Optus Business revenue falls by $27 million after being hit with ACCC ruling

Optus' enterprise business has taken a hit in revenue due to one-off projects and reduced mobile termination rates implemented by Australia's competition watchdog, the company claimed.

Optus Business revenue fell by $27 million in the third quarter ending 31 December 2016 to $389 million, compared to $416 million in the third quarter of 2015. EBITDA took a 25 percent hit, falling from $75 million to $56 million.

The solution provider arm of Optus encompasses ICT and managed services, data and IP, voice and mobile, all of which took a hit to revenue.

The decline was mainly due to ICT and managed services, Optus Business' largest market segment, which fell by $12 million to reach $165 million. Optus said this was mainly attributable to large one-off projects that weren't repeated this quarter.

Voice revenue fell by 8.8 percent, which Optus said was in line with a wider industry decline as customers which to cheaper IP-based voice solutions.

Despite smaller revenue, Optus said that it connected more enterprise customers to mobile services than the previous quarter last year. Mobile revenue fell 8.7 percent, which Optus said was due to mandated mobile termination rate reduction introduced in January 2016.

Optus has consistently blamed declining revenue and profit on the fee reduction, an industry-wide mandate by the Australian Competition and Consumer Commission that imposed a reduction in maximum mobile call and SMS termination charges.

Optus expects to lose up to $800 million this year from the change. Mobile decline was partially offset by growth in enterprise mobility applications and messaging services, Optus said.

Optus pointed out a $20 million managed services deal with the City of Townsville and a $40 million contract extension with security provider Suretek as highlights for the quarter which helped to boost the enterprise business.

For the entire Optus group, net profit fell 17 percent during the quarter to $188 million compared to the same time last year. Operating revenue fell 9.3 percent to $2.2 billion, and EBITDA was down 5.2 percent to $650 million.

The consumer business fared well, adding 153,000 mobile customers in the quarter, bringing the total number of customers to 9.57 million.

Optus chief executive Allen Lew said the company was responding to tough market conditions by focusing on product innovation, entertainment offers and a strong network proposition.

“Our network strategy, which is focused on delivering reach, capacity and reliability in both metropolitan and regional areas, is delivering real choice for customers," he said.

"With our continued commitment to investing in regional areas, which has been boosted by the recent Mobile Black Spots Funding announcement, we are expecting to make further network improvements in 2017 and beyond."