Optus Q3 profit rises 6% to $143m

Telecommunications company Optus has posted a six per cent rise in third quarter profit, solidifying its position as the number two communications infrastructure provider in Australia.

Parent company, Singapore Telecommunications reaffirmed its annual guidance for Optus, saying its Australian arm was still expected to grow full year revenue by 3.6 per cent.

Optus also forecast flat growth in earnings before interest, tax depreciation and amortisation (EBITDA) for the full year.

For the three months to December 31, net profit grew by 5.9 per cent to $143 million as operating revenue grew 3.6 per cent to $1.995 billion.

Chief executive Paul O'Sullivan said the rise in revenue came despite a reduction in mobile phone termination rates earlier in the year - led by the Australian Consumer and Competition Commission - by 40 per cent to nine cents per minute from 15 cents per minute.

He said during the quarter, Optus delivered increasing scale in mobile and on its fixed network, gaining profitable market share in Optus Business, pre-paid mobile and unbundled local loop (ULL).

"With the success of targeted campaigns and innovative product offerings, Optus recorded strong customer growth in mobile and ULL (unbundled local loop)," Mr O'Sullivan said.

During the third quarter Optus added 108,000 new mobile subscribers bringing the total to seven million.

The total ULL subscriber base grew by 64,000 to 265,000 subscribers by December 31. The number of broadband subscribers remained stable at 893,000.

"We are also set to provide a set of strategic initiatives that will, I believe, change the landscape of the industry in the next couple of years," Mr O'Sullivan said.

These initiatives included the continued expansion of Optus's third generation mobile network, which by year end would have a footprint covering 96 per cent of the Australian population, Optus said.

Mr O'Sullivan said broadband would continue to drive the market as it "unplugged", and added that finding a method of providing broadband quickly and easily was essential.

He said there would be continued growth in the telco's offerings such as the Optus Fusion product, a combined fixed line phone and broadband cap plan.

"Through out the quarter, strong demand continued for the innovative Optus Fusion," he said.

"We do feel we have significant momentum. For instance, our margins for our consumer division were up seven per cent to 12 per cent this quarter."

According to industry analyst Paul Budde, Australia's second biggest telco was now in the same league as Telstra as a utilities operator.

Mr Budde said Optus was now relying on mass markets, including receiving income from voice calls and data, which are rapidly shrinking.

"With large utilities like Optus and Telstra they are forced into the commodity areas rather than sexier niche markets such as digital media, which can tap into value added services.

"Instead Optus has to be content with low growth markets with low margin growth and those margins are under pressure.

"Optus has developed for itself a train on rails, which though not the most beautiful and attractive train, is steaming ahead in the right direction."

SingTel shares closed up nine cents to $3.08.

The Optus parent also affirmed its annual earnings guidance after reporting a fall in third quarter net profit.

SingTel's net profit for the three months to December 31 fell 4.2 per cent to $S952 million ($A742.05 million).

But underlying net profit, which excluded one of gains from property sales in the previous corresponding period, rose 21.7 per cent to $S931 million ($A725.722 million).