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What you need to know about SingTel's completely disastrous quarter down under
It was a complete decimation of their Optus business.
SingTel subsidiary Optus is struggling for its proverbial 4G life in Australia and new figures show the carrier is at risk of losing the fight for its future. This is very serious news for Singtel and has already been highlighted in their results.
But the results, whilst flat, don't tell the true story of a strategy that is leading to fundamental failure in the Australian market. As Australia, like Singapore, moves to 4G, Optus is getting crushed by Telstra, the number one telco. How crushed?
Let's look at the facts. In the last six months Telstra added about 600,000 new customers - half of them for the 4G service. Optus managed not even one tenth of that number - 53,000 new customers in all. This is not just a loss, its not a blip, its a complete rout and a disaster for Optus as it loses the race to 4G.
And it gets even worse. If you don't get new customers its pretty hard to grow profits. Telco's should be profit machines, yet Optus managed to see its profit decline 9% over the fourth quarter. This was a prime reason for SingTel seeing its own profits fall 8.3 % in the fourth quarter.
If SingTel can fix Optus, it can fix its own profitability woes. But the numbers suggest that its not just losing, it has been completely routed. It's only proposed solution is to invest some more money in more retail outlets and cut some ties with existing resellers.
But the number of shops selling Optus may not be the reason it is not picking up all those new 4G subscribers. Network speed are key for 4G customers and Telstra has the perceived advantage.
Optus increased its spending on its core infrastructure by 41 % to $176 million, but the customer decisions to choose Telstra over Optus by a 10 to 1 advantage would suggest this may not be enough. Shifting shops and distributors may not be enough to turn this ship around.
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