Optus has registered a first quarter that saw the Singaporean-owned Australian telco win in some areas, while losing in others.
Overall, the company reported revenue increased 3.3% to AU$2.25 billion for the quarter, and earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by almost 5% to $687 million. Once depreciation and amortisation are taken into account, the EBIT number is down by 19% compared to the first quarter of last year to $231 million, a AU$55 million drop.
That drop then flows through to underlying net profit and net profit, which were reported as being AU$117 million and AU$105 million respectively, representing 29% and 32% decreases on last year.
Optus’ consumer mobile business saw its overall revenue grow by 8% to AU$1.94 billion, with mobile service revenue dropping 7% to AU$855 million, but it rose by 7% when including equipment sales which grew from AU$396 million to AU$551 million.
Compared to last quarter, the telco said it lost 52,000 prepaid customers, added 50,000 postpaid customers, and 3,000 mobile broadband customers. Overall, the telco now has 3.37 million prepaid customers, 5.73 postpaid customers, and 1.18 million mobile broadband customers.
All three categories experienced drops in average revenue per user, with postpaid and mobile broadband down 11% each to AU$38 and AU$19 a month respectively, and prepaid down 5% to AU$18.
Revenue from fixed services was down 5% to AU$434 million, while payments from the National Broadband Network (NBN) increased from AU$24 million to AU$98 million. Optus said it added 49,000 new NBN customers this quarter taking it to 646,000 in total.
The telco added it now has 700,000 active subscribers to its Optus Sport service.
Optus Business saw its revenue drop 22% to AU$135 million, which the telco pinned to a large sale in the corresponding quarter and weaker demand from government and finance sectors, which saw EBITDA drop by 34% to AU$38 million.
Optus now has over 1,000 less people than at this time last year, with its headcount as of June 30 sitting at 7,114 compared to 8,146 a year prior. Consequently, Optus saw its staff costs drop by 20%.
“In the face of a challenging competitive market, Optus has delivered a set of numbers underpinned by customer growth from our investment in a premium national network and the continued execution of our exclusive content strategy,” Optus CEO Allen Lew said.
“With over 700,000 active Optus Sport subscribers, and record numbers viewing the Champions League final, we are poised to continue this momentum into the fourth season of the Premier League which kicks off exclusively on Optus Sport this weekend.”
Last week, rating agency S&P shifted its outlook on Optus to negative, as it restated its A long-term and A-1 short-term issuer credit ratings of the company.
“In Australia, we expect generally flat EBITDA (excluding NBN migration revenue) as rising costs diminish topline growth,” the agency said.
“NBN migration revenue will prop up Optus’ cash flow, after the NBN lifted a temporary suspension of migration to its hybrid fiber-coaxial network.”
Releasing its results at the same time, Optus owner Singtel reported stable revenue of SG$4.1 billion for the quarter, EBITDA down 2% to SG$1.18 billion, and net profit down 35% to SG$541 million.
Earlier this week, the Australian Competition and Consumer Commission took credit for identifying an outage issue impacting Optus NBN customers.
In its latest Measuring Broadband Australia report, Optus had an outage figure at least five times higher than its competitors, recording over 2.5 average daily outages lasting over 30 seconds compared to the rest of the industry that sat at around 0.5 outages or lower.
“Even though the average Optus subscriber experienced 2.6 outages per day, 81% of these outages lasted for less than a minute, and 90% lasted for less than 2 minutes. Furthermore, these figures are based on data collected during May,” the ACCC said.
“Since the data were collected, Optus has distributed a firmware update to its modems which was intended to reduce the rate of outages. Data collected during the first two weeks of July 2019 provides preliminary indication that this was successful; Optus’ average during this period was 0.5 outages per day, in line with other RSPs.”
The telco has developed applications that can transcribe voice calls in real-time and translate them from different languages into English.
Use of legacy applications allow Optus to seek an exemption from the rules.
Optus has deployed a firmware update to customer to reduce its outage rate.
Three quarters of AU$6.7 million on offer to 390,000 customers still available for claiming.
The consumer watchdog is concerned that it has yet again had to file legal action against Optus for alleged misleading conduct.
The locations to receive 4G coverage are either Indigenous communities or tourist destinations.