Optus Business sees revenue fall

Optus Business sees revenue fall

At the same time, the business unit's pre-tax earnings grew by five per cent year-on-year in the quarter ending December 2017

Optus Business saw a year-on-year decline in revenue for the quarter ending December 2017, according to the latest financial report by parent company, Singtel. However, the business unit's pre-tax earnings (EBITDA) grew by five per cent for the quarter. 

Optus Business ICT and managed services revenue declined 13 per cent year-on-year attributed to phasing contracts, posting $146 million. In the previous quarter the segment had shown a 15 per cent increase.

Broadly, Optus delivered a record postpaid handset customers growth of 127,000, while dealing with a 29,000 decline in prepaid customers during the December quarter.

According to Optus the decline in prepaid customers comes as the company continues to focus on acquiring quality customers.

Mobile revenue increased nine per cent due to record mobile net additions in the quarter, with higher carriage and mobile applications revenue.

Optus posted operating revenue growth of five per cent year-on-year to $2,328 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 14 per cent as a result of mobile service revenue, NBN migration payments and higher other income from disputes settlement.

Net profit increased 39 per cent compared to same period in 2016. There was also growth in net profit with the company posting $262 million, which shows growth from the previous quarter also when the company reported net profit of $175 million.

Net profit after tax (NPAT) was $239 million, bringing the NPAT for the nine months ended 31 December 2017 to $609 million.

Optus parent company, Singtel, revealed a four per cent growth in operating revenue, a positive change compared to the one per cent dip posted in the previous quarter.

Singapore-headquartered Singtel operating revenue was $4.44 billion, however net profit was down nine per cent to $858 million.

Optus consumer revenue rose eight per cent as a result of postpaid mobile and NBN customers’ growth as well as higher NBN migration payments.

“Strong postpaid mobile customer growth for the quarter has also benefited from new premium handset releases and continued network expansion,” Optus CEO, Allen Lew, said.

Optus increased by 65,000 its number of NBN customers, with the telco now claiming 416,000 NBN broadband customers.

Singtel reiterated that Optus’ 4G coverage now reaches 96.6 per cent of the population and the it also recently added to its spectrum portfolio new metropolitan licences in the 2300MHz and 3500MHz spectrum bands, which will enable it to offer high capacity 5G services in the future.

Consumer revenues in Singapore declined six per cent due to ongoing voice to data substitution and lower equipment revenues. Singtel said that equipment sales were affected by delays in popular handset launches and higher demand for SIM-only plans.

Currently, 17 per cent of Optus sales come from online engagement.

Optus' headcount grew from 8,261 to 8,414 in the quarter, however is still way below the December 2016 headcount of 8,924.

In November 2017, NBN Co announced a temporary suspension of new orders on its HFC access network. During this period, Optus will not be able to migrate customers onto the NBN HFC network but will continue to serve existing customers on Optus’ HFC network, the company said.

Optus Internet was taken to court by the Australian Competition and Consumer Commission (ACCC) who alleged that the telco misled up to 20,000 customers about the need to move quickly from its existing hybrid fibre-coaxial (HFC) network to the National Broadband Network (NBN).

The legal action came as Optus agreed to offer “remedies” to more than 8,700 of its customers who were misled about maximum speeds they could achieve on certain Optus NBN plans.

Telstra and TPG have agreed to compensate customers that were misled about maximum NBN speeds.

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