Thursday, 28 May 2020 11:44

Optus hit by revenue, profit declines in ‘challenging’ times Featured

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Australia’s second largest telco Optus has suffered an operating revenue decline of 2% to A$8,954 million for the full year to the end of March, despite higher NBN migration revenue offsetting lower equipment and service revenues.

And the results for the fourth quarter for the telco were also down, with what Optus described as “challenging times”, and with operating revenue declining 9% to A$2,104 million “due to lower service and equipment sales revenues and weaker consumer sentiment following recent natural disasters and the early impacts of COVID-19”.

In further evidence of the hit to Optus’ finances, EBITDA was down 2% to A$2,652 million reflecting lower contributions from Optus Business and retail fixed and equipment sales revenues, while full year net profit was A$402 million - down 39% from A659 million in 2019.

On a positive note, Optus reported that free cashflow grew strongly to A$1,396 million - up 36% - reflecting what the telco said was strong working capital management.

On the mobile phone market for Optus there was more bad news, with mobile service revenue decreasing 6% due to what the telco said was “an increased mix of SIM-only customers and continuing data price competition”.

And equipment sales also decreased sharply due to lower sales of mobile devices as “consumers retain their handsets for longer periods, the removal of handset subsidies, and delivery disruptions from a major logistics supplier”.

The telco reported a decline of 7% in retail fixed revenue as it “continues to transition customers to the NBN" - although Optus recorded 45,000 new NBN customers for the quarter taking total Optus NBN customers to 848,000.

And the news was no better for Optus Business with revenue declining in the quarter as a result of what Optus said was “continued price erosion for voice and data services and lower ICT project services and maintenance revenues” - but on a sequential quarterly basis the telco reported that operating revenue grew slightly.

Optus Chief Executive Kelly Bayer Rosmarin said, “It has been a challenging year for our industry as consumer demand has slowed compared with the previous year, and these challenges have intensified in the last quarter as Australia managed through natural disasters and COVID-19 impacted the economy.”

“However, recent events have underscored the importance of our essential services to Australia. I am confident that the fundamentals of our business remain strong and I am optimistic that our strategy - underpinned by an unwavering focus on our customers - will continue to drive our performance as economic conditions and consumer sentiment recover.”

Bayer Rosmarin noted that Optus has committed to keeping customers connected during the COVID-19 pandemic, with the company reacting quickly and implementing a range of measures to support its customers, including the provision of additional data allowances, waiving fees and charges for customers in hardship - and providing a special offer for Australia’s healthcare care workers “to show them our gratitude and to keep them connected”.

“During the quarter, Optus’ digital inclusion initiative Donate Your Data saw 200,000 unique donors contribute more than 5 million gigabytes of data to underprivileged Australian youth. Seven new charities were onboarded to broaden the impact of the program, underpinning the long-term viability of the donation platform in reaching the most vulnerable Australians.”

Bayer Rosmarin said Optus Business announced a seven-year IoT research partnership with James Cook University to drive innovation in IoT and co-deliver new business innovations that harness the power of IoT - and for the third successive quarter Optus was also named number one for NBN average download speeds in the ACCC’s Measuring Broadband Australia Report.

Singtel

Optus' parent company Singtel reported that its operating revenue for the full year declined 2% in constant currency terms at S$16.54 billion, a result of "lower mobile service revenue and equipment sales, aggravated by the onset of COVID-19 this February".

For the financial year ended 31 March 2020 Singtel reported:

  • Underlying net profit down 13% to S$2.46 billion due mainly to weakness in Australia
  • Net profit of S$1.08 billion due to Airtel’s exceptional charges of S$1.80 billion mitigated by other gains
  • Operating revenue down 2% in constant currency terms
  • Proposed final dividend per share of 5.45 cents; total dividend per share at 12.25 cents         


Chua Sock Koong, Singtel Group CEO, said, “This has been a challenging year, given structural shifts in the industry, already soft economic conditions, adverse regulatory outcomes in India and the onset of COVID-19 in the fourth quarter".

"Travel and movement restrictions have led to significant reductions in roaming and prepaid revenues and slowing economic growth has impacted business spend. Despite these challenges, we remained resilient and gained market share in mobile and fixed services in Singapore.

"Our enterprise business also defended its market leadership in Singapore and the Asia Pacific, particularly in cyber and cloud, while NCS closed the year with a strong order book.

"The Group’s ongoing investments in network quality and resilience across Singapore and Australia, in both fixed and mobile, have contributed towards the continued connectivity and functioning of both economies, even as data traffic surged during the partial lockdowns.

"In addition, business contingency has proven effective in ensuring that staff supporting essential services and critical frontline functions such as network engineers and retail personnel have been on the ground serving retail and business customers since the start of the pandemic. Importantly,

"Singtel will continue to invest in growing its digital capabilities, with a multi-year investment to lead in 5G and create new revenue opportunities. Singtel recently won one of two provisional licences to deploy 5G in Singapore and Optus has already started its 5G rollout last year."


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Peter Dinham

Peter Dinham - retired and is a "volunteer" writer for iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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