Optus has reported flat third quarter earnings, although revenue grew by 10 per cent as the nation's second biggest telecommunications company succeeded in attracting subscribers through cheaper plans on its Apple iPhones.
Shares in Optus parent Singapore Telecommunications Ltd (SingTel) fell after the group as a whole reported a 16 per cent decline in profit on Tuesday.
SingTel generates about 60 per cent of its revenue in Australia.
Optus chief executive Paul O'Sullivan said he expected revenue from the new iPhone customers, who spend 1.5 times more on average than existing subscribers, to flow in during coming months.
SingTel is forecasting revenue growth of 6.7 per cent for Optus in fiscal 2009 and a 1.3 per cent rise in earnings before interest, tax, depreciation and amortisation (EBITDA).
Optus took a $44 million hit in costs for iPhone sales during the three months to December 31 because it charges the total cost of the handsets when it signs a contract, which have a 12 or 24 month duration.
"We've been at the forefront of the iPhone and making it attractive to heavy internet users," Mr O'Sullivan said.
"It's the best reason in the world to have for margin contraction.
"We're winning a very good value customer."
Optus said it added 213,000 new mobile and wireless broadband subscribers during the third quarter, the highest number of additions in a quarter in more than four years. This brings Optus's total to 7.6 million customers, equivalent to about 34 per cent of the mobile market.
The lift in new subscribers drove mobile revenues 17 per cent higher to $1.3 billion and operating revenue for Optus as a whole to $2.2 billion.
Optus reported net profit of $143 million for the third quarter, while profit for the nine months to December 31 was $390 million, up 0.7 per cent on the same period last year.
The costs of gaining iPhone customers and introducing new unlimited plans caused mobile division EBITDA in the third quarter to fall by 5.3 per cent to $340 million.
As a result EBITDA margin for Optus as a whole declined to 23.2 per cent from 25.4 per cent in same period a year earlier.
Excluding the effect of the iPhone, EBITDA margin would have risen to 26.3 per cent.
Optus's group EBITDA was $510 million for the quarter, just 0.9 per cent stronger than the previous corresponding period.
In the third quarter, free cash flow rose 25 per cent to $167 million.
Optus staff numbers fell slightly in the quarter, from 10,740 at September 30, to 10,639 at December 31.
Parent SingTel reported a 16 per cent fall in its third quarter net profit to $S799 million, as the rising Singapore dollar cut earnings from overseas subsidiaries.
Profit for the nine months declined 11.2 per cent to $S2.55 billion.
Third quarter revenue was down 3.2 per cent to $S3.7 billion, following a 23 per cent decline in the Australian dollar against the Singapore dollar.
Group chief executive Chua Sock Koong reaffirmed the group's outlook for single-digit operating revenue growth for the remainder of the fiscal year.
"The global economic slowdown has started to impact the group," she said.
"With the current economic uncertainties, the group will continue to be vigilant and disciplined in our business decisions and leverage our vast experience to improve business performance."
Shares in SingTel fell six cents, or 2.43 per cent, to close at $2.41.
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