Cost cutting saves Optus profit from customer churn

Optus has reported a second quarter of declining mobile customers despite a targeted customer service transformation initiative.

The telco lost 64,000 customers from its mobile retail subscriber base during its third quarter ended 31 December 2013, bringing its total to 9.4 million.

The loss cut a 6.3 percent chunk out of its year-on-year mobile revenue across the last nine months of 2013, which dropped to $4.1 billion.

The result follows a drop of 49,000 mobile subscribers the previous quarter, ended September 2013.

Optus rival Telstra, which also revealed its fiscal results today, reported a growth of 739,000 mobile subscribers in the past six months, to a total of 15.8 million domestic mobile retail customers.

Optus' annual revenue per user also dropped 4.4 percent to $41 per month across both post and pre-paid customers.

The subscriber leaks come in spite of what the telco’s CEO Kevin Russell has described as “great progress” in customer service, which has seen it cut the number of Telecommunications Industry Ombudsman complaints by half. It has also increased investment in its 4G network, which is targeted to reach 70 percent on-street coverage in metropolitan areas by the end of March.

Despite the drop in its mobile customer base, Optus reported a net profit rise of 41 percent to $227 million in the December quarter as a result of cost-cutting initiatives.

The telco continued to apply pressure on its operating costs in the three months to December 31, achieving a 12 percent reduction by lowering the amount paid through sales commissions.

It also embarked on a new retail and distribution strategy which saw it end relationships with retail partners Allphones and Telechoice and slim its retail footprint by some 40 percent in the past 12 months.

Over in Optus’s enterprise division, revenue was up two percent for the quarter, boosted by contract wins with property services firm UGL and a mobile fleet management deal with NSW government shared services provider ServiceFirst.

Overall operating revenue was down 5.4 per cent to $2.16 billion for the quarter.