Optus fight to win back trust after outage

Optus has conceded it has a long way to go in rebuilding trust with consumers after last year’s national outage, as it considers further cost-cutting at a tough time for the telco sector.

Optus mobile service revenue has grown 4.2 per cent over the past 12 months. Picture: NCA NewsWire / Gaye Gerard

Optus interim chief executive Michael Venter has conceded the operator has a long way to go in rebuilding trust with consumers after the national outage in November, as it considers further cost-cutting at a tough time for the telco sector.

Parent company Singtel revealed earlier this year the catastrophic outage cost the telco $61.2m, while cutting off more than 10 million Australians from phone and internet services.

The incident prompted a Senate inquiry and ultimately chief executive Kelly Bayer Rosmarin’s resignation.

“I’ve been very clear with the team that we’ve got to make sure we’ve focused on fewer activities and sure that we do them very well,” Mr Venter said.

Stabilising Optus’s network and strengthening the company’s IT system was a must.

“That is what our customers expect and that is critical for us. We just cannot afford another large incident and the organisation understands this,” Mr Venter said.

Optus needed to rebuild trust with customers as it needed to grow its business to reinvest back in its network, he added.

The telco reported capital expenditure of $1.6bn over the past 12 months, more than $1bn of which was spent on its network. “We want to continue to fund at least a billion dollars into the network per year,” he said.

Optus’s recent $1.8bn network sharing deal with TPG would play a role in that.

The deal was significant not only for Optus but also Singtel, which regards it as a key strategic priority.

“We have invested billions of dollars over a period of time and the issue for us is that Telstra has a dominant position with market share,” Mr Venter said.

“At the core of it, we will share technology and TPG shares in the cost, and that helps us both to compete more effectively with Telstra.”

The telco has ruled out laying off further staff as Telstra did on Tuesday, announcing plans to axe 2800 jobs – or 9 per cent of its workforce – including offshore positions.

Mr Venter told The Australian that while Optus had also cut staffing costs it was looking at cost cutting measures beyond labour.

Optus interim CEO Michael Venter.

Optus anticipated rising energy and other costs more than a year ago and has made a number of cost savings.

In February it cut an entire department, known as the O-team, which handled smart home ­installations.

“Clearly there is more to do for us on top. We are turning sharply our attention to other parts of the cost base,” he said, adding that energy costs would come down this year and the telco would not incur some expenses it had last year when it was a major supporter of the Women’s World Cup.

Optus’s fixed revenue from wholesale, fleet and enterprise services sank 16 per cent over the past six months, impacting its full-year performance to March 31.

Second-half operating revenue fell 1 per cent to $4.04bn versus the corresponding period result of $4.09bn, which made for a flat FY24 haul of $8.06bn, compared to $8.05bn in FY23.

Earnings before interest and taxes (EBIT) rose 20 per cent in the second half to $147m, but on a full year basis rose just 0.5 per cent to $288m.

Optus reported revenue of $8.06bn in the 12 months to March 31, only slightly higher than the $8.05bn it recorded in FY23.

The telco saw a significant drop in mobile hardware sales, which sank 3.8 per cent, and minimal growth with its prepaid and postpaid mobiles plans.

Meanwhile, a $250m acquisition the nation’s second largest telco made three years ago has helped offset what otherwise was a largely flat financial result.

Its mobile virtual network operator amaysim has completely outdone its own branded services, responsible for over 93 per cent of all new subscribers.

Amaysim brought in 108,000 of the 116,000 total new subscribers in FY24, allowing the company to grow its mobile service revenue to 4.2 per cent.

Mr Venter said Optus-branded services did struggle.

“It’s been a great acquisition for us and amaysim was very well run and pleasantly very competitive. I definitely don’t want to take anything away from them,” he said.

Optus interim CEO Michael Venter.

Originally published as Optus fight to win back trust after outage