Cap plans for mobiles give Optus an edge

Optus added $2.4 billion in revenue to its parent company, Singapore Telecommunications.

SingTel's revenue rose 6 per cent for the three months to last December and was up 8.3 per cent, or $S13.3 billion ($10.4 billion), in the nine months to December. SingTel shares closed 1? lower at $2.37 on the Australian market.

The number of Optus's pre-paid customers fell by 62,000 after it took into account the number of customers disposing of cheap overseas-calling SIM cards.

But it added 149,000 customers to contracts, with 92 per cent choosing a capped plan. The chief executive, Paul O'Sullivan, said: "When we started selling cap plans about five years ago they were quite dilutive to both our revenue and our margins because a customer who traditionally bought a plan and then paid you every time they made a call now gets a free allowance.

"It had a big impact five to six years ago but now we are at a stage where nearly 70 per cent of our [customer] base is on these caps. That is a big contrast to Telstra who really only started to embrace cap plans over the last six months."

Telstra and Optus showed an increase in the average cost of acquiring customers, with Telstra's rising from $149 in December 2009 to $162 last December and Optus's from $211 to $254 in the same period.

The biggest driver of costs is the growing expectation from customers that they will get a subsidised smartphone when signing a contract. Mr O'Sullivan said Optus had proved its business model could generate profits and still acquire customers.

He would not comment on Optus's negotiations with the government's NBN Co over its inner-city cable network.

Telstra has agreed to turn off its cable network and transfer customers to NBN Co's fibre, but Optus is yet to announce whether it will also decommission its network for compensation.

AT A GLANCE

Revenue $A2.4b 3.6%

Net profit $S998m 0.8%

EPS 6.08? -2.3%

Dividend S6.8? 0.2?