Optus Business earnings down by millions as lower ICT deals bite

Another 468 jobs slashed in the latest quarter

Credit: Dreamstime

Optus Business has reported an overall decline in earnings of 7.9 per cent for the quarter ended 30 September 2018.

The total earnings before interest, tax, depreciation and amortisation (EBITDA) was $57 million, a $5 million decrease from the 2017 half year results of $62 million.

According to Optus parent company Singtel, operating revenue was stable for the half year, however, it declined by six per cent in the latest quarter.

"The decline was driven by lower ICT deals and voice usage decline in line with market movements," Singtel told shareholders.

Furthermore, the drop in earnings was due to lower ICT revenue and margin pressures from the declines in voice revenue, partly mitigated by lower operating costs.

Meanwhile voice revenue also fell 11 per cent due to price erosion and declines in switched voice as businesses migrated to lower cost IP-based voice solutions.

Mobile revenue has however increased 4.9 per cent as a result of higher mobile service revenue and equipment sales.

On the consumer side, Optus operating revenue for the half year totalled $3.6 billion, or a 6.7 per cent increase.

Delving deeper, migrations to the National Broadband Network (NBN) were down by 51.3 per cent, going from $96 million in 2017 to $47 million in 2018. Optus explained the decrease was due to NBN Co’s temporary suspension of migrating customers to the HFC network.

Wider business

Overall, Optus closed the first half with total revenue of $4.3 billion, a 5.5 per cent increase compared to the previous corresponding period, while EBITDA for the half year was $1.2 billion, a 0.4 per cent decrease from the 2017.

Net profit after tax dropped 20.3 per cent from $325 million in 2017 down to $259 million this year.

The company headcount went from 8,278 last year down to 7,441 in the half year ended 30 September.

As reported, in the previous quarter Optus saw its headcount down by 369 staff, as expected, going from 8,515 on 31 March to 8,146 on 30 June.

“Optus continues to achieve profitable customer growth in the quarter and attract customers by leveraging our premium national network," said Allen Lew, CEO at Optus. "After successfully concluding live 5G trials in Sydney we are on track to commercially launch fixed wireless access services in January 2019.

“Customer experience remains our top priority and we are focused on removing customer pain-points across the entire business."

Lew has been recently criticised by the telecommunications union after a report that he would've threatened staff who made customers unhappy.

According to a Sydney Morning Herald (SMH) report, a staff member said Lew told staff that if they made customers unhappy they would be sacked.

The CEPU Communications Union said the statement has crossed the line, and is a sign of how "out of touch" the CEO is with the real issues impacting the telco.

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