Optus' enterprise business drags down earnings

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Optus' enterprise business drags down earnings

Revenue from Optus' enterprise business has continued to slide amid "intense price competition" in managed services.

Optus' overall results slumped for the year, with the telco's total revenue dropping 7.6 percent to $8.4 billion. EBITDA fell 3.7 percent to $2.6 billion and net profit was down nearly 12 percent to $794 million.

Optus Business revenue fell 2.9 percent to $1.52 billion for the 2017 financial year ending 31 March. EBITDA fell nearly 16 percent to $253 million.

All four of Optus Business' units took a revenue hit, including ICT and managed services, which fell 0.6 percent to $603 million for the year. The division's other units are data IP, voice and mobile sales.

Along with heightened competition, Optus blamed sliding enterprise revenue on one-off projects that weren't renewed.

Voice revenue within Optus Business fell 6.3 percent to $324 million due to customers migrating to lower-cost, IP-based solutions. Mobile revenue was down 4.2 percent to $277 million due to declines in roaming rates. Optus said this was partially offset by growth in enterprise mobility application, messaging services and equipment sales.

The consumer side

The consumer business didn't fare much better, with revenue falling 8.4 percent to $6.8 billion, and EBITDA was down 1.9 percent to $2.4 billion.

Optus blamed the poor performance on the enterprise business as well as higher costs that arose from device repayment credits, where the company offers mobile plans credits to reduce their monthly payment fee.

Optus has continuously blamed its sliding revenue on the ACCC's mandate for telcos to cut mobile termination rates, which was introduced in January 2016.

The company was forced to pay back $134 million to the ATO last year for amended assessments related to the sale of Optus from its former parent company. Optus is currently disputing the charge.

Chief executive Allen Lew said: "Despite heightened competition in the Australian market, Optus' strategy of delivering customer growth through music, TV and sports content. Underpinned by a robust and resilient mobile network, is on track."

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