Optus outage damage bill hits $61m, Singtel reveals

The troubled telco’s national meltdown last November has dragged down parent company Singtel’s net profit and exacerbated churn.

Kelly Bayer Rosmarin resigned after appearing a Senate inquiry into the outage.

Optus’s catastrophic outage cost the telco $61.2m, its parent company Singtel has revealed, as it swings the axe through its workforce.

Singtel – which the Singapore government controls via its investment arm Temasek Holdings – blamed Optus’s national shutdown for dragging its overall profit down 13 per cent to $S465m ($527.1m).

Singtel has also moved to bolster its bottom line via sweeping redundancies, with “staff restructuring costs” blowing out to $S18m compared with $S2m in the previous corresponding period.

Optus’s crippling outage cut off more than 10 million Australians from phone and internet services last November. Almost 2700 could not contact triple-0 for emergency services, prompting a senate inquiry and ultimately chief executive Kelly Bayer Rosmarin’s resignation.

The outage prompted tens of thousands of disgruntled customers to dump the telco for bigger rival Telstra, while business clients told the Telecommunications Industry Ombudsman that Optus’s offer of free data was “not enough” to compensate for lost profits.

The shutdown sent Optus’s revenue tumbling 5.4 per cent to $S1.8bn in the three months to December 31. Earnings before interest, tax, depreciation and amortisation eased 1.8 per cent to $S465m.

Singtel has set aside $S54m – which converts to $61.2m at current exchange rates, for the outage – and accounted for the bulk of Singtel’s “exceptional losses”, which totalled $S94m.

“In this quarter, trading momentum in Optus was disrupted by a network outage. Operating revenue was down 2 per cent with continued weakness in the enterprise fixed business as a result of churn and price erosion,” the company said.

Singtel CEO Yuen Kuan Moon.

But Singtel chief executive Yuen Kuan Moon was confident the worst was behind its troubled Australian subsidiary.

“The Optus team has taken steps to increase network resilience since November’s outage. We are confident that our strong balance sheet and our priorities to improve the operational efficiencies of our core business and scale our growth engines will drive long-term value and returns,” he said.

The cost of the outage is yet to match the damage bill from a cyber attack that hit Optus in late 2022. The Australian revealed the data breach cost the telco $140m.

But analysts estimated that shutdown could end up costing Optus $400m, with one of Asia’s biggest banks, Maybank, basing its calculations on past network meltdowns.

“Drawing from the previous outage in 2016, Telstra has offered a $25 credit to consumers and a $50 credit to businesses who were offline for an extended period of time. In our view, Optus might enter a similar enforceable undertaking by ACMA (Australian Communications and Media Authority) to implement a compensation of up to $400m for its affected users,” Maybank analysts said in the aftermath of Optus’s outage.

Despite customers ditching Optus, its mobile revenue firmed 2.3 per cent to $1.43bn. It signed on an extra 228,000 customers, with its overall customer base growing 2.2 per cent to 10.5 million.

But during its half-year financial results earlier this month Telstra revealed much of the growth in the mobile market came from a return of skilled migrants after three pandemic-plagued years.

Optus is yet to hire a permanent replacement for Ms Bayer Rosmarin, which has created some problems among other executive appointments. Star recruit, crisis manager Danielle Keighery, was set to start at the telco this year but has since moved to lead marketing and corporate affairs at Qantas.

Singtel named Optus chief financial officer Michael Venter as an interim CEO last December but it is understood he is not interested in taking on the job permanently. The absence of a permanent chief executive has made it difficult to hire other C-suite executives.

The Telecommunications Industry Ombudsman’s latest quarterly data, released earlier this month, showed telco complaints soared in the aftermath of Optus’s outage last November. In the three months to December 31, complaints surged 13.4 per cent compared with the previous quarter, and 919 people lodged grievances against the nation’s second biggest telco.

Some small businesses lost as much as $10,000 after the outage crippled their operations, including their ability to accept payments and bookings.

Originally published as Optus outage damage bill hits $61m, Singtel reveals