Optus Sport app’s World Cup woes ‘not demand-related’: Allen Lew

Optus chief Allen Lew has rejected claims that the telco had undercooked its exclusive FIFA World Cup 2018 coverage.

Optus chief executive Allen Lew in Sydney yesterday. Picture: Hollie Adams

Optus chief executive Allen Lew has rejected claims that the telco had undercooked its exclusive FIFA World Cup 2018 coverage, saying that the Optus Sports app had undergone robust testing to meet with customer demand.

“It was not demand-related, we had tested the network for demand and the problem we had was isolated and a failure in our system with regards to a compatibility issue,” Mr Lew told The Australian.

“Other than that one specific weekend where we had a problem the platform performed really well for the rest of the tournament, when we had a lot more traffic.

“We ruggedised the platform and believe that it’s world class and we also have the ability to better understand customer issues and respond to them.”

The Optus Sports app ran into trouble from the opening bell, with many viewers signed up to see the second match of the tournament, between Egypt and Uruguay, stuck with frozen screens. The streaming glitches rendered the app useless for the opening weekend of the tournament, forcing Optus to eventually let public broadcaster SBS show all the World Cup on free-to-air TV.

Mr Lew said that the financial cost of sub-licensing the World Cup from SBS, believed to be around the $10 million mark, would not dent Optus books.

He added that the decision to give games back to SBS was not dictated by a lack of confidence in the Optus Sports app.

“We have a bottom line that can withstand the financial impact and the most important thing for us that we put the needs of the public first, especially after we didn’t perform to our and the public’s expectation on that first weekend,” he said.

Optus is still focused on expanding its portfolio of soccer content, having picked up exclusive Australian broadcast rights to the UEFA Champions League, the UEFA Europa League and UEFA Super Cup for the next three years.

Mr Lew has ruled out chasing other properties such as the AFL, NRL or US sports such as the NFL and NBA for the time being, saying that Optus would be disciplined in its pursuit.

“I don’t think we want to be the go-to sports channel for all Australians because to do that we will have to spend a lot of money, so we have to be focused,” he said.

Optus is also investing heavily on its mobile networks to keep the pressure on its rivals, especially Telstra. The telco has added 60,000 new customers to its mobile business in the June quarter. However, average revenue per user (ARPU) was lower as consumers move towards SIM-only plans.

Mr Lew said that lower ARPUs was pretty much the new normal in the mobile market.

“This decline is something we just have to accept as customers move away from handset bundled plans to BYO plans that have lower ARPUs and the fact that telcos give away more data at no extra cost,” he said.

“Handset technologies are not changing significantly. 5G may well change that but that’s not going to be around for some time and for the short term it’s not just about how you acquire customers, you have to look at the whole operating model.”

Optus posted a 3.5 per cent drop in net profit for the quarter ending on June 30, with a slowdown in the rollout of the National Broadband Network weighing on its results.

The telco posted NPAT of $154m, lower than the $160m posted for the same period last year.

Operating revenue grew 6 per cent year-on-year to $2.2 billion for the quarter ending June 30, with mobile service revenue rising 2 per cent to $963m.

The telco attributed the loss to lower NBN migration revenue, primarily on the back of the temporary suspension of sales over the hybrid coaxial fibre portion of the NBN.

Optus receives payments from NBN Co as customers are moved from its ADSL and pay TV networks to the NBN.

The telco added 30,000 NBN services during the quarter, taking its total NBN customer base to 483,000.