Optus boosts yearly profit despite tough quarter

Optus has managed to lift its net profit for the full fiscal year by 14 percent to $835 million despite a tough last three months, thanks to its ongoing efforts to cut costs and restructure the business.

Australia’s second largest telco today revealed a $26 million (10 percent) decline in net profit for the March quarter alongside a $107 million (5 percent) fall in revenue.

It attributed the revenue drop to a mandated reduction in mobile termination rates (from 4.8 cents to 3.6 cents per minute), which came into effect at the start of this year. 

It also blamed lower equipment sales and revenues from fixed services.

Increased investment in the Optus mobile network also pulled down the results, but meant the telco added 342,000 4G handset customers to its network during the quarter, to reach a total of 2.15 million. It now claims to reach 75 percent of the on-street metro population with its 4G coverage.

Despite a slight increase in mobile customers over the last quarter, Optus' mobile user base shrunk across the full year to 9.4 million compared to 9.6 million at the same time last year. Mobile revenue over the year was also down 5.7 percent to $5.3 billion.

The slight growth in mobile subscribers (1000 in the last quarter) marks the end of several consecutive quarters of decline. Optus posted a 64,000 drop in mobile subscribers in the December quarter, and a 49,000 subscriber drop in the three months prior to that.

Its average revenue per user also fell from $41 to $40 in the most recent quarter, down from $42 in March last year.

The company told investors today it expected mobile service revenues to continue falling over the next year in "low-single digit" percentage terms.

The telco’s overall yearly operating revenue also suffered a 5 percent decline to $8.5 billion.

But the company managed to pull its annual net profit to a 14 percent increase, which Optus CEO Paul O’Sullivan said was a result of the company’s ongoing efforts to transform the business and cut costs.

The cost cutting drive has seen 300 staff let go over the last 12 months, and another 350 in the firing line this month.

Optus’ restructuring of its workforce over the past year cost its parent company just $6.3 million, compared to the $100.5 million it forked out in the previous financial year.

Over the next fiscal year, Optus expects to drive its data revenue by touting its improved mobile network, and continuing to push its 4G devices and SIM only plans.