NBN boosts Optus revenue with mobile market flat

NBN sign-ups help Singtel Optus hold the line on half-year revenue despite a flat mobile market.

Optus boss Allen Lew said higher NBN migration payments had allowed the telco to counter the ongoing headwinds in the mobile market.

An uptick in consumers signing up to the National Broadband Network has helped Singtel Optus hold the line on half-year revenue despite a flat mobile market.

The telco posted a 1.8 per cent lift in revenue to $4.4bn for the six months ended September 30, with earnings before interest, tax, depreciation and amortisation (EBITDA) for the period rising 8 per cent to $1.4bn.

However, net profit after tax for the half year slipped 9.3 per cent year-on-year, from $259m to $235m.

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The telco’s mobile revenue remains under pressure, with average revenue per user (ARPU) for the half year coming in 6.7 per cent weaker, from $31 per user to $29 per user. The mobile market has seen intense price competition over the past 12 months and consumers opting for SIM-only plans as more of them hold on to their existing devices.

Optus boss Allen Lew said that higher NBN migration payments had allowed the telco to counter the ongoing headwinds in the mobile market.

“The growth that we have seen in earnings is a result of the higher NBN migration payments,” he said.

The telco is laying down the groundwork for the next phase of growth. Picture: Lawrence Machado

Optus receives payments from NBN Co as customers on its pay TV cable network move to the NBN and with the rollout of the network set to be completed by June 2020, Mr Lew said the telco was laying down the groundwork for the next phase of growth.

“We are in the process of building the revenue stream that will replace these payments, we have launched a 5G service, which I think will deliver incremental revenue for us.”

Optus officially launched 5G services in Australia this month with CEO Allen Lew saying the telco can go toe-to-toe with Telstra on offering reliable high-speed mobile and fixed wireless services.

The telco is offering a 5G fixed wireless alternative to the NBN to up to 138,000 homes. Optus’s service guarantees download speeds of 50 Mbps — comparable to that delivered over the NBN.

While the service can potentially steal customers away from NBN, with NBN Co’s mixed technology approach limiting the download speeds some consumers can get, Mr Lew on Friday said the service is more likely to work hand-in-hand with the NBN.

“At this stage it will be complementary to the NBN.”

Mr Lew added that getting consumers to sign on to an NBN service was just as important as giving them a 5G alternative.

“We are also working hard to make sure that moving to the NBN is a good experience for consumers and once they sign up to the network with us we can upsell them our mobile service.”

While consumers are taking their time moving from their existing services, especially those received over the pay TV (HFC) cables, to the NBN, Mr Lew said it was an issue that Optus was taking very seriously.

“There is evidence of this (people holding on to their existing service) and we are taking a very close look at the feedback from customers.”

“A lot of the (negative) sentiment is based on word of mouth and that’s why we are improving the migration experience better, particularly for customers moving from our HFC service to the NBN.”

“From December, we will do this for any customer coming across to the NBN through us,” he said.

With the telcos currently locked in discussions with NBN Co on wholesale prices and service standards, Mr Lew said the company rolling out the NBN had to give telcos a fighting chance to remain sustainable.

“The NBN is good for the country but NBN Co does need to take a look at the way the wholesale prices are structured, with perhaps some rebalancing between fixed and variable costs.”

“At the end of the day, NBN Co has to give the telcos a margin that allows them to be sustainable.”