Telstra Still Screwing Us Optus
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Telstra is still screwing Optus but by stealth as opposed to head on the CEO of Optus has claimed in a round about way.

“Increased competition from Telstra has really meant increased effort from Telstra to stop competition,” says Optus CEO Paul O’Sullivan CEO. “What we are seeing is unilateral increases to ULL (unbundled local loop) wholesale prices – and (Telstra’s) action on the price for line sharing is reminiscent of the East German Olympics, which was if you can’t beat them on the field, then beat them in any other way.”

“What we seeing with Telstra at the moment is an incredible amount of effort and energy going in to try and delay and prevent competition, which would ultimately be good for the Australian consumer,” O’Sullivan told a media teleconference called to discuss Optus’ third quarter financial results, released yesterday as part of owner Singapore Telecommunications’ Q3 report.

“We’ve seen an extremely aggressive action in trying to increase unbundled local loop pricing in the major population centres, and we’ve seen them put up wholesale line rental prices to try and blunt the competitiveness of other carriers,” he said. “I think it is a very unfortunate, destructive and negative approach for a company to take in the marketplace and we think it is important for government and the regulator to move quite quickly.”

In announcing the Q3 figures, which saw the company’s net profit fall by 4.8 percent to $160 million for the third quarter, O’Sullivan described the results as “solid”. “We believe we continue to outgrow the industry,” he said. “Our churn is at its lowest level in years. We continue to roll out our ULL broadband and deals with Flight Centre and Queensland Health have shown we have the ability to make good inroads despite Telstra’s aggressive behaviour.”

He said Optus is looking to gain future growth in markets such as 3G, ULL – it is building its own ULL network – and satellites. “Our mobile customer numbers showed strong growth, despite the market getting closer to saturation and experiencing strong price competition with capped plans; customers continued signing up to broadband; and Optus Business and Wholesale combined is growing as it continues to win customers to increase overall market share,” O’Sullivan said.

For Optus Mobile, revenue grew by 3.3 per cent to $1.05 billion but operational EBITDA fell 1.9 per cent to $384 million, reflecting the continued impact of mobile caps and lower termination rates – offset by higher usage. Incoming revenue grew 17 per cent as a result of higher traffic volumes, partly offset by the lower mobile termination rates. Overall service revenue was up 2.6 percent to $899 million.

Mobile postpaid churn rates declined to 1.2 per cent in the third quarter – the lowest for several years. Optus Business & Wholesale (excluding Alphawest) saw underlying operating revenue increase by 3.2 percent despite fierce price-based competition.

Sacrificing margin for market share business revenue increased by 5.1 percent while wholesale revenue declined by 1.1 per cent. Optus Business has increased its voice revenue by seven per cent – representing an improvement in its market share. Data and IP revenue increased by 1.8 per cent, with IP growth offset by declines in traditional data.

Commenting on the result, Ovum analyst David Kennedy said Optus margins should improve as its ULL rollout progresses, and its expanding base of DSL resale customers are migrated to its own infrastructure. “The overall picture is of an operator aggressively maintaining its market position in highly competitive market, and sacrificing margin to do it . . .
The next two quarter’s results will bring a clearer picture,” Kennedy said. Parent group Singapore Telecommunications’ Q3 profit rose 16.4 percent to
$885 million. Revenue was S$3.4 billion, an increase of 4.2 percent over Q3 last year.