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Optus Claws Back Q4 Result Via 7pc Lift: Looks To 5G

Optus posted results for its latest quarter, ended March 31, with operating revenue up seven per cent to A$2,303 million on the back of customer growth, higher equipment sales and higher NBN migration revenue following the resumption of NBN HFC migrations.

EBITDA was up six per cent to $748 million, while net profit increased 12 per cent to $228 million. Free cash flow for the quarter grew strongly, up 25 per cent to $446 million.

Mobile revenue was up nine per cent on strong customer growth, with 126,000 postpaid mobile subscribers added for the quarter.

In the mass market, operating revenue was up 19 per cent due to higher NBN migration payments and continued NBN customer growth, with 50,000 new installations added in the quarter.

For the full year, Optus operating revenue increased six per cent to $9099 million, but net profit was lower, due mainly to the impact of the temporary suspension of NBN HFC migrations.

During the year Optus added 379,000 new post-paid mobile subscribers and 137,000 new NBN broadband customers.

However, while commentators say the results show Optus recovering, they come on the back of temporary transfer connection fees.

“It is good to see that Optus is recovering from a bad year and that it is clawing back some lost territory, but the better financial results are to a large extent due to the transfer connection fees from its HFC network, temporarily providing extra income,” industry analyst Paul Budde told CDN.

“The overall financial outlook for the telco market remains rather flat,” he said. “We are seeing ‘peak telecom’ where it is unlikely that customers are significantly increasing their overall telecom spend. So new developments such as 5G are mainly allowing the operators to be more efficient, and profits largely need to be retained through cost savings.

“As we have seen over the last decade new revenues are largely generated through new apps, services and content provided by the digital giants. This will most likely also be the case with 5G: the promised new applications … will largely be developed by those giants and not by the telcos, who largely remain utility providers to those companies.”

Optus CEO Allen Lew said Optus is cementing its 5G rollout position by announcing Australia’s first commercial broadband service – Optus 5G Home Broadband – and completing a ground-breaking 5G video call, featuring augmented reality, between Singapore and Australia.

Speaking to The Australian, Lew also commented on the expectation that Vodafone Hutchison Australia may jump back on the 5G bandwagon after its proposed merger with TPG was “scuttled”.

“We need to look at this market in the long term; it’s a marathon, not a 100m sprint,” he said.

“There is a lot of evolution yet to come and a lot of new services that can be delivered over the network, so Vodafone is going to think about this very hard.

“I am sure they are not just going to sit there and allow the two other operators to speed ahead with 5G.”

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