Optus earnings hit by consumer sentiment
No. 2 telco Optus says weaker consumer sentiment dented its revenue for the fourth quarter and put a hole in annual earnings.
Australia’s No 2 telco Optus says the worst of customer hardship isn’t over as it braces for a second wave of weakness after the end of JobKeeper and JobSeeker support in September.
The telco was quick to provide customer assistance at the onset of the downturn in April, being one of the first to offer extra data packs and waive late fees, and chief executive Kelly Bayer Rosmarin says that support will continue as long as customers need it.
“We are in it for the long haul; we are not assuming the worst is over,” she told The Australian.
“It may be a different wave or different economic impact so we are just making ourselves available to provide hardship assistance where it is needed … not just in the next few months but especially after the end of JobSeeker and JobKeeper.”
Handing down her first results as chief, Ms Bayer Rosmarin notes her start in the role on April 1 hadn’t panned out as planned, with “even my best laid transition plans thrown out the window”.
But the Commonwealth Bank and Boston Consulting Group alumnus says she believes in cycles and is “no stranger” to a crisis after the GFC and dotcom crash.
Still, the weakness in the fourth quarter dragged on the company’s annual results delivered on Thursday, as already-weak sentiment took a further hit from the summer bushfires and then the early coronavirus downturn, sending equipment sales down 22 per cent.
Revenue for the fourth quarter dipped 9 per cent to $2.104bn, pulling annual revenue down 2 per cent to $8.954bn. Despite annual earnings slipping 2 per cent to $2.652bn, the company still booked a profit of $402m.
Telco providers became essential service providers during the pandemic-induced shutdowns, and had seen a surge in usage as workers increasingly worked from home and consumers relied on virtual connections due to the social-distancing restrictions.
Optus reported a jump in data use of between 10 per cent and 20 per cent, while voice calls were a surprise outperformer, jumping 30 per cent during the pandemic — a statistic Ms Bayer Rosmarin said she would like to attribute to people calling each other more, but probably also due to longer call centre wait times.
“Our patterns of usage have changed dramatically. We used to plan for clear peaks, we knew what time and where our heaviest use would be, but those patterns are no longer,” she said, noting there were some “green shoots” that hinted at a return to normal activity but there was a long way to go.
Usage is now spread more equally throughout the day, and widely in the suburbs rather than the CBDs. In the major centres of Sydney and Melbourne, Optus reports usage was down by 80 per cent while other capital cities such as Perth had been cut by half.
As some states eased restrictions, use patterns would inform the return of her own workforce. “We have seen some movement back into shopping centres and that will influence our decisions on how we staff our stores but it is still too early to call it on our CBDs.”
Migration of customers to the NBN continues to be a headwind, and Optus noted it had hit its results later than its peers.
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