while the pre-paid segment returned to growth this quarter with net additions of 43,000 subscribers.

“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.

During the quarter, Optus also continued to focus on enhancing network capacity and extending its 4G footprint to 95.9 per cent of Australians.

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

“With our continued commitment to investing in regional areas, which has been boosted by the recent Mobile Black Spots Funding announcement, we are expecting to make further network improvements in 2017 and beyond,” Lew said.

The company has also most recently launched a new in-built Wi-Fi calling service; ramped up its regional mobile coverage in the Northern Territory and South Australia; and joined the government’s new telecommunications service panel.

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Tags Telecommunicationsoptusfinancial resultssingtel


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