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2016-11-11

Optus-Mobile

Optus profits plunge despite mobile growth.

Optus has reported a big drop in both revenues and profits in its half yearly results released 10 November.

The results revealed a drop in revenues of nearly 9% over the 12 months to 30 September and a fall in profits of over 20%. That’s despite adding 107,000 new mobile subscribers over the quarter.

Optus has said that the results in part reflect the price of growth, with mobile handset repayment costs associated with both current and past customer acquisitions depressing earnings.

But that’s only part of the story. The costs associated with Optus’ move into content, particularly is purchase of the English Premier League rights, are also weighing on its balance sheet.

Optus CEO, Allen Lew, says these latest results “vindicate” the move through helping to drive mobile subscriber growth. But it remains to be seen whether such growth can be sustained at a rate sufficient to off-set the drag of the content acquisition expenses.

No wonder Optus, like Telstra, is opposed to measures that might give a regulatory helping hand to companies such as Vodafone and TPG in the mobile market.

Optus’ content play, while understandable, has left it vulnerable, at least in the short-term. It is to be hoped that its employees aren’t asked to pay the price for such risk taking.

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