Optus profit grows at Telstra's expense

Telstra's loss appears to be Optus' gain as Australia's number two telco reported a
16 per cent rise in annual net profit due to growth in its mobile phone business.
Optus on Thursday said the final quarter of its fiscal year to March 31 was its
strongest in five years for mobile customer growth.
The telco's mobile division also posted its first rise in its quarterly earnings
margin as mobile phone and broadband customers used more data services.
The wholly owned Singapore Telecommunications Ltd (SingTel) subsidiary reported an
annual net profit of $676 million, up from $583 million in the previous year.
Operating revenues in Optus' mobile business rose 13 per cent to $5.6 million,
driven by increased use of smartphone devices, such as the Apple iPhone, which use
more data than traditional handsets.
Average revenue per user rose slightly to $69 per month over the year to March,
while the percentage of total revenue from data was up from 33 per cent to 36 per
cent.
Optus' mobile growth contrasts to its major rival Telstra Corporation Ltd, which has
seen slower revenue growth in its mobile business.
Australia's biggest telco posted 4.7 per cent rise in mobile revenue for the six
months to December 31.
Optus also appeared to benefit from fixed line and internet demand, with revenue
from customers on its network growing by six per cent $1.07 billion in the year to
March 31.
It also managed to expand its earning margin on fixed line products by 1.8
percentage points from the previous year.
Telstra reported a seven per cent drop in revenue from its public switched telephone
network (PSTN), or fixed line service, in the six months to December 31.
"We'd be growing, at least we think, twice as fast as our competitors," Optus chief
executive Paul O'Sullivan told reporters.
"This is obviously going to be reflected in the profile of our numbers and the way
we operate.
"We think expanding our EBITDA (earnings before interest, tax, depreciation and
amortisation) with the sort of growth we have shows the strength of the business and
the value of the customers we are attracting."
Optus' group EBITDA for the year was up 4.2 per cent on the previous year to $2.15
billion.
Ovum analyst Nathan Burley said Optus' stronger mobile division results showed the
money it had spent acquiring high value customers was beginning to flow through to
the bottom line.
"They've performed very well in the last 18 months," he said.
"Telstra was clearly weaker in the second half of last year, and we anticipate a bit
of weakness in its mobile division in 2010 so far.
"I think it is clearly Optus outperforming Telstra at this point."
Optus forecast operating revenue and EBITDA growth at mid single-digit levels in
fiscal 2011.
After posting a 12 per cent rise in annual net profit to $1.02 billion, SingTel
recommended a final ordinary dividend of eight cents per share, taking total
ordinary dividends for the year to 14.2 cents.
Its shares fell three cents, or 1.25 per cent, to $2.37.