Optus plan to keep it simple
The company posted a $167 million quarterly profit, an increase of 7.7 per cent compared with the same period last year, despite a 5.3 per cent slump in revenue.
Optus chief executive Kevin Russell, who is under pressure to improve the company's performance, said tackling customer concern about "bill shock" was at the centre of his strategy.
"I personally see bill shock as a massive problem that is building for Australian consumers - that is because 4G usage is growing and data allowances are coming down, he said. "More customers are breaking through their allowances."
Optus introduced MyPlan in July to tackle this issue, which moves customers to a higher-priced plan costing $10 more a month if they go over their data allowances.
Mr Russell said he wanted to "put in place a plan that encourages or allows customers to use their smartphones as much as they want."
Optus' mobile division, which accounts for more than 50 per cent of the company's revenue, had next to zero growth in subscriber numbers in the past 12 months, compared with Telstra, which picked up more than 1.2 million mobile customers, capturing nearly 50 per cent of the market.
Frequently Asked Questions about this Article…
Optus posted a $167 million quarterly profit, up 7.7% compared with the same period last year, despite a 5.3% slump in revenue. For everyday investors, that means profitability improved even as top-line sales fell — highlighting the importance of watching both earnings and revenue trends.
MyPlan, introduced by Optus in July, is a simplified pricing approach that automatically moves customers to a higher-priced plan if they go over their data allowance. The higher plan costs $10 more a month, and the aim is to reduce unexpected bills ("bill shock") by giving customers clearer pricing and larger allowances when usage increases.
According to Optus CEO Kevin Russell, bill shock is a growing issue because 4G usage is increasing while data allowances are shrinking, so more customers are exceeding their limits. That creates customer dissatisfaction and is a focal point of Optus's strategy to keep people on suitable plans.
Optus's mobile division accounts for more than 50% of the company's revenue, making it critical to the group's performance. Improvements or setbacks in the mobile business can materially affect overall results.
Over the past 12 months, Optus's mobile division had next to zero growth in subscriber numbers, while Telstra added more than 1.2 million mobile customers and captured nearly 50% of the market.
Kevin Russell has said he wants a plan that encourages or allows customers to use their smartphones as much as they want while addressing bill shock. The MyPlan initiative is a step toward simpler pricing and larger or automatic adjustments so customers aren't surprised by overage charges.
The article says Optus is pinning hopes on rising data demand and a simplified pricing strategy to lift mobile performance in a declining market. If data demand continues to grow, clearer plans like MyPlan could limit bill shock and help retain customers, potentially improving future performance.
Based on the article, investors should monitor mobile subscriber growth, revenue trends, profit margins, and customer response to MyPlan (including any reduction in bill-shock complaints). Given the mobile division contributes over 50% of revenue, its subscriber trajectory versus competitors like Telstra is especially relevant.
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