Optus network owner grows revenues by 11 percent

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Optus network owner grows revenues by 11 percent

Singapore Telecommunications Limited (SingTel), owners of the Optus network has released its unaudited results for the second quarter and half year ended 30 September

The telecommunication provider’s revenue grew 11 percent to S$3.70 billion, the second consecutive quarter of growth.

According to SingTel’s statement to the ASX, Optus delivered a resilient performance against a highly competitive market. In Australian Dollar terms, Optus recorded a 3.7 percent revenue growth while in Singapore Dollars the growth was 12 percent as the Australian Dollar strengthened by 8 percent from a year ago.

Optus had a strong quarter in Mobile net, with overall, 92,000 new mobile subscribers added in this quarter, of which 65,000 were postpaid.

The statement said: "This was the highest quarterly number of postpaid net add in over two years, with the total mobile customer base reaching 6.89 million.”

In its Fixed business, there were impressive take-up levels for Optus Fusion – under which customers on Optus's network pay a fixed monthly amount for unlimited local and national calls, unlimited calls to Optus mobiles, and a highly attractive broadband offering.

The disruptive product has contributed to the 32 percent growth in broadband subscribers, compared to a year ago. The total number of broadband subscribers now stands at 895,000.

Optus also accelerated migration of customers to its Unbundled Local Loop (ULL) network.

70,000 ULL telephony subscribers were added this quarter, almost double the take-up rate of 38,000 in the June quarter.

In the “Business and Wholesale” segment, Optus is gaining market share whilst continuing to improve margins. This reflects Optus’s focus on developing IP based solutions as transformation offerings to Chief Information Officers that leverage its major competitors’ constraints in this area.

Despite the strong trading momentum in the second quarter, its operational EBITDA decreased by 1.5 per cent year-on-year. This mainly reflected the 40 percent decline inmobile termination rates imposed by the ACCC.

Optus’s margin was 24.7 percent, down 1.3 percentage points from a year ago, in a competitive market environment with higher costs associated with a number of major product launches, strong subscriber growth in mobile and broadband, as well as higher ULL migration activity.

Free cash flow generated by Optus in this quarter was $279 million, up 58 percent year-on-year, reflecting strong working capital management. Underlying net profit for the quarter decreased by 5.6 percent or $7 million to $123 million.

Furthermore, Optus Mobile revenue grew 3.9 percent to $1.08 billion. The Optus Mobile subscriber base reached 6.89 million, representing an increase of 4.5 percent compared to a year ago. As at 30 September 2007, 868,000 subscribers had been provisioned with 3G services, an increase of 27 per cent compared to a quarter ago.

Consumer fixed on-net revenue grew by 18 percent to $202 million, offsetting declines in off-net revenues due to the decision to exit unprofitable resale services.

Broadband revenue grew strongly by 24 percent to $94 million. As at 30 September 2007, Optus had 895,000 broadband customers, up 61,000 from a quarter ago.

In September 2007, OPEL Networks Pty Limited (OPEL), the 50:50 joint venture between Optus and Elders, signed the agreement with the Government for $958 million in funding to extend high-speed broadband services to rural and regional Australia. OPEL will be eligible to receive the agreed funding once certain specified conditions are met and it will commence business at that point in time.

The conditions include the Australian Government’s approval of commercial arrangements between Optus and Elders and satisfactory completion of further network planning. Detailed planning and preparation for building the OPEL network is presently being conducted by Optus and Elders. Within Optus, over 80 full-time equivalent staff are involved in this network planning and preparation phase.

Chua Sock Koong, SingTel Group CEO said Optus remains resilient in a tough Australian market.

“Our overseas operations now contribute 74 per cent of proportionate EBITDA, up from 71 per cent a year ago,” said Koong.
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