Optus has best mobile customer growth in five years

Optus has reported strong growth in revenue and mobile customers for its fourth quarter, but its full-year profits have been hit by the high cost of stealing English soccer rights from Telstra-owned rival Foxtel.

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During the past year Optus added 142,000 customers to take its total customer base to 9.72 million. About half were higher paying post-paid customers, 3.7 million pre-paid and just over 1 million were data-only mobile broadband customers.

Revenues for the final quarter of the year were up 1.6 per cent to $2.1 billion thanks to growth in NBN customers and higher equipment sales, but full-year revenues were 7.6 per cent lower at $8.4 billion due to regulatory changes, leading to a 12 per cent decline in profit to $794 million.

Optus’ share of NBN customers has increased 100 per cent in the past year to 228,000.

Management said earnings were down because Optus had to cut prices to be competitive for enterprise customers, higher credit to customers for handsets bought through contracts, and increased content costs.

Chief executive Allen Lew said the cost of securing the English Premier League rights made up the bulk of the increased content costs. The exclusive rights are reportedly costing Optus about $63 million annually.

Optus is fully owned by SingTel, which is listed on the Singapore sharemarket.

Revenue from enterprise services fell 3 per cent over the year to $1.52 million.

“The enterprise market is a very competitive one, and a lot of competition is coming from the smaller players,” Mr Lew said.

“And the competition in enterprise is mainly in the basic call carriage products, primarily in the fixed business.”

Revenue from supplying fixed phone services to companies dropped 6 per cent.

“It is getting commoditised and competition is based on cost and a minimum service level. We have had to do some level of discounting. We don’t disclose that publicly, but basically to retain the customers we have had to make some price adjustments,” Mr Lew said.

In the mobile space Optus’ average revenue per user [ARPU], a key measuring tool in the mobile industry, is down nearly 20 per cent for both pre-paid and post-paid.

Chief financial officer Murray King said the decline was due to more customers buying SIM-only plans, a trend happening across the industry as Australians hold on to phones for longer or buy them outright rather than through a multi-year contract.

There was also some accounting treatments of handset repayment credits that dragged down the reported ARPU figures.

Meanwhile, sales of Apple iPhones increased following the disastrous release and then recall of Samsung’s Galaxy Note 7 phone.

But Samsung’s new Galaxy 8 phone has been “getting some traction”, Mr Lew said.

And NBN Co’s slow rollout of its infrastructure in Optus’ HFC areas means Optus has seen only a marginal decline in its HFC customers, from 454,000 to 447,000 over the past year. Nearly all its customers bundle their HFC-delivered internet with other services, making it a valuable customer base.

Mr Lew said most of NBN’s HFC transfers had been on Telstra’s infrastructure so far.

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