Optus' mobile business has shown more signs of wear as the telco posted revenue and profit declines for its first quarter result.
The nation’s No 2 telco reported a 3.2 per cent drop in revenue to $2.24 billon for the quarter to June 30, while earnings before interest, tax depreciation and amortisation fell 2.6 per cent to $545 million and net profit dived 7.4 per cent to $161 million.
Revenue at Optus’s usually robust mobile division fell 4.2 per cent to $1.43 billion as the telco failed to grow equipment sales for the unit. Optus’s fixed-line business also suffered a decline with revenues at its consumer division dropping 5.8 per cent to $308 million.
Optus blamed the dipping results on lower equipment sales, and a regulatory ruling that reduced the mobile termination rates Optus receives when subscribers call landline phones. The company said changes in the way it accounts for handset sales also added to its revenue decline.
Optus has undergone some dramatic internal changes in the past six months after its parent Singapore Telcommunications triggered a massive reorganisation of its global operations into three business lines, consumer, ICT and digital, replacing the previous split along geographic lines.
As part of that restructure some 750 jobs are set to be cut as Optus seeks to become a leaner and more customer-focused unit.
Optus said today it was on track with its plans to cut costs from the business and that it already stripped 475 jobs from the company in the last quarter and had begun lowering its handset subsidies, which has led to a 19 per cent decline in customer acquisition costs compared with a year ago.
"Optus is focused on growing its business profitably and delivering positive customer experience,” the telco said in a statement.
“Optus continues to make investments to enhance the competitiveness of its mobile network, by improving network strength, depth and capability.”
Optus has also weathered attacks from a resurgent Telstra which has spent more than $1 billion over the past two years to lure back more than 3 million mobile customers.
That cash dump by Telstra has increased the competitive tension in the ultra-competitive mobiles sector where shrinking customer revenues and saturated growth has forced telcos to increasingly focus within their existing subscriber bases to drive new value.
In a bid to reverse that trend, Optus recently embarked on a major restructure of its local operations to simplify its business, reduce its cost structure and derive new revenues.
Despite those changes, Optus’s lucrative mobiles business lost some of its shine at its full-year results in March when it posted its first-ever revenue decline with a 2.6 per cent drop to $1.46 billion.
However, unlike its embattled rival Vodafone, Optus has continued to grow its mobile base, adding 421,000 mobile subscribers last year to push its total number of mobile subscribers to 9.5 million. By comparison Telstra now has 13.8 million mobile customers while Vodafone has about 6.8 million.
For the quarter to June 30 Optus said it had added 88,000 new post-paid customers but pre-paid customer numbers fell by 65,000 for the quarter.
SingTel delivered a first-quarter profit rise of 3.2 per cent to $S945.3 million ($723 million), compared with $S916.2 million a year earlier. The net profit was higher than the $S919 million forecast by a Dow Jones Newswires poll of four analysts.
SingTel's operating revenue for the quarter, however, fell to $S4.53 billion from $S4.61 billion because of the decline in the revenue from Optus and a weaker Australian dollar.
Revenue from Singapore operations rose 8 per cent to $S1.67 billion.
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