Optus to boost HFC network up to 100 Mbps

Wrangling over mobile growth success.

Optus has given the first speed indications for its hybrid fibre coaxial (HFC) network upgrade announced last year, revealing expected speeds up to 100 Mbps to be available by the middle of the year.

Chief executive Paul O'Sullivan said Optus hoped "to sell a lot of high-speed broadband off the product".

He appeared unconcerned by revelations last month that NBN Co did not appear interested in buying HFC network assets from carriers to add to the national broadband network, but he suggested Optus remained open to any advances.

"If anything comes alongside [our base business case] that would be purely optimistic and considered on its merits," O'Sullivan said.

Mobile "good, not great"

Optus achieved stronger performance in its mobile business, adding 164,000 postpaid customers.

It was the fifth consecutive quarter of double-digit mobile service revenue growth, according to Optus, which talked up the result as a "record-breaking increase".

But at least one analyst firm doused the telco's enthusiasm, believing it to be "a good rather than great performance".

"Optus postpaid additions and average revenue per user were up, however most growth appears to have been in wireless broadband and wholesale rather than retail voice," Ovum analyst Nathan Burley said.

"Attaching the Optus brand to the Apple iPhone in 2008 was a master stroke and among drivers of Optus more recent stronger mobile results. However, as we have seen in other markets iPhone subscribers rarely have strong affinity with their network operator.

"Preventing these high-value iPhone customers from going elsewhere will be key."

Burley believed Optus would most likely be "fighting with VHA" for second position in the mobile services market, rather than battling with Telstra for the top.

"Ovum estimates VHA service revenue is now within less than five percent of Optus," Burley said, although he admitted more would be known when Telstra announced its quarterly numbers later this week and VHA's results were released later this month.

Optus chief Paul O'Sullivan refuted the claim.

"Our sense is if we look at Telstra, they've been guiding the market to a lower number," he said.

"The challenge is VHA don't disclose revenue directly. We're trying ourselves to triangulate it but our sense is there's been a slowing of growth there. Our sense is the industry growth rate is 9 to 10 percent at best."

Wholesale bitten by voice

The slide in wholesale international voice spending continued to drag Optus' quarterly wholesale fixed results, offsetting gains in data, IP and satellite.

The telco said data and IP revenue for the quarter ended 31 December, 2009 was $64 million, up 4.4 percent compared to the same quarter a year ago.

Satellite revenues were up 9.3 percent to $67 million over the same period, "led by the sale of transponder services to Foxtel following the commercial launch of the D3 satellite."

But international voice revenue in the wholesale division plunged 76.8 percent to $5 million. Optus blamed "lower usage and rates for international inpayment traffic."

Optus chief financial officer Murray King said the trend was partly due to growth in the use of VoIP carriers but was more reflective of an ongoing trend in international traffic.

"Customers are finding other means to communicate," he said.

"It did impact quarterly revenues and has been impacting them in prior quarters as well. But we've recognised the market is moving and are driving significant focus on data, IP and satellite [as a result]."

Total business fixed revenue was also down 2.3 percent. The telco said that corporate telecom spending had remained "cautious".

Optus believed, however, that carriage revenue from recent managed services deals signed with ANZ and the Australian Taxation Office would flow "in subsequent quarters".