Optus 'resilient' after net profit plummets 12 per cent

Another tough quarter for the telco

‘Resilience’ was a word peppered across Optus’ fourth quarter results release, with figures showing a 12 per cent fall in net profit for the 12 months ending in March compared with the previous year.

“Optus reported resilient fourth quarter results,” the company said in its media release, noting that net profit was up 1 per cent from the previous quarter to $250 million. Parent company Singtel said in a statement this morning, that the financial year had ended on “a resilient note”.

Full year EBITDA declined by 4 per cent to $2.67 billion, which Optus fall blamed on lower contributions from the enterprise side of the business due to heightened price competition; higher service credits associated with device repayment plans; and increased content costs.

Free cash flow for the full year plummeted by 19 per cent to $500 million, which was due, the company said, to higher cash capital expenditure and the payment of $134 million to the Australian Taxation Office for “amended assessments which are currently being disputed”.

Amid the concerning figures Optus chief Allen Lew welcomed the ACCC’s draft decision not to regulate domestic mobile roaming.

“This decision will provide Optus with the certainty it needs to invest a further $1.5 billion in 2017/18 to deepen network capacity and coverage, and continue delivering high quality services, choice and competition, particularly in regional Australia,” Lew said in a statement.

The ACCC announced in September that it had launched an inquiry into whether it should declare a wholesale domestic mobile roaming service, a decision Telstra CEO Andy Penn described as “unambiguously bad for regional Australia”.

Consumer vs enterprise

The quarterly results show a widening gap between the success of Optus’ consumer operations compared with its enterprise effort.

The consumer arm of the Optus business in Australia recorded its highest quarterly mobile handset customer growth in five years with the addition of 78,000 postpaid customers and 64,000 prepaid handset customers, bringing its total mobile base to 9.72 million customers.

Demand for 4G services continued to grow with 256,000 new sign ups in the last quarter, Optus said, bringing the total 4G mobile subscriber base to 5.8 million, accounting for 60 per cent of mobile customers.

Investments in 4G and popular mobile entertainment plans were helping the “mobile customer growth momentum”, Optus said.

“Despite heightened competition in the Australian market, Optus’ strategy of delivering customer growth through music, TV and sports content, underpinned by a robust and resilient mobile network, is on track,” Lew said.

Strong mobile data and broadband growth across Optus‘s local consumer business and Singtel’s consumer operations in Singapore mitigated the decline in voice and roaming services, Singtel said. Both Group Consumer revenue and EBITDA rose seven per cent.

Across Singtel’s Group Enterprise, however, EBITDA dipped two per cent as a result of “ongoing investments to build ICT capabilities and competition in Australia”.

“The Singapore enterprise business recorded revenue growth for the sixth consecutive quarter while in Australia, the enterprise business was impacted by intense price competition and increased doubtful debts,” Singtel said in a statement.

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