Optus to shed non-branded stores by August

Optus will close about 300 non-branded retail stores between March and August as it faces up to challenging market conditions.

The Singtel subsidiary today reported a $728 million after-tax profit for the 12 months to 31 March, down 7.5 percent from the previous year.

SingTel Group executives said Optus had achieved stable financial results against a backdrop of negative revenue growth in the Australian mobile industry.

SingTel Group consumer chief executive officer Paul O’Sullivan said Optus had changed its business model to support sustainable profit growth.

He highlighted plans to exit a majority of Optus’ non-branded retail stores, representing about 45 percent of its overall retail distribution network.

Optus in March terminated its retail distribution agreement with premium reseller TeleChoice, which had 154 stores nationwide.

O’Sullivan said it would also terminate its “key partnership” with AllPhones, which had 165 stores, in August.

Meanwhile, the telco – Australia’s second-largest – planned to open 30 branded retail stores in the next 12 to 18 months, he said.

“We are less differentiated than we’d like to be,” O’Sullivan said of the Optus brand.

“The position we’ve had historically in the Australian market of being a champion for consumer needs is less pronounced than we would like.”

Mobile business suffers

Optus blamed the introduction of mobile usage caps, reduced call termination rates and lower equipment sales for a 4.6 percent revenue drop this financial year.

The decline came despite Optus’ recent restructure, which allowed it to cut operating expenses by $454 million (6.4 percent).

Optus’ mobile division suffered the greatest revenue fall, reporting a $361 million (5.9 percent) change.

Revenue from its consumer and SMB division also fell 5.1 percent ($65 million) in the year, while its business and wholesale revenues suffered 0.8 percent drops ($10 million and $5 million respectively).

Optus highlighted a reduction in mobile device subsidies – resulting in a $40 million decrease in equipment sales – and a device replacement plan that was implemented in October 2011 and cost it $20 million.

It took a further $18 million hit from the ACCC’s decision to reduce mobile termination rates from 9 cents a minute in 2011 to 6 cents last year and 4.8 cents as of 1 January 2013.

In addition, Optus reported less revenue from roaming and breakage fees because it had begun providing customers with usage alerts and caps on excess usage.

Optus grew its number of mobile subscribers by 1.1 percent to 9.59 million as of 31 March, with customers increasingly taking up postpaid services (5.9 percent increase to 5.5 million postpaid subscribers).

Of the total number of subscribers, 8 percent (785,000) used 4G devices. Optus said it had more than 750 4G sites across the nation as of 31 March.

“Optus continued to make significant investments to enhance the coverage, quality and performance of its network,” it said.

Optus’ parent Singtel Group today reported a 12 percent fall in net profit after tax, and 3.4 percent fall in operating revenue to S$18.18 billion ($14.80 billion).