Optus underlying profit up 12 pct

Written by Tamara

Tuesday, 14 August 2007

Australia's number two telecommunications company Optus has reported a 12 per cent rise in first-quarter earnings and says it has maintained its market position.

Optus, which is owned by Singapore Telecommunications, generated an underlying net profit of $122 million.

Operational earnings before interest, tax, depreciation and amortisation (EBITDA) was steady at $481 million.

Operating revenue rose 3.5 per cent to $1.9 million in the quarter ending June 30.

"Despite a highly competitive market, these financial results show Optus maintaining both market momentum and profitability," Optus chief executive Paul O'Sullivan said.

"In this quarter, revenue growth was achieved despite a 20 per cent decrease in mobile termination rates and a decline in off-net fixed telephony revenues."

Optus, which accounts for about a third of SingTel's operating revenue, said its mobile revenue grew three per cent to $1.04 billion.

The company added 65,000 mobile customers and its mobile customer base reached 6.8 million, up 3.8 per cent from a year ago.

Its post-paid mobile average revenue per user (ARPU) was generally stable, notwithstanding the increased penetration of capped plans.

Pre-paid mobile ARPU was up by 10 per cent.

Optus said its mobile EBITDA margin was 34 per cent, down one percentage point from a year ago.

"The decline was mainly due to higher handset subsidies as a result of targeted customer acquisition and recontracting activities," it said.

Optus said it had maintained its scale in the consumer market and increased SMS and other data revenue to 27 per cent of ARPU.

"Thirdly, Optus grew its market share in the business mobile market, with business mobile subscribers increasing by nine per cent compared to a year ago," it said.

In the quarter, total business and wholesale fixed revenue grew 6.6 per cent, with Optus Business fixed revenue up 6.5 per cent and Optus Wholesale fixed revenue showing a 6.9 per cent increase.

"Growth was driven by Data and IP products," it said.

Business data and IP revenue increased by 10 per cent in the first quarter, with a strong 39 per cent growth in Uecomm revenues.

Optus won major corporate deals with News Ltd and Boral.

Operational EBITDA for the combined division grew 11 per cent to $96 million, with EBITDA margin at 21 per cent up from 20 per cent last year.

Optus said also that its consumer fixed on-net revenue grew by 13 per cent reflecting the migration.

Off-net revenue declined by 12 per cent due to the action taken to cease unprofitable re-sale business.

"Broadband revenue grew strongly by 26 per cent to $88 million," it added.

As at June 30, Optus had 834,000 broadband customers including business grade customers, an increase of 53,000 customers in the quarter.

In June, the federal government announced that OPEL Networks Pty Limited (OPEL), the 50/50 joint venture between Optus and Elders, had been awarded A$958 million in funding to extend high-speed broadband services to rural and regional Australia.

"This project will create a competitive wholesale market to provide affordable backhaul capacity to local internet service providers and drive significant benefits for rural and regional customers," Optus said.

The Government expects the network to be built by June 30 2009.

Meanwhile, parent SingTel said its first-quarter net profit grew 10 per cent to $S927 million (about $725.2 million).

Underlying net profit was up 3.7 per cent to $S868 million ($678.8 million).

Operating revenue rose 11 per cent to $S3.57 billion ($2.8 billion), and was helped by a stronger Australian dollar.

"We have made an excellent start to the new financial year with all our key businesses delivering strong earnings growth," SingTel group chief executive Ms Chua Sock Koong said.

"In particular, I am delighted that our Singapore business delivered double-digit increase in revenue, which is unprecedented in recent years.

"Optus also performed well by maintaining growth and profitability in a highly-competitive environment while our regional mobile associates sustained their stellar growth."