Carriers at odds over looming mobile price war

 

High-end mobiles a boon for Optus, middling for Telstra, Vodafone.

Australian mobile carriers have argued over the potential for significant changes in plan prices over the next year, with Telstra and Optus unable to agree on the future course for consumers.

In financial results held today for Telstra and Optus parent SingTel, the companies’ respective chiefs maintained the mobile market was competitive.

However, where Telstra’s David Thodey called competitor behaviour “rational”, Optus’ Paul O’Sullivan argued the market was “hyper-competitive” and loss-leading.

“Both our major competitors have provided significant price discounts over the last half in the form of greater inclusion in caps,” O’Sullivan said in a media briefing today.

“Customers are using those minutes to make more calls although ironically for the industry it means there’s less ARPU [average revenue per user] being generated by the same volume of calls in the consumer market.”

He forecast the same level of competition would continue, indicating potential price drops for consumers between carriers.

Average revenues of Vodafone and Optus had steadily decreased in recent years. Telstra’s postpaid average revenue had also declined slightly, offset by an increases in revenues from prepaid handsets..

Thodey doubted an imminent “price war” among carriers to gain a wider mobile base.

“I think there’s reasonably rational behaviour at the moment and we’re hoping that will continue,” he said.

“Should there be a price war I think we’ll continue to be very focused on why people come to us - the coverage of the network, the strength, the great wireless data speeds - and we’ll respond accordingly. We’ve always said we want to have competitive offers in the market, we never said we’ll be the cheapest.”
Smartphone sales boom

Telstra and Optus also differed significantly in reporting smartphone penetration.

Where Optus reported 90 percent of new handset sales were smartphones - with almost a third of those being Android devices - Telstra and Vodafone reported half of those rates.

“Australians clearly like smartphones,” Optus chief Paul O’Sullivan said.

Telstra’s full-year financial results revealed 47 percent of all new handset additions were smartphones - almost half of Optus’ reported results.
This came despite Telstra gaining the highest number of customers of all three major carriers, with 1.66 million new subscribers reported.

The growth in customers had contributed to  a 10.7 percent increase in revenue to $8.1 billion for Telstra's mobile business. Handset sales themselves were worth $1.16 billion, up for $856 million.

Thodey said the increase in mobile users in total had come as a result of customers expanding the number of mobile devices they owned and churn from other carriers.

By comparison, Vodafone reported a sharp drop of 375,000 customers across the year with Optus reporting only marginal increases of 28,000 customers.

O'Sullivan would not disclose the level of smartphone penetration among Optus' current customer base.

Relatively slow smartphone sales for Telstra had taken its effect, however, with the telco reporting an inventory impairment of $27 million to hold slow-moving smartphone stock.

Gartner telco analyst Geoff Johnston attributed the stark differences in smartphone penetration to potential changes in reporting sales figures by carriers.

Regardless though, he said smartphone penetration would inevitably grow to become the vast majority of mobile handsets over time.

"The manufacturers are trying to promote it that way," he said. "When you look at your overheads and the handling you might as well sell smartphones - it's way more profitable.

"There's always going to be a section of the customer base who want a basic phone but Gartner's forecasting it's a decreasing part of the population."

Copyright © iTnews.com.au . All rights reserved.


Carriers at odds over looming mobile price war
 
 
 
Top Stories
Turnbull introduces data retention legislation
Still no definition of metadata to be stored.
 
Images: the next frontier in data analytics?
Barclay’s global data chief says we’re still at the starting line.
 
Crime Commission prepares core systems overhaul
Will replace 30 year-old national criminal database.
 
 
Sign up to receive iTnews email bulletins
   FOLLOW US...
Latest Comments
Polls
In which area is your IT shop hiring the most staff?




   |   View results
IT security and risk
  27%
 
Sourcing and strategy
  12%
 
IT infrastructure (servers, storage, networking)
  21%
 
End user computing (desktops, mobiles, apps)
  15%
 
Software development
  25%
TOTAL VOTES: 417

Vote
Would your InfoSec team be prepared to share threat data with the Australian Government?

   |   View results
Yes
  55%
 
No
  45%
TOTAL VOTES: 196

Vote