Optus revenue falls on the back of slowing mobile business

Net profit at Optus dropped 10.0 per cent to $164 million amid growing competition in the market.

Growing competition hampers growth

The telco is continuing to feel the heat from increased competition in the broadband market, with total on-net revenue falling 5.2 per cent (year-on-year) to $251 million due to lower ARPU as a result of an increased take-up of bundled plans.

On-net broadband revenue fell 6.5 per cent to $108 million, despite adding 8000 new on-net broadband customers. Optus now has 1 million broadband customers.

Russell said Optus currently has a “very small number” of customers on the NBN and revenue from the network is not significantly contributing to data revenue.

“That will take a little bit of time to roll out relative to the overall size of the business. It won’t have a material impact in the short-term,” he said.

Optus still has 498,000 customers on its HFC network for telephone services – unchanged from the previous quarter, with the telco signing an $800 million agreement with NBN Co in July this year for migrating its customers from the HFC network to the NBN once it is available in customers’ areas.

The telco also added 4000 new customers to its HFC network for broadband services.

Capital expenditure

Optus has heavily invested in its fixed business and wholesale market, sinking $75 million into the business in the second quarter, a year-on-year increase of 126.1 per cent, due to payments for the Optus 10 satellite.

The satellite is scheduled to be delivered in 2013 and is being built by Space Systems/Loral, the same US-based company responsible for building two Ka-band satellites for the NBN.

Optus also increased capital expenditure in its mobile business, increasing its year-on-year spend 19.7 per cent to $155 million.

Since 2009, Optus has invested a considerable amount of capital into upgrading its network – including adding 4G capabilities – spending $1.8 billion in the process. Most recently the telco invested $600 million in network upgrades over the past year, with further investment forecast.

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