Home Industry Listed Tech SingTel and Optus release ‘stable’ financials
SingTel and Optus release ‘stable’ financials Featured

Optus has joined Telstra and Vodafone in publishing its financial results. It’s a mixed bag for Australia’s number two telco.

Optus’s parent company SingTel has announced its third quarter financial results. Although the company is headquartered in Singapore, most of its revenues are accounted for by Optus. The Australian tail wags the Singaporean dog.

The Group saw an 8.3% drop net profit for the December quarter, compared to the same quarter in 2011, with Optus revenues declining by 5.7%. “In Australia, Optus is restructuring the business to drive profitable growth,” Optus said in its quarterly statement to the ASX. “We want to improve the customer experience and capitalise on the growing demand for mobile data. Against a backdrop of an industry slowdown and mandated mobile termination rate cuts, Optus reported stable results. While operating revenue declined to $2.28 billion, cost efficiencies lifted earnings to $576 million.”

The statement said the SingTel group has made substantial progress in rolling out 4G LTE, in Singapore and Australia. In Singapore, SingTel will achieve island-wide coverage by the end of March 2013. In Australia, Optus  extended its 4G coverage to Brisbane and the Gold Coast, and now covers Sydney, Melbourne, Brisbane and Perth, as well as Newcastle, where its 4G trial has held.

“The Group continues to invest in networks and strengthening its core business as well as transformational initiatives to drive longer term growth. As a result of these investments, the Group incurred higher depreciation, spectrum amortisation charges, and increased costs from the acquisition of digital companies. The Group also registered exceptional charges of S$67 million, including Optus’s ex-gratia payments for the restructuring of its workforce.”

Optus mobile reported an increase in margins and earnings despite lower operating revenue. Optus added 58,000 postpaid mobile customers in the quarter. They now comprised 57% of the total base, up 3 percentage points from a year ago. The company said higher churn from prepaid wireless broadband products, together with reduced prepaid device subsidies, contributed to a decline in the Optus prepaid customer base by 36,000.

In the consumer and small business fixed line business, earnings increased by 5% on lower traffic costs, driven by lower mobile termination rates and lower operating expenses. The lower ARPU (average revenue per user) from discounted broadband plans led to a 4% decline in consumer fixed line revenues. Broadband customers totalled 993,000 as at 31 December 2012.

The results are, as Optus said, stable. Compare that to Telstra’s growth and Vodafone’s decline. Optus is doing a good job at increasing its network coverage, and premises lucky enough to be on Optus cable are getting some of the best value and highest bandwidth internet connections in the country. Optus has begun a rationalisation of its sales channels – expect more changes as the market dynamics continue to change.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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