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Telecommunications Optus profit down by 8.5 percent
Telecommunications Optus profit down by 8.5 percent | Optus profit down by 8.5 percent |
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| by Stuart Corner | |
| Friday, 05 May 2006 | |
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For the full year, Optus recorded a 3.9 percent increase in operating revenue to $A7.2 billion. Excluding recent acquisitions Alphawest and Virgin, operating revenue increased 2.8 percent. Optus described its performance over the year as one of "above market growth, but in a declining profit environment". Operational EBITDA decreased 5.5 percent to $A2.04 billion. Free cash flow was $A294 million for the quarter, down 18 percent due to substantially higher capital expenditure related mainly to Optus' 3G mobile network, the ULL network rollout and D-series satellites construction. According to CEO, Paul O'Sullivan a number of steps were taken during the year to prune costs. "Key initiatives during FY06 included negotiating reductions in our mobile commission rates; offshoring certain customer service and back office functions; managing staff costs; and consolidating our IT and data centres." He said that, in the current financial year, "major investment programmes" would be executed "designed to capture growth, reduce costs and improve margins, including rolling out a joint 3G network and an unbundled local loop (ULL) network, as well as relocating our Sydney headquarters to campus-style accommodation delivering substantial rental savings." Optus said it was planning to control FY07 capex to less than $A1.2 billion. Optus Mobile revenue grew by 4.7 percent in the fourth quarter to $A993 million, including revenue from the recently acquired Virgin Mobile. Excluding the impact of this acquisition, Optus Mobile revenue grew 3.4 percent – driven mainly by growth in incoming revenue and equipment sales. Optus Business & Wholesale "continued to gain market share and win customer," according to Optus. Optus Business revenues grew by 24 percent (12 percent excluding Alphawest). However, wholesale revenues decreased by 16 percent, impacted by lower transit and interconnect revenue in the current quarter. Optus Business experienced an 18 percent increase in voice traffic, resulting in voice revenue lifting by 16 percent from the previous year. Data and IP revenue growth for the year was higher at 6.9 percent partly attributable to the inclusion of only nine months of Uecomm's results in the comparative year. Broadband revenue grew 44 percent with 50,000 new subscribers in the quarter.
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