Mobile headwinds shake Optus profits

Profits at Optus, Australia's second-largest mobile carrier, fell 7.5 per cent to $728 million in the latest year after declining mobile income.

Profits at Optus, Australia's second-largest mobile carrier, fell 7.5 per cent to $728 million in the latest year after declining mobile income.

Revenue in the last quarter ending March 31 was down 5.4 per cent to $2.17 billion and for the year was down 4.6 per cent.

The poor performance by Optus also dragged down the revenue of its parent company, SingTel, by as much as 6.3 per cent in the past quarter.

Optus chief executive Kevin Russell said the telco was facing strong headwinds in the mobile industry, where the growth of new customers has slowed markedly. "The net growth in the market, in terms of new customers, is dramatically less than what it was 12 months ago," Mr Russell said. "[The] overall industry has gone significantly backward in terms of mobile service revenues."

Optus added 33,000 new customers in the past three months and 103,000 customers in the past year.

While Optus struggled to attract new mobile users, rival Telstra bucked the industry trend and added more than 600,000 customers in the past three months.

Mr Russell said Telstra was able to defy the trend at the expense of Vodafone, the country's third-largest carrier.

"Vodafone has definitely had its challenges and Telstra has unquestionably capitalised on those challenges on the perception of its strong network," he said.

Mr Russell said its 4G network in metropolitan centres would be as good as any in the market in two to three years.

Mr Russell said the company was positioning itself to capitalise on mobile data revenue growth. Data revenue accounts for 53 per cent of Optus's service revenue, according to its financial report.

"Revenues on data will be driven by 4G," he said. "We want to steadily increase our penetration of 4G handsets ... and also to get right rates plan structure."

It is believed the major telcos are developing pricing plans to charge more for data usage in the coming months as they introduce their 4G networks, which will enable much faster download speeds.

Optus made a net profit of $257 million in the three months to the end of March, down from $267 million in the previous corresponding period. The year's profit of $728 million was down from $787 million in the previous 12 months.

Revenue declines were driven by pressures across three key business units - mobile, wholesale fixed-line and fixed-line services for consumer and small business. Revenue for the mobile division, Optus' largest revenue earner by far, declined by 7.3 per cent.

Mr Russell revealed Optus had 785,000 devices on its 4G network. Telstra has more than 2 million connected to its 4G network.

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