Thursday, 08 August 2019 12:14

Optus profit plunges, company cites depreciation charges Featured

By Peter Dinham and Stan Beer

Australia’s second biggest telco Optus has suffered a 32% drop in net profit for the three months of the June quarter with the telco attributing the decline to higher depreciation charges incurred with its investment in its mobile network and lower contributions from Optus Business.

The Singtel-owned Optus increased revenues by 3% for the quarter to $2.25 billion – up from $2.1 billion for the same quarter in 2018 - while earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 5% to $687 million.

Meanwhile, Net profit was down to $105 million compared to $154 million for the corresponding quarter in 2018.

Last week global ratings agency S&P Ratings delivered a slap in the face to Optus and its parent company Singtel by downgrading its outlook for both companies from stable to negative due to persistently high debt levels.

And with “market conditions remaining highly competitive” Optus reported its mobile service revenue increased by 7% due to higher equipment sales, and mobile service revenue declined with a higher mix of SIM-only plans and historic data price erosion resulting in lower ARPU.

Optus also reports that its retail fixed operating revenue increased strongly, up 19% for the quarter due to higher NBN migration payments – with its NBN customer base growing by 151,000 year on year bringing the total NBN broadband customer base to 646,000.

And the telco says its Optus Business operating performance slowed in the quarter due to softer market conditions - but during the quarter it secured a multi-year contract with Ramsay Health Care for digital network and telecommunications services including delivering voice and data serving over one million patients and Ramsay’s 30,000 employees.

Optus Quarter 201920

Optus Chief Executive Allen Lew said, “In the face of a challenging competitive market, Optus has delivered a set of numbers underpinned by customer growth from our investment in a premium national network and the continued execution of our exclusive content strategy.”

“With over 700,000 active Optus Sport subscribers, and record numbers viewing the Champions League final, we are poised to continue this momentum into the fourth season of the Premier League which kicks off exclusively on Optus Sport this weekend,” Lew said.

Lew said Optus had further enhanced its content credentials, announcing an exclusive partnership with Apple Music to provide new and re-contracting customers with free access to Apple’s music streaming service on a range of Optus plans.

“Optus continues its focus on rolling out a 5G network with more than 100 mobile sites on-air. Optus 5G Fixed Wireless Access customer trials are well advanced and have achieved peak download speeds of 295Mbps and an average download speed of 100Mbps,” Lew concluded.

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