Optus To Aggressively Defend Mobile Market Share
SYDNEY -(Dow Jones)- Optus, the Australian unit of Singapore Telecommunications Ltd. (T48.SG), will continue to "aggressively defend" its share of the consumer mobile market, Optus Chief Executive Paul O'Sullivan said Thursday.
Optus introduced capped mobile plans during the three months ended June 30 amid tough competition from rivals including the local arms of Vodafone Group PLC (VOD) and Hutchison Telecommunications Australia Ltd. (HTA.AU).
It said 24% of 105,000 new subscribers added during the first quarter took up capped call plans.
"We have had to adjust pricing and our acquisition costs to reflect the level of competition in the market," O'Sullivan told reporters after the group's first quarter report.
Optus spent A$30 million more on mobile subscriber acquisition costs during the first quarter than it did in its fiscal fourth quarter ended March 31 to retain high-value customers and launch its capped plans to ensure its market position.
"Moving forward, as we are not the price leader in the market place, we will reflect whatever is the ongoing competition in the market," he said.
However, the O'Sullivan raised questions over the sustainability of current pricing offers by some competitors, including Vodafone.
"I think it is noteworthy to look at Vodafone's results, which showed significant growth in subscribers in the order of 16% but revenue growth of only 2% and negative developments in profit. It would appear to me that there would be some question marks over sustainability of their pricing activity," he said.
Optus' operating margins fell to 29.7% in the first quarter from 32.5% in the March quarter.
Its mobile margins fell to 38% from 42% the previous quarter, while average revenue per user dropped 5.4% on year.
O'Sullivan declined to give specific guidance on the outlook for margins.
"I think what happens in the next few quarters really depends on what happens in the competitive outlook," he said.
He said the group continues to expect to outperform revenue growth across the industry, but growth rates were becoming harder to calibrate.
"As we go through the next few quarters, we will watch with interest to see our competitors' growth rates," he said.
In addition to aggressive pricing, O'Sullivan said Optus was looking to aggressively invest in infrastructure over the coming year as it rolls out its third generation (3G) mobile network and launch new satellites.
Government controlled Telstra Corp. (TLS) is the largest telephone company in Australia.
-By Lyndal McFarland, Dow Jones Newswires;
61-2-8235-2957; lyndal.mcfarland@dowjones.com
-Edited by Graham Morgan
(END) Dow Jones Newswires"
Posted to the site on 4th August 2005