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Optus’ Full-Year Profit Drops 12%

Optus’ Full-Year Profit Drops 12%

Optus has reported a 12% drop in net profit to $794 million for the year ending March 31, as the effects of increased competition, higher content costs and device repayment service credits take their toll.

Full year EBITDA fell by 4% to $2.67 billion. Optus say the ACCC’s mandated cuts to mobile termination rates had affected its operating revenue, which fell by 8% to $8.43 billion.

The telco reported modest profit growth for the quarter ending March 31, which Optus said was its strongest quarter of mobile customer growth in five years.

Quarterly EBIDTA rose by 0.3% from the same period a year earlier to $741 million, while net profit rose by 1% to $250 million.

Optus added 78,000 new postpaid and 64,000 new prepaid services during the quarter for a total of 9.72 million mobile customers, along with 256,000 new sign ups for Optus 4G services for a subscriber base of 5.8 million, or 60% of total mobile customers.

“Despite heightened competition in the Australian market, Optus’ strategy of delivering customer growth through music, TV and sports content, underpinned by a robust and resilient mobile network, is on track,” said Optus Chief Executive Allen Lew.

The quarter also saw a 1.6% rise in operating revenue to $2.11 billion which Optus attributed to higher NBN revenues and equipment sales.

Higher cash capital expenditure saw free cash flow drop for both the year, down by 19% to $500 million, and the quarter, down by 44% to $202 million.

Following $1.5 billion in capital expenditure during the year, Optus responded positively to the ACCC’s recent decision on domestic mobile roaming.

“We welcome the ACCC’s draft decision not to declare domestic mobile roaming. This decision will provide Optus with the certainty it needs to invest a further $1.5 billion in 2017/18 to deepen network capacity and coverage, and continue delivering high quality services, choice and competition, particularly in regional Australia,” Lew said.

Optus also said its total broadband customer base grew by 7% during the quarter to 1.15 million, including 228,000 NBN services.

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