Back to basics: Optus switches focus to fixed lines
"It is about the time to shine a bright light back on the fixed business and grow it with the same focus, intensity and passion that we have grown the mobile business over the years," Mr Mercer said.
Optus has experienced substantial growth in the mobile market over recent years, but has now stalled. It added just 53,000 new customers in the past six months, while Telstra had attracted more than 600,000 customers in the same period.
As a result, it is looking to its fixed-line business for growth.
"For a long time, Optus has become, in many respects, a mobile company first and a broadband company second," Mr Mercer said. "Under Kevin's [Optus chief executive Kevin Russell] leadership, he recognises that we need to manage the two parts of our business equally."
Mr Mercer sees the national broadband network as the key to fixed-line strategy and business growth opportunity. "NBN passes a lot of households where we don't have infrastructure. It significantly expands the accessible market," he said. "In many of these areas, we have mobile customers but no ability to provide broadband services."
The $37 billion national fibre network afforded a great opportunity for Optus to "cross-sell" to customers who already had mobile services with the telco.
Mr Mercer, who was chief executive of Vividwireless before joining Optus, said price would not be an important differentiator in the national broadband network world, where all internet services providers are able to access the network on equal wholesale terms. "The interesting thing about NBN is price is a lever that is going to be hard to pull. If your strategy is going to be based on price, then you are going to find it challenging in a NBN environment."
Rather, "customer experience" and "bundling" would be at the heart of Optus' national broadband network strategy, he said.
"We don't do bundling as well as we should and we are getting better," he said.
Another challenge facing Mr Mercer is to grow Optus' fixed line customers on its hybrid fibre-coaxial network, which connects about 2.4 million premises. The telco has about 500,00 customers on this network at moment.
"Part of my challenge now is to accelerate our performance in fixed broadband and to connect more customers to our HFC network. That is the real question of focus," he said.
Frequently Asked Questions about this Article…
Optus is refocusing on fixed-line services because mobile subscriber growth has slowed in a flat market. After strong mobile gains in earlier years, Optus added just 53,000 new mobile customers in the past six months (while Telstra added more than 600,000), so the telco is looking to broadband and fixed-line growth to expand its customer base.
Martin Mercer is a telco industry veteran and former chief executive of Vividwireless who has been appointed to lead Optus' fixed-line strategy. He will focus on growing Optus' fixed broadband business with the same intensity used for mobile, including accelerating performance on Optus' hybrid fibre‑coaxial (HFC) network and leveraging the national broadband network (NBN).
Optus sees the $37 billion national fibre NBN as a major growth opportunity because the NBN reaches many households where Optus currently lacks fixed infrastructure. Mercer says the NBN significantly expands the accessible market and gives Optus chances to cross‑sell broadband to its existing mobile customers in those areas.
According to Martin Mercer, price will not be an important differentiator in the NBN world because all internet service providers access the network on equal wholesale terms. Instead, Optus plans to compete on customer experience and bundling rather than trying to push price as the main lever.
Bundling and customer experience are central to Optus' NBN strategy. Mercer says Optus doesn't do bundling as well as it should but is improving, and that delivering a better customer experience and more effective bundles will be key ways to win broadband customers on the NBN.
Optus' hybrid fibre‑coaxial (HFC) network connects about 2.4 million premises. The challenge is growing the number of fixed‑line customers on that network: the article notes Optus currently has roughly 500,000 customers on the HFC network, and Mercer’s focus includes accelerating connections and uptake on this infrastructure.
In the past six months Optus added about 53,000 new mobile customers while Telstra added more than 600,000. This divergence matters because it helps explain Optus' strategic shift toward fixed-line and NBN opportunities as a new source of growth and cross‑sell potential to complement its mobile business.
Based on the article, the main opportunities are expanded addressable markets via the NBN and cross‑selling broadband to existing mobile customers. The key challenges include growing uptake on Optus' HFC network and competing on service and bundling rather than price in an NBN environment. Investors should watch execution on bundling, customer experience improvements, and progress connecting more customers to the fixed networks.
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