Optus chief Kelly Bayer Rosmarin’s future hangs on cold hard numbers

The collapse of Optus’s national network could leave the telco with a damage bill three times higher than last year’s cyber attack, placing its CEO’s future in the balance.

A cyber attack on Optus last year cost it $140m, it can be revealed, and its Singapore parent is now looking at any signs of a further earnings hit after the telco’s recent massive outage – with large losses likely to determine CEO Kelly Bayer Rosmarin’s future.

Black Friday and pre-Christmas sales provide one of the biggest bumps of the year for telco customer acquisition as bargain hunters look for hot deals on the latest Apple, Samsung and Google phones.

The key question customers will be asking themselves is whether they should renew their contract with Optus – hoping something else doesn’t go wrong – or switch to a competing telco.

Maybank, one of Asia’s biggest banks, is already expecting the outage to cost Optus almost three times more than last year’s cyber attack and estimates compensation payouts will hit $400m.

Maybank has also told investors that it expects customers to ditch Optus for rivals Telstra and TPG-owned Vodafone, further eroding earnings.

Once considered a cash cow for Singtel, Optus now requires heavy investment to upgrade the network to 5G as well as to repair the damage from last year’s cyber attack and this month’s outage.

The cyber attack pushed Optus into a $79m loss last financial year after it set aside $140m to cover associated costs.

Optus’s net assets, including debt, now total about $10bn. This compares with the $17.5bn Singtel paid to acquire Optus in 2001 and is a fraction of the total cash it has injected into its Australian network.

Optus CEO Kelly Bayer Rosmarin, who faces an uncertain future at the telco, leaves a Senate inquiry flanked by police security. Picture: Seven

Ms Bayer Rosmarin revealed at the Senate inquiry into the outage on Friday that Singtel has so far invested “more than $42bn in the networks in Australia for very low returns”.

For Ms Bayer-Rosmarin, it is now a matter of how many customers tear up their contracts and what will be the threshold for Singtel to take action.

The clock is ticking. If Singtel is to remove her, some insiders believe it is best to do it swiftly, rather than prolong the pain and customer anxiety.

Decisive action with an executive reset from the top will be viewed as key to restoring customer trust. But if customer numbers remain stable then Ms Bayer Rosmarin may be able to stay on.

Singtel’s sensitivities to the Optus outage – which cut phone and internet services for more than 10 million Australians for about 11 hours – were laid bare last week when it stepped in to clarify Optus’s statement about what triggered the shutdown.

Optus had said an upgrade of an international peering network – which it eventually revealed to be Singtel – sparked the outage. Twenty-four hours later, Singtel issued its own statement saying its upgrade was not the root cause, prompting Optus to clarify that the fault was entirely within its own network. It then revealed at the Senate inquiry that it didn’t have a plan for a national outage and Ms Bayer Rosmarin wasn’t aware of the extent of the crisis for 3½ hours.

Telstra chief executive Vicki Brady says the telco has already gained customers from Optus following the outage, as it did following the cyber attack. But she said it was too early to say how big the bump will be.

“There’s been some speculation about how large that could be, and I would just go back to the cyber breach last year … we saw elevated acquisition levels for around a six-week period,” Ms Brady said at Telstra’s investor day last week.

Ms Bayer Rosmarin told Senators that her focus was on her “team, the customers and the community … my focus is not on myself”. Nationals Senator Ross Cadell later pressed her to give a more definitive answer.

“Given you didn’t know the weakness in this network, given you haven’t responded to customers well, given you haven’t reflected your staff’s attitude, isn’t it time for new leadership at Optus?” Senator Cadell asked.

She replied: “Well thank you Senator, I will take that on board.”

Originally published as Optus chief Kelly Bayer Rosmarin’s future hangs on cold hard numbers