Optus Chops Football A Victim
Optus chief Kevin Russell has warned of a massive round of cost cutting that will see Optus spending more on its networks rather than focusing on acquiring more customers.
And in an apparent bout of self flagellation – Mr Russell described Optus as no more than “the best of a bad lot” and said the Singapore-controlled carrier needs to focus more on improving its service.
Optus will close or stop trading in 45 per cent of its retail stores and will reduce its marketing budget, he told ABC-TV’s Insider Business report at the weekend.
According to The Australian, Optus is not renewing its multimillion-dollar sponsorship and digital content rights deal with Football Federation Australia and a deal with the Carlton Football Club after the No 2 telco decided to withdraw from major sporting sponsorships to focus on its core business.
They claim that the decision will end a five-year relationship with the FFA and means Optus will not appear as a sponsor for the Socceroos if they qualify for next year’s World Cup in Brazil.
His remarks come two weeks after Optus reported a 5 per cent drop in revenue and a 6.9 per cent slide in net profit for its fourth quarter (CDN, May 16).
Russell pulled no punches: “We are reducing our marketing budget this year because – to me – trying to shout loudly and spend your marketing dollars when your core service needs to get better doesn’t make sense,” he said.
“It isn’t just a case of spending, it’s a case of balancing how you invest your money – in my view, in a smarter way, in a customer-centric way.”
Mr Russell described Optus as “the best of a bad bunch”, saying all three of Australia’s carriers have gone backwards in recent years, compared with European carriers.
And he said uncertainty over the future direction of Australia’s National Broadband Network, because of possible changes after the federal election, is a cause for concern.
“If there is a change in strategy, then what does it mean in terms of where Telstra lies? Because if it’s another step where potentially the landscape gets tilted in Telstra’s favour, it’s a concern, and that’s not clear just now.”
He told Inside Business that Telstra’s $11 billion deal to move its customers to the new NBN network and lease its infrastructure during the project’s construction has left the rival in a strong position.
“They negotiated a very nice pot of gold on a business that was probably declining and they are in a stronger position than they have ever been,” Mr Russell said.
He said Optus had “lost its way” in the past three or four years. “I think we could have done better. Overall we followed the market a little bit more than led the market.”
The full interview with Alan Kohler can be caught on abc.net.au/insidebusiness.