Optus reports drop in profits but healthy increase in revenues
Optus revealed its third quarter (December) results on the same day Telstra reported, providing the basis for an immediate comparison of the way the two largest telcos in the Australian market are travelling.
While Telstra continues to report strong profit growth, Optus has reported an 8.2% fall in profits for the December 2014 quarter. This headline result, however, is somewhat misleading as a guide to Optus’ actual performance.
Optus CEO, Allen Lew, has told analysts that the profit drop resulted largely from an increase in finance costs rather than from problems at an operational level.
At that level, in fact, Optus’ results track Telstra’s fairly closely, with the company reporting operating revenue growth of 6% and mobile sales revenue growth of 9.3%.
And while Optus still lags behind Telstra in both mobile subscriber numbers and mobile revenue per user, it is being successful in migrating its 3G customer base across to the higher revenue 4G platform which Optus says will cover 90% of the population by the end of March.
Over the last two years, Optus has struggled to achieve revenue growth and has relied on cost reductions (i.e. job cuts) to maintain profits. Investment in its 4G network is now beginning to return dividends. That should be good news for employees as a new round of enterprise bargaining looms.
