Optus’ March quarter net profit drops as mobile subscribers abandon carrier

Optus has released its March quarter results, showing 10.2% year-on-year drop in quarterly net profits, along with a 4.9% drop in operating revenue, as the number of subscribers using its mobile networks drops.

The carrier’s net profits for the quarter fell to $223 million, down from $249 million for the same quarter last year, while operating revenue dropped from $2.173 billion to $2.066 billion.

However, in a bright spot for the carrier, its full year profit to March actually increased 14.6% year-on-year, up from $728 million to $835 million, despite a 5.2% fall in revenues.

The fall in revenue was exacerbated for Optus’ Singapore-based parent company SingTel by an 11.5% drop in the average Australian dollar exchange rate to its Singaporean counterpart.

Expressed in Singapore dollar terms, this translated into a massive 15.8% year-on-year drop in revenues for the quarter, falling to $S2.35 billion.

The carrier notes its 4G/LTE coverage now reaches 75% of the Australian population with 3G coverage to 98% of the population. However, it is worth noting these figures measure the percentage of primary residences covered by its network, rather than the percentage of the land mass.

Optus management was keen to highlight it now claims 2.15 million 4G subscribers, up from 1.81 million last quarter and just 785,000 subscribers for the same quarter a year earlier.

However, the total number of mobile subscribers with Optus fell 1.7% year-on-year, down to 4.432 million from 4.592 million a year earlier.

The falls included a 1.8% year-on-year drop in the number of prepaid subscribers, from 4.089 million to 4.013 million, while postpaid subscriber numbers fell from 5.503 million to 5.419 million.

The carrier’s average revenue per user per month fell 7.9% year-on-year for the quarter, $58 to $52, but grew by 5.9% on prepaid, from $22 to 24.

The otherwise lacklustre results were saved by the fact the carrier slashed its acquisition costs per subscriber by 31.2% year-on-year for prepaid, $19 to $11, and 20.1% for postpaid, from $190 to $239.

The lower cost per user acquisition partly reflects lower subsidies for smartphones along with the falling cost of entry-level smartphones.

In a statement to investors, SingTel says it intends to boost the number of Optus mobile plans without subsidised phones.

It also intends to tackle Telstra/Cisco’s expansion into network applications and services in the Asia Pacific region head-on with its own “unified communications as a service” offering.

“Optus will drive data revenue growth by leveraging an improved network, increased penetration of 4G devices and ‘SIM only’ plans, and innovative products to drive service revenue across various mobile devices,” SingTel states.

“In the Managed ICT space, [SingTel] Group Enterprise expanded its suite of cloud solutions with the launch of Unified Communications-as-a-Service in Asia Pacific.”

As SmartCompany reported earlier this week, SingTel has signed on as a partner to Microsoft’s new Azure ExpressRoute hybrid cloud service.