Optus says the telco’s strategy is on track despite reporting a fall in third quarter net profit, declining revenue and flat subscriber growth.
In a result labelled disappointing by analysts, Optus reported net profit of $160 million for the three months to December 31, down 9.2 per cent from $177 million in the prior corresponding period.
Optus executive Kevin Russell said the telco’s transformation strategy – lowering costs, investing in its network and improving customer experience – were working given improved margins amid falling revenue and lower net profit.
“We definitely want to rebalance our business where we are not chasing sales in the marketplace through pricing, either in subsidy or in rate plan,” Mr Russell told reporters during a conference call on Thursday.
“We think there is a very clear opportunity for Optus to take a standout position in the marketplace in terms of customer experience.
“We do recognise that we have to do that from a platform where our network is strong and perceived to be as strong as the incumbent.”
Underlying net profit, which excluded one-off costs including a $30 million charge for restructuring, rose 2.7 per cent, Optus’ parent company Singapore Telecommunications (SingTel) said in a statement on Thursday.
The restructure included 305 job cuts in the three months to December, trimming Optus’ workforce to 8,764.
The company, Australia’s second largest telco, has cut its workforce by 962, or 9.9 per cent, in the past 12 months, company accounts showed.
Revenue fell 5.7 per cent in the third quarter to $2.28 billion, on the back of a 4.2 per cent revenue decline in the previous quarter.
Operating expenses were cut by eight per cent to $1.721 billion in the quarter.
“The Optus result was disappointing, as revenue decline accelerated in the third quarter,” Morningstar analyst Michael Wu said on Thursday.
“I think it has to do with the competitive pressure in the marketplace.
“All in all, it was below expectations.”
SingTel said revenue from Australia in the full year to March 31 was expected to decline at the “mid-single digit level”, while earnings before interest, tax, depreciation and amortisation would remain stable.
The guidance was unchanged from company forecasts in November.
At December 31, 2012, Optus had 9.565 million mobile subscribers, up 21,000 from 9.544 million at September 30.
Mr Wu noted Optus had added 53,000 mobile customers in the half, but Telstra had continued to take market share with more than 600,000 mobile customer additions in the same period.
Optus had flagged previously it would end distribution arrangements with Telechoice and Allphones in March and August, respectively, and reduce subsidies for mobile phones, tablets and wireless dongles.
At 1602 AEDT, SingTel was down three cents at $2.78 in local trade.
The stock is listed in Australia and Singapore.
