Optus restores network but rivals to cash in on telco’s failure

It could take Optus two years to rehabilitate its already tarnished reputation, industry experts say, while its bottom line will take a hit from compensation claims and falling market share.

It could take Optus two years to rehabilitate its already tarnished reputation, industry experts say, while its bottom line will take a hit from compensation claims and falling market share.

The telco giant was still scrambling late on Wednesday to find the exact source of a national outage that left its 10 million customers in the dark, wreaking havoc across the economy.

It is the second reputational disaster Optus has faced in 13 months under the leadership of chief executive Kelly Bayer Rosmarin, who is still struggling to ­restore customer confidence following last year’s cyberattack.

Scores of customers switched to Telstra and Vodafone, after cyber criminals hacked into Optus’s database last year and published a trove of personal and identity information, leaving customers exposed to a raft of financial crimes.

Optus risks losing more customers to rivals following Wednesday’s outage, further eroding the telco’s earnings.

Optus’s latest accounts reveal it swung to a $79m loss in 12 months to March 31, versus a $117m profit the year before. Revenue rose 2.8 per cent to $7.95bn.

Oliver Freedman, managing director at RepTrak, said it could take two years for Optus to rehabilitate its reputation, which already had taken a battering from the cyberattack.

Ms Bayer Rosmarin said late on Wednesday that services had been restored and, while the telco had “a few ideas” about what caused the outage, it was yet to fully identify the exact source.

“We have restored the network. What I can say is it’s a very technical network engineering issue and we are going to be doing a thorough root cause analysis,” she said.

She denied reports that the outage stemmed from an upgrade that went horribly wrong overnight on Tuesday.

Ms Bayer Rosmarin also said the company was looking into ways it could compensate people affected by the mass outage, and dismissed suggestions it would lose business to rivals.

“I believe at Optus that we are a customer champion and we go to great lengths to give our customers great value for money, excellent service and coverage and unique features they can’t get anywhere else,” she told 3AW.

“Nobody works harder to make sure our customers are looked after and trusted.”

The outage rocked Optus’s owner Singtel, whose shares slumped 5.2 per cent to $S2.35 in Singapore. Picture: NCA Newswire /Gaye Gerard

But investors are already betting on fed-up customers ditching Optus.

Shares in Telstra – which has about 18 million customers, almost double that of Optus – surged 1.3 per cent to $3.92, while TPG rose 0.7 per cent to $5.48.

Meanwhile, the outage rocked Optus’s owner Singtel, whose shares slumped 5.2 per cent to $S2.35 in Singapore.

Latest mobile market share data shows that Telstra dominates at 44 per cent, with Optus and TPG at 31 per cent and 17 per cent respectively. But this data is from 2021-22 and does not take into account the fallout of Optus’s cyberattack.

Singtel directors – including chairman Lee Theng Kiat – are in Australia ahead of the company’s financial results on Thursday. It is the second time Singtel directors – who include corporate lawyer John Arthur and former Westpac CEO Gail Kelly – are all in Australia as a crisis has engulfed Optus. All directors were in Australia last year when the cyberattack hit the company.

Ms Bayer Rosmarin was appointed Optus CEO in early 2020 after spending 14 years in several senior roles at Commonwealth Bank.

Corporate director Sam Mostyn said Optus’s response to last year’s cyberattack – which was roundly criticised for being too slow – has become a “most important” case study and the company would need to rapidly increase investment on customer retention.

“They will recover but I think they will have to invest heavily in a conversion with all their customers,” said Ms Mostyn, who worked as an Optus corporate ­affairs director in the 1990s.

“These were customers running big businesses. There will be a lot of rebuilding of trust that’ll be required.”

Ms Mostyn said it was important that Optus asked uncomfortable questions to ensure it “doesn’t find itself in this position again and then lose the confidence as the second carrier in this country. It’s a tough job ahead.”

Telco industry insiders told The Australian if the network upgrade had gone to plan, it would have taken place without detection in the wee hours of the night. Instead, they said it took more than one third of the nation offline. RepTrak’s Mr Freedman said how Optus communicated with customers would be vital in stemming a potential wave of customers switching to rivals.

“Being able to answer queries and all those sorts of aspects will be critical in terms of ensuring that this stays a capability issue and doesn’t move into character issue,” he said.

Mr Freedman said most companies took about two years to recover from major incidents.

“The Optus breach had a substantial and significant impact on its reputation just around this time last year. Optus’s reputation has slowly recovered over this calendar year but it is not back to the level it was before, at least according to our data,” he said.

Australian Communications Consumer Action Network chief executive Andrew Williams said Optus customers should count their “losses” sustained as a result of the outage and seek their entitled compensation.

“We encourage all Optus customers, and particularly business customers, to quantify their losses as accurately as possible,” he said.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the outage had a “significant impact” on all businesses, with small businesses left damaged by the network complications.

He said some cafes had reported being unable to serve almost 95 per cent of customers that sought to use online payments.

“Without internet connectivity, many businesses weren’t able to receive or process payments, weren’t able to trade, and therefore weren’t able to open,” Mr McKellar said.

For the tens of thousands of workers in the gig economy, Mr McKellar said the network outage left them suffering, unable to deliver goods or find the addresses of their clients when out on the road. “Optus has more than 400,000 business customers and the flow-on effects to the Australian economy will be massive,” he said.

The outage paralysed the call centre of Australia’s biggest bank, CBA, which said its staff were not able to receive phone calls. Many Uber drivers were also not able to take passengers, while Melbourne hospital provider Northern Health could not take patient phone calls.

Originally published as Optus restores network but rivals to cash in on telco’s failure