Optus restructuring drags down net profit

A $24 million price tag for Optus’ last three months of workforce restructuring dragged down the net profit of both the telco and its parent SingTel in the last quarter.

Since April 2012, the Singtel Optus group has been restructuring itself into three major divisions: consumer, digital life and ICT (which includes Optus Business), in order to refocus the business onto profitable growth and to cut costs.

Around 1850 workers have been shown the door in the past two years. The most recent round of job cuts occurred in April when Optus announced a further 350 positions would no longer be needed.

The last three months of restructuring incurred a cost of $24 million to June 30, Optus reported today, which it sent its net profit down almost two percent to $164 million compared to the same period last year.

Excluding this exceptional item, Optus reported net profit of $187 million - which would have represented a 12 percent rise on the June 2013 quarter.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by four percent to $597 million despite an almost three percent decline in operating revenue, which the telco said reflected “strong cost management and yield improvements”.

The reduction in industry-mandated mobile termination rates - from 4.8 cents per minute to 3.6 cents from January - and lower equipment sales dragged total mobile revenue down 1.5 percent to $1.3 billion.

The Optus workforce restructuring also had an impact on its parent’s net profit, which fell 17 percent to S$835 million (A$718 million) predominantly as result of the initiative.

SingTel said its net profit would have only been down 12 percent had it not incurred the $24 million restructuring cost.

Despite the job cuts, Optus’ workforce actually grew by five percent over the quarter to 9015 staff members. SingTel attributed the increase to a higher number of Optus retail staff, as the telco continues its move to open and rebrand more Optus-owned retail sites.

Optus reported a significant increase in 4G mobile subscribers over the last three months, with a 124 percent jump bringing it to 2.4 million 4G mobile users.

Optus has been investing in its mobile network in order to reach 90 percent 4G national population coverage by March next year. It launched 4G pilots in Darwin and Perth during the quarter after securing early access to 

The combined number of Optus postpaid and prepaid mobile subscribers fell slightly to 9.4 million, with about 126 customers departing the company over the quarter, while its average revenue per user was stable at $41 per month.