Optus profit falters in lead-up to sport transformation

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Optus profit falters in lead-up to sport transformation

Slow start to financial year.

Optus will be hoping the impact of its $200 million investment in English football rights kicks in next quarter, as profits skipped a beat in the first three months of its financial year.

The telco today reported a quarterly net profit of $173 million in the three months to 30 June 2016, with revenues unable to beat the impact of higher financing costs and reduced call rates, leading to a 1.9 percent drop in income.

Like its telco peers, Optus has been quick to point the finger at the ACCC for most of its operating pains.

It expects the consumer watchdog’s decision to halve the mobile termination rates that can be charged by network operators will cost it $800 million this financial year, with the quarter one hit alone amounting to $185 million.

Even without the impact of the termination rates change, the profitability of its consumer mobile business would have been down 5.5 percent.

The $185 million formed part of a $289 million, or 15 percent, total decline in consumer operating revenue for the quarter. Optus attributed the remaining decline to higher credits for device repayment plans and lower equipment sales as customers shift to SIM-only plans.

Across the whole Optus business, operating revenue was down 13 percent.

The telco will hope its big gamble on licensed content will boost its revenues, potentially as soon as Q2 should customers churn to take advantage of its football broadcast offer.

Optus forged new territory for an Australian carrier when it announced it had outbid pay TV operator Foxtel to win the exclusive broadcast rights to the English Premier League in November last year, in a deal rumoured to be worth roughly $200 million over three years.

The impact of the investment probably won’t begin to register on Optus' books until next quarter at the earliest, with the first games broadcast under its English Premier League and International Champions Cup licensing deal on 23 July.

The EPL kicks off on August 13.

“We have already received some very positive responses from customers who’ve seen our first live broadcast of international soccer games,” CEO Allan Lew said.

“In the coming quarters, Optus will continue to strengthen and expand its national 4G network and enhance its fixed network to deliver a market-leading, multi-media entertainment experience for customers”.

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