Optus ready for Telstra's new direction

Optus has posted its strongest quarterly earnings growth in five years as it continues to attract mobile customers away from its competitors.

But Australia's second largest telco faces tougher competition from Telstra in the months ahead after the telco giant revealed its intentions to step its competition in the mobile sector.

Optus, a wholly owned subsidiary of Singapore Telecommunications Ltd (SingTel), reported a net profit of $170 million for the three months to June 30, up 22 per cent from the previous corresponding period.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 10 per cent on the previous corresponding period to $553 million.

Optus chief executive Paul O'Sullivan said a focus on customer service and improvements in the telco's network coverage drove revenue growth from its mobile services.

"Based on all of the disclosures we've now seen, we're confident that we continue to gain revenue market share in the mobile area," he told reporters.

Optus saw a 6.7 per cent rise in mobile revenue from the previous corresponding quarter to $1.4 billion, and the mobile division now makes up 63 per cent of its total revenue.

There were 190,000 new mobile customers added in the quarter, taking the total customer base to 8.69 million.

Optus is also benefitting from its offering of smartphone devices such as the iPhone, with data usage making up 40 per cent of mobile revenue, up from 38 per cent three months earlier.

Mr O'Sullivan noted Telstra's initiatives announced on Thursday to simplify its business and increase its focus on marketing and sales, which are aimed squarely at its falling market share in the mobile market.

"We expect that what's been signalled by our competitor is a far more aggressive period in the next six to 12 months," Mr O'Sullivan said.

"We look forward to seeing them in the marketplace."

Among its other divisions, Optus' consumer and small business fixed line division recorded a 10.1 per cent rise in EBITDA from the previous corresponding period, as broadband revenue and customer numbers rose.

Revenue from business and wholesale fixed lines dropped 5.1 per cent from the previous corresponding period.

That was despite signs of a recovery in fixed line usage from business clients, with a seven per cent rise in revenue from those services from the same quarter last year.

"We believe that reflects a recovery in the corporate sector in Australia," Mr O'Sullivan said.

Optus maintained its full year guidance for mid-single digit percentage level growth in operating revenue and EBITDA.

For the total SingTel group, first quarter net profit was down 0.2 per cent from the previous corresponding period to $S943 million ($A773.2 million).

Group chief executive Chua Sock Koong said competition in emerging markets led to lower earnings, as those divisions responded to competition to protect market share.

SingTel shares ended down one cent at $2.46.

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