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.

Operating revenue at Optus has dropped 4.2 per cent ($98 million) to $2.24 billion on the back of a slowdown in its mobile business for the second quarter ending 30 September 2012.

Net profit dropped 10.0 per cent to $164 million, SingTel reported today.

Total mobile revenue at the company fell 5.1 per cent to $1.43 billion due to a fall in mobile termination rates and lower sales of equipment, with a $30 million drop in equipment sales due to lower shipment volumes with the reduction of device subsidies.

While SingTel had previously indicated revenue would grow, it has now said operating revenue is expected to fall further at a “mid-single digit level”.

Job losses jump to 900

As part of its business restructure, Optus recently introduced price increases to improve its profit margins, with customers hit with a $1 to $6 price increase on most phone and broadband plans. It also slashed its number of plans from more than 30 to 12.

The telco also recently terminated agreements with TeleChoice and Boost Mobile.

“We want to ensure that brands are complementary to Optus and that pricing is economically sustainable. This review is ongoing,” Russell said.

Optus let go of 350 staff in October this year, which cost the company $30 million. For the six months to 30 September, 2012, Optus cut 746 staff, 7.6 per cent of its workforce.

However, Russell told journalists Optus has now reduced its headcount by 900.

“We have found more opportunities than we originally expected in terms of efficiencies in the organisation,” he said.

Postpaid wins, prepaid losses

Optus added 132,000 new customers to its postpaid business during the quarter, including 60,000 as a result of the $230 million Vividwireless acquisition in February this year. However, it lost 100,000 prepaid customers during the quarter.

“The sustained demand for smartphones and competitive cap plans continued to increase the penetration of capped plans into the base. A total of 96 per cent of new and recontracted postpaid customers chose capped plans this quarter,” SingTel stated in its financial report.

The postpaid business now makes up 56 per cent of Optus’ customer base, a 3 per cent year-on-year increase.

“Recent results demonstrate the Australian mobile market has entered a phase in which mobile service revenues are declining as the impact of price competition is no longer compensated for by customer growth. We are refocusing our business in this new market reality,” Kevin Russell, CEO, consumer Australia, said.

“Firstly, we are prioritising profitable growth over the chase for customer numbers. Secondly, we are strengthening the focus on core Optus branded activity and thirdly we are establishing Optus as a brand that leads to a superior customer experience.”

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